Exhibit 10.1
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of
November 10, 2006 by and among CETCO Oilfield Services Company, a
Delaware
corporation ("Buyer"), and Nitrogen Specialty Company, L.L.C., a
Louisiana
limited liability company ("NSC"); Christopher M. Abide ("CA");
Gerald A. Boelte
("GB"); Kemberlia K. Ducote ("KD"); Cecile Gervais Dufrene,
individually and as
Independent Administratrix of the Succession of James Joseph
Dufrene, also known
as James Joseph Dufrene, Sr., Roy T. Sembera ("RS") and Wayne P.
Whitman ("WW")
(CA, GB, KD, Cecile Gervais Dufrene, individually and as
Independent
Administratrix of the Succession of James Joseph Dufrene, also
known as James
Joseph Dufrene, Sr., RS and WW are each referred to herein as a
"Member" and
collectively as the "Members").
Capitalized terms used but not defined herein shall have the
respective
meanings set forth in the Appendix of Definitions attached hereto
and made a
part hereof.
WITNESSETH
WHEREAS, the Members are the owners, beneficially and of record, of
one
hundred percent (100%) of the issued and outstanding membership
interests of
NSC;
WHEREAS, NSC provides nitrogen pumping, nitrogen delivery and
other
related services in the oil and gas pipeline, petrochemical and
refining
industries (the "Business"); and
WHEREAS, Buyer desires to acquire substantially all of the assets
and
assume certain of the liabilities of NSC and NSC and the Members
are desirous of
selling such assets to Buyer, all on the terms and subject to the
conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the
mutual promises, covenants and agreements hereinafter set forth,
and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
1.
Purchased Assets.
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1.1 Purchased
Assets. On the terms and subject to the
conditions contained herein, NSC agrees to sell to Buyer (and the
Members agree
to cause NSC to sell to Buyer) and Buyer agrees to purchase from
NSC at the
Closing (as such term is defined in Section 3 hereof), free and
clear of all
liens, claims and encumbrances (except as otherwise disclosed in
and permitted
by this Agreement), all of NSC's rights, assets and properties
wherever situated
and whether real, personal or mixed, tangible or intangible, in
electronic form
or otherwise and whether or not having any value for accounting
purposes or
carried or reflected on or specifically referred to in NSC's books
or financial
statements, except for those assets and properties specifically
excluded by
Section 1.2 hereof (the "Purchased Assets").
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The
Purchased Assets shall include, but not be limited to, the
following:
1.1.1
Machinery and Equipment. All machinery and
equipment (including spare parts), components, computers
(including data processing hardware and software), vehicles,
fixtures, capital works in process, tools, formers, lasts,
patterns, dies, molds, furniture and similar tangible personal
property employed by NSC in the conduct of the Business as of
the Closing Date (the "Equipment"). However, the Equipment at
minimum shall include the equipment listed on Schedule 1.1.1
hereto, which is a listing of all of such Equipment as of
October 31, 2006.
1.1.2
Inventory. All inventories, consisting of
raw materials, work-in-process, finished goods and supplies
and units located at customer facilities, employed and useable
by NSC in the conduct of the Business as the same may exist at
the Closing.
1.1.3
Receivables. All of NSC's trade receivables,
note receivables and other accounts receivable, including
trade accounts receivable from equipment leased or sold and
services rendered, and the full benefit to all security for
such accounts or rights to payment as the same may exist at
the Closing (all of such receivables being hereinafter
sometimes referred to as the "Receivables").
1.1.4
Certain Cash, Cash Equivalents and
Investments. All of the petty cash, cash on deposit in banks
or other financial institutions, deposits in transit, prepaid
accounts and security deposits of NSC and other cash
equivalents, and funds in payroll accounts of NSC; and all
certificates of deposit, bonds, stock and other securities and
investments of NSC as the same may exist at the Closing.
1.1.5
Contract and Certain Other Rights of NSC.
All rights and interests of NSC in, to and under all contracts
between it and any other party or parties and under contracts
which have been acquired by it by assignment or in any other
manner, whether or not disclosed or required to be disclosed
in Schedule 4.14 hereof, and all other claims, rights and
causes of action of NSC against third parties.
1.1.6
Certain Proprietary Rights. All patents,
trademarks, tradenames, service marks, copyrights, and other
intellectual property or proprietary technology (and all
applications therefor) whether or not registered, data
processing software, licenses, technology, trade secrets,
know-how, customer lists, inventions, and the goodwill
associated therewith and other proprietary information and
rights employed or utilized in the conduct of the Business,
including specifically, but not by way of limitation, the
corporate and trade name "Nitrogen Specialty," and all
telephone numbers of NSC used in the conduct of its Business
(all of such properties being hereinafter referred to as the
"Proprietary Rights").
1.1.7
Leasehold Interests.
All leasehold
interests and leasehold improvements used by NSC in the
conduct of the Business;
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1.1.8
Other Assets. Except with respect to the
Excluded Assets, all other assets of NSC whether or not
employed in the conduct of the Business, whether real,
personal, or tangible, intangible or mixed and whether or not
reflected in the Financial Statements or on the books or
records of NSC, including all books, records and files
(excluding all personal files), rights under executory
contracts and purchase and sale orders to be assumed by Buyer
hereunder, deposits under all leases assumed by Buyer and any
prepaid expenses and permits and licenses.
If and to the extent that the Members or any of their
respective Affiliates have any interest in any of the Purchased
Assets, then the
Members, for themselves and such Affiliates, do hereby sell,
transfer and assign
all such interest to the Buyer for no additional consideration.
1.2 Excluded
Assets. Notwithstanding anything to the
contrary contained herein, the assets set forth on Schedule 1.2
(the "Excluded
Assets") shall not be sold to Buyer and all of such Excluded Assets
shall be
retained by NSC.
1.3 Names
Following the Closing. Immediately following
the Closing, NSC shall amend its articles of organization so as to
change its
name to a name which is not, in the judgment of Buyer, confusingly
similar to
the name "Nitrogen Specialty Company", and neither NSC nor any of
the Members
shall thereafter use such name or other names acquired by Buyer
hereunder or
names confusingly similar thereto.
1.4
Documentation. In order to effectuate the sale,
conveyance, transfer and assignment contemplated by Section 1.1
hereof, NSC and
the Members shall execute and deliver on the Closing Date all such
warranty
deeds, bills of sale and other documents or instruments of
conveyance, transfer
or assignment as shall be reasonably necessary or appropriate to
vest or confirm
in Buyer all right, title and interest of NSC in and to all of the
Purchased
Assets, all of which documents shall be in form and substance
satisfactory to
counsel for Buyer, acting reasonably.
1.5 Assumption
of Liabilities. Subject to the conditions
described herein, at the Closing, the Buyer shall assume and agree
to perform,
pay or discharge, when due, to the extent not theretofore
performed, paid or
discharged, the following obligations of NSC existing on the
Closing Date and
only such obligations (collectively, the "Assumed
Liabilities"):
(a) All of
NSC's trade accounts payable and accrued
liabilities, in each case that are included on Final Purchased
Balance
Sheet required to be reflected therein in accordance with US GAAP
in
the amounts shown thereon, to the extent that such obligations are
not
different in nature or materially different in amount from
those
incurred in the ordinary course in accordance with past
practice;
(b) All of
NSC's orders to NSC's customers in the
ordinary course of business outstanding as of the Closing Date
reflected on NSC's books (other than any liability arising out of
or
relating to a breach or nonperformance thereof by NSC prior to
the
Closing Date);
(c) All of
NSC's checks outstanding on the Closing Date;
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(d) All of
NSC's liabilities expressly set forth in the
terms of the Contracts assumed by Buyer (other than any liability
under
any such Contract, offer or solicitation arising out of or relating
to
a breach or nonperformance thereof by NSC prior to the Closing
Date);
(e) Unpaid
bonuses and vacation time to the extent
accrued and included on the Final Purchased Balance Sheet;
(f) NSC's
liabilities made in the ordinary course for
product warranty arising from express warranties for products
shipped
or distributed by, or any services provided by NSC; in any
event
Buyer's financial liability for such express warranty claims shall
not
exceed $5,000 per claim and shall not include incidental and
consequential damages, although Buyer agrees to perform any
valid
warranty work in accordance with Buyer's usual practices even if
in
excess of $5,000 per claim, subject to reimbursement by NSC to
the
extent of the amount in excess of $5,000 per claim; and
(g) Any and
all Liabilities included in the Final
Purchased Balance Sheet in the amount shown thereon.
1.6 Retained
Liabilities. Notwithstanding anything else
to the contrary in this Agreement, Buyer does not hereby and shall
not assume or
in any way undertake to pay, perform, satisfy or discharge any
liabilities of
NSC or the Members existing before, on or after the Closing Date or
arising out
of any transactions entered into, or any state of facts existing,
before, on or
after the Closing Date, and whether or not related to or arising
out of any of
the Purchased Assets, except for the Assumed Liabilities (the
"Retained
Liabilities"). Without limiting the foregoing, the term "Retained
Liabilities"
shall include, except to the extent specifically listed on the
Final Purchased
Balance Sheet, any and all of the following:
(a)
Liabilities, including accounts or notes payable, of
NSC (i) to any Affiliate; (ii) for or in connection with any
dividends,
distributions, redemptions, or security rights with respect to
any
security of NSC; (iii) to indemnify NSC's officers, directors,
employees or agents; (iv) for unpaid bonuses and vacation time to
the
extent not accrued on the Final Purchased Balance Sheet; or (v)
arising
out of any transaction affecting NSC or obligations incurred by
NSC's
officers, directors, employees or agents after the Closing;
(b)
Liabilities expressly identified elsewhere in this
Agreement as being the responsibility of NSC or the Members;
(c)
Liabilities for any Taxes of NSC, whether or not by
reason of, or in connection with, the transactions contemplated by
this
Agreement, including (i) any Taxes arising as a result of NSC's
operation of its Business or ownership of the Purchased Assets
prior to
the Closing Date, (ii) any Taxes (other than Transfer Taxes to
the
extent such Transfer Taxes are the responsibility of Buyer pursuant
to
Section 10(a) of this Agreement) that will arise as a result of
the
sale of the Purchased Assets pursuant to this Agreement and (iii)
any
deferred Taxes of NSC of any kind;
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(d)
Liabilities attributable to the Excluded Assets,
including liabilities (i) that are incurred outside the ordinary
course
of business or not consistent with past practice, or (ii) that
are
contingent in nature and not both clearly disclosed on the
Schedules to
this Agreement and specifically identified in Section 1.5;
(e)
Liabilities to, under or with respect to any NSC
benefit plan (other than accrued vacation, personal days, sick
leave,
paid time off and similar matters reflected on the Final
Purchased
Balance Sheet) and the administration of any NSC benefit plan,
or
relating to payroll, workers' compensation liabilities,
unemployment
benefits, disability and occupational diseases of or with respect
to
employees or former employees of NSC, under any employment,
severance,
retention, change of control or termination agreements with any
employee of NSC or any of its Affiliates, or arising out of or
relating
to any employee grievance whether or not the affected employees
are
hired by Buyer;
(f)
Liabilities under any written employment agreement;
(g)
Liabilities of NSC for or arising out of any
indebtedness, including indebtedness referred to or disclosed
on
Schedule 4.14 and including any Contract giving rise to any
indebtedness or any other Contract not expressly assumed by
Buyer;
(h)
Liabilities relating to any pending or threatened
legal proceedings that exist prior to the Closing Date, including
those
set forth on Schedule 4.17 and any legal proceedings that arise
after
the Closing Date that relate to transactions entered into, or any
state
of facts existing, prior to the Closing Date;
(i)
Liabilities, including penalties, fines, levies and
assessments, arising out of any violation or breach of, or
noncompliance with, any Contracts, Governmental Approvals or
legal
requirements by NSC or any other person acting as agent for or
on
behalf of NSC;
(j)
Liabilities of NSC arising out of or relating to (i)
any violation of or noncompliance with any Environmental Law
occurring
prior to the Closing Date by NSC or any other person for whose
conduct
NSC is legally responsible, (ii) the ownership or operation of
the
facilities by NSC prior to the Closing Date, including the
migration of
any such condition after the Closing Date, (iii) the presence of
any
Contaminant at the facilities prior to the Closing Date as a result
of
NSC's actions or omissions, (iv) any hazardous activity conducted
by
NSC or any other person acting as agent for or on behalf of NSC,
(v)
any Release by NSC or any other person acting as agent for or on
behalf
of any of NSC on any other property, and (vi) any environmental
remedial action required to be taken by NSC;
(k)
Liabilities for products liability for all products
leased, sold, shipped, distributed, assembled or manufactured by,
or
any services provided by, NSC; and for all express warranties
that
exceed $5,000 per claim and implied warranties for all products
shipped, distributed, or assembled by, or any services provided
by,
NSC;
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(l) Losses
arising from legal liabilities for negligent
acts by NSC on or prior to the Closing Date;
(m)
Liabilities based on acts or omissions of NSC
occurring after the Closing Date; and
(n)
Liabilities of any of the Members or their
Affiliates.
2. The
Purchase Price.
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2.1 Delivery
and Review of Preliminary Closing Balance
Sheet and Preliminary Aged Accounts Report. No later than five (5)
business days
prior to Closing, NSC shall deliver to Buyer (i) a balance sheet of
NSC
estimated as of the Closing Date consisting of the estimated assets
and
liabilities of NSC as of the Closing Date in accordance with US
GAAP (but
excluding therefrom any Excluded Assets or Retained Liabilities
that Buyer will
not be purchasing or assuming according to the terms of this
Agreement), setting
forth an estimate of the amount by which the working capital of NSC
as of the
Closing Date will exceed $2,200,000 (the "Preliminary Working
Capital
Adjustment"), and (ii) a report of the aged accounts receivable of
NSC estimated
as of the Closing Date, recorded and aged in categories of 30 days
from invoice
date and setting forth a summary of the estimated face amount of
the Aged
Accounts as of the Closing Date (the "Estimated Aged Accounts
Amount"). NSC
shall endeavor to prepare such estimates in a reasonable manner
using reasonable
assumptions so as to accurately reflect the expected results as of
the Closing.
NSC shall review such estimates with Buyer prior to Closing in such
detail as
Buyer may reasonably request, and NSC shall provide such supporting
detail and
other cooperation as Buyer may reasonably request to support
Buyer's review and
analysis of such estimates prior to Closing. Subject to mutual
agreement, the
parties may update the estimates for changes occurring during the
five (5)
business days preceding the Closing.
2.2 Purchase
Price. The aggregate purchase price for the
Purchased Assets shall be the amount of Thirty Three Million
Dollars
($33,000,000), subject to adjustment as set forth in Section 2.3
below (the
"Purchase Price"). Such Purchase Price shall be payable as follows
and as set
forth in Section 2.3.
(a) At
Closing, Buyer shall deliver a sum equal to Thirty
Three Million Dollars ($33,000,000) less the amounts to be
escrowed
under subsections (b) and (c) of this Section 2.2 below, to NSC
in
immediately available funds by wire transfer to the bank
account
designated in writing by NSC.
(b) At
Closing, Buyer shall deposit with the Escrow Agent
the sum of Three Million Three Hundred Thousand Dollars
($3,300,000)
(the "Indemnification Escrow Deposit") to be held by the Escrow
Agent
pursuant to Section 8.6 and the terms of the Escrow Agreement.
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(c) At
Closing, Buyer shall deposit with the Escrow
Agent, a sum equal to the Estimated Aged Accounts Amount (the
"Aged
Accounts Escrow Deposit") to be held by the Escrow Agent pursuant
to
the terms of this Section 2.2(c) and the terms of the Escrow
Agreement.
During the Escrow Period, the Buyer shall use its commercially
reasonable efforts in the ordinary course of business and
consistent
with Buyer's past practices to collect the Aged Accounts. NSC
shall
forward to Buyer on a weekly basis during the Escrow Period all
payments that it receives on the Aged Accounts or any other
accounts
receivable of the Business, together with an accounting
therefor.
Within twenty-five (25) days after the end of each calendar
quarter
during the Escrow Period, Buyer shall deliver to NSC a report
setting
forth a summary of the Aged Accounts that were collected by
Buyer
during such preceding calendar quarter or portion thereof, and
Buyer
and NSC shall jointly direct Escrow Agent to pay such amount,
together
with interest earned thereon, to NSC from the Aged Accounts
Escrow
Deposit. Buyer shall apply all payments received from customers on
and
after the Closing Date to the respective customer's oldest
accounts
first, unless a debtor indicates the specific account or invoice it
is
paying in which event payment shall be applied to that account
or
invoice. Buyer and NSC agree that they will not willfully
influence
account specification pursuant to the preceding sentence
(although
Buyer may contact an account debtor to inquire or confirm whether
a
particular payment is intended for a particular invoice if not
otherwise indicated from the payment). Buyer and NSC shall
cooperate
with each other in communicating and making sure that payments on
the
accounts receivable of the Business are allocated to the
correct
invoice and any payments thereon received by NSC are forwarded
to
Buyer. Buyer's management, including CA, shall have authority
to
settle, compromise and collect the Aged Accounts in such manner as
they
determine during the Escrow Period utilizing commercially
reasonable
standards. Within twenty-five (25) days after the end of the
Escrow
Period, Buyer shall deliver to NSC a final summary of the Aged
Accounts
that were collected or settled by Buyer during the Escrow Period
(the
"Aged Accounts Report"). Upon receipt of the Aged Accounts Report,
NSC
shall have a period of up to thirty (30) days to review the
Aged
Accounts Report. If NSC approves the Aged Accounts Report or does
not
notify Buyer in writing during such thirty (30) day period that
it
disputes the Aged Accounts Report, the Aged Accounts Report
shall
become the Final Aged Accounts Report. If NSC notifies Buyer in
writing
within such thirty (30) day period that it disputes the Aged
Account
Report, indicating the items it disputes, the disputed items shall
be
resolved by the Arbitrator in accordance with the procedures set
forth
in Section 2.3.4, and upon resolution, the Aged Accounts Report,
as
modified, if at all, by arbitration, shall become the Final
Aged
Accounts Report. Any Aged Accounts that remain outstanding as of
the
end of the Escrow Period, as shown on the Final Aged Accounts
Report,
are referred to herein as the "Uncollected Aged Accounts." Within
five
(5) business days of the determination of the Final Aged
Accounts
Report, NSC and Buyer shall direct the Escrow Agent to pay out of
the
Escrow Deposit (i) an amount equal to the face amount of the
Uncollected Aged Accounts (plus interest accrued thereon) to Buyer,
and
(ii) an amount equal to the remaining amount of the Aged
Accounts
Escrow Deposit (plus interest accrued thereon) to NSC. Upon
such
payments, Buyer shall assign to NSC, without recourse or warranty,
the
Uncollected Aged Accounts, if any. Notwithstanding anything to
the
contrary in this Agreement, neither NSC or its Members or any of
their
respective affiliates shall take any action or file any lawsuits
to
collect or enforce any of the Uncollected Aged Accounts, nor shall
NSC
sell or transfer any of the Uncollected Aged Accounts, except
as
otherwise expressly permitted by Section 12(e) hereof. Buyer
shall
promptly remit to NSC any amounts subsequently received by Buyer
with
respect to the Uncollected Aged Accounts assigned to NSC hereunder.
The
parties agree that in no event will Buyer or NSC be entitled to
receive
any portion of the Aged Accounts Receivable Amount under this
Agreement
except as
specifically set forth in this Section 2.2(c).
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2.3 Adjustment
of Purchase Price. The Purchase Price
shall be subject to adjustment for the amount by which the Closing
Working
Capital Amount reflected in the Final Closing Statements exceeds
(or is less
than) Two Million Two Hundred Thousand Dollars ($2,200,000), such
adjustment to
be payable as and determined in the manner described below.
2.3.1
Payment of Preliminary Working Capital
Adjustment at Closing. At Closing, in addition to the payments
set forth in Section 2.2, Buyer shall deliver to NSC a sum
equal to the Preliminary Working Capital Adjustment in
immediately available funds by wire transfer to the bank
account designated in writing by NSC.
2.3.2
Initial Closing Statements. As soon as
reasonably practicable after the Closing Date and in any event
no later than sixty (60) days after the Closing Date, NSC will
prepare and present to Buyer the Initial Closing Statements,
which shall consist of the following statements reflecting the
respective values as at 11:59 P.M. on the day preceding the
Closing:
(i) a balance
sheet of NSC consisting of the
assets and liabilities of NSC, prepared in accordance with US
GAAP, except that all known adjustments will be made without
regard to materiality (the "Initial Closing Balance Sheet");
(ii)
a schedule adjusting the Initial Closing
Balance Sheet for any Excluded Assets or Retained Liabilities
recorded therein which Buyer is not purchasing or assuming
according to the terms of this Agreement (the "Purchased
Balance Sheet");
(iii) a
report of accounts receivable included in
the Purchased Balance Sheet that shows, by invoice by
customer, the amount of receivables recorded and aged in
categories of 30 day increments from invoice date (the
"Closing Aged Receivables Report"), and setting forth therein
a listing of the Aged Accounts and a summary of the Aged
Accounts Amount; and
(iv)
a calculation of the amount of closing
working capital (the "Closing Working Capital Amount"), which
shall be the current assets less current liabilities as
defined in accordance with US GAAP contained in the Purchased
Balance Sheet less Two Million Two Hundred Thousand Dollars
($2,200,000).
2.3.3
Final Closing Statements. Upon receipt of
the Initial Closing Statements, Buyer and its independent
accountants ("Buyer's Accountants") shall be permitted during
the succeeding sixty (60) day period to examine the books and
records of
NSC and the work papers prepared by NSC or NSC's
accountants. If Buyer agrees to the Initial Closing
Statements, they shall become the Final Closing Statements. If
Buyer does not agree to the Initial Closing Statements it
shall within sixty (60) calendar days after delivery of the
Initial Closing Statements by NSC, prepare and deliver to NSC
a list of disputed adjustments (the "Disputed Adjustments")
Buyer believes should have been recorded on the Initial
Closing Statements. Buyer and NSC shall use their commercially
reasonable best efforts to resolve the Disputed Adjustments.
If Buyer and NSC are able to reach an agreement on the
Disputed Adjustments, the Initial Closing Statements shall be
amended to reflect such agreement and shall become the Final
Closing Statements.
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If Buyer and NSC are unable to reach an agreement on
the Disputed Adjustments within thirty (30) calendar days
after receipt by NSC of the Disputed Adjustments, then the
matter will be resolved by the Arbitrator in accordance with
the provisions of Section 2.3.4 below.
The Final Closing Statements shall be deemed to be
and shall be conclusive and binding on the parties to this
Agreement for purposes of determining any adjustment of the
Purchase Price pursuant to this Section 2.3.
2.3.4
Disputes. For purposes of this dispute
resolution provision, NSC and the Members hereby appoint CA as
the "NSC Representative" and authorize him to act on its and
their behalf. NSC shall have thirty (30) days after receipt of
the Disputed Adjustments to dispute any calculations or
amounts reflected therein. If the NSC Representative does not
give Buyer written notice of such a dispute, specifying the
grounds therefor, within such thirty (30) day period, the
Disputed Adjustments shall be deemed to have been accepted by
NSC and the Members in the form in which it was delivered by
Buyer. In the event that the NSC Representative gives such
written notice to Buyer within such thirty (30) day period,
the NSC Representative and Buyer shall, within twenty (20)
days after the giving thereof, attempt to resolve the dispute
and agree in writing upon the final content of the Disputed
Adjustments. In the event that the NSC Representative and
Buyer are unable to resolve any such dispute within such
twenty (20) day period, then a nationally recognized
accounting firm mutually acceptable to the NSC Representative
and Buyer shall be employed as arbitrator (the "Arbitrator")
hereunder to settle such dispute as soon as practicable. The
Arbitrator shall have access to all documents and facilities
necessary to perform its function as arbitrator. The
Arbitrator's determination with respect to any such dispute
shall be final and binding upon the parties hereto. NSC and
Buyer shall each pay one half (1/2) of the fees and expenses
of the Arbitrator for such services.
2.3.5
Payment of Adjustment to Closing Working
Capital Amount. Within ten (10) calendar days after the Final
Closing Statements are determined and become final, either (i)
if the Preliminary Working Capital Adjustment is greater than
the Closing Working Capital Amount reflected in the Final
Closing Statements, NSC shall be responsible to pay Buyer in
immediately available funds the amount of such difference, or
(ii) if the Preliminary Working Capital Adjustment is less
than the Closing Working Capital Amount reflected in the Final
Closing Statements, Buyer shall pay to NSC in immediately
available funds the amount of such difference. If monies are
owing from NSC to Buyer under this subsection 2.3.5, then such
amounts, together with interest earned thereon, shall be paid
to Buyer
from the Indemnification Escrow Deposit in accordance
with the terms of the Escrow Agreement; provided, however, in
the event and to the extent that such amounts are not paid to
Buyer from the Indemnification Escrow Deposit for any reason
within ten (10) days of when due and owing, NSC shall pay such
amounts to Buyer upon written demand therefor.
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3.
Closing.
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3.1 Time. The
consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at
10:00 A.M.
Chicago time on the date hereof (the "Closing Date"). On the
Closing Date, NSC
shall sell, transfer, assign, convey and deliver to Buyer the
Purchased Assets,
Buyer shall pay the Purchase Price as described in Section 2 and
the parties
shall deliver the agreements, certificates and other documents
required to be
delivered pursuant to the terms of this Agreement. Upon the
occurrence of the
Closing, the Purchased Assets and the Assumed Liabilities shall be
deemed to
have been transferred effective as of 12:01 A.M. on the Closing
Date.
3.2 Further
Assurances. If at any time after the Closing
Date, Buyer shall consider or be advised that any further deeds,
assignments or
other instruments, documents or assurances or any other acts are
reasonably
necessary, desirable or proper to (a) vest, perfect or confirm, of
record or
otherwise, in Buyer, the title to the Purchased Assets, or (b)
otherwise carry
out the purposes of this Agreement, NSC and the Members agree to
execute and
deliver all such deeds, assignments, instruments, documents, make
such
assurances and do all acts reasonably necessary, desirable or
proper to vest,
perfect and confirm title to such Purchased Assets in Buyer, and
otherwise to
carry out the purposes of this Agreement. Without limiting the
foregoing, the
parties agree that NSC's bank accounts shall be transferred to
Buyer at Closing,
and that the parties shall take such actions with the applicable
depository
banks as are necessary or desirable to effectuate or evidence such
transfer at
or reasonably promptly after the Closing.
4.
Representations and Warranties of NSC. NSC represents and
-------------------------------------
warrants to Buyer as follows:
4.1 Status;
Authority, Binding Agreement. NSC has all
requisite power and authority, corporate or otherwise, to enter
into this
Agreement and to carry out its obligations hereunder. This
Agreement has been
duly executed and delivered by NSC and this Agreement constitutes,
and all other
agreements, documents and instruments to be executed and delivered
by NSC
pursuant hereto will constitute, the legal, valid and binding
obligations of
NSC, enforceable against NSC in accordance with their terms
(subject, as to the
enforcement of remedies, to general principles of equity and to
bankruptcy,
insolvency and similar laws affecting creditors' rights
generally).
4.2
[Intentionally Omitted].
4.3
Capitalization. Schedule 4.3 to this Agreement sets
forth the name and address of the Members and their interest in
NSC. There are
no outstanding options, warrants or other rights or agreements to
purchase or
subscribe to become a member or own any interest in NSC. All of the
currently
issued and outstanding membership interests of NSC have been duly
authorized and
are validly issued, fully paid and nonassessable and have not been
issued in
violation of any applicable law, NSC's Articles of Organization and
Operating
Agreement or the terms of any other agreement to which the Members
or NSC are
bound. The interests represent one hundred percent (100%) of the
fully diluted
membership interest of NSC.
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4.4
Organization, Power and Qualification. NSC is a
limited liability company duly organized, validly existing and in
good standing
under the laws of the State of Louisiana, and has all requisite
corporate power
and authority to own or hold under lease its properties and assets
and to carry
on its business as now conducted. NSC is duly qualified to do
business and is in
good standing as a foreign limited liability company in the
jurisdictions listed
on Schedule 4.4. NSC is duly qualified to do business and is in
good standing as
a foreign corporation in all of the jurisdictions in which the
failure to be so
qualified would have a material adverse affect on the ability of
NSC to carry
out its business as now being conducted.
4.5 No
Violation. Except as set forth on Schedule 4.5
hereto, neither the execution and delivery of this Agreement, nor
the
consummation of the transactions contemplated hereby will
constitute a violation
of, or be in conflict with, or result in a cancellation of, or
constitute a
default under, or create (or cause the acceleration of the maturity
of) any
debt, obligation or liability affecting, or result in the creation
or imposition
of any security interest, lien, or other encumbrance upon any of
NSC's assets
under: (a) any term or provision of the certificate of organization
or operating
agreement (or other organic document) of NSC; (b) any judgment,
decree, order,
regulation or rule of any court or governmental authority; (c) any
statute, law
or regulation; (d) any contract, agreement, indenture, lease or
other commitment
to which either NSC or any of the Members are a party or by which
they or the
Purchased Assets are bound; or (e) cause any change in the rights
or obligations
of any party under any such contract, agreement, indenture, lease
or commitment.
4.6 Consents.
Except as set forth on Schedule 4.6 hereto,
no consent of, or notice to, any federal, state or local authority,
or any
private person or entity, is required to be obtained or given by
NSC or the
Members in connection with the execution, delivery or performance
of this
Agreement or any other agreement or document to be executed,
delivered or
performed hereunder by NSC or the Members or to enable Buyer to
continue to
conduct the Business after the Closing in the manner in which it is
currently
conducted.
4.7
Investments. NSC does not own, directly or
indirectly, any stocks, bonds or securities or any equity or other
proprietary
interest in any corporation, partnership, joint venture, business
enterprise or
other entity of any nature whatsoever.
4.8 Financial
Statements. Schedule 4.8 hereto contains
true and correct copies of the following financial statements (the
"Financial
Statements"): (a) the balance sheets of NSC as of August 31, 2006
and December
31, 2005; and (b) the income statements of NSC for the eight (8)
month period
ended August 31, 2006 and for the twelve (12) month period ended
December 31,
2005. As disclosed in Schedule 4.8, each of the balance sheets
included in the
Financial Statements fairly present the assets, liabilities and
financial
condition of NSC as at the dates thereof in all material respects,
and such
statements of operations included in the Financial Statements
fairly present the
results of operations for the periods therein referred to, all in
accordance
with the accounting policies used by NSC, consistently applied.
Generally, NSC
recognized revenue upon the completion of its services and
recognized expenses
as they were incurred. NSC has not used estimates to determine
assets,
liabilities, contingencies, revenues and expenses. Property and
equipment are
carried at cost and NSC depreciates property and equipment using
tax
depreciation methods and depreciable lives of 5 to 7 years.
Maintenance and
repairs are charged to expense as incurred and expenditures for
major
improvements are capitalized.
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4.9
Undisclosed Liabilities. Except as set forth on
Schedule 4.9, NSC does not have any indebtedness, liabilities or
obligations
(direct or indirect, contingent or absolute, matured or immatured)
of any nature
whatsoever, whether arising out of contract, tort, statute or
otherwise which
are not reflected, reserved against or given effect to in the
Financial
Statements, except liabilities and obligations incurred in the
ordinary course
of business since the date of the Financial Statements which are
the same nature
as those set forth on the Financial Statements, and there is no
basis for
assertion against NSC of any liabilities or obligations not
adequately
reflected, reserved against or given effect to in the Financial
Statements. The
parties agree that to the extent that another representation or
warranty given
by NSC in this Section 4 relates more specifically to a particular
type of
liability or obligation, that such other representation or warranty
shall
supersede the more general representation and warranty of this
Section 4.9 with
respect thereto.
4.10
Absence of Certain Changes. Except as disclosed in
Schedule 4.10, since December 31, 2005, there has not been: (a) any
adverse
change in the condition (financial or otherwise) of the properties,
assets,
liabilities, results of operation or prospects of NSC's business;
(b) any
damage, destruction or loss (whether or not covered by insurance)
affecting the
properties, assets, liabilities, financial condition, results of
operations or
prospects of the Business; (c) any direct or indirect redemption,
retirement,
purchase or other acquisition of any interest of NSC; (d) any
increase in the
compensation, commissions or perquisites payable or to become
payable by NSC to
any director, officer, employee, or agent thereof, or any payment
of any bonus,
profit sharing or other extraordinary compensation to any NSC
employee (other
than any such increase or payment paid or to become payable in the
ordinary
course of business consistent with past practices); (e) any change
in any of the
accounting methods or practices followed by NSC or any change in
depreciation or
amortization policies or rates theretofore adopted; (f) any
cancellation of any
debts owed to or claims held by or on behalf of NSC; (g) any actual
or
threatened termination of any business relationships or material
agreements
between NSC and any of its customers and suppliers; (h) any
incurrence of any
obligation or liability (absolute or contingent) for indebtedness;
(i) any
acceleration or other prepayment of indebtedness, or (j) any sale,
lease,
abandonment or other disposition of any real property, or, other
than in the
ordinary course of business, of any machinery, equipment or other
properties, or
any intangible assets utilized in the Business.
4.11
Taxes. NSC has filed on a timely basis all Tax
returns that are or were required to be filed by it under
applicable Law. All
such Tax returns were correct and complete in all respects and have
been
prepared in accordance with applicable legal requirements. NSC has
paid all
Taxes that have or may have become due for all periods covered by
the Tax
returns or otherwise, or pursuant to any assessment received by
NSC. NSC has
withheld and paid all Taxes required under applicable Law to have
been withheld
and paid in connection with any amounts paid, owing, or applicable
to any
employee, independent contractor, creditor, member or other person,
and all
Internal Revenue Service Forms W-2 and 1099 required with respect
thereto have
been properly and timely filed. NSC has not received any written
notice from a
taxing authority of a jurisdiction where NSC does not file Tax
returns claiming
that it is or may be subject to taxation by that jurisdiction.
There are no
liens for Taxes on any of the Purchased Assets that arose in
connection with any
failure (or alleged failure) to pay any Tax, and, there is no basis
for
assertion of any claims attributable to Taxes which, if adversely
determined,
would result in any such liens. There is no pending, or to NSC's
and the
Members' knowledge, threatened or anticipated assessment of any
additional Tax
against NSC for any taxable period for which Tax returns have been
filed which
may cause the Purchased Assets to be subject to an encumbrance.
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<PAGE>
4.12
Title to and Condition of Assets. NSC is the owner
of and has good title to all of the Purchased Assets, including
those assets and
properties reflected in the Financial Statements (other than those
properties
and assets disposed of since August 31, 2006, in the ordinary
course of
business), and to all properties and assets acquired by NSC after
such date,
free and clear of all mortgages, liens, pledges, charges, security
interests,
encumbrances or other third party interests of any nature
whatsoever. To the
Knowledge of NSC, the Purchased Assets are in reasonable operating
condition and
repair, ordinary wear and tear excepted.
The Purchased Assets constitute all of the rights, properties
and assets, tangible and intangible, real, personal and mixed, in
electronic
form or otherwise, utilized by NSC in the conduct of its Business.
None of the
Purchased Assets are owned or controlled by any of the Members or
their
Affiliates.
4.13
Real Estate and Leases. NSC does not own any real
property. There is disclosed in Schedule 4.13 a description of all
real estate
(including buildings and improvements) leased by NSC or any of the
Members and
used in the Business according to the character of the property and
the location
thereof. There is disclosed in Schedule 4.13 a brief description
(including in
each case the annual rental payable, the expiration date, a brief
description of
the property covered and the name of the lessor) of every lease or
agreement
(written or oral) under which NSC is lessee of, or holds or
operates, any real
property. Each of such leases and agreements is in full force and
effect and
constitutes a legal, valid and binding obligation of NSC and, to
the Knowledge
of NSC, the other respective parties thereto. Neither NSC, nor to
the Knowledge
of NSC, any other party thereto is in default in any respect under
any such
lease or agreement nor has any event occurred which with the
passage of time or
giving of notice or both would constitute such a default. To the
Knowledge of
NSC, the real property and the buildings thereon utilized by NSC in
the conduct
of the Business do not violate any building, zoning or other laws
or ordinances,
or any agreements, applicable thereto, and no notice of any such
violation or
claimed violation has been received by NSC or any of the
Members.
Except as set forth on Schedule 4.13, NSC's right, title and
interest in and to each of the real property leases shall continue
after the
completion of the transactions contemplated by this Agreement,
without the
consent, waiver or approval of any party and such transactions will
not give any
party thereto the right to terminate the lease.
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<PAGE>
4.14
Contracts. Except as set forth in Schedule 4.14, NSC
is not a party to, or bound by, any oral or written contracts,
agreements,
commitments or understandings ("Contracts"): (a) for the employment
of any
officer or employee; (b) for the purchase or sale of membership
interests of
NSC; (c) for any indebtedness; (d) for leasing personal property
(including,
without limitation, leases for machinery and office equipment,
furniture,
fixtures, vehicles, tools and dies); (e) involving the payment of
money or other
property in connection with machinery and equipment or inventory in
excess of
Five Thousand Dollars ($5,000) per contract or in connection with
any other
contract in excess of Five Thousand Dollars ($5,000) per contract
by NSC or the
term of which at any time exceeded one year (including, without
limitation,
vendor supply contracts or customer "blanket" purchase orders); (f)
providing
for the services of dealers, distributors, sales representatives or
similar
representatives; (g) relating to the ownership, use or licensing of
any patents,
trademarks, trade names, brand names, copyrights, inventions,
processes,
know-how, formulae, trade secrets or other proprietary rights; (h)
relating to
oral or written and currently effective warranties or
representations expressly
or impliedly made by NSC, in respect of any products manufactured
or sold or
services provided by NSC, and any other liability or obligation of
NSC to
service, repair, maintain, take back or otherwise do or not do
anything in
respect to any products, inventory or services that has been
delivered by NSC
outside the normal course of business or inconsistent with past
practices; (i)
any covenants by or binding NSC not to compete or to abide by
any
confidentiality agreement; (j) any other contract that is material
to the
Business; or (k) for any transaction between NSC and the Members or
their
Affiliates.
All of the Contracts constitute legal, valid and binding
obligations of NSC and, to the Knowledge of NSC, the other
respective parties
thereto, are in full force and effect, and neither NSC nor, to the
Knowledge of
NSC, any other party thereto has violated any provision of, or
committed or
failed to perform any act which with notice, lapse of time or both
would
constitute a default under the provisions of any Contract. Correct
and complete
copies or descriptions of all Contracts disclosed on Schedule 4.14
have been
made available to Buyer.
4.15
Receivables. All of the accounts receivable shown on
the Financial Statements, and any such receivables which arose
since the
respective dates thereof ("Receivables"), arose from transactions
made in the
ordinary course of business, represent legal and valid obligations
to NSC and,
are not subject to any set-off or counterclaim, except for
adjustments
reflecting returns and allowances in the ordinary course of
business. All of the
Receivables are enforceable and are current and collectible in the
ordinary
course of business, net of reserves for doubtful accounts, and in
accordance
with their terms. Except as set forth on Schedule 4.15, no customer
has notified
NSC that such customer disputes or has a claim against any of the
Receivables.
4.16
Inventory. Except as reserved in the Financial
Statements, all inventory of the rental and sale products included
in the
Purchased Assets are in usable condition. All rental products are
labeled to
identify NSC as the owner of the units. Except as reserved in the
Financial
Statements, none of NSC's inventory is obsolete, has been consigned
to others or
is on consignment from or is owned by others.
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4.17
No Default, Violation or Litigation. NSC is not in
violation of any law, regulation or order of any court or federal,
state,
municipal or other governmental department, commission, board,
bureau, agency or
instrumentality (including, without limitation, laws, regulations,
orders,
restrictions and compliance schedules applicable to environmental
standards and
controls, wages and hours, civil rights and occupational health and
safety) and
NSC has not received any notice of claimed noncompliance. Except as
disclosed in
Schedule 4.17, (i) there are no lawsuits, proceedings, claims or
governmental
investigations pending or, to the Knowledge of NSC, threatened
against or
involving NSC or against or involving any of NSC's assets, or
against or
involving any officers or directors of NSC; and (ii) there are no
judgments,
consents, decrees, injunctions, or any other judicial or
administrative mandates
outstanding against NSC or the Members.
4.18
Insurance. Schedule 4.18 contains a list of all
insurance policies (specifying (a) the insurer, (b) the amount of
the coverage,
(c) the type of insurance, (d) the policy number and (e) any
currently pending
claims thereunder or any claims asserted thereunder or under
similar policies
maintained by or on behalf of NSC, its properties, assets, business
or
personnel. All such policies are (and pending Closing will continue
to be) in
full force and effect, and NSC is not in default with respect to
any provision
contained in any insurance policies. NSC has not failed to give any
notice or
present any claim thereunder in due and timely fashion, which could
adversely
affect the coverage under such policy or be grounds for termination
of such
policy.
To the Knowledge of NSC, all such insurance is in amounts and
against such risks as are usual and customary and reasonably
adequate to protect
NSC's Business and assets. At no time has NSC been denied any
insurance or
indemnity bond coverage which it has requested, or received any
written notice
from or on behalf of any insurance carrier presently providing
insurance
relating to it (i) that insurance rates may or will be
substantially increased,
(ii) that there will be no renewal of policies presently in effect,
or (iii)
that material alterations to any of the properties or business
operations of NSC
are necessary or required by such carrier.
4.19
Employment, Labor and Other Relations. Schedule 4.19
sets forth the name, job classification, total annual compensation
(base salary,
bonus and other benefits) and whether any employee is on leave (and
if so, what
type of leave the employee is on) of each of NSC's officers,
employees, sales
representatives and consultants as of the Closing Date.
Except as disclosed in Schedule 4.19, NSC is not a party to or
is otherwise bound by any contract, agreement or collective
bargaining agreement
with any labor union or organization or other commitment respecting
employment
or compensation of any of its officers, directors, agents,
consultants or
employees, and no employees of NSC are represented by any labor
union or similar
organization. To the Knowledge of NSC, there is no existing or
threatened labor
disturbance by NSC's employees or of any of NSC's principal
suppliers,
contractors or customers.
Except as set forth in Schedule 4.19, there are no charges or
complaints involving any federal, state or local civil rights
enforcement agency
or court; complaints or citations under the Occupational Safety and
Health Act
or any state or local occupational safety act or regulation; unfair
labor
practice charges or complaints with the National Labor Relations
Board; or other
claims, charges, actions or controversies pending, or, to the best
Knowledge of
NSC, threatened or proposed, involving NSC and any employee, former
employee or
any labor union or other organization representing or claiming to
represent such
employees' interests.
15
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NSC is and has heretofore been in compliance with all laws,
rules and regulations respecting employment and employment
practices, terms and
conditions of employment and wages and hours, the sponsorship,
maintenance,
administration and operation of (or the participation of its
employees in)
employee benefit plans and arrangements and occupational safety and
health
programs, and NSC is not engaged in any violation of any law, rule
or regulation
related to employment, including unfair labor practices or acts of
employment
discrimination.
NSC has not had a plant closing or mass lay-off (as those
terms are defined in the Worker Adjustment and Retraining
Notification Act of
1988) affecting in whole or in part any facility, operating unit or
employee of
NSC.
4.20
Employee Benefits.
(a) Benefit
Plans. Schedule 4.20 discloses all written
and unwritten Benefit Plans, whether or not funded and whether or
not
terminated, (i) maintained or sponsored by NSC, (ii) with respect
to
which NSC has or may have liability or is obligated to
contribute,
(iii) that otherwise cover any of the current or former employees
of
NSC or their beneficiaries, or (iv) as to which any current or
former
employees of NSC or their beneficiaries participated or were
entitled
to participate or accrue or have accrued any rights, other than
a
Multiemployer Plan (each, a "NSC Benefit Plan").
(b) NSC Group
Matters; Funding. Neither NSC, nor any
corporation or other trade or business that may be aggregated with
NSC
under Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code
(the "NSC Group"), has any obligation to contribute to, or any
direct
or indirect Liability with respect to, any Benefit Plan of the
type
described in Sections 4063 and 4064 of ERISA or Section 414(c) of
the
Internal Revenue Code (the "IRC"). NSC does not have, and, after
the
Closing, Buyer will not have, any liability with respect to any
Ben