ARTICLE I DEFINITIONS | 1 |
ARTICLE II PURCHASE AND SALE | 12 |
Section 2.01 Purchase and Sale. | 12 |
Section 2.02 Purchase Price. | 12 |
Section 2.03 Transactions to be Effected at the Closing. | 13 |
Section 2.04 Purchase Price Adjustment. | 13 |
Section 2.05 Earn-Out Payments. | 16 |
Section 2.06 Closing. | 17 |
Section 2.07 Withholding Tax. | 18 |
Section 2.08 Allocation of Purchase Price. | 18 |
ARTICLE III REPRESENTATIONS AND WARRANTIES ON BEHALF OF THE COMPANY | 18 |
Section 3.01 Organization and Authority of the Company. | 18 |
Section 3.02 Capitalization. | 19 |
Section 3.03 No Subsidiaries. | 19 |
Section 3.04 No Conflicts; Consents. | 19 |
Section 3.05 Financial Statements. | 20 |
Section 3.06 Undisclosed Liabilities. | 20 |
Section 3.07 Absence of Certain Changes, Events and Conditions. | 20 |
Section 3.08 Material Contracts. | 23 |
Section 3.09 Title to Assets; Real Property. | 25 |
Section 3.10 Condition and Sufficiency of Tangible Assets. | 26 |
Section 3.11 Intellectual Property. | 26 |
Section 3.12 Accounts Receivable. | 28 |
Section 3.13 Customers and Suppliers. | 28 |
Section 3.14 Insurance. | 29 |
Section 3.15 Legal Proceedings; Governmental Orders. | 30 |
Section 3.16 Compliance With Laws; Permits. | 30 |
Section 3.17 Environmental Matters. | 30 |
Section 3.18 Employee Benefit Matters. | 31 |
Section 3.19 Employment Matters. | 34 |
Section 3.20 Taxes. | 36 |
Section 3.21 Warranties. | 39 |
Section 3.22 Licenses. | 39 |
Section 3.23 Related Party Transactions. | 39 |
Section 3.24 Books and Records. | 39 |
Section 3.25 Brokers. | 40 |
Section 3.26 Full Disclosure. | 40 |
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES | 40 |
Section 4.01 Authority of Sellers. | 40 |
Section 4.02 Title. | 40 |
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER | 41 |
Section 5.01 Organization and Authority of Buyer. | 41 |
Section 5.02 No Conflicts; Consents. | 41 |
Section 5.03 Brokers. | 41 |
Section 5.04 Legal Proceedings. | 41 |
ARTICLE VI INTENTIONALLY OMITTED | 42 |
ARTICLE VII COVENANTS | 42 |
Section 7.01 Post-Closing Confidentiality. | 42 |
Section 7.02 Non-Competition; Non-Solicitation. | 42 |
Section 7.03 Release by Seller Parties. | 43 |
Section 7.04 Governmental Approvals and Consents. | 44 |
Section 7.05 Books and Records. | 46 |
Section 7.06 Public Announcements. | 46 |
Section 7.07 Further Assurances; Post-Closing Cooperation. | 46 |
Section 7.08 Escrow Fees. | 46 |
ARTICLE VIII TAX MATTERS | 47 |
Section 8.01 Tax Covenants. | 47 |
Section 8.02 Termination of Existing Tax Sharing Agreements. | 49 |
Section 8.03 Tax Indemnification. | 49 |
Section 8.04 Straddle Period. | 49 |
Section 8.05 Contests. | 50 |
Section 8.06 Cooperation and Exchange of Information. | 50 |
Section 8.07 Tax Treatment of Indemnification Payments. | 50 |
Section 8.08 Payments to Buyer. | 50 |
Section 8.09 Survival. | 50 |
Section 8.10 Overlap. | 51 |
ARTICLE IX CONDITIONS TO CLOSING | 51 |
Section 9.01 Conditions to Obligations of All Parties. | 51 |
Section 9.02 Conditions to Obligations of Buyer. | 51 |
Section 9.03 Conditions to Obligations of Sellers. | 53 |
ARTICLE X INDEMNIFICATION | 55 |
Section 10.01 Survival. | 55 |
Section 10.02 Indemnification By Seller Parties. | 55 |
Section 10.03 Indemnification By Buyer. | 56 |
Section 10.04 Certain Limitations. | 57 |
Section 10.05 Indemnification Procedures. | 57 |
Section 10.06 Payments; Escrow Fund. | 59 |
Section 10.07 Distribution of Escrow Fund. | 59 |
Section 10.08 Tax Treatment of Indemnification Payments. | 59 |
Section 10.09 Effect of Investigation. | 59 |
Section 10.10 Liability of the Company. | 60 |
Section 10.11 Strict Liability or Buyer Indemnitee Negligence. | 60 |
Section 10.12 Exclusive Remedies. | 60 |
ARTICLE XI TERMINATION | 60 |
ARTICLE XII SELLER REPRESENTATIVE | 60 |
Section 12.01 Appointment and Powers. | 60 |
Section 12.02 Reliance on Actions. | 62 |
Section 12.03 Authority. | 62 |
Section 12.04 Expenses. | 62 |
ARTICLE XIII MISCELLANEOUS | 62 |
Section 13.01 Expenses. | 62 |
Section 13.02 Notices. | 62 |
Section 13.03 Interpretation. | 63 |
Section 13.04 Headings. | 64 |
Section 13.05 Severability. | 64 |
Section 13.06 Entire Agreement. | 64 |
Section 13.07 Successors and Assigns. | 64 |
Section 13.08 No Third-party Beneficiaries. | 64 |
Section 13.09 Amendment and Modification; Waiver. | 64 |
Section 13.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. | 65 |
Section 13.11 Specific Performance. | 65 |
Section 13.12 Counterparts. | 65 |
DEFINITIONS
(a) | At the Closing, Buyer shall: |
(b) | At the Closing, Sellers shall deliver to Buyer: |
(a) | Closing Adjustment. |
(b) | Post-Closing Adjustment. |
(c) | Examination and Review. |
REPRESENTATIONS AND WARRANTIES ON BEHALF OF THE COMPANY
(y) acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets of or equity interests in, or by any other manner, any business or any Person or any division thereof; (z) action by the Company to make, change or rescind any Tax election, amend any Tax Return, take any position on any Tax Return, or take any action or omit to take any action, or enter into any other transaction that would have the effect of increasing the Tax Liability or reducing any Tax asset of Buyer in respect of any Post-Closing Tax Period; or (aa) Contract entered into to do any of the foregoing, or any action or omission that would result in any of the foregoing. |
(c) There has been no use, generation, manufacture, treatment, storage, transportation, or handling of any Hazardous Material on, under, about or from any Real Property currently or, to the Knowledge of Sellers previously owned, leased or used by the Company in connection with the business in violation of any Environmental Law or that will subject the Company to any liability under any Environmental Law.
(f) Each Benefit Plan can be amended, terminated or otherwise discontinued after the Closing in accordance with its terms, without material liabilities to Buyer, the Company or any of their Affiliates other than ordinary administrative expenses typically incurred in a termination event. The Company has no commitment or obligation and has not made any representations to any employee, officer, director, manager, independent contractor or consultant, whether or not legally binding, to adopt, amend, modify or terminate any Benefit Plan or any collective bargaining agreement, in connection with the consummation of the transactions contemplated by this Agreement or otherwise.
(d) The Company has been a validly electing S corporation within the meaning of Sections 1361 and 1362 of the Code (and any similar provisions of state and local Law) at all times since its organization, and the Company will be an S corporation up to and including the Closing Date. The Company has not, since its inception (i) acquired assets from another corporation in a transaction in which the Company’s Tax basis for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets (or any other property) in the hands of the transferor or (ii) acquired the stock of any corporation which is a qualified subchapter S subsidiary. The Company will not be liable for any Taxes under Section 1374 of the Code or any other applicable state or local Law as a result of the transactions hereby contemplated, including the making of the Section 338(h)(10) Election.
(e) DP-NXA has, at all times since its organization, elected to be classified as a partnership for Tax purposes, and DP-NXA will be a partnership for Tax purposes as of the Closing Date.
(f) To the Knowledge of the Sellers, DP-NXA, has timely filed with the appropriate Taxing Authorities all Tax Returns required to be filed by it as of the Closing Date, and all such Tax Returns are true, correct and complete and were prepared in accordance with all applicable Laws.
(g) No Tax Contest is pending or, to the Knowledge of the Sellers, threatened with respect to DP-NXA. DP-NXA has not received from any Taxing Authority any (i) notice indicating an intent to open a Tax Contest; (ii) request for information related to Tax matters; or (iii) notice of deficiency or proposed adjustment for any amount of Tax or Tax item.
(h) There are no Encumbrances for Taxes (other than for current Taxes not yet due and payable) relating to the Company. None of the assets of the Company are subject to any Encumbrances for Taxes.
(i) Neither the Company nor the Sellers has waived or requested to waive any statute of limitations in respect of Taxes of the Company or agreed to or requested any extension of time with respect to a Tax assessment or deficiency and neither the Company nor Sellers has not consented to extend to a date later than the date hereof the period in which any Tax of the Company may be assessed or collected by any Taxing Authority.
(j) The Company is not a party to or bound by any Tax allocation, indemnification, sharing or similar agreement (including any advance pricing agreement, closing agreement or other agreement relating to Taxes with any Governmental Authority), and the Company does not have a contractual or legal obligation to indemnify any other Person with respect to Taxes.
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES
REPRESENTATIONS AND WARRANTIES OF BUYER
INTENTIONALLY OMITTED
COVENANTS
TAX MATTERS
(d) | Section 338(h)(10) Election. |
CLOSING
INDEMNIFICATION
INTENTIONALLY OMITTED
SELLER REPRESENTATIVE
MISCELLANEOUS
If to Seller Parties or the Seller Representative: | Steven L. Pellerin 4512 Ridgehaven Road Fort Worth, TX 76116 E-mail: stevepellerin@dpengineering.com |
with a copy to: | Dow Golub Remels & Gilbreath, PLLC 2700 Post Oak Boulevard, Suite 1750 Houston, Texas 77056 Attn: Keith M. Remels E-mail: kremels@dowgolub.com |
If to Buyer: | GSE Performance Solutions, Inc. c/o GSE Systems, Inc. 6940 Columbia Gateway Drive, Suite 470 Columbia, MD 21046 Attn: Kyle Loudermilk, President & CEO E-mail: kyle.loudermilk@gses.com |
with a copy to: | Miles & Stockbridge P.C. 100 Light Street Baltimore, Maryland 21202 Attn: Scott R. Wilson E-mail: swilson@MilesStockbridge.com |
BUYER: GSE PERFORMANCE SOLUTIONS, INC. By: /s/ Kyle Loudermilk Name: Kyle Loudermilk Title: President |
COMPANY: DP ENGINEERING LTD. CO. By: /s/ Steven L. Pellerin Name: Steven L. Pellerin Title: President | |
SELLERS: /s/ Steven L. Pellerin STEVEN L. PELLERIN /s/ Christopher A. Davenport CHRISTOPHER A. DAVENPORT | |
SELLER REPRESENTATIVE: /s/ Steven L. Pellerin STEVEN L. PELLERIN |