ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

DATED AS OF JANUARY 31, 2009

BY AND BETWEEN

INSITUFORM TECHNOLOGIES, INC.,

TBC ACQUISITION CORP.

AND

THE BAYOU COMPANIES, LLC

TABLE OF CONTENTS

 

 

i

TABLE OF CONTENTS

(continued)

 

 

ii

TABLE OF CONTENTS

(continued)

 

 

iii

TABLE OF CONTENTS

(continued)

 

 

iv

List of Schedules

 

 

v

 

vi

List of Exhibits

 

 

vii

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of January 31, 2009, by and among Insituform Technologies, Inc., a Delaware corporation (“ ITI ”), TBC Acquisition Corp., a Delaware corporation (“ Buyer ”) and The Bayou Companies, LLC, a Louisiana limited liability company (“ Seller ”). Buyer and Seller are collectively referred to herein as the “ Parties ” and each individually as a “ Party. ”

WHEREAS, Seller and the Related Entities (this and other capitalized terms having the respective meanings as set forth hereinafter) are engaged, among other businesses (related and otherwise), in the Business; and

WHEREAS, Buyer is a wholly owned subsidiary of ITI and wishes to purchase from Seller, and Seller wishes to sell to Buyer, all of the right, title and interest of Seller in, under, and with respect to, certain assets of Seller used in connection with or related to the Business, all upon the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained, the Parties agree as follows.

ARTICLE I

Definitions

“ Affiliate ” of a Person means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with that first Person.

“ Agreement ” has the meaning set forth in the preface above.

“ Allocation Statement ” has the meaning set forth in Section 2.8 .

“ Ancillary Agreements ” means the following agreements to be entered into between the Parties and Seller as of the Closing: the Escrow Agreement, the Assignment Agreement and the Interest Assignment Agreements.

“ Assigned Contract ” has the meaning set forth in Section 2.1(d) .

“ Assignment Agreement ” means the Bill of Sale, Assignment and Assumption Agreement attached hereto as Exhibit A .

“ Assumed Liabilities ” has the meaning set forth in Section 2.3(a) .

“ BFT ” means Bayou Flow Technologies, LLC, a Delaware limited liability company.

“ BTR ” means Bayou Coating, LLC, a Louisiana limited liability company.

“ BWW ” means Bayou Welding Works, LLC, a Louisiana limited liability company.

“ Benefit Plan ” means each employment, bonus, deferred compensation, incentive compensation, stock purchase, stock option, stock appreciation right or other stock-based incentive, severance, salary continuation, retention, change-in-control, or termination pay, hospitalization or other medical, welfare benefits, disability, life or other insurance, supplemental unemployment benefits, profit-sharing, pension, or retirement plan, program, agreement or arrangement and each other employee benefit plan, program, agreement or arrangement sponsored, maintained or contributed to or required to be contributed to by any Person for the benefit of Employees, other than ordinary salary or wages for work performed.

“ Bodily Injury ” means physical injury, sickness, disease, mental anguish, fear or emotional distress sustained by any person, including death resulting there from.

“ Business ” means the business of Seller and the Related Entities in providing services to the oil and gas pipeline industry, including, without limitation, the fabrication, bending and coating of pipe used in the transportation of oil and gas and which includes (1) fusion bond epoxy (FBE) coating, Internal Diameter (ID) lining, concrete coating, thermal spray aluminum, c-therm, polyurethane foam and field joint coatings, and (2) welding, handling and loading, project management, anode installation and ancillary services.

“ Business Insurance Policies ” has the meaning set forth in Section 3.23 .

“ Business Day ” means any day other than a Saturday, Sunday or a day on which banks in New York, New York, or Lafayette, Louisiana are authorized or obligated by applicable law or executive order to close or are otherwise generally closed.

“ Business Governmental Approvals ” has the meaning set forth in Section 3.20(a) .

“ Buyer ” has the meaning set forth in the preface above.

“ Buyer Parties ” means Buyer and ITI.

“ Buyer Indemnified Parties ” has the meaning set forth in Section 8.2 .

“ Cash ” means cash equivalents and marketable securities less outstanding checks and plus deposits in transit.

“ CCSI ” means Commercial Coating Services International, Ltd., a Texas limited partnership.

“ CCSIM ” means CCSI Management, LLC, a Texas limited liability company.

 

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“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq ., and the rules and regulations promulgated thereunder, as amended.

“ Claim ” means any and all Liabilities, losses, damages, deficiencies, demands, claims, fines, penalties, interest, assessments, judgments, Liens, charges, Orders, dues, assessments, Taxes and Proceedings of whatever kind and nature and all costs and expenses relating thereto, including fees and expenses of counsel, accountants and other experts, and other expenses of investigation and litigation; provided, however, with respect to disputes or claims arising between the Parties hereto, the term “ Claim ” shall not include speculative, exemplary or punitive damages of a Party.

“ Cleanup ” means all actions required to (a) identify, investigate, contain, characterize, cleanup, monitor, remove, remediate, transport, treat or otherwise address any Hazardous Substances present in the Environment, (b) prevent the Release of Hazardous Substances into the Environment so that they do not migrate, endanger or threaten to endanger public health or welfare or the Environment, (c) perform pre-remedial studies and investigations and post remedial monitoring and care, or (d) respond to any government directives, orders, requests for information or other documents in any way relating to investigation, cleanup, removal, treatment, monitoring or remediation of Hazardous Substances in the Environment. The term includes, but is not necessarily limited to, the definitions of “removal,” “remedial action,” and “respond” as set forth in CERCLA, 42 U.S.C. § 9601 (23), (24) and (25), as amended, and “corrective action” as used in the Resource Conservation and Recovery Act, 42 U.S.C. § 6928(h), as amended.

“ Cleanup Costs ” means all costs, fees, expenses (including attorneys’ fees and expenses), settlements, judgments, fines, penalties and other remuneration incurred for Cleanup, including response costs incurred and oversight fees imposed or assessed by any Governmental Authority with jurisdiction over the Cleanup.

“ Closing ” has the meaning set forth in Section 2.9 .

“ Closing Date ” has the meaning set forth in Section 2.9 .

“ Closing Working Capital ” has the meaning set forth in Section 2.6(b) .

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Confidential Information ” has the meaning set forth in Section 6.3(d) .

“ Confidentiality Agreement ” means that certain Confidentiality Agreement, dated as of August 6, 2008, between ITI and Seller.

“ Consent ” means any consent, approval or authorization of a Person, including any Governmental Approval.

 

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“ Consolidated EBITDA ” means the net income attributable to controlling interest of the Business for any applicable Holdback Period determined in accordance with GAAP (consistently applied by Buyer after the Closing during the Holdback Period as applied by Seller prior to Closing), plus interest expense, minus interest income, plus income Taxes, depreciation and amortization expense; modified, to the extent included in the determination of net income of ITI, to exclude the effect of the following items: (a) the impact of non-cash purchase accounting adjustments and new accounting pronouncements; (b) nonoperating income and nonoperating expense, and (c) the gain or loss from any sale, exchange or other disposition of assets owned by Seller or the Buyer Parties (as applicable).

“ Contract ” means any agreement, contract, obligation, promise, or undertaking, whether written or oral and whether express or implied, that is legally binding.

“ Control ” means the power to direct, or cause the direction of, directly or indirectly, the management or policies of the specified Person, whether through the ownership of more than 50% of the voting equity ownership of such Person (or securities convertible or exchangeable into more than 50% of such voting equity ownership interest), by contract or otherwise.

“ Disclosure Report ” has the meaning set forth in Section 5.7 .

“ Employee ” means an employee of Seller or a Related Entity engaged exclusively or primarily in the Business.

“ Employment Agreement ” means a Contract of Seller or any Related Entity with or addressed to any current or former Employee pursuant to which any Person has any actual or contingent liability or obligation to provide compensation and/or benefits in consideration for past, present or future services.

“ Environment ” means surface or subsurface soil or strata, surface waters and sediments, navigable waters, wetlands, groundwater, sediments, drinking water supply, ambient air, plants, wildlife, animals and natural resources. The term also includes indoor air, structures and building materials to the extent regulated under Environmental Laws.

“ Environmental Claim ” means a claim or demand by, or notice from, a third party, including any Governmental Authority, person or citizens’ group, seeking a remedy or alleging liability or responsibility for or with respect to any Environmental Condition or violation of or liability under Environmental Law or Environmental Permits, whether due to negligence, strict liability or otherwise. The term includes administrative investigations, hearings and proceedings, court actions, arbitrations, orders, notices of violation, notice of potential responsibility, claims, actions (including contribution actions), demands and notices by third parties for or with respect to Bodily Injury, Environmental Property Damage, Cleanup, Cleanup Costs and violations of Environmental Laws, regardless of whether the claim at issue is false, fraudulent or has no basis in fact and regardless of whether the party against whom the claim is asserted has a legal or equitable defense to such claim.

 

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“ Environmental Condition ” means the intentional or unintentional presence, Release, or Threatened Release of any Hazardous Substances at or into the Environment. The term includes the presence of abandoned or closed containers, tanks or receptacles that contain or formerly contained Hazardous Substances and exposure or alleged exposure of the Environment, persons, or property to Hazardous Substances.

“ Environmental Laws ” means any federal, state or local statute, law, regulation, rule, ordinance, guidance document and policy statement dealing with the pollution or protection of the environment and natural resources, including indoor and ambient air, and includes, but is not necessarily limited to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq ., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq ., the Clean Water Act, 33 U.S.C. § 1251 et seq ., the Clean Air Act, 42 U.S.C. § 7401 et seq ., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq ., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq ., the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq ., the Oil Pollution Act, 33 U.S.C. § 2701 et seq ., the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq ., and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq ., as amended.

“ Environmental Permits ” means any authorizations, licenses, permits, plans or registrations required by or issued pursuant to any Environmental Law by any Governmental Authority in connection with Seller’s activities and operations at the Facility and Real Property.

“ Environmental Property Damage ” means physical damage, injury to or destruction of tangible real or personal property or the Environment.

“ Equity Securities ” of any Person means (a) shares of capital stock, limited liability company interests, partnership interests or other equity securities of such Person, (b) subscriptions, calls, warrants, options or commitments of any kind or character relating to, or entitling any Person to purchase or otherwise acquire, any capital stock, limited liability company interests, partnership interests or other equity securities of such Person, (c) securities convertible into or exercisable or exchangeable for shares of capital stock, limited liability company interests, partnership interests or other equity securities of such Person, and (d) equity equivalents, interests in the ownership or earnings of, or equity appreciation, phantom stock or other similar rights of, or with respect to, such Person.

“ ERISA ” means the United States Employee Retirement Income Security Act of 1974 and the rules and regulations promulgated thereunder, as amended.

“ Escrow Agent ” means an escrow agent selected by Seller and approved by Buyer in its reasonable discretion prior to Closing.

“ Escrow Agreement ” has the meaning set forth in Section 2.4(b) .

“ Escrow Fund ” has the meaning set forth in Section 2.4(b) .

“ Excluded Assets ” has the meaning set forth in Section 2.2 .

 

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“ Excluded Liabilities ” has the meaning set forth in Section 2.3(b) .

“ Facility ” means any of the facilities described on Schedule 1(a) .

“ Financial Statements ” means (a) the audited balance sheets of Seller and each Related Entity as of December 31, 2005, 2006 and 2007 and income statements and statements of cash flows of Seller and each Related Entity for the years then ended, together with the notes thereto, and (b) the unaudited balance sheets of Seller and each Related Entity as of September 30, 2007 and 2008 and the income statements of Seller and each Related Entity for the nine-month periods then ended.

“ FIRPTA Affidavit ” means the affidavit to be delivered by Seller at the Closing pursuant to Section 1445(b)(2) of the Code, to establish that Seller is not a “ foreign person ” within the meaning of that Section, a copy of the form of which is attached hereto as Exhibit B .

“ Fundamental Excluded Liabilities ” mean those Excluded Liabilities described in Sections 2.3(b)(vi)(A), 2.3(b)(vi)(B), 2.3(b)(vii), 2.3(b)(viii), 2.3(b)(ix), 2.3(b)(xi), 2.3(b)(xii), 2.3(b)(xiii), 2.3(b)(xiv) and 2.3(b)(xv) and those set forth on Schedule 2.4(a) .

“ GAAP ” means accounting principles generally accepted in the United States as in effect from time to time and consistently applied through the periods involved.

“ Governmental Approval ” means any grant, credit, concession, Permit, ruling, Order, tariff or rate of, filing or registration with, or declaration, report or notice to, any Governmental Authority required under any applicable Law (including any Environmental Permit).

“ Governmental Authority ” means any national, state, regional, county, municipal, local or foreign court, arbitral tribunal, agency, board, bureau or commission or other governmental or other regulatory authority or instrumentality.

“ Hazardous Substances ” means any solid, liquid, gaseous or thermal pollutant, element, chemical, compound, irritant, substance, vapor or waste regulated as a “contaminant,” “hazardous material,” “hazardous substance,” “hazardous waste” or “pollutant” under any applicable Environmental Law, including but not necessarily limited to: explosives, radioactive materials, mold, solid waste, hazardous waste, asbestos-containing material, polychlorinated biphenyls, pesticides, lead-based paint, petroleum-based products and constituents thereof, radiation, noise, and any other material, substance or waste to which liability or standards of conduct are imposed under any applicable Environmental Law.

“ Holdback Periods ” has the meaning set forth in Schedule 2.5(b) .

“ Indemnified Party ” has the meaning set forth in Section 8.6(a) .

“ Indemnifying Party ” has the meaning set forth in Section 8.6(a) .

“ Indemnity Notice ” has the meaning set forth in Section 8.6(f) .

 

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“ Independent Accountant ” has the meaning set forth in Section 2.5(d) .

“ Intellectual Property ” means domain names and any rights available (including with respect to Technology), under patent, trademark, service mark, utility model, copyright or trade secret law or any other statutory provision or common law doctrine in the United States or other country, irrespective of whether such rights are registered, and including without limitation, utilization rights, in all cases that are used or held for use by Seller or the Related Entities in connection with the Business.

“ Intercompany Payables ” means all intercompany payables between or among (a) Seller and any Affiliate of Seller or between Affiliates of Seller, and (b) between Seller and any employee, officer or member thereof, including advances, loans and payables, and (c) rebillable purchases of Seller.

“ Intercompany Receivables ” means all intercompany receivables between or among (a) Seller and any Affiliate of Seller or between Affiliates of Seller, and (b) between Seller and any employee, officer or member thereof, including advances and loans, and (c) rebillable purchases of Seller.

“ Interest Assignment Agreement ” means assignment agreement(s) assigning all of Seller’s right, title and interest in all Equity Securities held by Seller in the Related Entities in forms reasonably acceptable to the Buyer Parties.

“ Inventory ” means inventory held for sale and all raw materials, work in process and finished products, in each case exclusively or primarily used in the Business including such as are located at the Facilities and any of the foregoing located at any third party warehouse or storage location.

“ IRS ” means the United States Internal Revenue Service and, to the extent relevant, the United States Department of Treasury.

“ ITI ” has the meaning set forth in the preface above.

“ Know-How ” means proprietary trade secrets, formulae, invention records, specifications, quality control procedures, manufacturing processes and other know-how.

“ Knowledge ” means, with respect to an individual and a given fact or matter, that either (i) such individual is actually aware of such fact or matter, or (ii) a prudent individual in such individual’s position should reasonably be expected to be aware of such fact or other matter.

“ Knowledge of Seller, ” “ Seller’s Knowledge, ” and similar phrases mean the Knowledge of any individual who is serving as a manager, member or officer of Seller and the following individuals: Gary Brown, Michael Burke, Joey Zagar, and Glenn Smotek.

 

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“ Law ” means any federal, state, local or foreign statute, rule, code, regulation, ordinance, Order, Permit or directive of, or issued by, any Governmental Authority, including any Environmental Law.

“ Liability ” means any debt, liability or obligation (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated, and whether due or to become due).

“ Leased Real Property ” means those certain parcels of real property and the buildings thereon which are leased by Seller or a Related Entity.

“ Lien ” means any mortgage, deed of trust, lien, pledge, claim, charge, security interest, option, restriction, limitation, easement, title defect or other adverse claim of ownership or use, or other encumbrance of any kind, character or description, whether or not of record (including any deposit, conditional or installment sale, other title retention Contract or capital lease), any lease in the nature thereof, or any filing of, or agreement to give, any financing statement.

“ Material Adverse Effect ” or “ Material Adverse Change ” means any effect or change that would be materially adverse to (i) the assets, liabilities, results of operations, business, prospects or condition (financial or otherwise) of the Business taken as a whole, except any such effect resulting from or arising in connection with (A) the execution or announcement of this Agreement, or (B) any change in the financial markets or general economic conditions generally affecting the industry in which the Business operates, or (ii) the ability of Seller to consummate timely the transactions contemplated hereby.

“ NLRB ” means the National Labor Relations Board.

“ Order ” means any award, decision, injunction, judgment, stipulation, order, ruling, subpoena, writ, determination, decree, consent decree or verdict entered, issued, made or rendered by any arbitrator or Governmental Authority.

“ Ordinary Course of Business ” means the ordinary course of business of Seller or the Related Entities, as applicable, with respect to the Business consistent with past custom and practice (including with respect to quantity and frequency).

“ Owned Real Property ” means any parcels of real property and the buildings thereon in which Seller or a Related Entity has an ownership interest, together with all fixtures thereto.

“ Party ” has the meaning set forth in the preface above.

“ Permit ” means any permit, authorization, approval, registration, license, certificate, exemption, waiver or variance issued or granted by or obtained from any Governmental Authority.

“ Permitted Liens ” means, with respect to all Purchased Assets: (a) Liens for Taxes and other governmental charges and assessments which are not yet due and payable or are being contested in good faith in accordance with applicable law and for which adequate reserves have

 

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been recognized in the Financial Statements; (b) zoning, building and land use laws, ordinances, orders, decrees, restrictions and conditions imposed by any Governmental Authority, provided no such laws are being violated in any material respect by the current use or occupancy or ownership of the Purchased Asset subject thereto; (c) other imperfections of title or encumbrances with respect to the Purchased Assets which arise in the Ordinary Course of Business and do not materially detract from the value of or materially and adversely interfere with the present use of the Purchased Assets subject thereto or affected thereby; (d) purchase money Liens disclosed to Buyer (except as to Owned Real Property) and Liens securing rental payments under lease arrangements; and (e) Liens incurred in the Ordinary Course of Business in respect of pledges or deposits under workers’ compensation laws or similar legislation, carriers, landlord’s, workmen’s, warehousemen’s, mechanics, laborer’s, materialmen’s or other similar Liens, if the obligations secured by such Liens are Assumed Liabilities and are not delinquent.

“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity or a Governmental Authority (or any department, agency, or political subdivision thereof).

“ Personal Property ” means all machinery and other mobile and immobile equipment, tools, tooling, parts, spare parts (whether capitalized or dedicated); supply and packaging materials, any other supplies, stores, furniture, furnishings, personal property, vehicles, vessels, barges, rolling stock, computers, materials and all other tangible personal property, in each case, that is exclusively or primarily used in or exclusively or primarily related to the Business.

“ Post-Closing Environmental Liabilities ” means and shall be limited to any accrued, absolute claim, liability, responsibility, obligation or economic loss arising from or associated with (i) actual Buyer violations of or liability under any existing or former lease or other contract, any Environmental Laws and any Environmental Permits, (ii) any Environmental Claim, not pertaining to one or more pre-closing events or activities, and (iii) any Environmental Conditions at, on, under, or emanating to or from the Real Property; in each case (i) through (iii) arising from facts, conditions or events first existing or first occurring after the Closing Date due to acts of a Buyer Party which occurred during a Buyer Party’s leasing or ownership of such Real Property, or any other property, regardless of how the fact, condition, or event giving rise to any such claim, liability, responsibility or obligation is caused. The term includes, but is not limited to, any such claim, liability, responsibility, obligation or economic loss arising from or associated with (a) the transportation, treatment, storage or disposal by a Buyer Party of Hazardous Substances after the Closing at or on any of the Real Property; (b) the failure of Buyer or its Affiliates to obtain and comply with any Environmental Permits after the Closing; and (c) the exposure, due to acts by or on behalf of a Buyer Party, of the Environment, persons, or any real or personal property to Hazardous Substances after the Closing.

“ Pre-Closing Environmental Liabilities ” means and shall be limited to any accrued, absolute claim, liability, responsibility, obligation or economic loss arising from or associated with (i) actual violations of or liability under any existing or former lease or other contract, any Environmental Laws and any Environmental Permits, (ii) any Environmental Claim, not

 

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pertaining to one or more post-closing events or activities, and (iii) any Environmental Conditions at, on, under, or emanating to or from the Real Property or any real property formerly owned, leased, occupied or otherwise used for any purpose by Seller or a Related Entity or any predecessor and/or the Business; in each case (i) through (iii) arising from facts, conditions or events first existing or first occurring on or before the Closing Date due to acts of Seller or any Related Entity which occurred during the Seller’s or any Related Entity’s leasing or ownership of such Real Property, or any other property, regardless of how the fact, condition, or event giving rise to any such claim, liability, responsibility or obligation is caused, and whether or not the fact, condition, event, claim, liability, responsibility or obligation is, at the time of this Agreement or the Closing Date, known, suspected or unknown, disclosed or undisclosed, latent or patent. The term includes, but is not limited to, any such claim, liability, responsibility, obligation or economic loss arising from or associated with (a) the transportation, treatment, storage or disposal by Seller or any Related Entity of Hazardous Substances at any time prior to Closing at or on any of the Real Property; (b) the failure of Seller or the Related Entities to obtain and comply with any Environmental Permits prior to Closing; and (c) the exposure, due to acts by or on behalf of Seller or the Related Entities, of the Environment, persons, or any real or personal property to Hazardous Substances prior to Closing. Pre-Closing Environmental Liabilities are Excluded Liabilities under Section 2.3(b) of this Agreement.

“ Proceeding ” means any claim, assertion, notice of claim or assertion, complaint, action, litigation, suit, proceeding, formal investigation, inquiry, audit or review of any nature, civil, criminal, regulatory, administrative or otherwise, or any grievance, arbitration or arbitration demand.

“ Proportional Related Entity Net Debt ” means the amounts calculated for each Related Entity as follows: (a) the sum of (i) all indebtedness for borrowed money of such Related Entity (including any long term indebtedness, accrued interest, capital leases and Intercompany Payables) on the Closing Date, less (ii) all Cash and Intercompany Receivables of such Related Entity on the Closing Date (but not including any Cash distributed pursuant to Section 5.3(b)(xxvii) ), multiplied by (b) a fraction, the numerator of which is the total Equity Securities held by Seller in such Related Entity at Closing and the denominator of which is the total outstanding Equity Securities of such Related Entity at Closing.

“ Purchased Assets ” has the meaning set forth in Section 2.1 .

“ Purchase Price ” has the meaning set forth in Section 2.4 .

“ Real Property ” means the Owned Real Property and the Leased Real Property.

“ Records ” means all books, books of account, engineering plans, designs, documents, records, drawings and similar record-keeping materials, regardless of the type of medium on which stored, relating to the Business or Purchased Assets.

“ Regulations ” means the final and temporary Treasury Regulations promulgated under the Code.

 

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“ Related Entities ” means CCSI, CCSIM, BFT, BTR and BWW.

“ Release ” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, leaking, dispersing, depositing, injecting, escaping, leaching, disposing, migrating or dumping into the Environment, whether intentional or unintentional, foreseen or unforeseen. The term also includes the abandonment or discarding of barrels, containers or closed receptacles containing or previously containing any amount of Hazardous Substances, or abandonment or speculative accumulation of any Hazardous Substance for recycling as well as the definition of “disposal” at 42 U.S.C. §6903(3). The term “ Threatened Release ” means a substantial likelihood of a Release which warrants action to prevent a Release or mitigate damage to the Environment which may result from such Release

“ Relevant Competition Authorities ” means (i) the relevant Governmental Authority with legal authority to make a decision pursuant to antitrust, competition or similar laws granting or refusing to consent to any merger or acquisition falling within its jurisdiction and within whose jurisdiction the acquisition of all or part of the Purchased Assets by Buyer actually falls, and (ii) the relevant Governmental Authority in each jurisdiction in which additional mandatory filings may be required in connection with the acquisition of all or part of the Purchased Assets by Buyer by reason of a change in legislation after the date of this Agreement.

“ Representatives ” has the meaning set forth in Section 5.6(a) .

“ Restricted Area ” has the meaning set forth in Section 6.3(a) .

“ Restricted Period ” has the meaning set forth in Section 6.3(a) .

“ Securities Laws ” means all applicable federal and state securities laws, including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and any regulations promulgated thereunder.

“ Seller ” has the meaning set forth in the preface above.

“ Seller’s Members ” means Jerry Shea, Stewart Shea, Jimmy Shea, Suzy Kimball, Ellen Mullen, Maureen Smith, Steven Shea, Katy Svendson, Mary Zaunbrecher, Stephanie Shea and Kelly Holleman.

“ Seller Indemnified Parties ” has the meaning set forth in Section 8.4 .

“ Site ” means, with respect to a given Facility, the Owned Real Property or Leased Real Property forming a part of, or used or usable in connection with the Facility. Any reference to a Site shall include, by definition, the surface and subsurface elements, including the soils and groundwater present at the Site, and any reference to items “at the Site” shall include items “at, on, in, upon, over, across, under and within” the Site.

“ Software ” means any and all computer programs, whether in source code or object code; databases and compilations, whether machine readable or otherwise; descriptions, flow-charts

 

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and other work product used to design, plan, organize and develop any of the foregoing; and all documentation including user manuals and other training documentation related to any of the foregoing.

“ Stupp Agreement means an agreement executed by Stupp Bros., Inc. not to exercise certain rights to purchase the assets and/or interests of Seller in BTR pursuant to the terms of Section 11.5 of the Operating Agreement of BTR for a period of at least 5 years.

“ Stupp Payment ” means a payment to be made at Closing to Stupp Brothers, Inc. or its designated Affiliates in exchange for the execution of the Stupp Agreement.

“ Straddle Period ” has the meaning set forth in Section 6.4(e) .

“ Target Working Capital ” has the meaning set forth in Section 2.6(a) .

“ Tax ” or “ Taxes ” means (A) all net income, gross income, gross receipts, sales, use, ad valorem, franchise, profits, license, lease, service, service use, withholding, employment, payroll, earnings, net worth, unemployment insurance, Social Security, Medicare, excise, severance, transfer, value added, documentary, mortgage, registration, stamp, occupation, real or personal property, environmental, premium, property, windfall profits, customs, duties and other taxes, fees, levies, assessments or charges of any kind whatsoever, together with any interest, penalties, fines and other additions with respect thereto, imposed by any federal, territorial, state, provincial, local or foreign government; and (B) any penalties, interest, fines or other additions to tax for the failure to collect, withhold, or pay over any of the foregoing, or to accurately file any Tax Return; and the term “Tax” shall mean any one of the foregoing Taxes (including, without limitation, any obligation in connection with a duty to collect, withhold or pay over any Tax, any obligation to contribute to the payment of any Taxes determined on a consolidated, combined, or unitary basis, any liability as a transferee, or any liability as a result of any express or implied obligation to indemnify or pay the Tax obligations of another person).

“ Tax Return ” means collectively, (A) all reports, declarations, filings, questionnaires, estimates, returns, information statements and similar documents relating to, or required to be filed in respect of any Taxes, including, without limitation, any amendments thereof; and (B) any statements, returns, reports, or similar documents required to be filed pursuant to Part III of Subchapter A of Chapter 61 of the Code or pursuant to any similar income, excise or other tax provision of federal, territorial, state, provincial, local or foreign law, including, without limitation, any amendments thereof; and the term “Tax Return” means any one of the foregoing Tax Returns.

“ Technology ” means, collectively, designs, formulae, methods, techniques, ideas, data, improvements, inventions, Software and other similar materials, and all recordings, graphs, drawings, reports, analyses, and Know-How and other writings, and any other embodiments of the above, in any form whether or not specifically listed herein, and all related technology, that are used, incorporated or embodied in or displayed by any of the foregoing or used in the design, development, reproduction, sale, marketing, maintenance or modification of any of the foregoing, in all cases that are used or held for use by Seller or the Related Entities in connection with the Business.

 

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“ Third Party Claim ” has the meaning set forth in Section 8.6 .

“ Transaction Documents ” means this Agreement, the Ancillary Agreements and the other agreements, instruments and documents delivered or caused to be delivered in accordance with Article 7 and such other documents and instruments of transfer or assignment that are reasonably requested by a Party to carry out the intent of the Parties hereunder or thereunder.

“ WARN Act ” means the United States Worker Adjustment and Retraining Notification Act and the rules and regulations promulgated thereunder, as amended.

ARTICLE II

Purchase and Sale of Assets

Section 2.1 Purchase of Assets . Subject to the terms and conditions of this Agreement, at the Closing, Seller shall sell, assign, transfer, convey and deliver to Buyer, free and clear of all Liens and Liabilities (other than Permitted Liens and the Assumed Liabilities), all of their right, title and interest in and to the properties, assets, rights, business, claims and Contracts (other than such properties, assets, rights, business, claims and/or Contracts specifically included in the Excluded Assets), of every kind and description, wherever located, real, personal or mixed, tangible or intangible, owned by Seller as the same shall exist on the Closing Date, in each case, exclusively or primarily relating to, or exclusively or primarily used in, the Business (collectively, the “ Purchased Assets ”). Without in any way limiting the generality of the foregoing, except for the Excluded Assets, the Purchased Assets shall include all right, title and interest owned by Seller in and to:

(a) Facilities and Real Property . Leasehold interests in the Facilities and the Real Property;

(b) Personal Property . The Personal Property;

(c) Inventory . The Inventory;

(d) Contracts . Subject to receipt of any required Consent and subject to the exclusion of certain Contracts pursuant to Section 2.2(j) , all right, title and interest of Seller in and under the Contracts that exclusively or primarily relate to the Business or exclusively or primarily relate to the operations existing at the Real Property (the “ Assigned Contracts ”), including all rights to receive goods and services purchased pursuant to such Contracts and to assert claims and take other actions in respect of breaches or other violations thereof, except to the extent related to Excluded Assets or Excluded Liabilities, including the Contracts described on Schedule 2.1(d) ;

 

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(e) Records . All Records of Seller pertaining exclusively or primarily to (i) the Business, (ii) the ownership and operation of the Facilities, (iii) the Know-How, or (iv) the Employees (subject in each case to the right of Seller to retain copies of same for its use);

(f) Intellectual Property . All Intellectual Property of Seller;

(g) Technology . All Technology of Seller;

(h) Credits and Prepaid Expenses . All credits, prepaid expenses, deferred charges, advance payments and security deposits (other than those relating to Taxes) of Seller exclusively or primarily relating to or exclusively or primarily used in the Business;

(i) Customer Lists . The list of Seller’s customers of the Business and the potential customers of the Business with which Seller is, as of the Closing, in discussions regarding future Contracts;

(j) Marketing Materials . All sales, promotional, advertising and other literature, catalogues, price lists and other sales-related materials (in any medium) of Seller exclusively or primarily used in or exclusively or primarily relating to the operation or conduct of the Business;

(k) Warranty Rights . All of Seller’s rights under express or implied warranties exclusively or primarily relating to the Business from third parties, except to the extent related to the Excluded Liabilities;

(l) Governmental Approvals . Subject to the receipt of any required Consent, (A) all Governmental Approvals held by Seller that are exclusively or primarily used, required or necessary for the lawful ownership or operation of the Purchased Assets (including the Governmental Approvals (and applications therefor) listed on Schedules 3.20(a) , 3.20(b) and 3.20(c) , and the Environmental Permits listed on Schedule 3.21 , and all certifications, registrations and similar rights, if any, held by Seller or any of its Affiliates that are necessary to, allow Buyer to fulfill its obligations under Assigned Contracts;

(m) Goodwill . All goodwill of Seller attributable to the Business;

(n) Interest in Affiliates . All partnership interests, membership interests and all other Equity Securities held by Seller in CCSI, BFT, BTR, BWW and CCSIM; and

(o) Contact Information . All e-mail addresses, website addresses, domain names and Internet Universal Resource Locators and all telephone and telecopier numbers and post office boxes.

For the avoidance of doubt, the Purchased Assets do not include any assets of the Related Entities and such assets shall be unaffected by, and shall not be transferred or assigned by, this Agreement.

 

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Section 2.2 Excluded Assets . Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement will constitute or be construed as conferring on Buyer, and Buyer is not acquiring, any right, title or interest in or to any of the following assets of Seller (collectively, the “ Excluded Assets ”):

(a) Dispositions in Ordinary Course . All properties, assets, rights, business, claims, and Contracts sold or otherwise disposed of by Seller in the Ordinary Course of Business and not in violation of any provision of this Agreement during the period from the date hereof until the Closing Date;

(b) Cash . All Cash of Seller;

(c) Insurance . All insurance policies or insurance coverage of Seller (or assumed coverage);

(d) Intercompany Accounts . All Intercompany Receivables between Seller and any Affiliate of Seller, whether incurred prior to or on the Closing Date;

(e) Tax Refunds . All refunds, rebates or similar payments of Taxes to the extent such Taxes were paid by or on behalf of Seller;

(f) Tax Returns . All Tax Returns of Seller;

(g) Benefit Plans . All Benefit Plans of Seller;

(h) Corporate Records . The organizational documents, the minute and stock record books, the corporate seals and the accounting, Tax, litigation and insurance Records of Seller;

(i) Tickets . All LSU stadium (non-suite) football tickets; and

(j) Contracts . Those Contracts which a Buyer Party identifies as an Excluded Asset in writing to Seller on or prior to the Closing Date, in which case such Contracts shall not be Assigned Contracts.

Section 2.3 Liabilities .

(a) Assumed Liabilities . At the Closing, subject to the terms and conditions of this Agreement, including without limitation, Article 8 of this Agreement, Seller shall assign, and Buyer shall assume and agree to pay, perform and discharge all Liabilities of Seller under any Assigned Contract that arise after the Closing Date and all accrued Liabilities arising on or prior to the Closing Date under the Assigned Contracts in the Ordinary Course of Business to the extent performance is required after the Closing Date and payment for such performance has not been previously paid to Seller (other than any Liability for the payment of money or any Liability in respect of any breach or failure of performance, in either case arising on or prior to the Closing Date) and Buyer shall further assume all liabilities of Seller set forth in the Working

 

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Capital calculations of Section 2.6 herein (collectively, the “ Assumed Liabilities ”). For the avoidance of doubt, the Assumed Liabilities do not include any liability or obligation of the Related Entities and such liabilities and obligations shall not be assigned or assumed as part of the transactions contemplated by this Agreement.

(b) Excluded Liabilities . Neither Buyer nor any of its Affiliates has agreed to pay or discharge, shall be required to assume or shall have any Liability of Seller, any of Seller’s Affiliates or any other Person, the assumption of which by Buyer or its Affiliates is not expressly provided for in this Agreement. Without limiting the foregoing, except for the Assumed Liabilities or as otherwise expressly provided for in this Agreement, Buyer or its Affiliates shall not assume, be liable for, or otherwise become responsible for (i) any Liability of any nature of Seller or any of its Affiliates or (ii) any Liability (whether arising prior to, on or after the Closing Date) arising from, or in connection with, the ownership, holding, use or operation by Seller of the Purchased Assets or the Business, in each case in this clause (ii) on or prior to the Closing Date (collectively, the “ Excluded Liabilities ”), including:

(i) any Liability relating to any operations of Seller other than those Liabilities expressly identified above under Section 2.3(a);

(ii) any Intercompany Payables or any other Liability between Seller and any Affiliate of Seller, whether incurred prior to, on or after the Closing Date;

(iii) any Liability under, with respect to, or in connection with, any Contract of Seller or any of its Affiliates other than the Liabilities assumed under the Assigned Contracts under Section 2.3(a);

(iv) any Liability associated with products sold or manufactured by Seller with respect to the Business on or prior to the Closing Date and any other Liability with respect to the Business and the Purchased Assets relating to events or circumstances arising on or prior to the Closing Date;

(v) any Liability that arises, whether before, on or after, the Closing Date, out of, or in connection with, the Excluded Assets;

(vi) (A) any and all Liability with respect to any Pre-Closing Environmental Liabilities, (B) any and all Liability with respect to any Release, act or omission, event or condition set forth on Schedule 3.21 , and (C) any and all other Liabilities, under Environmental Laws, affecting or related in any way to any portion of, the Facilities, the Real Property or the Purchased Assets or any other property or assets related to or used by Seller, its Affiliates or any predecessor thereof in the Business, whether arising from Releases, acts or omissions or events or conditions in existence or occurring prior to, on or after the Closing Date or arising from Releases, acts or omissions of Seller, the Related Entities or any of their respective Affiliates, any respective predecessor thereof, or any of their respective employees, agents, representatives or contractors, including Liabilities related to any off-site transportation, treatment, storage or disposal of Hazardous Substances;

 

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(vii) any Liability in connection with any compensation or benefit obligation (including, without limitation, vacation pay, medical expenses, bonuses and all agreements with respect to split dollar life insurance) or other Liability relating to events or circumstances arising on or prior to the Closing Date, including under the WARN Act or other local or state plant closing law, in connection with any Employee or any other employee, former employee or independent contractor of Seller or the Related Entities;

(viii) any Liability with respect to Employees or under or with respect to any Benefit Plan;

(ix) any Liability in connection with any Proceeding that (1) on the Closing Date is in progress, pending or threatened against or affecting Seller, the Purchased Assets, the Business or this Agreement, in each case at law or in equity, by or before any Governmental Authority or any other Person or (2) arises prior to, on, or following the Closing Date against or affecting Seller, the Purchased Assets or the Business at law or in equity, by or before any Governmental Authority or other Person, to the extent relating to the period on or prior to the Closing Date;

(x) the outstanding and unaccrued expenses and accounts payable of Seller at the Closing Date, including such liabilities attributable to the Business, except those expressly identified in Section 2.3(a) ;

(xi) any Tax obligation of Seller to the extent that such obligation relates to any Tax period or portion thereof ending on or prior to the Closing Date or any Tax obligation of any of the Related Entities;

(xii) any Liabilities or Claims associated with that certain litigation entitied Daniel Carrera, Joel E. Dixon, Ernie M. Hernandez, Michael R. Hernandez and Rafel Tello vs. Commercial Coating Services International, Ltd. and CCSI Management, L.L.C. (US District Court, Southern District of Texas, Houston Division, Case No. 4:08cv3021) and any Liabilities or Claims relating to or involving allocations of racial or ethnic discrimination, including retaliatory discharges associated with racial or ethnic discrimination, involving CCSI or any of employees of CCSI; any Liabilities or Claims associated with that certain litigation entitled Annie Stewart v. Bayou Coating, LLC , (19 ^th Judicial District Court, Parish of East Baton Rouge, Case No. 573135, Section 24); any Liabilities or Claims associated with that certain litigation entitled Enbridge Energy Partners, L.P., Enbridge Energy Company, Inc. (Successors in Interest to Lakehead Pipe Line Partners, L.P. and Lakehead Pipe Line Company, Inc.) and Enbridge Energy management, L.L.C. v.s Stupp Corporation, Stupp Bros., Inc. and Bayou Coating L.L.C. (266 ^th District Court of Harris County, Texas; Cause No. 2008-13773);

 

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(xiii) the one time bonus payment due to Gary L. Brown based on the gross sales price of certain transactions related to CCSI pursuant to that certain First Amendment to Employment Agreement between Gary L. Brown and CCSI dated January 28, 2008;

(xiv) any Tax arising from (1) the ownership of the Purchased Assets, (2) the assumption and incurring of the Assumed Liabilities or (3) the operation and conduct by Seller or otherwise attributable to, the Business, to the extent any such Tax relates to any Tax period or portion thereof ending on or prior to the Closing Date; and

(xv) any Liability under, with respect to, or in connection with, any Tax Sharing Agreement.

(c) However, notwithstanding any of the foregoing, Buyer acknowledges that the Purchased Assets include interests in the Related Entities, which are “going concerns” that have liabilities (“ Related Entity Liabilities ”), which will continue following the Closing and nothing in this Agreement shall create any direct liability to any party to this Agreement with respect to those Related Entity Liabilities.

Section 2.4 Purchase Price for Purchased Assets . Buyer shall pay or deliver the following to Seller at the Closing as follows, as adjusted pursuant to Sections 2.5 and 2.6 (the “ Purchase Price ”):

(a) Wire transfer of immediately available Federal funds in the amount of One Hundred Twelve Million Five Hundred Thousand Dollars ($112,500,000) (the “ Base Amount ”), reduced by the amount of the Proportional Related Entity Net Debt and the Stupp Payment, to a bank account designated by Seller. At the Closing, Seller shall apply a portion of the Base Amount to repay the obligations under those Excluded Liabilities set forth on Schedule 2.4(a) ; and

(b) Deliver to the Escrow Agent by wire transfer of immediately available Federal funds the amount of Twelve Million Five Hundred Thousand Dollars ($12,500,000) (the “ Escrow Fund ”) pursuant to the terms of the Escrow Agreement in the form attached as Exhibit C among Buyer, Seller and the Escrow Agent (the “ Escrow Agreement ”), to be held and disbursed thereafter in accordance with the Escrow Agreement. Subject to any claims made or pending against the Escrowed Fund, the remaining balance of the Escrowed Fund shall be released to Seller in accordance with the terms of the Escrow Agreement eighteen (18) months after the Closing Date.

 

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Section 2.5 Holdback Consideration .

(a) In addition to the payment of the amounts set forth in Section 2.4 , Buyer shall be entitled to additional amounts of purchase consideration in such amounts, at such times and based on such requirements as set forth in this Section 2.5 (collectively, such additional amounts are hereinafter referred to as the “ Holdback Consideration ”). Schedule 2.5 sets forth the terms and conditions of the Holdback Consideration targets and amounts.

(b) Following the expiration of each applicable calendar year of 2009, 2010 and 2011 (each, a “ Holdback Period ”), Buyer shall review all necessary records and supporting documents of the Business and, if Buyer shall determine that any portion of the Holdback Consideration shall be due pursuant to Schedule 2.5 , Buyer shall no later than March 16 of the calendar year following any such Holdback Period, deliver to Seller by check or by wire transfer to an account or accounts designated by Seller, such amount of Holdback Consideration earned.

(c) No later than March 16 of the calendar year following a Holdback Period, Buyer shall provide Seller with records and supporting documents detailing the payment or non-payment of the Holdback Consideration for such Holdback Period. Until April 17 of the calendar year following such Holdback Period, Seller and its auditors, accountants and other authorized representatives shall, upon prior agreement of the Buyer, which agreement shall not be unreasonably withheld, be given free and full access at Seller’s sole cost and expense during normal business hours to the financial records of Buyer in order to have a full opportunity to make such investigation as Seller may require to independently calculate the Holdback Consideration for the applicable Holdback Period.

(d) If Seller disputes the payment or non-payment of Holdback Consideration for any Holdback Period, Seller shall notify Buyer in writing, and Buyer and Seller shall promptly commence good faith negotiations for a period of thirty (30) days thereafter with a view to resolving any such dispute. If Buyer and Seller are unable to resolve any such dispute by mutual consent, such dispute shall be referred to Deloitte Financial Advisory Services LLP (“ Independent Accountant ”).

(e) Buyer and Seller shall (i) use their respective commercially reasonable efforts to cause the Independent Accountant to render a timely determination within thirty (30) days following submission of the dispute to the Independent Accountant, (ii) cooperate with the Independent Accountant, and (iii) provide the Independent Accountant with access to such books, records, personnel and other information as the Independent Accountant may deem necessary to render a decision. Buyer and Seller shall each pay one half of the fees and expenses of the Independent Accountant.

(f) The determination of the amount or payment of any Holdback Consideration shall be (i) rendered in writing and delivered to Buyer and Seller within 30 days after submission of such dispute or as soon thereafter as reasonably practicable as determined by the Independent Accountant, (ii) final and binding upon the Parties, and (iv) enforceable in any court of competent jurisdiction in the United States.

 

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(g) If, as finally determined, Buyer owes Seller any additional Holdback Consideration for a Holdback Period, then Buyer shall pay the amount to Seller by wiring such amount in immediately available Federal funds to a bank account designated by Seller. If, as finally determined, Seller has received more Holdback Consideration for a Holdback Period than was due, then Seller shall pay the amount to Buyer by wiring such amount in immediately available Federal funds to a bank account designated by Buyer. Any payment due under Section 2.5 shall be due and payable within five Business Days following the final determination of the Holdback Consideration.

(h) For purposes of determining Consolidated EBITDA, the expenses of the Seller and the Related Entities will be normalized to exclude any inter company charges and expenses (such as management or consulting fees) that are not currently being incurred to operate the Seller. For the avoidance of doubt, salaries, bonuses and equity compensation expenses for employees of the Business paid in the ordinary course of business or pursuant to employment agreements shall be an expense for purposes of determining Consolidated EBITDA. Furthermore, when calculating Consolidated EBITDA for any given Holdback Period, no payment of Holdback Consideration will be subtracted in the calculation of the earnings. The Consolidated EBITDA targets in each of calendar year 2009, 2010 and 2011 as set forth in Schedule 2.5 shall be appropriately adjusted upward if, at any time after execution of this Agreement, Buyer acquires Equity Securities of any of the Related Entities (other than those Equity Securities of the Related Entities held by Seller as of the date of this Agreement).

Section 2.6 Working Capital Adjustment .

(a) The parties have agreed to a target proportionate working capital amount equal to $15,949,000 (“ Target Working Capital ”).

(b) No later than ninety (90) days following the Closing Date, Buyer shall deliver to Seller the computation of the consolidated working capital of Seller as of the close of business on the Closing Date (“ Closing Working Capital ”), prepared by Buyer based on the principles set forth in Schedule 2.6(b) .

(c) If Seller disputes the computation of the Closing Working Capital, Seller shall notify Buyer in writing, and Buyer and Seller shall promptly commence good faith negotiations for a period of thirty (30) days thereafter with a view to resolving any such dispute. If Buyer and Seller are unable to resolve any such dispute by mutual consent, such dispute shall be referred to the Independent Accountant.

(d) Buyer and Seller shall (i) use their respective commercially reasonable efforts to cause the Independent Accountant to render a timely determination within thirty (30) days following submission of the dispute to the Independent Accountant, (ii) cooperate with the Independent Accountant, and (iii) provide the Independent Accountant with access to such books, records, personnel and other information as the Independent Accountant may deem necessary to render a decision. Buyer and Seller shall each pay one half of the fees and expenses of the Independent Accountant.

 

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(e) The determination of the Closing Working Capital by the Independent Accountant shall be (i) prepared in accordance with GAAP and Schedule 2.6(b) , (ii) rendered in writing and delivered to Buyer and Seller within thirty (30) days after submission of such dispute or as soon thereafter as reasonably practicable as determined by the Independent Accountant, (iii) final and binding upon the Parties, and (iv) enforceable in any court of competent jurisdiction in the United States.

(f) If, as finally determined, the Closing Working Capital exceeds the Target Working Capital, then Buyer shall pay the amount of such excess to Seller by wiring such amount in immediately available Federal funds to a bank account designated by Seller, which shall be deemed to be an increase in the Purchase Price as described in Sections 2.4 and 2.5 . If the Target Working Capital exceeds the Closing Working Capital, then Seller shall pay the amount of such excess to Buyer by wiring such amount in immediately available Federal funds to a bank account designated by Buyer, which shall be deemed to be a decrease in the Purchase Price described in Sections 2.4 and 2.5 .

(g) Any payment due under Section 2.6 shall be due and payable within five Business Days following the final determination of the Closing Working Capital.

(h) Any account receivable of Seller which Buyer determines is uncollectible and for which Seller has not received credit in the working capital calculation, shall be retained by Seller; or if previously transferred to Buyer and Seller received credit in the working capital calculation, such account receivable shall be reassigned to Seller for collection by Seller to Seller’s benefit and Seller shall pay to Buyer the amount of such reassigned account receivable. If Seller decides to institute or take any action with respect to the collection of any such receivables, Seller will notify Buyer in advance and will confer in good faith with Buyer with respect to the collection of any such uncollected accounts receivable.

Section 2.7 Prorations . With respect to the accrued real property, personal property and other Taxes, utility and similar payments arising from the ownership or use of the Purchased Assets, the accrued rents and other payments under Assigned Contracts and similar accrued items all as relating to a Straddle Period, Buyer shall be responsible for only the pro rata portion thereof based upon the number of days in such Straddle Period following the Closing Date as a percentage of the total number of days in such Straddle Period.

Section 2.8 Allocation of Purchase Price . Prior to the Closing Date, Buyer and Seller shall agree on Schedule 2.8 (“ Allocation Statement ”), to be attached to this Agreement, setting forth the allocation of the Purchase Price among the Acquired Assets, including, without limitation, for purposes of Code section 754 in respect of any Related Entity properly treated as a partnership for federal income tax purposes. Seller and Buyer agree to allocate such Purchase Price among the Purchased Assets for all purposes (including financial accounting and Tax purposes) in accordance with such Schedule 2.8 . Except with respect to any subsequent adjustments to the Purchase Price (which shall be allocated in the same manner for allocating the Purchase Price as provided in such Schedule 2.8 ), Buyer and Seller covenant to prepare and file their respective Tax Returns in a manner consistent with such allocation and not to take any

 

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position in any Tax Return, or examination or other administrative or judicial proceeding relating to any Tax Return, or for financial purposes that is inconsistent with such allocation. Buyer and Seller each shall file with their federal income Tax Returns an appropriate IRS Form 8594 reflecting such allocation. Payment of any Holdback Consideration is an increase to the Purchase Price and shall be allocated as a Class VII asset on form 8594.

Section 2.9 Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at a location or locations mutually satisfactory to the Parties commencing at 10:00 a.m. local time with an effective time at the close of business (i) on a date mutually agreeable to Buyer and Seller that is at least five (5) Business Days but not more than ten (10) Business Days after Buyer has notified Seller of the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself), or (ii) on such other date as Buyer and Seller may mutually agree in writing (the “ Closing Date ”).

Section 2.10 Deliveries and Actions at Closing . At the Closing,

(a) Seller will deliver to the Buyer Parties the various certificates, instruments and documents referred to in Section 7.1 ;

(b) The Buyer Parties will deliver to Seller the various certificates, instruments and documents referred to in Section 7.2 ; and

(c) Buyer will deliver to Seller and/or the Escrow Agent the Purchase Price as follows:

(i) by wire transfer on the day of the Closing and in accordance with Seller’s instructions as to the Base Amount;

(ii) by wire transfer on the day of the Closing and in accordance with the Escrow Agent’s instructions as to the Escrow Fund.

Section 2.11 Employment Agreements . Concurrent with the execution of this Agreement, the Buyer Parties are entering into Employment Agreements with James Shea, Jerry Shea and Stewart Shea in forms reasonably acceptable to the Buyer Parties and each of such persons, with the effective date of such Employment Agreements to be the Closing Date.

Section 2.12 Lease Extension Agreements . Concurrent with the execution of this Agreement, the Buyer Parties are entering into agreements in the forms attached hereto as Exhibit E with certain of those landlords set forth on Schedule 3.7(l) extending the terms of such leases.

 

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ARTICLE III

Representations and Warranties of Seller

Seller represents and warrants to the Buyer Parties as follows:

Section 3.1 Organization .

(a) Seller, BTR and BWW are limited liability companies duly organized, validly existing and in good standing under the laws of the State of Louisiana. BFT is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. CCSI is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Texas. CCSIM is a limited liability company duly organized, validly existing and in good standing under the laws of Texas.

(b) Seller and the Related Entities (i) have all requisite organizational power and authority to own, lease and operate their respective properties and to carry on their respective businesses as now conducted, and (ii) are duly qualified or authorized to do business and are in good standing under the laws of each jurisdiction in which the conduct of their respective businesses or the ownership of their properties as of the date hereof requires such qualification or authorization.

Section 3.2 Authorization of Transaction .

(a) Seller has full power and authority (including full limited liability company power and authority) to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents. Seller’s Members have approved the execution, delivery and performance of this Agreement and the other Transaction Documents by Seller.

(b) The execution, delivery and performance of this Agreement and the other Transactions Documents have been duly authorized by Seller. This Agreement has been duly executed by Seller.

(c) This Agreement and each other Transaction Document to which Seller is or shall be a party, assuming the due authorization, execution and delivery by each other Party hereto and thereto, constitutes a valid and legally binding obligation of Seller, enforceable against Seller in accordance with its terms and conditions, subject to (i) the effect of any applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or similar laws affecting creditors’ rights generally, (ii) general principles of equity, including concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law, (iii) legal rights of rescission due to a vice of consent, and (iv) the effect of applicable laws or judicial decisions governing the enforceability of non-competition restrictions.

(d) Except as set forth on Schedule 3.2 , Seller is not required by applicable Law to give any notice to, make any filing with, or obtain any Governmental Approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement.

 

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Section 3.3 Non-contravention . Except as set forth on Schedule 3.3 , neither the execution and the delivery of this Agreement and the other Transaction Documents nor the consummation of the transactions contemplated hereby or thereby, will:

(a) violate any provision of Seller’s articles of organization, limited liability company agreement or other governing or organizational documents,

(b) violate any Law or conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any Person the right to accelerate (whether after the giving of notice or lapse of time or both), terminate, modify or cancel, or require any notice or Consent under any Assigned Contract or Governmental Approval to which Seller is a party or by which Seller is bound or to which any of Seller’s assets is subject, or

(c) result in the imposition, loss, or creation of a Lien upon, or with respect to, any of the Purchased Assets, other than Permitted Liens.

Section 3.4 Subsidiaries and Affiliates .

(a) Schedule 3.4(a)  sets forth (i) with respect to CCSI, each Person who is a partner of CCSI and the Equity Securities or percentage interest held by each such partner, and (ii) for each Related Entity that is a limited liability company, each Person who is a member or holder of any Equity Securities and the Equity Securities or percentage interest held by such Person. Except as set forth on Schedule 3.4(a) , there are no subscriptions, calls, warrants, options or commitments of any kind or character relating to, or entitling any Person to purchase or otherwise acquire, any capital stock or other Equity Securities of any Related Entity. Except as set forth on Schedule 3.4(a) , there are no commitments or agreements providing for the issuance of additional Equity Securities of any Related Entity, or for the repurchase or redemption of Equity Securities of a Related Entity. There are no agreements of any kind that may obligate a Related Entity to issue, purchase, register for sale, redeem or otherwise acquire any Equity Securities of such Related Entity. Except as set forth on Schedule 3.4(a) , there are no voting trusts, partner or member agreements, proxies or other agreements in effect to which Seller or a Related Entity is a party or by which any of them may be bound with respect to the voting or transfer of Equity Securities of a Related Entity. Copies of the certificate of organization, limited liability company operating agreement, partnership agreement or other governing documents of each Related Entity have been provided or made available to a Buyer Party and are accurate and complete as of the date hereof. All of the outstanding shares of Equity Securities in the Related Entities have been duly and validly authorized and issued and are fully paid and nonassessable, and with respect to the Equity Securities of a Related Entity owned by Seller, are free and clear of any Liens or Liabilities other than Permitted Liens and Assumed Liabilities.

 

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(b) Except as set forth on Schedule 3.4(b) , neither Seller nor any Related Entity owns of record or beneficially any Equity Securities of any Person or any right (contingent or otherwise) to acquire the same.

(c) Except as set forth in Schedule 3.4(c) , neither Seller nor any Related Entity is a member of (nor are any part of their respective businesses conducted through) any partnerships or limited liability companies, and neither Seller nor any Related Entity is a participant in any joint venture or similar arrangement. With respect to any joint venture or similar arrangement listed on Schedule 3.4(c) , copies of the agreements or other documents governing such joint venture or arrangement have been provided or made available to a Buyer Party and are accurate and complete as of the date hereof.

Section 3.5 Sufficiency of Assets . Subject to normal external business conditions, and except as disclosed on Schedule 3.5 , the Purchased Assets, together with the rights, goods and services granted or transferred pursuant to this Agreement and the other Transaction Documents, or, to the Knowledge of Seller to be performed by Seller pursuant to this Agreement and the other Transaction Documents, constitute all of the material assets used or held for use by Seller in the Business, and outside of the Business workforce no other assets are necessary to operate or conduct the Business as currently conducted.

Section 3.6 Certain Assets .

(a) Seller owns, leases or has the legal right to use all of the Purchased Assets, subject to the lessor’s, or any other third party’s, rights in any lease agreement set forth on Schedule 3.8 , and further subject to any Permitted Liens.

(b) To the Knowledge of Seller, the Related Entities own, lease or have the legal right to use all of their assets used in the Business, subject to the lessor’s, or any other third party’s, rights in any lease agreement set forth on Schedule 3.8 , and further subject to any Permitted Liens.

(c) With respect to each Assigned Contract, Seller enjoys the right to the benefits of such Contract in accordance with its terms. Seller owns and has good, marketable, indefeasible and insurable title to, or, to the extent any leasehold estates, easement estates or license rights are to be transferred or conveyed hereunder, has valid and subsisting estates, easement estates, interests or licensee rights in, the Purchased Assets, free and clear of all Liens and Liabilities, except for Permitted Liens and Assumed Liabilities, and further subject to the lessor’s, or any other third party’s, rights in any lease agreement set forth on Schedule 3.8 .

(d) Subject to obtaining the Consents set forth on Schedule 3.6(d) , Seller has the full right to convey, transfer, assign and deliver the Purchased Assets as provided herein. Without limiting the generality of the foregoing, Seller (A) has not granted, or agreed to grant, (1) any ownership interest or right in, or with respect to, any Purchased Asset or (2) any right to acquire or receive any Purchased Asset or any interest or right therein or with respect thereto, and (B) is not a party to, or bound by, any Contract, other than the Transaction Documents, affecting or relating to a right to transfer any Purchased Asset (or any interest or right therein or

 

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with respect thereto) that, in the case of either of foregoing clause (A) or (B), has had, or could reasonably be expected to result in, a Material Adverse Effect on the ability of Buyer (or its Affiliates) to utilize the Purchased Assets as contemplated by this Agreement and the other Transaction Documents.

(e) At the Closing, Seller shall transfer and deliver to Buyer (or its Affiliates), and Buyer (or its Affiliates) shall, receive, the interests and rights of Seller in all Purchased Assets (other than with respect to the Assigned Contracts requiring any Consent), free and clear of any Lien or Liability, except for Permitted Liens. Without limiting the generality of the foregoing, at the Closing, Seller shall transfer and deliver to Buyer (or its Affiliates), and Buyer (or its Affiliates) shall receive, valid title to the Facilities owned by Seller, the Personal Property of Seller and all other Purchased Assets, free and clear of any Lien, except for Permitted Liens.

(f) Except as set forth on Schedule 3.6(f) , the Facilities and all Personal Property of Seller and the Related Entities are in good operating condition and repair, subject to ordinary wear and tear.

(g) Schedule 3.6(g) sets forth a true, correct and complete list of all Personal Property of Seller and the Related Entities with a book value in excess of $50,000.

(h) Except for the leases set forth on Schedule 3.6(h) , none of the Purchased Assets are subject to any material Contract pursuant to which Seller, any Affiliate of Seller, a Related Entity or another Person is a lessee or lessor of, or holds, manages or operates, any Purchased Asset. Except as set forth on Schedule 3.6(h) , neither Seller nor any of the Related Entities, is a party to any material Contract under which:

(i) it is a lessee or lessor of, or holds, manages or operates, any property (real or personal) owned by any Person other than Seller or a Related Entity that is exclusively or primarily used in the operation of, or otherwise in connection with, the Business, or

(ii) any property, real or personal, owned by Seller or a Related Entity that is exclusively or primarily used in the operation of, or otherwise in connection with, the Business is held, occupied, operated or managed by a Person other than Seller or a Related Entity.

With respect to each lease set forth on Schedule 3.6(h) pursuant to which Seller or a Related Entity is described therein as the lessee thereunder, it is the legal owner and holder of the leasehold estates purported to be granted by such lease.

(i) Schedule 3.6(i) sets forth a general description of the Owned Real Property of each Related Entity, and the interest of any Related Entity in such Owned Real Property. Seller does not own any Real Property.

(j) Schedule 3.6(j) sets forth a general description of the Leased Real Property of Seller and each Related Entity, and the interest of Seller and any Related Entity in

 

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such Leased Real Property. “ Sublease ” means any lease where Seller or any Related Entity subleases any part of any Leased Real Property to any Person. All Subleases are listed on Schedule 3.6(j) .

(k) Schedule 3.6(i) and 3.6(j) set forth all of the real property in which Seller or any Related Entity holds an interest (as owner, lessee, licensor or otherwise).

Section 3.7 Real Property .

(a) All of the Real Property is described on Schedules 3.6(i) and 3.6(j) . Neither Seller nor any Related Entity uses or occupies any real estate other than the Real Property. Neither Seller nor any Related Entity has any interest in the Real Property other than as set forth on Schedules 3.6(i) and 3.6(j) . No party other than Seller and the Related Entities use or occupy any part of the Real Property, subject to the terms of any lease of Real Property set forth in Schedule 3.6(h) or 3.7(m) .

(b) There is no pending or, to the Knowledge of Seller, threatened Proceeding against Seller, any Related Entity or any other party that could materially adversely affect the interest of Seller or any Related Entity in any of the Real Property, the use, occupancy or operation of the Real Property by Seller or any Related Entity, the Real Property or any portion thereof, or the value or utility of any Facility or any portion hereof, including without limitation, in eminent domain, for rezoning or otherwise, nor does Seller know of the existence of any fact that could be reasonably likely to give rise to any such Proceeding.

(c) The Real Property and the use and occupancy of the Real Property by Seller and the Related Entities comply in all material respects with all Laws, including without limitation the Americans with Disabilities Act, and all private covenants and indentures and Contracts affecting such Real Property, and neither Seller nor any Related Entity has received any notice that any of the Real Property does not so comply. The use and occupancy of the Real Property by Seller and the Related Entities is permitted by Laws and all private covenants and indentures and Contracts affecting such Real Property of Seller or Related Entity without any variance, special use permit or other exception or special proceeding, and Seller’s and Related Entities’ use or occupancy of the Real Property or any portion thereof and the operation of the business as currently conducted is not dependent on a “permitted non-conforming use” or “permitted nonconforming structure” or similar variance, exemption or approval from any governmental entity.

(d) To the Knowledge of Seller, there is no public improvement or special assessment affecting, or that could affect, the Real Property, or any portion thereof that has resulted in or could result in any charge being levied or assessed against any of the Real Property or in the creation of any Lien against any of the Real Property, or that is or could be payable by Seller or any Related Entity.

(e) To the Knowledge of Seller, there is no plan, study or program in effect by any Governmental Authority to widen, modify or realign any public street providing access to the Real Property. Seller and the Related Entities have legal and practical vehicular, rail and ship access and rights of ingress and egress to and from all of the Real Property, including to and from each Facility.

 

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(f) There is no commitment or agreement with any Governmental Authority or public or private utility with respect to any of the Real Property or any other Purchased Asset or any portion of the foregoing that has not been disclosed in writing by Seller to a Buyer Party.

(g) To the Knowledge of Seller, there is no mining, mineral or water extraction or development project planned or in progress under the Real Property or any portion thereof or on or under any other land adjacent thereto that would materially affect (including by subsidence) the Real Property or any other Purchased Asset or any portion of the foregoing.

(h) The Real Property and all improvements, buildings, structures, fixtures, building systems and equipment (including the mechanical, plumbing, heating, sprinkler and fire suppression, electrical and air conditioning systems), and all components thereof, are in good condition and repair and sufficient for the operation of the Business and there are no defects in any of the foregoing, normal wear and tear excepted. To the Knowledge of Seller, there is no defect or condition of the soil that could materially impair the operation or structural integrity of the Facilities or any portion thereof.

(i) All water, oil, gas, electrical, steam, compressed air, telecommunications, sewer, storm and waste water systems and other utility services or systems for the Real Property and the current operations of the Seller and the Related Entities have been installed within lawful rights of way owned by Seller and are connected to the improvements and Facilities and are operational and sufficient for the operation of the business of Seller and Related Entities as currently conducted thereon.

(j) The Facilities and other improvements of Seller and the Related Entities are located wholly within the boundaries of the Real Property and no part thereof encroaches onto any adjoining land.

(k) Other than Permitted Liens, there are no improvements, fixtures, buildings, structures or fences that are not included as part of the Facilities that are located within or encroach upon the Real Property, and there are no improvements that are not owned by Seller or any Related Entities located on any of the Real Property or encroaching onto the Real Property.

(l) Schedule 3.7(l) identifies each party who is an Affiliate of Seller, or an Affiliate or family member of any of Seller’s Members who is the owner of any Leased Real Property. The parties so identified in Schedule 3.7(l) as the owner of such parcel of Leased Real Property has good and marketable leasehold title to the Leased Real Property, free and clear of all Liens, except Permitted Encumbrances, and such Leased Real Property is not subject to any Lien, easement, right-of-way, or building or use restriction, other than Permitted Liens, and there are no outstanding options, rights of first offer or rights of first refusal to purchase such Leased Real Property or any portion thereof or interest therein.

 

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(m) Schedule 3.7(m) contains a list of each of the tenants, including any tenants under any Subleases, located at any Real Property.

(n) All accounts for work and services performed and materials provided or furnished upon or in respect of the Real Property have been fully paid and satisfied and no Person is entitled to claim any Lien against the Real Property or any part thereof. Except as set forth on Schedule 3.7(n) , no material alteration, repair, improvement or other work has been ordered, directed or requested in writing to be done or performed to or in respect of the Real Property or any Facility which (i) has not been completed and (ii) is not in the Ordinary Course of Business. Each lease (“ Lease ”) pursuant to which Seller or any Related Entity has the right of occupancy or use or any interest in any Real Property is legal, valid, binding, enforceable and in full force and effect.

(o) There is no default under any Lease or Sublease by any party thereto, and there is no dispute or event that with the passage of time or giving of notice would be a default under any Lease or Sublease by any party thereto.

(p) Neither Seller nor any Related Entity owes, or will owe in the future, any brokerage commissions or finder’s fees with respect to any Lease or Sublease, and does not owe and will not owe in the future any sums or reimbursements for any improvements or allowances under any Lease or Sublease.

(q) The other party to any Lease or Sublease is not an Affiliate of, and otherwise, except for payments of rent, does not have any economic interest in, Seller or any Related Entity.

(r) Neither Seller nor any Related Entity has pledged, mortgaged, hypothecated, assigned, sublet, transferred, or granted any interest in any Lease or Sublease, or any Leased Real Property or any of the improvements thereon. Except as set forth on Schedule 3.7(r) , none of the Real Property or any portion thereof is located in a flood hazard area (as defined by the Federal Emergency Management Agency), or in a wetlands area designated by Federal or state authorities.

Section 3.8 Material Contracts .

(a) Except for Contracts listed on Schedule 3.8 , there is no Contract to which Seller, or to Seller’s Knowledge, a Related Entity is a Party which is:

(i) a Con