EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is entered into on May 14,
1997, by and among PETROTECH ACQUISITION, INC., a Delaware corporation (the
"Buyer"), XXXXX INDUSTRIES, INC., a Delaware corporation and parent of Buyer
("Parent"), PETROTECH, INC., a Louisiana corporation and its wholly-owned
subsidiary, PETROTECH INTERNATIONAL, INC., a Louisiana corporation
(collectively, "Petrotech") and XXXXXXX X. XXXXX, XXXXX X XXXXX, XXXXXXX X.
XXXX, each individual residents of the state of Louisiana and the XXXXXXX X.
XXXX AND XXXXXXXXXX X. XXXX CHARITABLE REMAINDER TRUST, a trust established
under the laws of the state of Louisiana and represented herein by its
independent special trustee Xxxxxxx Xxxxxx (each of the latter individuals, as
well as said trust, a "Shareholder"). The Buyer, Parent, Petrotech and the
Shareholders are referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which Buyer shall merge with
Petrotech, with Buyer being the surviving corporation and in connection
therewith, the Shareholders will receive certain consideration in the form of
cash and shares of capital stock of Parent.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Acquired Company" means Petrotech and Petrotech's interests in
Petrotech Europa BV., a Netherlands corporation ("Petrotech Europa").
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses; provided,
however, that an Indemnified Party shall be obligated to take steps which are
reasonable under the circumstances to mitigate any Adverse Consequences.
"Affiliated Group" means any affiliated group within the meaning of Code
Sec. 1504(a) (or any similar group defined under a similar provision of state,
local, or foreign law).
"Affiliate Leased Real Property" means the leasehold interests in and to
the real property and improvements used by Petrotech, which is located at (i)
000 Xxxxxxx Xxxxx, Xxxxx
Xxxxxx, Xxxxxxxxx, (xx) the annex to the 000 Xxxxxxx Xxxxx property, including,
without limitation, the adjacent warehouse, parking lot and other items located
therein, and (iii) 000 Xxxxxxx Xxxxx, Xxxxx Xxxxxx, Xxxxxxxxx and more
particularly described in (S) 3(l)(ii) of the Petrotech Disclosure Schedule.
"Agreed Value" means that price per share of the Parent Shares which is
the average of the closing sales prices of the common stock of the Parent on
each of the three (3) trading days immediately preceding, on and immediately
following (each a "Trading Day") the Closing Date as reported by the New York
Stock Exchange ("NYSE").
"Applicable Rate" means the corporate base rate of interest announced
from time to time by NationsBank.
"Bank Loan" means that certain loan agreement, dated as of July 20,
1990, by and between Petrotech and Whitney National Bank, with a revolving line
of credit in the original amount of $3,050,000, as amended to date with a line
of credit of $7,000,000.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, occurrence, event, incident, action, failure to
act, or transaction that forms or would probably form the basis for any
specified consequence.
"Business" means the business conducted by the Acquired Company,
including without limitation, gas pipeline systems and services, turbo machinery
controls, production and wellhead safety controls and related engineering,
construction, and training services.
"Buyer" has the meaning set forth in the preface above.
"Buyer Disclosure Schedule" has the meaning set forth in (S) 4 below.
"Cash Consideration" shall have the meaning set forth in (S) 2(c) below.
"Closing" has the meaning set forth in (S) 2(e) below.
"Closing Balance Sheet" has the meaning set forth in (S) 2(f)(i) below.
"Closing Date" has the meaning set forth in (S) 2(g) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Loans" means any and all loans of Petrotech for borrowed money
including, without limitation, the Bank Loan, the Shareholder Loan and the
Sellers Loan.
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"Confidential Information" means: (a) confidential data and confidential
information relating to the business of any Party (the "Protected Party") which
is or has been disclosed to another Party (the "Recipient") or of which the
Recipient became aware as a consequence of or through its relationship with the
Protected Party and which has value to the Protected Party and is not generally
known to its competitors and which is designated by the Protected Party as
confidential or otherwise restricted; and (b) information of the Protected
Party, without regard to form, including, but not limited to, Intellectual
Property, technical or nontechnical data, algorithms, formulas, patents,
compilations, programs, devices, methods, techniques, drawings, processes,
financial data, financial plans, product or service plans or lists of customers
or suppliers which is not commonly known or available to the public and which
information (i) derives economic value from not being generally known to, and
not being readily ascertainable by proper means by, other Persons who can obtain
economic value from its disclosure or use, and (ii) is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy.
Notwithstanding anything to the contrary contained herein, Confidential
Information shall not include any data or information that (a) has been
voluntarily disclosed to the public by the Protected Party, (b) has been
independently developed and disclosed to the public by others, (c) otherwise
enters the public domain through lawful means, (d) was already known by
Recipient prior to such disclosure or was lawfully and rightfully disclosed to
Recipient by another Person, or (e) that is required to be disclosed by law or
order.
"Controlled Group of Corporations" has the meaning set forth in Code
Sec. 1563.
"Delaware Act" shall mean the General Corporation Law of the State of
Delaware, as amended.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan (as
defined in ERISA Sec. 3(2)), (b) qualified defined contribution retirement plan
or arrangement which is an Employee Pension Benefit Plan, (c) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan (as
defined in ERISA Sec. 3(1)) or material fringe benefit plan or program.
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, state law rulings, codes, plans, permits, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local and
foreign governments (and all agencies thereof) concerning pollution or
protection of the environment, natural resources, public health and safety, or
employee health and safety, including, but not limited to, laws relating to
emissions, discharges, releases, or threatened releases of Hazardous Substances
in ambient air, surface water, drinking water, wetlands, ground water, or lands
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, recycling, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agreement" means the Escrow Agreement dated the Closing Date,
entered into among the Parties with respect to the indemnification obligations
of the Shareholders under (S) 7 of this Agreement, the form of which is set
forth as Exhibit J.
"Escrow Funds" shall have the meaning set forth in (S) 7(b)(v).
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statements" shall have the meaning set forth in (S) 3(g).
"GAAP" means United States generally accepted accounting principles as
in effect as of the date hereof.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Hazardous Substance" means any substance regulated under or defined by
Environmental, Health, and Safety Laws, including, but not limited to, any
pollutant, contaminant, hazardous substance, hazardous constituent, hazardous
waste, special waste, solid waste, industrial waste, petroleum derived substance
or waste, or toxic substance.
"Indemnified Party" has the meaning set forth in (S) 7(d) below.
"Indemnifying Party" has the meaning set forth in (S) 7(d) below.
"Intellectual Property" means with respect to the Business:
(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) all trademarks, service marks, trade dress, logos, trade names and
corporate 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;
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(c) all copyrightable works, 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).
"Knowledge" means knowledge of the Shareholders, after due inquiry of
Petrotech employees with management responsibility in the area of Petrotech
operations with respect to which the applicable representation or warranty
applies.
"Leased Real Property" means the Affiliate Leased Real Property and the
leasehold interests in and to the real property and improvements used by
Petrotech, which is located at (i) 0000 Xxxxx Xxxx Xxxx, Xxxxxxx, Xxxxx, (ii)
0000 Xxxxxxx XxXxxxxx Xxxxx, Xxxxxxx Xxxxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxx and
(iii) Xxxxxxxx 00, Xxxxxxxxx Xxxx, Xxxxxxxx Xxxx, Xxx Xxxx, and more
particularly described in (S) 3(l)(ii) of the Petrotech Disclosure Schedule.
"Louisiana Corporation Act" shall mean the Louisiana Business
Corporation Law, LA.R.S. 12:1, et seq., as amended.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Merger" shall have the meaning set forth in (S) 2 below.
"Merger Consideration" shall have the meaning set forth in Section 2
hereof.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
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"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Parent Financial Statements" shall have the meaning set forth in (S)
4(f).
"Parent Shares" means the shares of common stock, par value $.01, of
Parent which shares shall be delivered to Petrotech as provided in (S) 2(c)
below without registration under, and subject to the restrictions imposed by,
the Securities Act.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Petrotech" has the meaning set forth in the preface above.
"Petrotech Disclosure Schedule" has the meaning set forth in (S) 3
below.
"Petrotech Plans" has the meaning set forth in (S) 3 below.
"Petrotech Shares" means share(s) of the Common Stock, no par value, of
Petrotech.
"Process Agent" has the meaning set forth in (S) 8 below.
"Product Warranty Claims" means claims of Petrotech customers and/or
users made at any time following Closing in the Ordinary Course of Business with
respect to products sold, manufactured, leased or delivered by Petrotech on or
prior to the Closing Date which are based on the written terms and conditions
set forth in the documentation regarding each project in which Petrotech is
engaged.
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"Public Information" means all Forms 00-X, 00-X, 0-X, and proxy
statement of Buyer since December 31, 1996.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Sellers Loan" means those certain four (4) promissory notes executed by
Petrotech in favor of Xxxxx Xxxxxxx, in the aggregate principal amounts of
$200,000; the current principal balance of which is $120,000. The four (4)
promissory notes executed by Petrotech in favor of Xxxxx Xxxxxxx are as follows:
(i) promissory note in the amount of $100,000 executed on December 25, 1995;
(ii) promissory note in the amount of $25,000 executed on February 26, 1996;
(iii) promissory note in the amount of $50,000 executed on March 6, 1996; and
(iv) promissory note in the amount of $25,000 executed on October 21, 1996.
"Shareholder(s)" means Xxxxxxx X. Xxxxx, Xxxxx X Xxxxx, Xxxxxxx X. Xxxx,
and Xxxxxxx Xxxxxx, as independent special trustee of the Xxxxxxx X. Xxxx and
Xxxxxxxxxx X. Xxxx Charitable Remainder Trust, who are the only shareholders of
Petrotech.
"Shareholder Family Trusts" means the Xxxxx Children Trust (Xxxxxxxx Xxx
Xxxxx, beneficiary of one trust and Xxxxxxxx Xxxxxxxxx Xxxxx, beneficiary of the
second trust) established by act dated December 21, 1993; the Xxxx Children
Trust (Xxxxx Xxxxxxx Xxxx Xxxxxxx, beneficiary of one trust and Xxxxx Xxxx Xxxx
Loga, beneficiary of the second trust) established by act dated December 21,
1993; and the Xxxxx Children Trust (Xxxxx X Xxxxx, XX, beneficiary of one trust
and Xxxxx Xxxx Xxxxx Xxxxxx, beneficiary of the second trust) established by act
dated December 21, 1993.
"Shareholder Loan" means that certain loan, made as of June 7, 1994 in
the principal sum of Five Million and no/100 Dollars ($5,000,000.00) or the
aggregate unpaid principal amount owed thereon, whichever is less, as evidenced
by the internal records of the lenders with interest thereon at the rate of
Whitney National Bank Prime plus 1% per annum from date until paid in full, by
Xxxxxxx X. Xxxxx, Xxxxx X Xxxxx and Xxxxxxx X. Xxxx to Petrotech.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise profits, withholding, social security
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(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
2. MERGER.
(a) At the Effective Time (as hereinafter defined) and subject to the
terms and conditions of this Agreement, Buyer shall be merged with
Petrotech, in accordance with the relevant provisions of the Louisiana
Corporation Act and the Delaware Act, the separate corporate existence of
Petrotech shall cease and the Buyer shall continue as the surviving
corporation (the "Merger"). The Buyer is the surviving corporation after
the Merger and is hereinafter sometimes referred to as the "Surviving
Corporation." The Merger shall otherwise have the effect set forth in the
Delaware Act.
(b) At the Closing, the parties hereto shall cause the Merger to be
consummated by delivering articles of merger to the Secretary of State of
Louisiana and the Secretary of State of Delaware executed in accordance
with relevant provisions of the Louisiana Corporation Act and the Delaware
Act for filing thereby (the time of such filing being the "Effective
Time"). The Articles of Incorporation and Bylaws, respectively, of the
Buyer as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation and Bylaws of the Surviving Corporation. The
officers and directors of Buyer immediately prior to the Effective Time
shall be the officers and directors of the Surviving Corporation, in each
case, until their respective successors are duly elected and qualified. The
corporate name of the Surviving Corporation shall be Petrotech, Inc.
(c) At the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof:
(i) all of the Petrotech Shares shall be converted into, and
represent the right to receive in the manner provided in Sections 2(d)
and 2(e) below, the sum of (A) that number of shares of Parent Common
Stock equal to Six Million Five Hundred Thousand Dollars
($6,500,000.00) divided by the Agreed Value (the "Stock
Consideration") plus (B) cash in the amount of Six Million Five
Hundred Thousand Dollars ($6,500,000.00) (the "Cash Consideration" and
the Stock Consideration collectively, the "Merger Consideration");
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(ii) each share of capital stock of Petrotech that is held in
the treasury of Petrotech, if any, shall be cancelled and retired and
cease to exist and no consideration shall be issued in exchange
therefor; and
(iii) each issued and outstanding share of capital stock of
Buyer shall be converted into and become one fully paid and non-
assessable share of common stock of the Surviving Corporation.
(d) At the Closing Date, the Cash Consideration shall be paid as
follows:
(i) $1,324,000 shall be paid to the escrow agent pursuant to the
Escrow Agreement to be held and disbursed as provided in Section 7 of
the Agreement and the Escrow Agreement; and
(ii) the balance of the Cash Consideration shall be paid as
follows: 37.5% thereof to Xxxxxxx X. Xxxxx, 37.5% thereof to the
Xxxxxxx X. Xxxx and Xxxxxxxxxx X. Xxxx Charitable Remainder Trust and
the remaining 25% thereof to Xxxxx X Xxxxx.
(e) Five (5) days following the Closing Date, Parent shall transmit to
Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxx and Xxxxx X Xxxxx certificates
representing the aggregate Merger Consideration issuable pursuant to
Section 2(c) above. Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxx each shall be
entitled to receive 37.5% of the total Stock Consideration and Xxxxx X
Xxxxx shall be entitled to receive the remaining 25% of the total Stock
Consideration. At the Closing, each Shareholder shall execute and deliver a
letter of transmittal, in a form reasonably satisfactory to Parent and
deliver such letter of transmittal to Parent, together with a
certificate(s) that immediately prior to the Effective Time represented the
Petrotech Shares held by such Shareholder (the "Certificates"). Upon
surrender of Certificates to Parent, together with such letter of
transmittal, the holder of such Certificates shall be entitled to receive
in exchange therefore the Merger Consideration as set forth above and the
Certificates so surrendered shall be forthwith cancelled. No fraction of
the Parent Shares shall be issued and each Shareholder who would otherwise
be entitled to receive a fractional share of Parent Shares (after taking
into account all shares then held by such Shareholder) shall receive, in
lieu thereof and as a part of the Merger Consideration, one fully-paid and
non-assessable share of Parent Shares.
(f) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Powell,
Goldstein, Xxxxxx & Xxxxxx LLP, on May 16, 1997 or such other date as the
Parties may agree (the "Closing Date").
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(g) Deliveries at the Closing. (i) At the Closing, Petrotech will
deliver to the Buyer the various certificates, instruments, and documents
referred to in (S) 5(a) below; (ii) the Buyer will deliver to Petrotech the
various certificates, instruments, and documents referred to in (S) 5(b)
below; (iii) Petrotech and the appropriate Shareholders and the trustees of
the Shareholder Family Trusts will execute, acknowledge (if appropriate),
and deliver to the Buyer (A) the original lease agreements with respect to
the Leased Real Property in the forms attached hereto as Exhibits A-1
through A-3 together with fully executed original amendments thereto in the
form attached to said Exhibits and (B) such other documents as the Buyer
and its counsel may reasonably request; (iv) the Buyer will execute,
acknowledge (if appropriate), and deliver to Petrotech (A) such documents
as Petrotech and the Shareholders and their counsel reasonably may request;
and (v) the Buyer will deliver to Petrotech the Cash Consideration.
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The Shareholders
jointly and severally represent and warrant to the Buyer and Parent that the
statements contained in this (S) 3 are correct and complete as of the date
hereof and will be as of the Closing Date, except as specified to the contrary
in the disclosure schedule prepared by Petrotech accompanying this Agreement and
initialed by Petrotech and the Buyer and as amended or supplemented as of the
Closing Date (the "Petrotech Disclosure Schedule"). The Petrotech Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this (S) 3.
(a) Organization of the Acquired Company; Investment Interest.
(i) Petrotech, Inc. is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of
its incorporation; and is duly qualified to conduct business and in
good standing in each of the jurisdictions set forth in Schedule
3(a)(i) hereto, which constitute the jurisdictions in which the
character of Petrotech, Inc.'s properties or the nature of its
Business requires such qualification, except for those jurisdictions
where the failure to be so qualified would not have a material adverse
effect on the Business of Petrotech, Inc.
(ii) Petrotech International, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; and is duly qualified to conduct
business and in good standing in each of the jurisdictions set forth
in Schedule 3(a)(ii) hereto, which constitute the jurisdictions in
which the character of Petrotech International Inc.'s properties or
the nature of its Business requires such qualification, except for
those jurisdictions where the failure to be so qualified would not
have a material adverse effect on the Business of Petrotech
International, Inc.
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(iii) Petrotech Europa is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation; and is duly qualified to conduct business and in
good standing in each of the jurisdictions set forth in Schedule
3(a)(iii) hereto, which constitute the jurisdictions in which the
character of Petrotech Europa's properties or the nature of its
Business requires such qualification, except for those jurisdictions
where the failure to be so qualified would not have a material adverse
effect on the Business of Petrotech Europa.
(iv) The Petrotech Shares are held of record and beneficially by
the Shareholders as described in (S) 3(a)of the Petrotech Disclosure
Schedule. All issued and outstanding shares of capital stock of
Petrotech International, Inc. are held of record and beneficially by
Petrotech, Inc. and fifty-one percent (51%) of the issued and
outstanding shares of capital stock of Petrotech Europa are held of
record and beneficially by Petrotech, Inc. as described in (S) 3(a) of
the Petrotech Disclosure Schedule.
(v) Xxxxxxx X. Xxxxx, Xxxxx X Xxxxx and Xxxxxxx X. Xxxx, are
each Accredited Investors. Each said Shareholder understands that the
Parent Shares being acquired by him have not been, and are not
proposed to be, registered under the Securities Act or any state
securities laws, and are being offered and sold in reliance upon
United States federal and state exemptions for transactions not
involving any public offering. Each said Shareholder acknowledges that
he is acquiring the Parent Shares for investment purposes and not with
a view to, or intention to effect, the distribution thereof in
violation of the Securities Act or any applicable state securities
laws, and that such Parent Shares may not be disposed of in
contravention of the Securities Act or any applicable state securities
laws. Each said Shareholder represents that he is a sophisticated
investor with knowledge and experience in business and financial
matters, is able to evaluate the risks and benefits of the investment
in Parent Shares, has received the Public Information concerning the
Parent and has had the opportunity to obtain additional information as
desired in order to evaluate the merits of and the risks inherent in
acquiring such Parent Shares.
(b) Authorization of Transaction. Petrotech and each Shareholder has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its, his or their
obligations hereunder. Without limiting the generality of the foregoing,
the board of directors of Petrotech and the Shareholders of Petrotech have
duly authorized the execution, delivery, and performance of this Agreement
by Petrotech. This Agreement constitutes the valid and legally binding
obligation of Petrotech, enforceable in accordance with its terms and
conditions. Petrotech and the Shareholders do not need to give any notice
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to, make any filing with, or obtain any authorization, consent, or approval
of any governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement other than the notification and
approval under the Xxxx-Xxxxx-Xxxxxx Act.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Acquired Company or
any Shareholder is subject or any provision of the charter or bylaws of the
Acquired Company, or (ii) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other
arrangement to which the Acquired Company or any Shareholder is a party or
by which it is bound or to which any of its assets is subject (or result in
the imposition of any Security Interest upon any of its assets).
(d) Brokers' Fees. Neither the Acquired Company nor any Shareholder has
any Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement.
(e) Title to Assets. The assets of the Acquired Company and the Leased
Real Property constitute all of the property and assets necessary to
conduct the Business as presently conducted. Each Shareholder has the right
to convey, and upon the transfer of the Petrotech Shares to the Buyer, each
Shareholder will have conveyed good title and interest in and to the
Petrotech Shares free and clear of all Security Interests. Petrotech has
good title to all of the assets of the Acquired Company free and clear of
any Security Interest, except the Company Loans and except as listed on
Schedule 3(p)(iv), or restriction on transfer.
(f) Petrotech Shares. The Petrotech Shares constitute all of the issued
and outstanding capital stock of Petrotech and are validly issued, fully
paid and non-assessable and owned, beneficially and of record, by the
Shareholders and no Petrotech Shares are subject to, nor have any been
issued in violation of, preemptive or similar rights. All issuances, sales
and repurchases of equity interests by the Acquired Company have been
effected in compliance with all applicable laws, including, without
limitation, applicable federal and state securities laws. The Shareholders
have good title to the Petrotech Shares, free and clear of any Security
Interest or restriction on transfer, except for the restrictions on
transfer set forth in Article VI of the articles of incorporation of
Petrotech, which the Shareholders individually and on behalf of Petrotech
hereby waive. The stock ledger and other corporate records of the Acquired
Company contain a complete and correct record of all issuance and transfer
of equity interests of the Acquired Company. There are no preemptive or
similar rights on the part of any holder of any Petrotech Shares. No
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options, warrants, conversion or other rights, agreements, commitments,
arrangements or understandings of any kind obligating Petrotech,
contingently or otherwise, to issue or sell any shares of its common stock
or any securities convertible into or exchangeable for any such shares or
any other securities, are outstanding, and no authorization therefor has
been given.
(g) Financial Statements. Attached hereto as Exhibit B is an unaudited
balance sheet and income statement of the Acquired Company as of March 31,
1997 (the "Financial Statements"). The Financial Statements present fairly
the assets and liabilities of Petrotech as of such date, are prepared in
accordance with the historical accounting practices of Petrotech, are
correct and complete, and are consistent with the books and records of
Petrotech subject to normal year-end audit adjustments.
As of the Closing Date, the total amount owed by Petrotech under
the Sellers Loan shall not exceed the principal sum of $120,000; under the
Shareholder Loan shall not exceed the principal sum of $1,906,326; and
under the Bank Loan shall not exceed the principal sum of $7,000,000.
(h) Events Subsequent to March 31, 1997. Since March 31, 1997, there has
not been any material adverse change in the business, financial condition,
operations, or results of operations of the Acquired Company. Without
limiting the generality of the foregoing, since that date, the Acquired
Company:
(i) has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible outside the Ordinary Course of
Business;
(ii) has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) either involving more than $150,000 (exclusive of customer
orders) or outside the Ordinary Course of Business, except as listed
on Schedule 3(h)(ii);
(iii) has not and to the Knowledge of the Acquired Company or
any Shareholder no party has, accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more
than $150,000 to which the Acquired Company is a party or by which it
is bound, except as listed on Schedule 3(h)(iii);
(iv) has not imposed or permitted any Security Interest upon any
of its assets, tangible or intangible, except the continuing Security
Interest granted on July 20, 1990 in favor of Whitney National Bank to
secure the Bank Loan, and the continuing Security Interest granted on
July 7, 1994 in favor of Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxx and Xxxxx X
Xxxxx to secure the Shareholder Loan;
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(v) has not made any capital expenditure (or series of related
capital expenditures) either involving more than $150,000 or outside
the Ordinary Course of Business, except as listed on Schedule 3(h)(v);
(vi) has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person, except
as listed on Schedule 3(h)(vi);
(vii) has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation other than performance
bonds issued in the Ordinary Course of Business, and except as listed
on Schedule 3(h)(vii);
(viii) has not delayed or postponed the payment of accounts
payable or other Liabilities outside of the Ordinary Course of
Business, except as listed on Schedule 3(h)(viii);
(ix) has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) outside the
Ordinary Course of Business, except as listed on Schedule 3(h)(ix);
(x) has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property, except as listed
on Schedule 3(h)(x);
(xi) has not changed or authorized any change in its charter or
bylaws;
(xii) has not experienced any material damage, destruction, or
loss (whether or not covered by insurance) to its property, except as
listed on Schedule 3(h)(xii);
(xiii) has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees, other
than normal advances to employees (excluding the Shareholders) in the
Ordinary Course of Business, and except as listed on Schedule
3(h)(xiii);
(xiv) has not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement, except as listed on Schedule
3(h)(xiv);
(xv) has not granted any increase in the base compensation of
any of its directors, officers, and employees, except as listed on
Schedule 3(h)(xv);
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(xvi) has not adopted, amended, modified or terminated any
bonus, profit-sharing incentive, severance, or other plan, contract,
or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee
Benefit Plan), except as listed on Schedule 3(h)(xvi);
(xvii) has not made any other change in employment terms for any
of its directors, officers, and employees, except as listed on
Schedule 3(h)(xvii);
(xviii) has not made or pledged to make any charitable or other
capital contribution;
(xix) has not suffered or experienced any other occurrence,
event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business;
(xx) has not declared or paid any dividend or other equity
distribution, whether in cash or other property; and
(xxi) has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Acquired Company has no Liability (and
there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against the
Acquired Companies giving rise to any Liability), except for (i)
Liabilities set forth on the face of the Financial Statements, (ii)
Liabilities which have arisen after the date of the Financial Statements in
the Ordinary Course of Business (none of which results from, arises out of,
or was caused by any breach of contract, breach of warranty claims, product
liability, tort, infringement, or violation of law), (iii) Liabilities
which will arise from and after the Closing Date under contracts,
instruments and similar obligations of the Acquired Company to be performed
following the Closing Date and (iv) Liabilities set forth on Schedule 3(i).
(j) Legal Compliance. The Acquired Company has complied with all
applicable laws (including rules, regulations, codes, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal,
state, local, and foreign governments (and all agencies thereof), the
failure to comply with which will result in Adverse Consequences the costs
of which will exceed $25,000, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed
or commenced against the Acquired Company alleging any failure so to
comply.
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(k) Tax Matters.
Except as set forth on Schedule 3(k):
(i) The Acquired Company has filed all Tax Returns that they
were required to file and were due. All such Tax Returns were correct
and complete in all material respects. All Taxes owed by the Acquired
Company (whether or not shown on any Tax Return) have been paid. The
Acquired Company currently is not the beneficiary of any extension of
time within which to file any Tax Return. No claim is presently being
made by an authority in a jurisdiction where the Acquired Company does
not file Tax Returns that such Acquired Company is or may be subject
to taxation by that jurisdiction. There are no Security Interests on
any of the assets of any of the Acquired Company that arose in
connection with any failure (or alleged failure) to pay any Tax. The
Acquired Company has not been a member of an Affiliated Group that has
filed a "consolidated return" within the meaning of Code Sec. 1501, or
has filed a combined or consolidated return with another corporation
with any other taxing authority.
(ii) The Acquired Company has made all withholdings of Taxes
required to be made in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder, or other
third party and such withholdings have either been paid to the
appropriate governmental agency or set aside in appropriate accounts
for such purpose.
(iii) The Acquired Company has not received any notice or other
indication that any authority is considering assessing any additional
Taxes for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax Liability of the Acquired
Company either (A) claimed or raised by any authority in writing or
(B) as to which the Acquired Company or any Shareholder has knowledge
based upon personal contact with any agent or representative of such
authority. (S) 3(k) of the Petrotech Disclosure Schedule lists all
federal, state, local, and foreign income Tax returns filed with
respect to the Acquired Company for taxable periods ended on or after
July 31, 1993, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit.
The Acquired Company has delivered to the Buyer correct and complete
copies of all federal and foreign income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to
by the Acquired Company since July 31, 1993.
(iv) The Acquired Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
-16-
(v) The Acquired Company has not made any payments, is not
obligated to make any payments, or is not a party to any agreement
that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Sec. 280G. The
Acquired Company is not a party to any Tax allocation or sharing
agreement. The Acquired Company (A) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Petrotech) or (B)
has no Liability for the Taxes of any Person (other than the Acquired
Company) under Treas. Reg. (S) 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(l) Real Property.
(i) The Acquired Company owns no real property.
(ii) (S) 3(l)(ii) of the Petrotech Disclosure Schedule lists
briefly the Leased Real Property. Petrotech has delivered to the Buyer
correct and complete copies of the leases listed in (S) 3(l)(ii) of
the Petrotech Disclosure Schedule (as amended to date). With respect
to each lease listed in (S) 3(l)(ii) of the Petrotech Disclosure
Schedule:
(A) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(B) the Acquired Company is not, and to the Knowledge of the
Acquired Company, no party to the lease or sublease is, in breach
or default, and no event has occurred which, with notice or lapse
of time, would constitute a breach or default or permit
termination, modification, or acceleration thereunder, except as
set forth on Schedule 3(l)(ii)(B);
(C) the Acquired Company has not, and to the Knowledge of the
Acquired Company, no party to the lease or sublease has,
repudiated any provision thereof;
(D) to the Knowledge of the Acquired Company, there are no
disputes, oral agreements, or forbearance programs in effect as
to the lease;
(E) the Acquired Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the leasehold; or
-17-
(F) to the Knowledge of the Acquired Company, all facilities
leased thereunder have received all approvals of governmental
authorities (including licenses and permits) required in
connection with the operation thereof and have been operated and
maintained in all material respects in accordance with applicable
laws, rules, and regulations.
(m) Intellectual Property.
(i) The Acquired Company owns or has the right to use pursuant
to license, sublicense, agreement, or permission of all Intellectual
Property necessary or desirable for the operation of the Business as
presently conducted or as proposed to be conducted. Each item of
Intellectual Property included among the Assets or owned or used by
the Acquired Company or any Shareholder immediately prior to the
Closing hereunder will be owned or available for use by the Buyer on
identical terms and conditions immediately subsequent to the Closing
hereunder.
(ii) Except as set forth in Schedule 3(m)(ii), the Acquired
Company or any Shareholder has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and the Acquired Company or any
Shareholder has not ever received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that any of the
Acquired Company or any Shareholder must license or refrain from using
any Intellectual Property rights of any third party). To the Knowledge
of the Acquired Company or any Shareholder, no third party has
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of the Acquired
Company.
(iii) (S) 3(m)(iii) of the Petrotech Disclosure Schedule
identifies each patent or registration which has been issued or
transferred to the Acquired Company or any Shareholder with respect to
any of its Intellectual Property, identifies each pending patent
application for registration which the Acquired Company or any
Shareholder has made with respect to any of its Intellectual Property,
and identifies each license, agreement, or other permission which the
Acquired Company or any Shareholder has granted to any third party
with respect to any of its Intellectual Property. The Acquired Company
has delivered to the Buyer correct and complete copies of all such
patents, registrations, applications, licenses, agreements, and
permissions (as amended to date) and has made available to the Buyer
correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such
item. (S) 3(m)(iii) of the Petrotech Disclosure Schedule also
identifies each trade name or unregistered trademark used by the
Acquired Company in connection with the Business. With respect to each
item of Intellectual Property required to be identified in (S)
3(m)(iii) of the Petrotech Disclosure Schedule:
-18-
(A) the Acquired Company possess all right, title, and interest
in and to the item, free and clear of any Security Interest,
license, or other restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of
the Acquired Company threatened, which challenges the legality,
validity, enforceability, use, or ownership of the item; and
(D) Neither the Acquired Company nor any Shareholder has ever
agreed to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to
the item.
(iv) (S) 3(m)(iv) of the Petrotech Disclosure Schedule identifies
each item of Intellectual Property that any third party owns and that
the Acquired Company uses pursuant to license, sublicense, agreement, or
permission other than licenses for commercially available software
involving standard license fees, which need not be listed. Petrotech has
delivered to the Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified
in (S) 3(m)(iv) of the Petrotech Disclosure Schedule;
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force
and effect;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of
the transactions contemplated hereby (including the Merger
referred to in (S) 2 above);
(C) The Acquired Company, and to the Knowledge of the Acquired
Company, no other party to the license, sublicense, agreement, or
permission, is in breach or default, and no event has occurred
which with notice of lapse of time would constitute a breach or
default or permit termination, modification, or acceleration
thereunder;
-19-
(D) The Acquired Company has not, and to the Knowledge of the
Acquired Company, no other party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
(E) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are
true and correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree, ruling,
or charge;
(G) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to the Knowledge of the
Acquired Company, threatened, which challenges the legality,
validity, or enforceability of the underlying item of
Intellectual Property; and
(H) The Acquired Company has not granted any sublicense or
similar right with respect to the license, sublicense, agreement,
or permission.
(n) Tangible Assets. The Acquired Company owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the conduct
of the Business as presently conducted, except for those items thereof
which need to be acquired in the ordinary course of the normal day-to-day
operations of the Business of the Acquired Company consistent with past
practice. Each such tangible asset owned or leased by the Acquired Company
is free from any known material defects, has been maintained in accordance
with normal industry practice, is in good operating condition and repair
(subject to normal wear and tear), and is suitable for the purposes for
which it presently is used.
(o) Inventory. The inventory of the Acquired Company consists of raw
materials and supplies, manufactured and purchased parts, construction work
in progress, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or
manufactured, except for those items which have no value and none of which
is slow-moving (except for parts and components on hand for servicing
products already sold), obsolete, damaged, or defective.
(p) Contracts. (S) 3(p) of the Petrotech Disclosure Schedule lists the
following contracts and other agreements, written or oral, to which the
Acquired Company is a party, exclusive of contracts with customers and
related project documentation entered into in the Ordinary Course of
Business, which need not be listed hereunder;
-20-
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease
payments in excess of $15,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, or which to the Knowledge of the Acquired Company, will result
in a loss to the Acquired Company, or which involves consideration, in
excess of $50,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, under which it
has imposed a Security Interest on any of its assets, tangible or
intangible (other than the Company Loans) except as listed on Schedule
3(p)(iv);
(v) any agreement concerning confidentiality or noncompetition,
other than with Parent;
(vi) any agreement involving any Shareholder to which the
Acquired Company is a party;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $75,000 or providing severance benefits
(other than accounting and legal consultants, which have no fixed
annual compensation);
(ix) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees;
-21-
(x) any agreement not already listed herein or on the Petrotech
Disclosure Schedule under which the consequences of a default or
termination would have an adverse effect in the amount of $50,000 or
more on the business, financial condition, operations or results of
operations of the Acquired Company; or
(xi) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $50,000.
The Acquired Company has delivered to the Buyer a correct and complete copy of
each written agreement listed in (S) 3(p) of the Petrotech Disclosure Schedule
(as amended to date) and the listing in (S) 3(p) of the Petrotech Disclosure
Schedule is a written summary setting forth the terms and conditions of each
oral agreement referred to in (S) 3(p) of the Petrotech Disclosure Schedule.
With respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect, subject to applicable bankruptcy,
insolvency, fraudulent conveyance or transfer, reorganization, arrangement,
moratorium or other similar laws from time to time affecting creditor's rights
generally; (B) to the Knowledge of the Acquired Company, the agreement will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to in (S) 2 above),
subject to applicable bankruptcy, insolvency, fraudulent conveyance or transfer,
reorganization, arrangement, moratorium or other similar laws from time to time
affecting creditor's rights generally; (C) the Acquired Company is not, and to
the Knowledge of the Acquired Company, no other party, is in material breach or
default, and no event has occurred which with notice or lapse of time would
constitute a material breach or default, or permit termination, modification, or
acceleration, under the agreements; and (D) no party has repudiated any
provision of the agreement.
(q) Notes and Accounts Receivable. Notes and accounts receivable of the
Acquired Company included among the assets are at least an aggregate face amount
as of the Closing Date as set forth on the list of aged receivables to be
delivered at Closing and set forth on Exhibit C and all such notes and accounts
receivable are reflected properly on their books and records, are valid
receivables subject to no setoffs or counterclaims, are current and collectible,
subject only to the reserve for bad debts set forth on the face of the Financial
Statements, except that no representation shall be made with respect to accounts
receivable outstanding longer than 90 days from invoice date, which will be
treated as described in (S) 7.
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Acquired Company, except as set forth on Schedule
3(r).
-22-
(s) Insurance. The Acquired Company has provided the Buyer with each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements) to which
the Acquired Company has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past seven 7 years.
Except as described on Schedule 3(s), with respect to each such insurance
policy: (A) all policy premiums due to date have been paid in full, and to the
Knowledge of the Acquired Company, the policy is legal, valid, binding,
enforceable, and in full force and effect with respect to the periods for which
it purports to provide coverage subject to applicable bankruptcy, insolvency,
fraudulent conveyance or transfer, reorganization, arrangement or moratorium or
other similar laws from time to time affecting creditor's rights generally; (B)
the Acquired Company or, to the Knowledge of the Acquired Company, any other
party to the policy is not in breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (C) no
party to the policy has repudiated any provision thereof. Section 3(s) of the
Petrotech Disclosure Schedule describes any self-insurance arrangements
affecting the Acquired Company.
(t) Litigation. The Acquired Company (i) is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge and (ii) is
not a party nor, to the Knowledge of the Acquired Company, is threatened to be
made a party to any action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator, other than as
set forth herein, and except as set forth in Schedule 3(t).
(u) Warranty. Each product manufactured, sold, leased, or delivered by
the Acquired Company or service provided by the Acquired Company has been in
conformity with all applicable contractual commitments and all express and
implied warranties, and, except as set forth in the documentation with respect
to ongoing projects of the Acquired Company, the Acquired Company has no
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
it giving rise to any Liability) for replacement or repair thereof or other
damages in connection therewith. Except as otherwise may be provided by
applicable law, no product manufactured, sold, leased, or delivered by the
Acquired Company is subject to any guaranty, warranty, or other indemnity beyond
the applicable written terms and conditions of sale or lease set forth in the
Acquired Company's documentation with respect to such projects.
(v) Product Liability. Except as set forth in Schedule 3(v), there are
no existing or, to the Knowledge of the Acquired Company, threatened, claims
against the Acquired Company arising out of any injury to individuals or
-23-
property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by the Acquired Company which could
result in Liability to the Acquired Company and neither Petrotech nor the
Shareholders have any knowledge of a reasonable basis for any such claim.
(w) Employees. Except as set forth in Schedule 3(w), to the Knowledge of
the Acquired Company, no executive, key employee, or group of employees has any
plans to terminate employment with the Acquired Company. The Acquired Company is
not a party to or bound by any collective bargaining agreement, nor has it
experienced any strikes, grievances, claims of unfair labor practice. The
Acquired Company has no Knowledge of any organizational effort presently being
made or threatened by or on behalf of any labor union with respect to its
employees. There is no claim outstanding or, to the Knowledge of the Acquired
Company, threatened or any Basis for a claim respecting employment of any past
or present employee of the Acquired Company including, without limitation,
claims of personal injury (unless fully covered by worker's compensation,
liability or indemnity insurance) discrimination, wage, hours or similar laws or
regulations.
(x) Employee Benefits.
(i) No other corporation, trade, business, or other entity,
would, together with the Acquired Company, now or in the past 5 years,
constitute a single employer within the meaning of Code (S) 414.
(ii) Section 3(x) of the Petrotech Disclosure Schedule contains
a true and complete list of all of the Employee Benefit Plans which
are presently in effect or which have previously been in effect in the
last 5 years for the benefit of current or former employees, officers,
directors or consultants of the Acquired Company (the
"Petrotech Plans").
(iii) Except as set forth in (S) 3(x) of the Petrotech
Disclosure Schedule, the Acquired Company does not maintain and has
never maintained an "employee benefit pension plan," within the
meaning of ERISA (S) 3(2), that is or was subject to Title IV of
ERISA.
(iv) There is no lien outstanding upon any Assets pursuant to
Code (S) 412(n) in favor of any of the Petrotech Plans. No Assets or
assets of any Affiliate have been provided as security to any of the
Petrotech Plans pursuant to Code (S) 401(a)(29).
(v) Except as set forth in (S) 3(x) of the Petrotech Disclosure
Schedule, Petrotech has no past, present or future obligation or
liability to contribute to any multiemployer plan as defined in ERISA
(S) 3(37).
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(vi) Petrotech has complied in all material respects with the
continuation health coverage requirements of Code (S) 4980B and ERISA
(S)(S) 601 through 608.
(vii) Petrotech is not obligated, contingently or otherwise,
under any agreement to pay any amount which would be treated as a
"parachute payment," as defined in Code (S) 280G(b) (determined
without regard to Code (S) 280G(b)(2)(A)(ii)).
(viii) With respect to each of the Petrotech Plans, except as
set forth in (S) 3(x) of the Petrotech Disclosure Schedule:
(A) each of the Petrotech Plans has been established,
maintained, funded and administered in all material respects in
accordance with its governing documents, and any applicable
provisions of ERISA, the Internal Revenue Code of 1986 (the
"IRC"), other applicable law, and all regulations promulgated
thereunder;
(B) none of the Petrotech Plans nor any fiduciary has
engaged in a prohibited transaction as defined in ERISA (S) 406
or IRC (S) 4975 (for which no individual or class exemption exist
under ERISA (S) 408 or IRC (S) 4975, respectively);
(C) all filings and reports as to each of the Petrotech
Plans required to have been made on or before the Closing Date to
the Internal Revenue Service, or to the United States Department
of Labor or to the Pension Benefit Guaranty Corporation, have
been or will be duly made by that date;
(D) each of the Petrotech Plans which is intended to
qualify as a tax-qualified retirement plan under IRC (S) 401(a)
has received a favorable determination letter(s) from the
Internal Revenue Service as to qualification of such Petrotech
Plan for the period from its adoption through the Closing Date;
nothing has occurred, whether by action or failure to act, which
has resulted in or would cause the loss of such qualification;
and each trust thereunder is exempt from tax pursuant to IRC (S)
501(a);
(E) each of the Petrotech Plans which is required to
satisfy IRC (S)(S) 401(k)(3) or 401(m)(2) has been tested for
compliance with, and has satisfied the requirements of, IRC
(S)(S) 401(k)(3) and 401(m)(2) for each plan year ending prior to
the Closing Date;
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(F) no event has occurred and no condition exists
relating to any of the Petrotech Plans that would subject the
Acquired Company to any tax or Liability under IRS (S)(S) 4971,
4972 or 4979, or to any Liability under ERISA (S)(S) 502 or 4071;
and
(G) to the extent applicable, each of the Petrotech
Plans has been funded in accordance with its governing documents,
ERISA and the IRC, has not experienced any accumulated funding
deficiency (whether or not waived) and has not exceeded its full
funding limitation (within the meaning of IRC (S) 412) at any
time.
(ix) With respect to the Petrotech Plans which provide group
health benefits to employees of the Acquired Company and are subject
to the requirements of IRC (S) 4980B and ERISA Title I Part 6
("COBRA"), such group health plan has been administered in every
material respect in accordance with its governing documents and COBRA.
(x) With respect to employee benefit matters generally:
(A) the Acquired Company (nor any person, firm or
corporation which is or has been under common control within the
meaning of Section 4001(b) of ERISA of the Acquired Company) does
not maintain or contribute to or has ever maintained or
contributed to any Petrotech Plan subject to Title IV of ERISA;
(B) except as set forth on (S) 3(x) of the Petrotech
Disclosure Schedule, the consummation of the transactions
contemplated hereby will not accelerate or increase any Liability
under any of the Petrotech Plans because of an acceleration or
increase of any of the rights or benefits to which Petrotech Plan
participants or beneficiaries may be entitled thereunder;
(C) except as set forth on (S) 3(x) of the Petrotech
Disclosure Schedule, the Acquired Company has no obligation to
any retired or former employee or any current employee of the
Company upon retirement or termination of employment under any
Petrotech Plans, other than such obligations imposed by COBRA;
and
(D) except as set forth on (S) 3(x) of the Petrotech
Disclosure Schedule, any of the Petrotech Plans which is an
"employee welfare benefit plan," within the meaning of ERISA (S)
3(1), may be terminated prospectively without Liability to the
Acquired Company or Parent or Buyer, including, without
limitation, Liability for unreported (e.g., run-off) benefit
claims, premium adjustments or termination charges of any kind.
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(y) Guaranties. The Acquired Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person (except for indemnities under project documentation of the Acquired
Company).
(z) Environment, Health, and Safety.
(i) The Acquired Company has complied with all Environmental,
Health, and Safety Laws, the failure to comply with which could result
in Adverse Consequences in an amount in excess of $25,000 individually
or in the aggregate, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against the Acquired Company alleging such failure.
(ii) The Acquired Company has no Liability (and the Acquired
Company, to its Knowledge, has not handled used, stored, treated,
recycled, or disposed of any Hazardous Substance, arranged for the
disposal of any Hazardous Substance, exposed any employee or other
individual to any Hazardous Substance or owned or operated any
property or facility in any manner that could form the Basis for any
present or future action, suit, proceeding, hearing, investigations,
charge, complaint, claim or demand giving rise to any Liability) for
penalties, investigations of or damage to any site, location, body of
water (surface or subsurface), or other natural resource, for any
illness of or personal injury to any employee or other individual, or
for any reason under any Environmental, Health, and Safety Laws.
(iii) Except as set forth in (S) 3(z) of the Petrotech
Disclosure Schedule, all properties and equipment used in the Business
are and in the past have been free of any amounts of Hazardous
Substances, the presence of which could result in Adverse
Consequences.
(iv) Except as set forth in (S) 3(z) of the Petrotech Disclosure
Schedule, there are no in-service or out-of-service underground or
above ground storage tanks.
(aa) Certain Business Relationships With the Acquired Company. Except as
set forth in (S) 3(aa) of the Petrotech Disclosure Schedule, none of the
Shareholders or their relatives has been involved directly or indirectly in any
business arrangement or relationship with Petrotech within the past 36 months,
and, except for the Leased Real Property and automobile leases of the
Shareholders, none of the Shareholders owns any asset, tangible or intangible,
which is used in the Business.
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(ab) Disclosure. To the Knowledge of the Acquired Company, the
representations and warranties contained in this (S) 3 (including the
Petrotech Disclosure Schedule) do not as of the Closing Date contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statement and information contained in this
(S) 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. Parent and Buyer, jointly
and severally, represent and warrant to the Shareholders that the statements
contained in this (S) 4 are correct and complete as of Closing Date, except as
set forth in the disclosure schedule prepared by Buyer accompanying this
Agreement and initialed by the Parties (the "Buyer Disclosure Schedule"). The
Buyer Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this (S) 4.
(a) Organization of the Buyer. Each of Parent and Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its incorporation and is duly qualified as a foreign
corporation to do business in every jurisdiction where such qualification
is required.
(b) Authorization of Transaction. Each of Parent and Buyer has full
power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of Parent and Buyer, enforceable in accordance with its terms
and conditions. Parent and Buyer need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agencies in order for the Parties to consummate
the transactions contemplated by this Agreement (including the assignment
and assumption referred to in (S) 2 above) other than the notification and
approval under the Xxxx-Xxxxx-Xxxxxx Act.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in (S) 2 above) will
(i) violate any constitution, state, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Parent or Buyer is
subject, or any provision of its charter or bylaws or (ii) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which Parent or Buyer
is a party or by which they are bound or to which any of their assets are
subject.
(d) Broker's Fees. Neither Parent nor Buyer has Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which the
Shareholders could become liable or obligated.
-28-
(e) Disclosure. To the Knowledge of Parent and Buyer, (i) the
representations and warranties contained in this (S) 4 (including the Buyer
Disclosure Schedule) do not contain any untrue statements of a material
fact or omit to state any material fact necessary in order to make the
statements contained in this (S) 4 not misleading and (ii) the Public
Information did not, as of the date of its release, contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein not misleading.
(f) Financial Statements. Attached hereto as Exhibit D are the following
financial statements of the Parent (collectively the "Parent Financial
Statements"):
(i) audited balance sheets, statements of income, changes in
shareholders' equity, and cash flow as of and for the fiscal year
ended October 31, 1996; and
(ii) unaudited balance sheet and statement of income, change in
shareholders' equity, and cash flow as of and for the quarter ended
January 31, 1997.
The Parent Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, present fairly the financial condition of
Parent as of such dates and the results of operations of Parent for such
periods (subject in the case of interim statements only to normal year-end
adjustments which in the aggregate are not material), are correct and
complete, and are consistent with the books and records of Parent (which
books and records are correct and complete).
(g) Events Subsequent to Most Recent Fiscal Quarter End. Since January
31, 1997, there has not been any material adverse change in the business,
financial condition, operations, or results of operations of Parent.
5. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of Parent and Buyer. The obligation of
Parent and Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in (S) 3 above shall be
true and correct in all material respects at and as of the Closing Date;
(ii) Petrotech and the Shareholders shall have performed and complied
with all of their covenants hereunder in all material respects through the
Closing;
-29-
(iii) no action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, or (C) affect adversely the right of the Buyer to own
the assets of the Acquired Company or to operate the Business (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(iv) Petrotech shall have delivered to the Buyer a certificate to the
effect that each of the conditions specified above in (S) 5(a)(i)-(iii) is
satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof) under the
Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been terminated;
(vi) Xxxxxxx X. Xxxxx, Xxxxx X Xxxxx and Xxxxxxx X. Xxxx shall each have
entered into an Employment Agreement and a Noncompetition Agreement in form
and substance as set forth in Exhibits E-1 through E-6 attached hereto and the
same shall be in full force and effect;
(vii) the Buyer shall have received from counsel to the Acquired Company
an opinion in form and substance as set forth in Exhibit F attached hereto,
addressed to the Buyer, and dated as of the Closing Date;
(viii) the certificates of merger with respect to the Merger shall have
been filed in accordance with the Louisiana Corporation Act and the Delaware
Act; and
(ix) the amount necessary to pay and satisfy in full the Company Loans
shall not exceed $9,026,326, exclusive of interest;
(x) all actions to be taken by the Acquired Company in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
the Buyer;
(xi) Petrotech shall provide Buyer and Parent with a true and complete
copy of the written consent from Chevron with respect to the 0000 Xxxxxxx
XxXxxxxx Xxxxx property, from the landlord of the 0000 Xxxxx Xxxx Xxxx,
Xxxxxxx, Xxxxx property and from the landlord of the Xxxxxxxx 00, Xxxxxxxxx
Xxxx, Xxxxxxxx Xxxx, Xxx Xxxx property;
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(xii) with respect to the Leased Real Property, the Buyer shall receive
estoppel letters from each landlord in the form attached as Exhibit G; and
(xiii) with respect to the Affiliate Leased Real Property, each lease shall
be amended in the form attached hereto as Exhibit A-1 through A-3.
(xiv) the spouse of any Shareholder shall have executed an appropriate
consent or joinder with respect to the obligations of the Shareholders under
this Agreement.
The Buyer may waive any condition specified in this (S) 5(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Sellers. The obligation of Shareholders to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in (S) 4 above shall be
true and correct in all material respects at and as of the Closing Date;
(ii) Parent and Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(iv) the Buyer shall have delivered to Petrotech a certificate to the
effect that each of the conditions specified above in (S) 5(b)(i)-(iii) is
satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof) under the
Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been terminated;
-31-
(vi) Petrotech shall have received from counsel to the Buyer an
opinion form and substance as set forth in Exhibit H attached hereto,
addressed to Petrotech, and dated as of the Closing Date;
(vii) Buyer shall have caused the Company Loans (except the Sellers
Loan) to be paid and satisfied in full;
(viii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to Petrotech; and
(ix) Parent shall have delivered to Petrotech and the Shareholders
resolutions from its Board of Directors (or Compensation Committee)
granting options under Parent's 1991 Stock Option Plan to individuals as
set forth on Exhibit I.
The Shareholders may waive any condition specified in this (S) 5(b) if it
executes a writing so stating at a prior to the Closing.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of the
Shareholders and Buyer will take such further action (including the
execution and delivery of such further instruments and documents) as any
other Party reasonably may request, at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor hereunder). The Shareholders acknowledge and agree that from and
after the Closing the Buyer will have the right to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort relating to the Acquired Company in this Agreement;
provided, however, that the Shareholders shall have the right to obtain
access to such documents, books, records (including Tax records),
agreements, and financial data and make photocopies thereof for a proper
purpose, such as in connection with the preparation of their tax returns.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Surviving Corporation or any
Shareholder, each of the other Parties will reasonably cooperate with the
contesting or defending Party and his or its
-32-
counsel in the contest or defense, make available his or its personnel, and
provide such testimony and access to his or its books and records as shall
be necessary in connection with the contest or defense, all at the sole cost
and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under (S) 7 below).
(c) Transition. Each of the Shareholders will use his best efforts not to
take any action that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier, or other business
associate of the Acquired Company from maintaining the same business
relationships with the Surviving Corporation after the Closing as it
maintained with the Acquired Company prior to the Closing.
(d) Confidentiality. Each Shareholder will treat and hold as confidential
all of the Confidential Information, refrain from using any of the
Confidential Information and deliver promptly to the Surviving Corporation
or destroy, at the request and option of the Surviving Corporation, all
tangible embodiments (and all copies) of the Confidential Information which
are in his or its possession. In the event that a Shareholder 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, that Party
will notify the Surviving Corporation promptly of the request or
requirement so that the Surviving Corporation may seek an appropriate
protective order or waive compliance with the provisions of this (S) 6(d).
If, in the absence of a protective order or the receipt of a waiver
hereunder, a Shareholder is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable
for contempt, that Party may disclose the Confidential Information to the
tribunal; provided, however, that a Shareholder shall use its reasonable
efforts to obtain, at the reasonable request of the Surviving Corporation
and at the Surviving Corporation's sole expense, an order or other
assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Surviving
Corporation shall designate.
(e) Parent Shares. The Shareholders covenant and agree that they
shall hold Parent Shares for a period of not less than one (1) year
following the Closing Date and they shall not sell, transfer or otherwise
dispose of such Parent Shares during such period except for donations to
relatives of Shareholders or their wives, and then only as permitted by Rule
144 of the Securities Act and subject to the holding requirements hereof.
The Parent Shares shall contain an appropriate legend reflecting the
understanding of the Parties as to the holding period of the Parent Shares
set forth herein.
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7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties contained in (S) 3(g)--(ab), except (S) 3(k)
and 3(x), of this Agreement and of Buyer contained in (S) 4(d)-(g) of this
Agreement shall survive the Closing and continue in full force and effect
for a period of 1 year thereafter; the representations and warranties
contained in (S) 3(k) and (S) 3(x) shall survive the Closing and continue in
full force and effect for a period of 30 days following the applicable
statute of limitations with respect to such matters; all of the other
representations, warranties, covenants, indemnities, and other agreements of
the Buyer and the Shareholders contained in this Agreement (including the
representations and warranties contained in (S) 3(a)-(f) and (S) 4(a)-(c))
shall survive the Closing and continue in full force and effect forever
thereafter, subject to any applicable statues of limitations. No action,
claim, or proceeding may be brought by any Party hereto against any other
Party resulting from, arising out of, or caused by a breach of a
representation or warranty contained herein, or the failure to perform any
covenant or other obligations hereunder, after the time such representation,
warranty or covenant ceases to survive pursuant to the preceding sentence,
unless written notice of such claim setting forth with specificity the basis
for such claim is delivered to the applicable Party prior to such time.
(b) Indemnification Provisions for Benefit of the Parent and the Buyer.
(i) In the event a Shareholder breaches (or in the event any third party
alleges facts that, if true, would mean Shareholder has breached) any of its
representations, warranties, and covenants contained in this Agreement, and,
if there is an applicable survival period pursuant to (S) 7(a) above,
provided that the Buyer makes a written claim for indemnification setting
forth the basis for such claim against the Shareholders pursuant to (S) 8(g)
below within such survival period, then each of the Shareholders jointly and
severally agrees to indemnify Parent, Buyer and the Surviving Corporation,
subject to the limitations set forth herein, from and against the entirety
of any Adverse Consequences the Parent, the Buyer or the Surviving
Corporation may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Parent, the Buyer or
the Surviving Corporation may suffer after the end of any applicable
survival period) resulting from, arising out of, or caused by the breach (or
the alleged breach); provided, however, that
(w) The Shareholders shall not have any obligation to indemnify the
Buyer from and against any Adverse Consequences resulting from, arising
out of, or caused by the breach (or alleged breach) of any
representation, warranty or covenant contained in (S) 3(g)-(ab) of the
Agreement which exceed the funds escrowed pursuant to the Escrow
Agreement; and
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(x) The Shareholders shall have no such indemnification obligation
with respect to such (S) 3(g)-(ab) (excluding (S) 3(q)) breaches (or
alleged breaches) until the Buyer has suffered Adverse Consequences by
reason thereof in excess of One Hundred Seventy-Five Thousand Dollars
($175,000). No such restriction shall be applicable to the
representations and warranties contained in (S) 3(a)-(f) and (S) 3(q).
(ii) Each of the Shareholders jointly and severally agrees to indemnify
Parent, Buyer and the Surviving Corporation for any foreign or domestic
worker's compensation claims incurred by any employee, consultant,
independent contractor, agent, affiliate or other individual of the Acquired
Company prior to Closing, including, without limitation any claims for
personal injuries, property damages and lost wages, except to the extent
coverage is provided for such claims under the Acquired Company's applicable
insurance policy. Such indemnification shall not be limited in time or
amount or subject to any deductible or cap.
(iii) Each of the Shareholders jointly and severally, agrees to
indemnify Parent, Buyer and the Surviving Corporation for any damages
(including costs of cleanup, containment, or other remediation) arising,
directly or indirectly from or in connection with any Environmental, Health,
and Safety Laws arising out of or relating to: (A) the ownership, operation,
or condition at any time on or prior to the Closing Date of any facilities
or any other properties and assets (whether real, personal, or mixed and
whether tangible or intangible) in which Petrotech has or had an interest,
(B) any Hazardous Substances that were present on the facilities or such
other properties and assets at any time on or prior to the Closing Date, or
(C) any Hazardous Substances, wherever located, that were, or were
allegedly, used, generated, recycled, disposed, transported, stored,
treated, released, or otherwise handled by Petrotech or by any other person
for whose conduct they are or may be held responsible at any time on or
prior to the Closing Date.
(iv) Each of the Shareholders jointly and severally agrees to indemnify
and reimburse the Surviving Corporation upon demand for the full amount of
any accounts receivable of Petrotech which were (A) invoiced more than
ninety (90) days prior to the Closing Date and (B) remain uncollected by the
Surviving Corporation one hundred eighty (180) days following the Closing
Date. Within a reasonable time following such 180 day period, Parent or the
Surviving Corporation shall provide the Shareholders with a reconciliation
of such accounts receivable and certify to the Shareholders that such
receivables remain unpaid. The Shareholders shall pay to the Surviving
Corporation or Parent such uncollected amount within ten (10) days following
receipt of such reconciliation and certification.
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(v) As security for the indemnification obligations of Shareholders
under this Agreement, the Parties shall enter into the Escrow Agreement as
of the Closing Date in the form and substance as set forth in Exhibit J,
which shall be funded with $1,324,000 of the Cash Consideration otherwise
payable to the Shareholders (the "Escrow Funds") The amount of $300,000
shall be exclusively allocated from the Escrow Funds for the indemnification
obligations of Shareholders under (S) 7(b)(iv) of this Agreement (the
"Receivables Funds"). In the event indemnification obligations under (S)
7(b)(iv) are less than or equal to $300,000, Parent or the Surviving
Corporation shall be paid from the Receivables Funds the amount owed at the
time specified under (S) 7(b)(iv), and Shareholders shall receive from the
Escrow Funds the balance of the Receivables Funds remaining at that time.
The Receivables Funds shall be the exclusive remedy of Parent or the
Surviving Corporation in the event Shareholders indemnification obligations
under (S) 7(b)(iv) are $300,000 or less. In the event indemnification
obligations under (S) 7(b)(iv) are greater than $300,000, Parent or the
Surviving Corporation shall have the option of (i) receiving payment of all
of the Receivables Funds and the amount owed in excess of $300,000 from the
Escrow Funds, or (ii) receiving payment of all of the Receivables Funds and
the amount owed in excess of $300,000 directly from the Shareholders. The
amount of the Escrow Funds shall be reduced at the first anniversary of the
Closing Date to $75,000 (except with respect to claims then outstanding)
and, solely with respect to claims under (S) 3(k) and (S) 3(x), shall
continue until the third anniversary of the Closing Date.
(vi) Notwithstanding the foregoing, the Liability of any Shareholder
under this (S) 7 shall not exceed the percentage of the Merger Consideration
set opposite such Shareholder's name below:
Shareholder Percentage of Merger Consideration
----------- ----------------------------------
Xxxxxxx X. Xxxxx 37.5%
Xxxxxxx X. Xxxx, individually
and Xxxxxxx X. Xxxx and 37.5%
Xxxxxxxxxx X. Xxxx Charitable
Remainder Trust
Xxxxx X Xxxxx 25%
(vii) In addition to the foregoing, each of the Shareholders jointly and
severally agrees to indemnify the Parent, Buyer and the Surviving
Corporation from and against any Adverse Consequences arising out of the
nonpayment of employee loans referenced in Petrotech Disclosure Schedule (S)
3(p)(ix).
(c) Indemnification Provisions for Benefit of the Shareholders.
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In the event Parent or Buyer breaches (or in the event any third party
alleges facts that, if true, would mean Parent or Buyer has breached) any of
their representations, warranties, and covenants contained in this
Agreement, and, if there is an applicable survival period pursuant to (S)
7(a) above, provided that the Shareholders makes a written claim for
indemnification setting forth with specificity the basis for such claim
against Parent or Buyer pursuant to (S) 8(g) below within such survival
period, then Parent and Buyer jointly and severally agree to indemnify the
Shareholders from and against the entirety of any Adverse Consequences (up
to but not in excess of the Merger Consideration) the Shareholders may
suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Shareholders may suffer after the
end of any applicable survival period) resulting from, arising out of, or
caused by the breach (or the alleged breach).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified Party")
with respect to any matter ( a "Third Party Claim") which may give rise to a
claim for indemnification against any other Party (the "Indemnifying Party")
under this (S) 7, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (A) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by
the Third Party Claim, (B) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations hereunder, (C)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential custom
or practice materially adverse to the continuing business interest of the
Indemnified Party, and (E) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
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(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with (S) 7(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably).
(iv) In the event any of the conditions in 7(d)(ii) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it may
deem appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, any Indemnifying Party in connection therewith),
(B) the Indemnifying Parties will reimburse the Indemnified Party promptly
and periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Adverse Consequences
the Indemnified Party may suffer resulting, arising out of, relating to,
in the nature of, or caused by the Third Party Claim to the fullest extent
provided in this (S) 7.
(e) Determination of Adverse Consequences. The Parties shall take into
account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this (S) 7. All
indemnification payments under this (S) 7 shall be deemed adjustments to the
Merger Consideration.
(f) Post-Closing. Following the Closing, the remedy of the
Shareholders, on the one hand, and Parent and the Buyer on the other hand,
with respect to any breach or threatened breach of a representation,
warranty or covenant contained herein or with respect to any event,
circumstance or condition occurring on or before the Closing shall be
limited to the enforcement of the indemnification obligations set forth in
(S) 7; provided, however, that nothing provided in this (S) 7(f) shall limit
the right of any Party to seek any equitable remedy available to enforce his
or its rights hereunder in accordance with (S) 8 (n).
8. MISCELLANEOUS.
(a) Press Releases and Public Announcements. Neither Petrotech nor any
Shareholder shall issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of the Parent. Parent, upon prior notice to Petrotech, may make any
public disclosure it believes in good faith is required or permitted by
applicable law or any listing or trading agreement concerning its publicly-
traded securities.
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(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of the other Party; provided, however, that the Buyer may
(i) assign any or all of its rights and interests hereunder to one or more
of its affiliates and (ii) designate one or more of its affiliates to
perform its obligations hereunder (in any or all of which cases the Buyer
nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and
then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to Petrotech and the Shareholders:
Petrotech, Inc. Copy to: Xxxxxxx X. Xxxxxx, Xx., Esq.
Xx. Xxxxxxx X. Xxxxx, President 000 Xxxxxxx Xxxxxx, Xxxxx 000
000 Xxxxxxx Xxxxx Xxx Xxxxxxx, XX 00000
Xxxxx Xxxxxx, XX 00000
and
Xx. Xxxxxxx X. Xxxxx Xx. Xxxxxxx X. Xxxx
000 Xxxxx Xxxxx 000 Xxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000 Xxxxxx, XX 00000
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Xx. Xxxxx X Xxxxx Xxxxxxx X. Xxxx and Xxxxxxxxxx X. Xxxx
00 Xxxxxxxx Xxxxx Charitable Remainder Trust
Xxxxxxx, XX 00000 000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
If to Buyer or Parent:
Xxxxxxx X. Key Copy to: Xxxxxxx X. Xxxxx, Esq.
Xxxxx Industries, Inc. Xxxxx Industries, Inc.
000 Xxx Xxxxxx Xxxx 000 Xxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000 Xxxxxx, Xxxxxxx 00000
(000) 000-0000 (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but
no such notice, request, demand, claim, or other communication shall be
deemed to have been duly given unless and until it actually is received by
the intended recipient. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Delaware.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
each of the Parent, Buyer, Petrotech and the Shareholders. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
-40-
(k) Expenses. Buyer and each Shareholder will bear its (his) own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby. The Shareholders shall
bear all such expenses incurred by Petrotech.
(l) Construction. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. Items set forth in the
Petrotech Disclosure Schedule or the Buyer Disclosure Schedule shall be deemed
an exception only to the representations and warranties for which they are
identified and any other representations and warranties to which the Petrotech
Disclosure Schedule or Buyer Disclosure Schedule with respect to such
representations and warranties contains an appropriate cross-reference.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having, in accordance with the
terms of this Agreement, jurisdiction over the Parties and the matter, in
addition to any other remedy to which it may be entitled, at law or in equity.
(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Delaware in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court. Each Party also agrees not to bring any action or proceeding arising
out of or relating to this Agreement in any other court. Each of the Parties
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety, or other security that might
be required of any other Party with respect thereto. Parent and Buyer appoints
The Xxxxxxxx-Xxxx Corporation System, Inc. (the "Process Agent") as his or its
agent to receive on is or its behalf service of copies of the summons and
complaint and any other process that might be served in the action or
proceeding. Shareholders shall have service of process personally served to the
address listed in (S) 8(g) above. Any Party may make service on any other Party
by sending or delivering a copy of the process (i) to the Party to be served at
the address and in the manner provided for the giving of notices in (S) 8(g)
above or (ii) to the Party to be served in care of the Process Agent at the
address and in the manner provided for the giving of notices in (S) 8(g) above.
Each Party agrees that a final judgment in any
-41-
action or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment or in any other manner provided by law or in equity.
(p) Xxxx Guaranty. Xxxxxxx X. Xxxx, in addition to his individual
obligations as a Shareholder under this Agreement, shall fully and completely
guarantee any and all obligations of the Xxxxxxx X. Xxxx and Xxxxxxxxxx X. Xxxx
Charitable Remainder Trust which may arise and exist under this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
BUYER
Petrotech Acquisition, Inc.
By: /S/ XXXXXX X. XXXXXXX
---------------------
Name: Xxxxxx X. Xxxxxxx
-----------------
Title: Vice President
--------------
PARENT
Xxxxx Industries, Inc.
By: /S/ XXXXXXX X. KEY
------------------
Xxxxxxx X. Key,
President and Chief Executive Officer
PETROTECH
PetroTech, Inc.
By: /S/XXXXXXX X. XXXXX
-------------------
Xxxxxxx X. Xxxxx
President
[SIGNATURES CONTINUED ON NEXT PAGE]
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XXXXXXXXX XXXXXXXXXXXXX, INC.
BY: /S/ XXXXXXX X. XXXXX
--------------------
NAME: XXXXXXX X. XXXXX
----------------
TITLE: PRESIDENT
---------
SHAREHOLDERS
/S/ XXXXXXX X. XXXXX
--------------------
XXXXXXX X. XXXXX
/S/ XXXXX X. XXXXX
------------------
XXXXX X XXXXX
/S/ XXXXXXX. X. XXXX
--------------------
XXXXXXX X. XXXX
THE XXXXXXX X. XXXX AND XXXXXXXXXX
X. XXXX CHARITABLE REMAINDER TRUST
BY: /S/ XXXXXXX XXXXXX
------------------
XXXXXXX XXXXXX
INDEPENDENT SPECIAL TRUSTEE
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CONSENT TO BE BOUND BY THE ABOVE AND FOREGOING AGREEMENT
We, XXXX XXXXXXX XXXXX, XXXXXXXXXX XXX XXXXXX XXXX AND JO XXXXX
XxXXXXXXX XXXXX, declare and state that each of us is a spouse of a shareholder
in the above and foregoing Agreement and Plan of Merger; and we further declare
and state that we have read said Agreement and Plan of Merger and understand it
and approve it, including, without limitation, specifically approving and
authorizing the Plan of Merger and the sale thereunder of all of the issues and
outstanding shares of capital stock of Petrotech, Inc., which are in the names
of our respective husbands; and we hereby further agree to be bound by all of
the terms, conditions and provisions contained in said Agreement and Plan of
Merger, and hereby ratify and approve all actions which our husbands have taken
and will take in connection with consummating the transactions contemplated by
the Agreement and Plan of Merger.
Thus done and signed by each of us on the 14th day of May, 1997.
/S/ XXXX XXXXXXX XXXXX
----------------------
XXXX XXXXXXX XXXXX
/S/ XXXXXXXXXX XXX XXXXXX XXXX
------------------------------
XXXXXXXXXX XXX XXXXXX XXXX
/S/ JO XXXXX XxXXXXXXX XXXXX
----------------------------
JO XXXXX XxXXXXXXX XXXXX
