Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of this 25th day of January, 2000, by and among PMC
Acquisition, Inc., a Texas corporation ("Purchaser"), and ABCO
Industries, Inc., a Texas corporation ("Seller"). Purchaser and Seller
are sometimes together hereinafter referred to collectively as the
"Parties."
R E C I T A L S
WHEREAS, Seller is engaged in the design, marketing, distribution,
and selling of industrial boilers (the "Business");
WHEREAS, on December 1, 1999 (the "Petition Date"), Seller
obtained an order for relief and became and continues as a debtor-in-
possession under chapter 11 of Title 11 of the United States Code
("Bankruptcy Code") in a case pending in the United States Bankruptcy
Court for the Northern District of Texas (the "Bankruptcy Court"),
styled In re ABCO Indus., Inc., Case No. 00-00000-00 (the "Bankruptcy
Case"); and
WHEREAS, Seller desires to sell, and Purchaser desires to
purchase, selected assets of Seller in accordance with Sections 363(f),
363(m) and 365 of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions, and
promises herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the Parties agree as follows:
ARTICLE I
GENERAL
1.01. Definitions. The following terms shall have the
following meanings (the following definitions to be equally applicable
to both the singular and plural forms of any of the terms herein
defined):
"Agreement": As defined in the first paragraph of this Agreement.
"Alternative Offer": As defined in Section 5.02(a)(1) of this
Agreement.
"Appraisal": As defined in Section 1.06 of this Agreement.
"Approval Order": An order of the Bankruptcy Court, the form of
which shall be acceptable to Purchaser, in its reasonable
discretion, approving and authorizing Seller to enter into this
Agreement and to consummate the transactions contemplated hereby,
and ordering, at a minimum, that (i) the Assets sold to Purchaser
pursuant to this Agreement shall be free and clear of all liens,
claims, encumbrances, and other interests including, but not
limited to, all product liability, warranty and environmental
claims of any nature, except Permitted Encumbrances;
(ii) Purchaser has acted in good faith within the context of
Section 363(m) of the Bankruptcy Code and is entitled to any and
all protections afforded thereunder; (iii) Purchaser is not
acquiring any of Seller's liabilities except as expressly provided
in this Agreement; (iv) the assumption and assignment of any
executory contracts or unexpired leases which are being
transferred under this Agreement are approved, subject to the
terms hereof and provided the Bankruptcy Court Order finds that
there are no accrued liabilities or defaults or events which, with
the passage of time or the giving of notice or both, would give
rise to a default under said executory contracts or unexpired
leases other than those specifically identified in the Bankruptcy
Court order approving said assumptions and assignments; (v) except
with respect to claims expressly assumed by Purchaser pursuant to
this Agreement, all Persons are enjoined from in any way pursuing
Purchaser or the Assets by suit or otherwise to recover on any
claim which they had, have or may have against Seller; (vi) any
disputes regarding the Seller's ownership of any Assets acquired
by Purchaser hereunder shall not have any affect upon Seller's
ability to transfer complete and clear title and ownership to
Purchaser; (vii) any disputes over the ownership of any Assets
shall be limited solely to the proceeds of such Assets in dispute;
and (viii) notice of the terms contained in the Sale Motion and of
the hearing to approve the Asset Sale was provided in a timely and
appropriate manner.
"Asset": As defined in Section 1.02 of this Agreement.
"Assets": As defined in Section 1.02 of this Agreement.
"Assigned Leases": As defined in Section 1.02(e) of this
Agreement.
"Assumed Obligations": As defined in Section 1.08(c) of this
Agreement.
"Bankruptcy Case": As defined in the recitals of this Agreement.
"Bankruptcy Code": As defined in the recitals of this Agreement.
"Bankruptcy Court": As defined in the recitals of this Agreement.
"Bidder's Total Offer": As defined in Section 5.04 of this
Agreement.
"Xxxx of Sale": As defined in Section 1.11 of this Agreement.
"Business": As defined in the recitals of this Agreement.
"Breakup Fee": As defined in Section 5.02 of this Agreement.
"Business Day": Any day other than a Saturday, Sunday, or other
day on which the Bankruptcy Court is closed, a legal holiday in
Dallas, Texas, or a day on which banking institutions are
authorized or required by law to close in Dallas, Texas.
"Closing" As defined in Section 8.01 of this Agreement.
"Closing Date": As defined in Section 8.01 of this Agreement.
"Competing Offer": As defined in Section 5.05 of this Agreement.
"Deposit": As defined in Section 5.04 of this Agreement.
"Xxxxxxx Money": As defined in Section 1.05(a) of this Agreement.
"Effective Time of Closing": As defined in Section 8.02 of this
Agreement.
"Engineering Documentation": As defined in Section 1.02(f) of
this Agreement.
"Equipment": As defined in Section 1.02(b) of this Agreement.
"Escrow Agent": As defined in Section 1.05(a) of this Agreement.
"Excluded Assets": As defined in Section 1.03 of this Agreement.
"Final Order": An order or judgment of the Bankruptcy Court
entered by the Clerk of the Bankruptcy Court on the docket in the
Bankruptcy Case which has not been reversed, vacated or stayed and
as to which the time to appeal, petition for certiorari or move
for a new trial, reargument or rehearing has expired and as to
which no appeal, petition for certiorari or other proceedings for
a new trial, reargument or rehearing shall be pending or, if an
appeal, writ of certiorari, new trial, reargument or rehearing has
been sought, such order or judgment of the Bankruptcy Court shall
be then affirmed by the highest court to which such order or
judgment was appealed or certiorari shall have been denied or
motion for a new trial, reargument or rehearing shall have been
denied or resulted in no modification of such order or judgment,
and the time to take any further appeal, petition for certiorari
or move for a new trial, reargument or rehearing shall have
expired, provided that the possibility that a motion under Rule 60
of the Federal Rules of Civil Procedure, or any analogous rule
under the Bankruptcy Rules may be filed relating to such order,
shall not cause such order not to be a Final Order.
"General Conveyance, Transfer and Assignment": As defined in
Section 1.11 of this Agreement.
"Governmental Body": Any court or any federal, state, municipal
or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign.
"Intellectual Property": As defined in Section 1.02(j) of this
Agreement.
"Inventory": As defined in Section 1.02(d) of this Agreement.
"Marketing Information": As defined in Section 1.02(g) of this
Agreement.
"Order": Any order, writ, injunction, decree, judgment, award or
determination of any court or Governmental Body.
"Permitted Encumbrances": Liens for current Taxes and assessments
not yet due and payable, including, but not limited to, liens for
nondelinquent ad valorem Taxes, nondelinquent statutory liens
arising other than by reason of any default on the part of Seller,
and liens in respect of motor vehicles and transportation
equipment used in the ordinary course of business.
"Person": An individual, partnership, joint venture, corporation,
bank, trust, unincorporated organization or a Governmental Body.
"Petition Date": As defined in the recitals of this Agreement.
"Purchase Price": As defined in Section 1.05 of this Agreement.
"Purchaser": As defined in the opening paragraph of this
Agreement.
"Real Property and Improvements": As defined in Section 1.02(a)
of this Agreement.
"Records": As defined in Section 1.02(g) of this Agreement.
"Sale Hearing": As defined in Section 5.02(a) of this Agreement.
"Sale Motion": As defined in Section 5.04 of this Agreement.
"Seller": As defined in the opening paragraph of this Agreement.
"Taxes": All federal, state or local income, sales, real or
personal property or other taxes or assessments.
"Vehicles": As defined in Section 1.02(c) of this Agreement.
1.02. Agreement to Purchase and Sell. Subject to the terms
and conditions set forth in this Agreement, Seller agrees to sell,
convey, transfer, assign, and deliver to Purchaser, and Purchaser
agrees to purchase from Seller, all of Seller's right, title, and
interest in and to the following assets, rights, and properties (all
such assets, rights, and properties are collectively referred to herein
as the "Assets" and individually referred to as an "Asset") free and
clear of all liens, claims, and encumbrances, other than Permitted
Encumbrances.
(a) All of Seller's estates, rights, titles, and interests in and
to all real estate, buildings, offices, warehouses, storage
facilities, works, structures, fixtures, construction in progress,
improvements, betterments, installations, and additions
constructed, erected, or located on, attached, or affixed to the
real property described in Schedule 1.02(a) of this Agreement (the
"Real Property and Improvements").
(b) All of Seller's furniture, equipment, machinery, trade
fixtures, apparatus, appliances, implements, spare parts,
supplies, and all other tangible personal property of every kind
and description (other than the Vehicles) used in the Business and
described in Schedule 1.02(b) of this Agreement (the "Equipment").
(c) All trucks, trailers, and other certificated vehicles
described in Schedule 1.02(c) of this Agreement (the "Vehicles").
(d) All of Seller's inventory, raw materials, parts, and
components used in the Business and described in Schedule 1.02(d)
of this Agreement (the "Inventory").
(e) All right, title, and interest of Seller in, to, and under
the leases and agreements, whether written or oral, described in
Schedule 1.02(e) of this Agreement (the "Assigned Leases") and all
rights (including rights of refund and offset), privileges,
deposits, claims, causes of action, and options relating or
pertaining to the any of the Assigned Leases.
(f) All of Seller's documents, drawings, blueprints, records, and
papers of whatever nature and wherever located used in the
Business that relate to the design and construction of commercial
boilers (the "Engineering Documentation") except for Engineering
Documentation delivered or transferred to Merck & Co. during the
Bankruptcy Case; provided, that Seller shall be entitled from time
to time upon reasonable notice to review and make copies of such
Engineering Documentation to complete work-in-process and honor
existing warranties as are assumed by Seller.
(g) All of (i) Seller's books, records, papers, and instruments
of whatever nature and wherever located that relate to the Assets
or which are required or necessary for Purchaser to use and enjoy
the Assets from and after the Effective Time of Closing (the
"Records"); and (ii) all sales, marketing materials, credit
records of Seller's customers, customer lists, customer sales
lists, and contact lists relating to the Business (the "Marketing
Information"); provided, that Seller shall be entitled from time
to time upon reasonable notice to review and make copies of such
Records and Marketing Information to fulfill tax and bankruptcy
reporting obligations.
(h) All right, title, and interest of Seller in and to all
prepaid expenses relating to any of the Assets.
(i) All right, title, and interest in and to the name "ABCO
Industries;" provided, that Purchaser grants Seller a non-
assignable license for the continued use of such name in
conducting the affairs of the Bankruptcy Case, which license shall
terminate upon the earlier of (i) confirmation of a plan of
reorganization in the Bankruptcy Case, (ii) dismissal of the
Bankruptcy Case, or (iii) closing of the Bankruptcy Case.
(j) All right, title, and interest of Seller in, to, and under
all patents, trademarks, tradenames, logos, technology, know-how,
data, copyrights, service marks, licenses, covenants by others not
to compete, rights, and privileges used in the conduct of the
Business, all applications therefor, and the right to recover for
infringement thereon and all goodwill associated with the marks
describe in Schedule 1.02(j) of this Agreement (the "Intellectual
Property").
(k) All other or additional privileges, rights, interests,
properties, and assets of Seller of every kind and description
that are used or intended for use in connection with, or are
necessary to the continued use of, the Assets, including but not
limited to licenses, permits, and authorizations to own, possess,
or use the Assets.
1.03. Excluded Assets. The Assets shall not consist of: (i)
cash, cash equivalents, and deposit accounts; (ii) accounts receivable;
(iii) work in process; (iv) contracts rights, other than the Assumed
Leases; (v) retainage funds; (vi) corporate book, general books of
account and books of original entry that comprise Seller's permanent
tax records and books and records that Seller is required to retain
pursuant to any statute, rule, or regulation or that do not relate
primarily to the Assets; (vii) all written or oral consulting or
employment agreements (unless otherwise specifically assumed
hereunder); (viii) claims for refunds of Taxes for periods prior to the
Effective Time of Closing; (ix) all past, present, and future claims,
causes of action (including, without limitation, avoidance claims and
causes of action of Seller's bankruptcy estate, including any causes of
action under Sections 547 and 548 of the Bankruptcy Code), choses in
action, rights of recovery, and rights of set-off of any kind to the
extent relating to the operation of the Business prior to the Closing
Date, other than claims of Seller relating to the Assigned Leases
(including claims against parties to such contracts); (x) prepaid
insurance and interests in insurance policies, other than policies
relating to the Assets; or (xi) all property, including but not limited
to portable buildings, owned by Desert X-Ray (the "Excluded Assets").
1.04. Assigned Leases. As of the Effective Time of Closing,
Seller shall assume and assign to Purchaser under Section 365 of the
Bankruptcy Code all right, title, and interest to the Assigned Leases,
and Purchaser shall assume all current indebtedness under the Assigned
Leases in an aggregate amount not to exceed $10,000, and all future
indebtedness, obligations and liabilities under the Assigned Leases.
Seller shall assign to Purchaser all right, title, and interest in any
deposits or prepaid rents under the Assigned Leases. Purchaser agrees
to indemnify, defend, and hold Seller harmless from any and all claims,
causes of action, demands, and liabilities (including attorneys' fees
and court costs) under any of the Assigned Leases on or after the
Effective Time of Closing, except for liabilities existing on the
Closing Date in excess of $10,000.
1.05. Purchase Price. For and in consideration of the sale of
the Assets in accordance with the provisions of this Agreement,
Purchaser shall pay to Seller $1,250,000 in cash or immediately
available funds at Closing and assume certain liabilities under the
Assigned Leases as set out in Section 1.04 hereof (the "Purchase
Price"). The cash portion of the Purchase Price shall be payable as
follows:
(a) Within five (5) Business Days from the execution of this
Agreement, the sum of $62,500.00 shall be tendered to an escrow
agent acceptable to both Seller and Purchaser (the "Escrow Agent")
as xxxxxxx money ("Xxxxxxx Money") to secure Purchaser's
obligations under this Agreement and to be applied or refunded, as
the case may be, in accordance with the terms of this Agreement.
If the conditions to Closing set out in Article VII of this
Agreement are met, the Xxxxxxx Money will be applied towards the
Purchase Price at Closing.
(b) At Closing, Purchaser shall deliver the balance of the
Purchase Price to Seller after deducting (i) the Xxxxxxx Money and
(ii) any adjustments to the Purchase Price required under Section
1.06 of this Agreement, by certified or bank cashier's check or
wire transfer.
1.06. Adjustments to Purchase Price. Prior to Closing,
Seller shall allow Purchaser full access to the Assets, including the
Equipment, the Vehicles, the Inventory, and the Records, for purposes
of conducting a physical inventory count to ensure that the Equipment
listed on Schedule 1.02(b) of this Agreement, the Vehicles listed on
Schedule 1.02(c) of this Agreement, and the Inventory listed on
Schedule 1.02(d) of this Agreement are present and accounted for. Prior
to Closing, Seller shall allow Purchaser full access to the Assets,
including the Records, for purposes of ensuring that the Intellectual
Property is accounted for and as warranted in this Agreement. If any
Equipment or any Vehicle cannot be located using reasonably diligent
efforts, the cash portion of the Purchase Price shall be reduced by the
listed value of the item of Equipment or Vehicle listed on the Xxxxx
Systems appraisal dated April 29, 1999 (the "Appraisal"). If any item
of Equipment or any Vehicle is not, in Purchaser's sole opinion, in
good working order (ordinary wear and tear excepted), Purchaser shall
promptly notify Seller and Seller shall have, upon receipt of such
notice, the option of (i) designating the item of Equipment or Vehicle
as an Excluded Asset under Section 1.03 of this Agreement and reducing
the cash portion of the Purchase Price by the listed value of the item
of Equipment or Vehicle on the Appraisal, or (ii) repairing the item of
Equipment or Vehicle to good working order and including such item in
the sale contemplated by this Agreement.
1.07. Application of Purchase Price. Purchaser shall have no
liability or obligation with respect to the application, allocation, or
payment of the Purchase Price to any of Seller's creditors.
1.08. Assumption Of Liabilities. The sole liabilities assumed
by Purchaser hereunder are:
(a) the duties and obligations of Seller arising on or after the
Effective Time of Closing to perform the Assigned Leases to the
extent the Assigned Leases have not been performed and remain in
effect at the Effective Time of Closing;
(b) accrued and unpaid amounts under the Assumed Leases up to but
not exceeding $10,000;
(c) all obligations of Seller under the Assumed Leases after the
Effective Time of Closing (the "Assumed Obligations"); and
(d) the Permitted Encumbrances (subject to pro ration of ad
valorem or similar Taxes, not yet due and payable, pursuant to
Section 1.10).
1.09. No Assumption of Other Liabilities. Except as
otherwise provided in Section 1.08, Purchaser does not assume or agree
to pay, perform, or discharge, and shall not be responsible for, any
other liabilities or obligations of Seller, whether accrued, absolute,
contingent, or otherwise.
1.10. Pro Ration of Taxes. Seller and Purchaser shall each
be obligated for their respective pro rata portion of all 2000 ad
valorem or similar Taxes on any property or lease included in the
Assets. Seller shall pay to Purchaser at the Closing estimated ad
valorem or similar Taxes for the current year (based on the prior
year's Taxes) prorated to the date of the Closing. Seller shall make
available to Purchaser copies of all statements and assessments
reflecting such prior year's Taxes. Purchaser shall pay such sums to
the appropriate taxing authorities when due, prior to becoming
delinquent. Purchaser shall promptly forward to Seller after receipt
by Purchaser copies of all 2000 Tax assessments under any such property
or lease. If the 2000 Taxes shall be readjusted such that the amounts
payable are greater than the prior year's Taxes, Seller shall pay its
pro rata share of any difference promptly upon notice of such Taxes
having been paid by Purchaser. If such 2000 Taxes shall be readjusted
such that the amounts payable are less than the prior years' Taxes,
Purchaser shall refund to Seller its pro rata share of such reduction
upon notice of such Taxes having been paid by Purchaser. Except as
provided herein, Purchaser shall have no other liability for Taxes
payable by Seller (including income taxes) relating to the Assets, the
Business, the operations of Seller, or the transactions contemplated
hereunder.
1.11. Instruments of Transfer, Further Assurances. In order
to consummate the transactions contemplated by this Agreement, at the
Closing, Seller and Purchaser shall execute and deliver to each other
(i) a completed General Conveyance, Transfer and Assignment, in the
form attached as Exhibit "A" hereto (the "General Conveyance, Transfer
and Assignment"), covering all of the Assets, and (ii) a Xxxx of Sale
in the form attached as Exhibit "B" hereto (the "Xxxx of Sale"). At
the Closing, and at all times thereafter as may be necessary, Seller
shall execute and deliver to Purchaser (i) such other instruments of
transfer as shall be reasonably necessary or appropriate to vest in
Purchaser good and indefeasible title to the Assets and to comply with
the purposes and intent of this Agreement, and (ii) such other
instruments as shall be reasonably necessary or appropriate to evidence
the assignment by Seller of the Assigned Leases.
1.12. Escrow Terms. The Xxxxxxx Money shall be deposited with
Escrow Agent with the understanding that Escrow Agent is not (a) a
party to this contract and does not have any liability for the
performance or non-performance of any party to this contract, (b)
liable for interest on the Xxxxxxx Money or (c) liable for any loss of
Xxxxxxx Money caused by the failure of any financial institution in
which the Xxxxxxx Money has been deposited unless the financial
institution is acting as Escrow Agent. If either party makes demand
for the payment of the Xxxxxxx Money, Escrow Agent has the right to
require from the Parties a written release of liability of Escrow Agent
for disbursement of the Xxxxxxx Money. Any refund or disbursement of
Xxxxxxx Money under this contract shall be reduced by the amount of
unpaid expenses incurred on behalf of the party receiving the Xxxxxxx
Money, and Escrow Agent shall pay the same to the creditors entitled
thereto. At closing, the Xxxxxxx Money shall be applied first to any
cash down payment, then to Purchaser's closing costs and any excess
refunded to Purchaser. Demands and notices required by this paragraph
shall be in writing and delivered in accordance with Section 9.06 of
this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
2.01. Representations and Warranties of Seller. The
representations and warranties in Article II of this Agreement are true
and correct on the date of this Agreement and will be true and correct
through the Effective Time of Closing.
2.02. Existence and Good Standing of Seller. Seller is a
corporation validly existing and in good standing under the laws of the
State of Texas.
2.03. No Violations. The execution and delivery of this
Agreement by Seller and the consummation of the sale and purchase of
the Assets on the Closing Date (i) will not violate any provision of
the organizational documents of Seller, (ii) will not violate any
statute, rule, regulation, order, or decree of any public body or
authority by which Seller or its properties or assets are bound and
(iii) except for Seller's filing of a case under chapter 11 of the
Bankruptcy Code, will not result in a violation or breach of, or
constitute a default under, any license, franchise, permit, indenture,
agreement or other instrument to which Seller is a party.
2.04. Corporate Power. Seller has all requisite corporate
power and authority to execute and implement this Agreement, subject to
the issuance of the Approval Order. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite corporate action on the part
of Seller, subject to obtaining the Approval Order. This Agreement has
been duly executed and delivered by Seller and, subject to obtaining
the Approval Order, constitutes the valid, binding, and enforceable
obligation of Seller, subject to applicable laws and general equitable
principles.
2.05. Assets. Schedules 1.02(a), (b), (c), (d), and (j)
contain a true and complete list of Seller's Real Property and
Improvements, Equipment, Vehicles, Inventory, and Intellectual
Property, respectively.
2.06. Title to Assets. Seller owns all right, title, and
interest to the Assets, and to the extent provided in the Approval
Order, shall transfer good title to the Assets to Purchaser free and
clear of all liens, claims, and encumbrances other than Permitted
Encumbrances.
2.07. Intellectual Property. Seller has not infringed,
misappropriated, or misused any patent, trademark, trade name,
copyright (or application for any of the foregoing), trade secret
know-how, confidential information, or data of another. Seller has the
complete and unrestricted right to use, own, and has good title to, and
the exclusive right to assign the entire right, title, and interest in
and to the Intellectual Property, each of such items is in full force
and effect and such items are the only proprietary property used or
necessary in connection with the Business as presently conducted.
Schedule 1.02(j) lists all of Seller's Intellectual Property. All of
the representations contained in this section are provided to the best
of Seller's knowledge.
2.08. DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.
SELLER DOES NOT MAKE, AND HAS NOT MADE, ANY REPRESENTATIONS OR
WARRANTIES RELATING TO SELLER, ITS BUSINESS, OPERATIONS OR THE ASSETS
OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY
OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS ARTICLE II. EXCEPT AS
EXPRESSLY SET FORTH IN THIS ARTICLE II, THE ASSETS ARE BEING SOLD "AS
IS" AND "WHERE IS," AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED AND PARTICULARLY WITHOUT ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01. Representations and Warranties of Purchaser. The
representations and warranties in Article III of this Agreement are
true and correct on the date of this Agreement and will be true and
correct through the Effective Time of Closing.
3.02. Existence and Good Standing of Purchaser. Purchaser is a
corporation validly existing and in good standing under the laws of the
State of Texas.
3.03. No Violations. The execution and delivery of this
Agreement by Purchaser and the consummation of the sale and purchase of
the Assets on the Closing Date (i) will not violate any provision of
its organizational documents, (ii) will not violate any statute, rule,
regulation, order or decree of any public body or authority by which
Purchaser is bound and (iii) will not result in a violation or breach
of, or constitute a default under, any license, franchise, permit,
indenture, agreement or other instrument to which Purchaser is a party,
or by which Purchaser or any of its properties or assets is bound.
3.04. Corporate Power. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized and approved by all requisite corporate
action of Purchaser. This Agreement has been duly executed and
delivered by Purchaser and constitutes the valid, binding, and
enforceable obligations of Purchaser, subject to applicable laws and
general equitable principles.
3.05. Financing. Purchaser has sufficient funds to pay the
Purchase Price.
ARTICLE IV
EMPLOYEE MATTERS
4.01. Employees. Seller shall provide to Purchaser a complete
and accurate list of all of Seller's current employees, off-site
employees, and contract employees, such employees' dates of hire,
salaries or hourly rates, and annual bonuses (last paid or payable), if
any, and list of any other fringe benefits or incentive paid or payable
to such employees. Except as specifically described therein, all
employees are actively at work and no employee is currently on a leave
of absence, layoff, suspension, sick leave, workers compensation, short
or long term disability, military leave, or otherwise not actively
performing his or her work during all normally scheduled business
hours.
4.02. Employee Relations. Purchaser shall not be liable for
any amounts or payments which Seller may owe on account of Seller's
employees, including without limitation on account of Seller's
employees' work, life, health, or welfare insurance, commissions,
bonuses, finders fees, vacation payments, severance payments, or
pension, profits sharing, stock options, retirement, or similar plans,
or any other employee benefit plans or any other employee obligations.
4.03. Employees' Continued Employment. Purchaser may, in its
sole discretion and without any obligation or liability related
thereto, seek to employ any or all employees set forth on Schedule
4.01, upon terms and conditions acceptable to Purchaser in its sole
discretion. Nothing, however, contained in this Agreement shall
obligate Purchaser to employ any employees of Seller, or confer upon
any employee of Seller any right to continued employment after the
Closing Date. Seller shall fully comply with and be solely liable for,
any damages, costs, fees, or claims related to any federal, state, or
other applicable law or regulation pertaining to the winding down,
closing, or moving of Seller's business and/or termination of Seller's
employees.
4.04. Retiree Medical Plans. To the best of Seller's
knowledge, there are no benefits or retiree medical plans for
employees.
4.05. Worker's Compensation Claims. Prior to Closing, Seller
shall remain fully responsible and liable for all workers compensation
benefits payable to Seller's employees for any claim for workers
compensation benefits arising as the result of an injury or
occupational disease sustained while employed by Seller.
ARTICLE V
BIDDING PROCEDURES
5.01. Order Approving Sale. Purchaser's obligation to close
shall be subject to entry of the Approval Order. As an absolute
condition to Closing, all terms of the Approval Order should be
reasonably acceptable to Purchaser. In the event the Approval Order
does not become a Final Order before February 28, 2000, then Purchaser,
at its sole option, may immediately terminate this Agreement.
5.02. Breakup-Fee. Seller shall pay to Purchaser a fee in
cash in the amount of $50,000 (the "Breakup Fee") if:
(a) all of the conditions to Purchaser's obligations contemplated
by this Agreement either have been satisfied or have been waived
by Purchaser before the date of the hearing on the Approval Order
(the "Sale Hearing"), and this Agreement is not approved by the
Bankruptcy Court at the Sale Hearing because:
(1) of an offer by some other person or entity to purchase
all or a substantial portion of the Assets (an "Alternative
Offer"), which is approved by the Bankruptcy Court and
results in a closing of a sale of all or part of the Assets
to such person or entity; or
(2) Seller undertakes to obtain confirmation of a plan of
reorganization that provides for the continued operation of
Seller's business or for anything other than the approval of
this Agreement; or
(b) Seller determines to proceed with a plan of reorganization
not involving the timely sale of the Assets to Purchaser pursuant
to this Agreement; or
(c) Purchaser terminates this Agreement pursuant to the
provisions of Section 8.03 hereof; or
(d) Purchaser terminates this Agreement due to a material breach
by Seller.
5.03. Payment of Breakup Fee. The Breakup Fee shall be due
and payable immediately upon closing of a sale of all or part of the
Assets to another person or entity, and shall constitute an allowed
administrative expense pursuant to 11 U.S.C. S 503(b). The obligations
of Seller under this paragraph shall survive any termination of this
Agreement.
5.04. Overbid Procedure. In the motion seeking approval of
this Agreement and the sale of the Assets to Purchaser (the "Sale
Motion"), and at the Sale Hearing if the Bankruptcy Court requires that
higher and better offers be solicited in conjunction with the approval
of this Agreement, Seller shall insist on the following procedure with
respect to the sale: (1) any overbids with respect to the Assets must
be in writing and received by Seller at least two (2) Business Days
before the Sale Hearing; (2) each and every overbid must disclose the
total amount of consideration being offered for the purchase of
Seller's Assets ("Bidder's Total Offer"); (3) each and every overbid
must be accompanied by a refundable cash deposit (or immediately
available funds) of not less than ten percent (10%) of the Bidder's
Total Offer (the "Deposit"); (4) each and every overbid must be
accompanied by evidence satisfactory to Seller of the over bidder's
financial ability to consummate the asset purchase; (5) an over bidder
shall not be permitted to make its over bid contingent in any manner,
including, but not limited to: (i) due diligence by over bidder, (ii) a
financing contingency; or (iii) any contingency to be completed, or
option exercised, after the auction or other selection process has
concluded; and (6) all Alternative Offers must exceed the total
consideration of the Purchase Price (defined in Section 1.05) to be
paid by Purchaser as set forth in this Agreement, by at least one
hundred thousand dollars ($100,000). In the event the Bankruptcy Court
approves an Alternative Offer at the sale hearing, then the Deposit
shall become immediately non-refundable and shall constitute the
Seller's property for all purposes.
5.05. Matching Bid. If Seller receives a competing offer from
any third party in conjunction with the hearing and approval of this
Agreement (a "Competing Offer"), then Seller shall, within twenty-four
(24) hours of receipt, provide a complete and true copy of the
Competing Offer to Purchaser. In the event Seller determines that a
Competing Offer is higher and a better offer than Purchaser's offer,
Seller shall promptly so inform Purchaser. Purchaser has the right to
match any Competing Offer. The Parties agree that the matching bid by
Purchaser of any Competing Offer shall be deemed to be a higher and/or
better offer than the Competing Offer.
5.06. Notice of Material Development. Seller and Purchaser
will give prompt written notice to the other of any (1) representation
or warranty contained herein which was true as of the date hereof, but
which as subsequently become untrue; (2) breach of any covenants
hereunder by either party; (3) any loss of any asset; (4) the
termination or resignation of any employee; and (5) any other material
development affecting the ability of such party to consummate the
transactions contemplated in this Agreement.
ARTICLE VI
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
6.01. Access to Records and Properties; Confidentiality.
Between the date of this Agreement and the Effective Time of Closing,
Seller shall give Purchaser and its advisors such access to the
premises, books, and records of Seller, and to cause the officers,
employees, and accountants of Seller to furnish such financial and
operating data and other information with respect to Seller as
Purchaser shall from time to time reasonably request.
6.02. Obligations of Seller. Between the date hereof and the
Effective Time of Closing, except as contemplated herein or except with
the prior consent of Purchaser, which consent will not be unreasonably
withheld, Seller shall:
(1) use its commercially reasonable efforts to operate and
maintain, or to cause to be operated and maintained, the Assets in
such a manner so that the representations and warranties of Seller
contained herein shall continue to be true and correct as of the
Effective Time of Closing.
(2) not dispose of, or commit to dispose of, any Assets (other
than in the ordinary and customary course of Seller's business);
and
(3) continue in effect until immediately following the Effective
Time of Closing all present insurance coverage with respect to the
Assets and the Seller's employees.
6.03. Risk of Loss. All risk of loss arising out of fire,
casualty, and theft and all liability to third parties or to employees
arising out of operations of the Business prior to the Effective Time
of Closing shall be that of Seller, and Purchaser shall have no
obligation or liability in connection therewith.
6.04. No Public Announcements. Prior to the Effective Time of
Closing, neither Seller nor Purchaser shall issue any press release or
make any public statement regarding the transactions contemplated by
this Agreement without obtaining the prior consent of the other party,
which consent shall not be unreasonably withheld; provided, however,
Seller shall not be prohibited from filing with the Bankruptcy Court
such pleadings, copies of this Agreement and related documents, or
other information regarding the proposed transaction as Seller or its
counsel deem necessary or advisable. Seller may also seek such
competitive bids as it deems necessary or appropriate.
6.05. Best Efforts to Satisfy Conditions. Seller shall use
its best efforts to cause the conditions to the obligations of
Purchaser contained in Section 7.01 to be satisfied to the extent that
the satisfaction of such conditions is in the control of Seller, and
Purchaser shall use its best efforts to cause the conditions to the
obligations of Seller contained in Section 7.02 to be satisfied to the
extent that the satisfaction of such conditions is in the control of
Purchaser.
6.06. Insurance. As of the Effective Time of Closing,
Seller, at its option, shall cease to be covered with respect to any
occurrence after the Effective Time of Closing under the insurance
policies obtained and maintained by Seller covering the business,
property and employees of Seller. All such occurrences prior to the
Effective Time of Closing which are insured under such policies shall
continue to be so insured, and Seller hereby covenants and agrees to
make claims for such occurrences under such policies. Purchaser shall
be entitled to the benefits of such policies to the limited extent
necessary to hold Purchaser harmless from actual out-of-pocket expenses
and losses paid or incurred by Purchaser with respect to such
occurrences, and any remaining benefits thereof shall be paid to the
benefit of Seller. At Purchaser's request, Seller shall (i) make
copies of such policies available to Purchaser for inspection and shall
assist Purchaser in determining whether any claim or loss is covered by
such policies of insurance, and (ii) provide reasonable assistance to
Purchaser in obtaining continuous, uninterrupted insurance coverage for
the business operations and the Employees after the Closing, including
authorizing Purchaser to contact Seller's existing brokers to discuss
such possible coverage.
6.07. Notice of Insurance Related Claim. Following the
Effective Time of Closing, Purchaser shall give to Seller prompt notice
of the assertion by any Person of any claim against Seller which might
be subject to the insurance coverage described in Section 6.08.
Purchaser shall cooperate with Seller and any applicable insurance
carrier in any investigation by Seller or any applicable insurance
carrier of any such claim and shall give to Seller and any applicable
insurance carrier reasonable access to the books, records and personnel
formerly of Seller to the extent reasonably necessary to enable Seller
and any applicable insurance carrier to investigate such claim.
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ARTICLE VII
CONDITIONS OF CLOSING
7.01. Conditions of Obligations of Purchaser. The obligations
of Purchaser to consummate the purchase and sale under this Agreement
are subject to the satisfaction of the following conditions, each of
which may be waived in writing by Purchaser:
(a) The representations, warranties and covenants of Seller set
forth in Article II of this Agreement and in each certificate,
agreement, document, or instrument delivered pursuant hereto on or
before the Closing Date or in connection with the transactions
contemplated hereby on the Closing Date shall have been and shall
be true and correct in all material respects on the date of this
Agreement and shall be true and correct in all material respects
on the Closing Date, as though made on and as of the Closing Date.
(b) Seller shall have performed in all material respects its
covenants, agreements and obligations required to be performed
under this Agreement prior to and on the Closing Date.
(c) Seller shall have delivered to Purchaser the duly authorized
and executed General Conveyance, Transfer and Assignment, and such
other conveyance documents that Purchaser may reasonably request
to effect the transfer and conveyance of the Business to
Purchaser.
(d) All consents and approvals of all Persons necessary for the
consummation of the Transaction under Seller's organizational
documents or any agreement, permit, law or regulation shall have
been received and delivered to Purchaser or have been granted or
otherwise deemed satisfied by any Order of the Bankruptcy Court,
all notices to any Person required by any of the foregoing to be
given in respect of the Transaction shall have been duly given,
and all necessary action shall have been taken to assign to
Purchaser the Assigned Leases
(e) Purchaser shall have entered into agreements with Seller's
key officers prohibiting said officers from competing with
Purchaser for at least three (3) years.
(f) The Approval Order shall have been issued and entered and
shall have become a Final Order.
(g) Seller shall have given notice to all known creditors in the
Bankruptcy Case of the hearing for the approval of the
transactions contemplated by this Agreement to the extent required
by the Bankruptcy Code and the Bankruptcy Court.
7.02. CONDITIONS OF OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the sale and purchase under this Agreement are
subject to the satisfaction of the following conditions, each of which
may be waived in writing by Seller:
(a) The representations and warranties of Purchaser set forth in
Article III of this Agreement and in each certificate, agreement,
document or instrument delivered pursuant hereto on or before the
Closing Date or in connection with the transactions contemplated
hereby on the Closing Date shall have been and be true and correct
in all material respects on and as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing
Date. Purchaser shall have performed in all material respects the
covenants, agreements and obligations necessary to be performed by
it under this Agreement prior to the Closing Date.
(b) Purchaser shall have delivered the Purchase Price to Seller.
(c) The Approval Order shall have been issued and entered by the
Bankruptcy Court, and no Order staying the Approval Order shall be
in effect.
(d) Seller's key officers shall have entered into agreements with
Purchaser prohibiting said officers from competing with Purchaser
for at least three (3) years.
ARTICLE VIII
CLOSING DATE AND TERMINATION OF AGREEMENT
8.01. Closing Date. Subject to the right of Seller and
Purchaser to terminate this Agreement pursuant to Section 8.03 hereof,
the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place on a mutually agreed upon date after the
date on which the Approval Order is issued and entered by the
Bankruptcy Court; provided that (i) no Order staying the Approval Order
shall be in effect, and (ii) the Closing shall not occur until all
conditions to closing have been satisfied, but in no event later than
March 1, 2000 without the mutual consent of the parties hereto. The
Closing shall occur at the offices of Xxxxxx & Xxxx, L.L.P. in Dallas,
Texas, or at such other place, date, and time as the parties may
mutually agree. The date on which the Closing occurs is the "Closing
Date."
8.02. Effective Date of Closing. For all purposes hereof,
the term "Effective Time of Closing" shall occur upon the delivery to
Purchaser of the General Conveyance, Transfer and Assignment, and the
other Operative Documents as contemplated herein on the Closing Date.
8.03. Termination of Agreement. This Agreement may, by
written notice given at or prior to Closing in the manner hereinafter
provided, be terminated or abandoned:
(a) By Seller or by Purchaser in the event that the Closing Date
shall not have occurred on or before March 1, 2000;
(b) By Purchaser if the Bankruptcy Case is converted to a
proceeding under chapter 7 of the Bankruptcy Code or a trustee is
appointed under the Bankruptcy Case under chapters 7 or 11 of the
Bankruptcy Code;
(c) By Purchaser if a material default or breach shall be made by
Seller with respect to the due and timely performance of any of
its covenants and agreements contained herein, or with respect to
the correctness of or due compliance with any of its
representations and warranties contained in Article II hereof, and
such default cannot be promptly cured and has not been waived in
writing by Purchaser;
(d) By Seller if a material default or breach shall be made by
Purchaser with respect to the due and timely performance of any of
its covenants and agreements contained herein, or with respect to
the correctness of or due compliance with any of its
representations and warranties contained in Article II hereof, and
such default cannot be promptly cured and has not been waived in
writing by Seller;
(e) By Purchaser if Seller fails to satisfy in any material
respect its obligations under Section 7.01 hereof on or before
March 1, 2000 and such failure cannot be promptly cured; or
(f) By Seller if Purchaser fail to satisfy in any material
respect their obligations under Section 7.02 hereof on or before
March 1, 2000 and such failure cannot be promptly cured; or
(g) By mutual consent of Seller and Purchaser.
8.04. Effect of Termination. In the event this Agreement is
terminated pursuant to Section 8.03, the Escrow Agent shall return the
Xxxxxxx Money to Purchaser and all further obligations of the parties
hereunder shall terminate; provided, however (i) that if this Agreement
is so terminated by Purchaser pursuant to Sections 8.03(c) or (e), then
Purchaser shall have at its election and as its sole and exclusive
remedy, (A) the right of specific performance, or (B) the right to
pursue Seller for any actual damages arising therefrom in an amount not
to exceed $100,000, and (ii) that if this Agreement is so terminated by
Seller pursuant to Sections 8.03(d) or (f), then the Escrow Agent shall
pay the obligations of the Xxxxxxx Money to Seller as liquidated
damages and as Seller's sole and only remedy and all further
obligations of the Parties hereunder shall terminate.
ARTICLE IX
MISCELLANEOUS
9.01. Further Action. From time to time, as and when
requested by Purchaser, Seller shall execute and deliver, or cause to
be executed and delivered, such documents and instruments and shall
take, or cause to be taken, such further or other actions as may be
reasonably necessary to transfer, assign and deliver to Purchaser or
its permitted assigns the Assets (or to evidence the foregoing) and to
consummate and to effect the other transactions expressly required to
be performed by Seller hereunder.
9.02. No Broker. Each of Seller and Purchaser agree to
indemnify the other against, and to hold the others harmless from, at
all times after the date hereof, any and all liabilities and expenses
(including without limitation legal fees) resulting from, related to or
arising out of any claim by any Person for brokerage commissions or
finder's fees, or rights to similar compensation, on account of
services purportedly rendered on behalf of Seller or Purchaser, as the
case may be, in connection with this Agreement or the transactions
contemplated hereby. Notwithstanding the foregoing, Seller and
Purchaser acknowledge and agree that it is contemplated that the
Bankruptcy Court will approve compensation to certain Persons based on
the transactions contemplated herein, and that such compensation shall
be payable by the Seller.
9.03. Expenses. Except as otherwise specifically provided
herein, Seller and Purchaser shall each bear their own legal fees,
accounting fees and other costs and expenses with respect to the
negotiation, execution and the delivery of this Agreement and all other
documents related thereto and the consummation of the transactions
hereunder, and Seller will pay its expenses after the Effective Time of
Closing out of the Purchase Price proceeds paid by Purchaser to Seller.
Seller shall, unless exempt pursuant to Section 1146(c) of the
Bankruptcy Code, pay all sales, transfer and documentary Taxes incident
to the sale of the Business and, in no event, shall Purchaser have any
liability for such Taxes.
9.04. Entire Agreement. This Agreement, the Exhibits hereto,
the other Operative Documents and the Approval Order contain, and are
intended by the parties as a final expression of, the entire agreement
among Seller and Purchaser with respect to the transactions
contemplated by this Agreement and, supersedes all prior oral or
written agreements, arrangements or understandings with respect
thereto.
9.05. Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or affect the
meaning or construction of any provision of this Agreement.
9.06. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and shall be
delivered either personally or by telegram, telex, telecopy or similar
facsimile means, by registered or certified mail (postage prepaid and
return receipt requested), or by express courier or delivery service,
addressed as follows:
If to Seller:
Xxxxxxxx X. Xxxx
ABCO Industries, Inc.
0000 X. Xxx 00
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxxxx
XxXxxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Fax: (000) 000-0000
If to Purchaser:
Xxxxxxxx Xxxxx
Peerless Mfg. Co.
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxxxxxx
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
or at such other address and number as either party shall have
previously designated by written notice given to the other party in the
manner hereinabove set forth. Notices shall be deemed given when
received, if sent by telecopy or similar facsimile means (confirmation
of such receipt by confirmed facsimile transmission being deemed
receipt of communications sent by facsimile means); and when delivered
and receipted for (or upon the date of attempted delivery where
delivery is refused), if hand delivered, sent by express courier or
delivery service, or sent by certified or registered mail.
9.07. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas (other than
the choice of law principles thereof). The Bankruptcy Court shall
retain exclusive jurisdiction to resolve any controversy or claim
arising out of or relating to this Agreement or the Transaction.
9.08. Assignability. This Agreement shall not be assignable
by any party without the prior written consent of the other party, and
any purported assignment by any party without the prior written consent
of the other party shall be void.
9.09. Waivers and Amendments. Any waiver of any term or
condition of this Agreement, or any amendment or supplementation of
this Agreement, shall be effective only if in writing and executed by
the parties hereto; provided, that any material amendment hereto must
be approved by the Bankruptcy Court. A waiver of any breach or failure
to enforce any of the terms or conditions of this Agreement shall not
in any way affect, limit or waive a party's rights hereunder at any
time to enforce strict compliance thereafter with every term or
condition of this Agreement.
9.10. Third Party-Rights. Notwithstanding any other provision
of this Agreement, this Agreement shall not create benefits on behalf
of any Person who is not a party to this Agreement (including without
limitation any broker or finder, notwithstanding the provisions of
Section 9.02 hereto, and this Agreement shall be effective only as
between the parties hereto, their successors and permitted assigns.
9.11. Illegalities. In the event that any provision contained
in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and the
remaining provisions of this Agreement shall not, at the election of
the party for whose benefit the provision exists, be in any way
impaired.
9.12. Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be
deemed to be an original instrument, but all such counterparts together
shall constitute but one Agreement.
9.13. Cost of Litigation. If any legal action or other
proceeding is brought for the enforcement of this Agreement or because
of an alleged dispute, breach, default or misrepresentation in
connection with this Agreement or the transactions contemplated hereby,
the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees and other reasonable costs actually
incurred in connection with such action or proceeding, in addition to
any other relief to which it or they may be entitled.
9.14. Exhibits and Schedules. Seller and Purchaser shall
agree as to the form of all exhibits and schedules hereto on or prior
to the date of the issuance of the Approval Order, at which time such
exhibits and schedules shall be attached hereto and shall be
incorporated herein for all purposes.
9.15. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of each party hereto, their successors and
assigns, including, but not limited to, any trustee(s) and/or
examiner(s) appointed and/or elected under chapter 11 or chapter 7 of
the Bankruptcy Code in the Bankruptcy Case and/or any related
proceeding.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
PURCHASER:
PMC Acquisition, Inc.
a Texas corporation
By: _____________________________
Name: ___________________________
Title: __________________________
SELLER:
ABCO INDUSTRIES, INC.
a Texas corporation
By: _____________________________
Name: ___________________________
Title: __________________________
