SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
APRIL 21, 1998
(Date of earliest event reported)
U S LIQUIDS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13259 76-0519797
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
411 NORTH SAM HOUSTON PARKWAY EAST, SUITE 400, HOUSTON, TEXAS 77060
(Address of principal executive offices) (Zip Code)
(281) 272-4500
Registrant's telephone number, including area code
Item 2. Acquisition or Disposition of Assets.
(a) On April 21, 1998, U S Liquids Inc. (the "Company") acquired
substantially all of the assets of Parallel Products, a California limited
partnership ("Parallel"), in exchange for approximately $3.4 million in cash and
214,932 shares of common stock, par value $.01, of the Company. In addition, the
Company assumed approximately $3.5 million of Parallel's outstanding debt.
Additional consideration is payable by the Company if the earnings before
interest, taxes, depreciation and amortization of the business acquired exceed
certain negotiated levels. These transactions were consummated pursuant to an
Agreement for Purchase and Sale of Assets, dated April 21, 1998, among USL
Parallel Products of California, Parallel Products of Kentucky, Inc., and
Parallel Products of Florida, Inc., each a wholly-owned subsidiary of the
Company, Parallel, DWA of Belvedere Company, the Estate of David W. Allen, the
David W. Allen Trust No. 1, Peter Allen, Neal Koehler and Richard Eastman. The
following discussion is only a summary and is qualified in its entirety by
reference to the Exhibits to this Current Report or Form 8-K, filed herewith or
to be subsequently filed as indicated.
Parallel was engaged in the business of processing and disposing of bulk
liquids and unsaleable beverages. Parallel was also engaged in the marketing of
ethanol produced from liquid wastes processed by Parallel and the brokering of
ethanol purchased from third parties. The Company
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currently intends to use the assets purchased from Parallel for the same
purposes as Parallel did prior to this transaction.
The Company funded the cash portion of the purchase price with borrowings
under the Company's revolving credit facility with Bank of America National
Trust and Savings Association, BankBoston, N.A. and Wells Fargo Bank, N.A. The
purchase price was determined based upon an evaluation of the assets acquired by
the Company and the results of negotiations between the Company and Parallel.
(b) On April 21, 1998, the Company acquired all of the outstanding capital
stock of Waste Stream Environmental, Inc. and Earth Blends, Inc., each a New
York corporation (collectively referred to herein as "Waste Stream"), in
exchange for approximately $3.9 million in cash and 264,318 shares of common
stock, par value $.01, of the Company. In addition, the Company assumed
approximately $1.4 million of Waste Stream's outstanding debt. Additional
consideration is payable by the Company if the earnings before interest, taxes,
depreciation and amortization of certain Waste Stream projects exceed certain
negotiated levels, if another pending project is approved by the Company's Board
of Directors, or if other specified events occur. These transactions were
consummated pursuant to a Stock Purchase Agreement, dated April 21, 1998, among
the Company, U S Liquids Northeast, Inc., Waste Stream Environmental, Inc., C.
Wesley Gregory III, C. Wesley Gregory, Jr. and Donald E. Gordon and a Stock
Purchase Agreement, dated April 21, 1998, among the Company, U S Liquids
Northeast, Inc., Earth Blends, Inc., C. Wesley Gregory III, C. Wesley Gregory,
Jr. and Donald E. Gordon. The following discussion is only a summary and is
qualified in its entirety by reference to the Exhibits to this Current Report on
Form 8-K filed herewith or to be subsequently filed as indicated.
Waste Stream accepts liquid and dry cake biosolids, or sludge, from
municipal wastewater treatment facilities and private businesses and processes
these biosolids into a product that is sold for use as a fertilizer and landfill
cover. The Company currently intends to operate Waste Stream in substantially
the same manner as it was operated prior to this transaction.
The Company funded the cash portion of the purchase price paid for Waste
Stream with borrowings under the Company's revolving credit facility with Bank
of America National Trust and Savings Association, BankBoston, N.A. and Wells
Fargo Bank, N.A. The purchase price was determined based upon an evaluation of
the business of Waste Stream and the results of negotiations between the
parties.
(c) On April 21, 1998, the Company acquired Amigo Diversified Services,
Inc., a Texas corporation ("Amigo"), in exchange for approximately $630,000 in
cash and 249,400 shares of Common Stock, par value $.01, of the Company. These
transactions were consummated pursuant to an Agreement and Plan of
Reorganization, dated April 21, 1998, among the Company, Amigo Acquisition,
Inc., Amigo, Raoul Garza and Alex Salas. The following discussion is only a
summary and is qualified in its entirety by reference to the Exhibits to this
Current Report on Form 8-K filed herewith or to be subsequently filed as
indicated.
Amigo is engaged in the business of processing contaminated and/or
off-specification petroleum fuels and used oil and selling by-products recovered
from these waste streams. In addition,
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Amigo provides environmental emergency response services, asbestos and lead
abatement services and ground water and soil remediation services. The Company
currently intends to operate Amigo in substantially the same manner as it was
operated prior to this transaction.
The Company funded the cash portion of the purchase price paid for Amigo
with borrowings under the Company's revolving credit facility with Bank of
America National Trust and Savings Association, BankBoston, N.A. and Wells Fargo
Bank, N.A. The purchase price was determined based upon an evaluation of the
business of Amigo and the results of negotiations between the parties.
Item 7. Exhibits.
(a) To be filed by amendment. Pursuant to Item 7(a)(4) of Form 8-K, the
Company hereby undertakes to file the financial statements required in response
to this Item in an amendment to this Current Report on Form 8-K no later than 60
days after May 6, 1998.
(b) To be filed by amendment. Pursuant to Item 7(b)(2) of Form 8-K, the
Company hereby undertakes to file the financial statements required in response
to this Item in an amendment to this Current Report on Form 8-K no later than 60
days after May 6, 1998.
(c) EXHIBITS.
2.1 Agreement for Purchase and Sale of Assets, dated April 21,
1998, among USL Parallel Products of California, Parallel
Products of Kentucky, Inc., Parallel Products of Florida,
Inc., Parallel Products, DWA of Belvedere Company, the Estate
of David W. Allen, the David W. Allen Trust No. 1, Peter
Allen, Neal Koehler and Richard Eastman, and First Addendum
thereto.
2.2 Stock Purchase Agreement, dated April 21, 1998, among U S
Liquids Inc., U S Liquids Northeast, Inc., Waste Stream
Environmental, Inc., C. Wesley Gregory III, C. Wesley Gregory,
Jr. and Donald E. Gordon.
2.3 Stock Purchase Agreement, dated April 21, 1998, among U S
Liquids Inc., U S Liquids Northeast, Inc., Earth Blends, Inc.,
C. Wesley Gregory III, C. Wesley Gregory, Jr. and Donald E.
Gordon.
2.4 Agreement and Plan of Reorganization, dated April 21, 1998,
among U S Liquids Inc., Amigo Acquisition, Inc., Amigo
Diversified Services, Inc., Raoul Garza and Alex Salas.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
U S LIQUIDS INC.
Date: May 5, 1998 By: /s/ MICHAEL P. LAWLOR
Michael P. Lawlor,
Chief Executive Officer
AGREEMENT FOR
PURCHASE AND SALE OF ASSETS
AMONG
USL PARALLEL PRODUCTS OF CALIFORNIA,
A CALIFORNIA CORPORATION
PARALLEL PRODUCTS OF KENTUCKY, INC.
A KENTUCKY CORPORATION
PARALLEL PRODUCTS OF FLORIDA, INC.
A FLORIDA CORPORATION
PARALLEL PRODUCTS,
A CALIFORNIA LIMITED PARTNERSHIP
DWA OF BELVEDERE COMPANY
A CALIFORNIA CORPORATION
ESTATE OF DAVID W. ALLEN
DAVID W. ALLEN TRUST NO. 1
PETER ALLEN
NEAL KOEHLER
AND
RICHARD EASTMAN
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TABLE OF CONTENTS
PAGE
1. SALE AND TRANSFER OF ASSETS..................................(1)
1.01 GENERAL...............................................(1)
(a) SCHEDULED PROPERTY.............................(1)
(b) CONTRACTUAL RIGHTS.............................(1)
(c) LICENSES AND PERMITS...........................(1)
(d) EQUIPMENT......................................(2)
(e) SHORT TERM ASSETS..............................(2)
(f) NAMES AND NUMBERS..............................(2)
(g) RECORDS........................................(2)
(h) REAL PROPERTY..................................(2)
(i) OTHER ASSETS...................................(2)
(j) EXCLUDED ASSETS................................(2)
1.02 PURCHASE PRICE........................................(3)
(a) CLOSING CASH PAYMENT...........................(3)
(b) CLOSING STOCK PAYMENT..........................(3)
(c) CONTINGENT CASH PAYMENT........................(3)
(d) CONTINGENT STOCK PAYMENT.......................(3)
(e) EBITDA CALCULATIONS............................(3)
(f) VALIDITY; OTHER MATTERS........................(4)
(g) RESALE OF PARENT STOCK.........................(4)
(h) LEGENDS........................................(5)
1.03 ASSUMPTION OF LIABILITIES.............................(5)
1.04 ALLOCATION OF ASSETS AND PURCHASE PRICE...............(6)
1.05 EXCISE AND PROPERTY TAXES.............................(6)
1.06 THE CLOSING...........................................(6)
1.07 TITLE ASSURANCES......................................(6)
(a) OWNERS TITLE POLICY............................(6)
(b) PERMITTED ENCUMBRANCES.........................(7)
(c) SURVEY.........................................(7)
1.08 DELIVERIES AT THE CLOSING.............................(7)
1.09 EFFECTIVE DATE OF TRANSACTION.........................(7)
2. POST CLOSING ADJUSTMENT......................................(7)
2.01 CALCULATION OF NET WORKING CAPITAL AT CLOSING DATE. .(7)
2.02 PAYMENT OF ADJUSTMENT AMOUNTS.........................(8)
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION....(8)
3.01 REPRESENTATIONS AND WARRANTIES OF THE SELLERS.........(8)
(a) AUTHORIZATION OF TRANSACTION...................(8)
(b) NONCONTRAVENTION...............................(8)
(c) BROKERS' FEES..................................(8)
3.02 REPRESENTATIONS AND WARRANTIES OF THE BUYERS..........(9)
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(a) ORGANIZATION OF THE BUYERS.....................(9)
(b) AUTHORIZATION OF TRANSACTION...................(9)
(c) NONCONTRAVENTION...............................(9)
(d) BROKERS' FEES..................................(9)
(e) SECURITIES DOCUMENTS...........................(9)
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS..........(10)
(g) ABSENCE OF LITIGATION.........................(10)
(h) DISCLOSURE....................................(10)
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.......(10)
4.01 ORGANIZATION, QUALIFICATION, AND POWER...............(10)
4.02 CAPITALIZATION.......................................(11)
4.03 NONCONTRAVENTION.....................................(11)
4.04 BROKERS' FEES........................................(11)
4.05 TITLE TO ASSETS......................................(11)
4.06 CUSTOMERS AND SALES..................................(12)
4.07 NO SUBSIDIARIES OR EQUITY INVESTMENTS................(12)
4.08 FINANCIAL STATEMENTS.................................(12)
4.09 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END.....(12)
4.10 UNDISCLOSED LIABILITIES..............................(14)
4.11 TAX MATTERS..........................................(14)
4.12 REAL PROPERTY........................................(15)
4.13 INTELLECTUAL PROPERTY................................(17)
4.14 PERSONAL PROPERTY....................................(17)
4.15 CONTRACTS............................................(17)
4.16 HAZARDOUS MATERIALS; DISPOSAL SITES..................(18)
4.17 PERMITS AND ENVIRONMENTAL MATTERS....................(19)
4.18 REPORTS, ETC.........................................(20)
4.19 APPLICABLE LAWS COMPLIANCE...........................(20)
4.20 ENVIRONMENT, HEALTH, AND SAFETY......................(21)
4.21 POWERS OF ATTORNEY...................................(22)
4.22 INSURANCE............................................(22)
4.23 LITIGATION...........................................(22)
4.24 EMPLOYMENT CONTRACTS.................................(22)
4.25 EMPLOYEE BENEFITS....................................(23)
4.26 GUARANTIES...........................................(23)
4.27 CERTAIN BUSINESS RELATIONSHIPS.......................(23)
4.28 SECURITIES MATTERS...................................(23)
4.29 SUFFICIENCY OF ASSETS................................(23)
4.30 DISCLOSURE...........................................(23)
5. PRE-CLOSING COVENANTS.......................................(24)
5.01 GENERAL..............................................(24)
5.02 NOTICES AND CONSENTS.................................(24)
5.03 OPERATION OF BUSINESS................................(24)
5.04 MAINTENANCE OF INSURANCE.............................(24)
iii
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5.05 PRESERVATION OF BUSINESS.............................(24)
5.06 FULL ACCESS..........................................(24)
5.07 NOTICE OF DEVELOPMENTS...............................(25)
5.08 EXCLUSIVITY..........................................(25)
6 POST-CLOSING COVENANTS......................................(26)
6.01 GENERAL..............................................(26)
6.02 TRANSITION...........................................(26)
6.03 CONFIDENTIALITY......................................(26)
6.04 TAX RETURNS AND FILINGS..............................(26)
6.05 USE OF NAMES.........................................(27)
6.06 BATF PERMITS.........................................(27)
6.07 CCWD DISCHARGE FEE...................................(27)
7 CONDITIONS TO OBLIGATION TO CLOSE...........................(27)
7.01 CONDITIONS TO OBLIGATION OF THE BUYERS...............(27)
7.02 CONDITIONS TO OBLIGATION OF THE SELLERS..............(29)
8 REMEDIES FOR BREACHES OF THIS AGREEMENT.....................(30)
8.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
INDEMNITIES.........................................(30)
8.02 INDEMNIFICATION PROVISIONS FOR BENEFIT OF
THE BUYERS..........................................(31)
8.03 INDEMNIFICATION PROVISIONS FOR BENEFIT OF
THE SELLERS.........................................(31)
8.04 MATTERS INVOLVING THIRD PARTIES......................(32)
8.05 LIMITATION ON LIABILITY..............................(33)
8.06 OTHER INDEMNIFICATION PROVISIONS.....................(33)
9 TERMINATION.................................................(33)
9.01 TERMINATION OF AGREEMENT.............................(33)
9.02 EFFECT OF TERMINATION. .............................(34)
10 CERTAIN DEFINITIONS.........................................(34)
11. GENERAL.....................................................(38)
11.01 INCORPORATION OF EXHIBITS AND SCHEDULES..............(38)
11.02 NO THIRD-PARTY BENEFICIARIES.........................(39)
11.03 ENTIRE AGREEMENT.....................................(39)
11.04 SUCCESSION AND ASSIGNMENT............................(39)
11.05 COUNTERPARTS.........................................(39)
11.06 HEADINGS.............................................(39)
11.07 NOTICES..............................................(39)
11.08 APPOINTMENT OF AGENT.................................(40)
11.09 GOVERNING LAW........................................(40)
11.10 AMENDMENTS AND WAIVERS...............................(41)
11.11 SEVERABILITY.........................................(41)
11.12 EXPENSES.............................................(41)
11.13 CONSTRUCTION.........................................(41)
iv
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11.14 SPECIFIC PERFORMANCE.................................(41)
11.15 AUTHORITY............................................(41)
Exhibit A-1 = Bills of Sale and Assignment - California/Oregon Assets
Exhibit A-2 = Bill of Sale and Assignment - Kentucky Assets
Exhibit A-3 = Bill of Sale and Assignment - Florida Assets
Exhibit B = Assignment and Assumption - Kentucky Property
Exhibit C-1 = Grant Deed for California Property
Exhibit C-2 = Grant Deed for Kentucky Property
Exhibit D = Form of Noncompetition Agreement
Exhibit E = Form of Opinion of Counsel to the Sellers
Exhibit F = Form of Spousal Consent
Schedule 1.01(j) = Excluded Assets
Schedule 1.03 = Assumption of Liabilities
Schedule 1.04 = Allocation Purchase Price
Schedule 3.01 = Authorization of Transaction/Noncontravention
Schedule 4.01 = Organization, Qualification, and Power
Schedule 4.02 = Capitalization
Schedule 4.03 = Noncontravention
Schedule 4.04 = Brokers' Fees
Schedule 4.05 = Title to Assets
Schedule 4.06 = Customers and Sales
Schedule 4.08 = Financial Statements
Schedule 4.09 = Events Subsequent to Most Recent Fiscal Year End
Schedule 4.10 = Undisclosed Liabilities
Schedule 4.12 = Real Property
Schedule 4.12(d) = Litigation, Land, Environmental
Schedule 4.13 = Intellectual Property
Schedule 4.14 = Personal Property
Schedule 4.15 = Contracts
Schedule 4.16 = Hazardous Materials; Disposal Sites
Schedule 4.17 = Permits and Environmental Matters
Schedule 4.18 = Reports, Etc.
Schedule 4.22 = Insurance
Schedule 4.23 = Litigation
Schedule 4.24 = Employment Contracts
Schedule 4.25 = Employee Benefits
Schedule 4.27 = Certain Business Relationships
v
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AGREEMENT FOR PURCHASE AND SALE OF ASSETS
This Agreement for Purchase and Sale of Assets ("Agreement") is entered
into as of April 21, 1998 by and between USL Parallel Products of California, a
California corporation ("PPC"), Parallel Products of Kentucky, Inc., a Kentucky
corporation ("PPK"), Parallel Products of Florida, Inc., a Florida corporation
("PPF" and collectively with PPC and PPK, the "BUYERS"), Parallel Products, a
California limited partnership (the "Company"), DWA of Belvedere Company, a
California corporation and the Company's general partner, Estate of David W.
Allen, David W. Allen Trust No. 1, Peter Allen, Neal Koehler and Richard Eastman
(collectively the "Partners"). The Company and the Partners are referred to
collectively herein as the "SELLERS". The Buyers and Sellers are referred to
collectively herein as the "Parties."
Buyers desire to purchase from the Company and the Company desires to
sell to Buyers, on the terms and subject to the conditions of this Agreement,
all the business and properties of the Company in return for the Purchase Price
provided for herein;
The Partners owns all of the outstanding partnership interests in the
Company and desire that this transaction be consummated;
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. SALE AND TRANSFER OF ASSETS.
1.01 GENERAL. Subject to the terms and conditions set forth in
this agreement, the Company agrees to sell, convey, transfer, assign,
and deliver to Buyers, and Buyers agree to purchase from the Company,
all the assets, properties, and business of Company of every kind,
character, and description, whether tangible, intangible, real,
personal, or mixed, and wherever located (except the Excluded Assets),
all of which are collectively referred to as the "Assets", including,
but without limitation to, the following:
(a) SCHEDULED PROPERTY. All property and other rights
listed as assets of the Company in the schedules or exhibits
attached to this Agreement;
(b) CONTRACTUAL RIGHTS. All rights and benefits of the
Company under all contracts, including, without limitation, all
(i) leases of real property used by the Company in the operation
of its Business and all leasehold improvements and fixtures
relating thereto, and (ii) all leases or rental agreements
covering machinery, equipment computer hardware and software,
tools, supplies, furniture and fixtures, vehicles and other
tangible personal property and assets used in the Business of the
Company.
(c) LICENSES AND PERMITS. All licenses, permits, operating
rights and franchises held or used by the Company in connection
with the ownership of the assets and the conduct of the operation
of the Assets.
(1)
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(d) EQUIPMENT. All rolling stock, containers, machinery,
equipment, fixtures, furniture, computer hardware and software,
tools, supplies, vehicles and other tangible personal property
and assets of the Company related to its Business.
(e) SHORT TERM ASSETS. All royalty rights, purchase and
sale orders, inventories, deposits, cash and cash equivalents,
accounts receivable, short-term investments, inventory and
prepaid expenses of the Company arising in connection with the
Business of the Company.
(f) NAMES AND NUMBERS. All right, title and interest the
Sellers have to use any trade names (including, without
limitation, "Parallel Products"), trademarks, service marks,
copyrights, patents, phone numbers and the like related to the
Business of the Company.
(g) RECORDS. All operating data and records of the Company
relating to its Business, including, without limitation, customer
lists and records, production reports and records, equipment
logs, operating guides and manuals, projections, copies of
financial, accounting and personnel records, correspondence and
other similar documents and records; provided, however, that
Seller may retain copies of such records as may be necessary for
Internal Revenue Service and local tax verification purposes.
(h) REAL PROPERTY. Those certain parcels of real property
(the "Land") more particularly described in SCHEDULE 4.14 hereof
together with any buildings, structures, or other improvements or
fixtures located on the Land and all rights, privileges, and
easements appurtenant to the Land, including, without limitation,
all minerals, oil, gas and other hydrocarbon substances on or
under the Land (to the extent owned by Sellers) as well as all
development rights, permits, air rights, water, water rights, and
water stock relating to the Land, and any other easements,
rights-of-way or appurtenances used in connection with or
existing for the benefit of the Land owned by the Company
(collectively the "Real Property").
(i) OTHER ASSETS. All other real, personal and mixed
property and assets of every kind and nature, tangible or
intangible (including warranties and performance guaranties with
respect to such assets) owned by the Company or used or held for
use by the Company in connection with the Business of the
Company, except Excluded Assets.
(j) EXCLUDED ASSETS. The Assets shall not include assets
of the Company used primarily in connection with the "Cucamonga
Gold" line of business (the "Excluded Assets") specifically set
forth on SCHEDULE 1.01(J). Buyers and Seller shall enter into a
supply agreement for the purchase of raw materials used in the
manufacture of "Cucamonga Gold" products at fair market price
under commercially reasonable terms.
(2)
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1.02 PURCHASE PRICE. Subject to Sections 1.03 and 2 below and the
contingencies set forth in the Section 1.02, Buyers will pay to the
Company for the Assets the aggregate sum of $15,750,000 less the amount
of any Long Term Liabilities as of the Closing (the "Purchase Price")
payable as follows:
(a) CLOSING CASH PAYMENT. $7,250,000 less the amount of
any Long Term Liabilities (the "Closing Cash Payment"), in
immediately available funds at the Closing.
(b) CLOSING STOCK PAYMENT. $4,300,000 (the "Closing Stock
Payment") in common stock of U S Liquids, Inc. ("Parent"), a
Delaware corporation (such stock referred to as "Parent Stock")
at the Closing. Buyers will issue (or cause Parent to issue) and
deliver to the Company, duly executed certificates in valid form
evidencing, in the aggregate, that number of shares of Parent
Stock determined as to the nearest whole share, by dividing into
the amount of the Closing Stock Payment, the average of the
closing sale price for such shares on the American Stock Exchange
("AMEX"), as reported by THE WALL STREET JOURNAL, for the twenty
(20) trading days prior to the earlier of (i) five (5) trading
days immediately preceding the Closing Date, or (ii) the public
announcement of this transaction (the "Valuation Price").
(c) CONTINGENT CASH PAYMENT. $2,100,000 (the "Contingent
Cash Payment") in immediately available funds, if the annual
earnings before interest, income tax, depreciation, and
amortization ("EBITDA") of the Business transferred hereunder
exceed $3,200,000 in any four consecutive quarters during the
first three (3) consecutive years after the Closing Date, payable
within sixty (60) days after attainment of such earnings (the
"Contingent Payment Date").
(d) CONTINGENT STOCK PAYMENT. $2,100,000 (the "Contingent
Stock Payment") in Parent Stock if the annual EBITDA of the
Business transferred hereunder exceed $3,200,000 in any four
consecutive quarters during the first three (3) consecutive years
after the Closing Date, payable on or before the Contingent
Payment Date. Buyers will issue (or cause Parent to issue) and
deliver to the Company, duly executed certificates in valid form
evidencing, in the aggregate, that number of shares of Parent
Stock determined as to the nearest whole share, by dividing the
average of the closing sale price for such shares on the AMEX, as
reported by THE WALL STREET JOURNAL, for the twenty (20) trading
days prior to the five (5) trading days immediately preceding the
Continent Payment Date into the amount of the Contingent Stock
Payment.
(e) EBITDA CALCULATIONS. In calculating the EBITDA of the
Company for purposes of the Contingent Cash Payment and the
Contingent Stock Payment, Buyers agree that they shall:
(i) measure only the Business transferred hereunder
and not aggregate loss activities from any other
Affiliates of Parent;
(3)
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(ii) include all profits from the Business
transferred hereunder regardless of the fact that
such Business will be held by three separate
entities-PPF, PPC and PPK;
(iii) reduce the EBITDA threshold of $3,2000,000 in
the event that a substantial portion of the
Business transferred hereunder is disposed of other
than in the Ordinary Course of Business during the
first three (3) consecutive years. In such event,
the EBITDA threshold shall be reduced in proportion
to the value of that the assets comprising the
portion of the Business disposed of bears in
relation to the Purchase Price. For purposes of
this determination, assets disposed of shall be
valued consistent with the allocations of the
Purchase Price set forth in SCHEDULE 1.04.
(iv) take no write-off and/or charge affecting
EBITDA in any quarter which, if taken in the next
succeeding quarter would have resulted in a
Contingent Cash payment and Contingent Stock
Payment.
(v) use their reasonable best efforts to maximize
the EBITDA of the Company consistent with Buyers'
Ordinary Course of Business;
(vi) ensure that write-off and charges affecting
EBITDA of the Company shall be directly related to
operations of the Business and not related to other
Affiliates of the Buyers or Parent;
(vii) ensure that compensation and overhead for the
Company shall be consistent with the Ordinary
Course of Business of the Parent and consistent
with allocations made to other Subsidiaries of
Parent;
(viii) cause the Buyers' accountants to make the
calculations of EBITDA of the Company in accordance
with GAAP, applied consistently; and
(ix) provide access by Sellers to the accounting
records relating to the business for the purpose of
confirming the EBITDA of the Company.
(f) VALIDITY; OTHER MATTERS. The Parent Stock, when issued
and delivered as provided herein, will be duly authorized and
validly issued, fully paid, nonassessable and free of any
preemptive rights, and will be covered by a then-effective
registration statement under the Securities Act of 1933, as
amended (the "Securities Act"). Buyers shall file, or cause
Parent to file, with the AMEX a subsequent listing application
such that the Parent Stock is tradable on such exchange.
(4)
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(g) RESALE OF PARENT STOCK. For a period of one year after
the Closing Date, Sellers shall comply with the resale
requirements of Rule 145(d) under the Securities Act, more
specifically, the volume limitations, broker transactions, and
manner of sale provisions of Rule 144(e), (f) and (g),
respectively. In addition, fifty percent (50%) of the Parent
Stock representing the Closing Stock Payment (the "Restricted
Stock") shall not be sold assigned, exchanged, transferred,
encumbered, pledged, distributed or otherwise disposed of for a
period of one (1) year after issuance
(h) LEGENDS. Sellers acknowledges and agrees that all
Parent Stock shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF RULE 145(D) PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AND MAY NOT BE TRANSFERRED OR
DISPOSED OF BY THE HOLDER WITHOUT COMPLIANCE WITH SAID
RULE.";
PROVIDED, HOWEVER, that pursuant to Rule 145(d) of the
Securities Act, on the first anniversary following the
Closing Date, the foregoing legend shall be removed from
such certificates, and Buyers (or Parent) shall issue a
certificate without such legend to the Company upon
request.
In addition, the Restricted Stock shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
VOLUNTARILY SOLD, ASSIGNED, EXCHANGED, TRANSFERRED,
ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE
DISPOSED OF, AND ISSUER SHALL NOT BE REQUIRED TO GIVE
EFFECT TO ANY ATTEMPTED VOLUNTARY SALE, ASSIGNMENT,
EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION,
APPOINTMENT OR OTHER DISPOSITION OF ANY OF THESE SHARES,
DURING THE ONE-YEAR PERIOD ENDING ON [APPROPRIATE DATE]."
(i) EXPENSES OF ISSUANCE OF PARENT STOCK. With respect to
the initial issuance of the Parent Stock, Buyers (or Parent)
shall pay all customary fees, costs and expenses of such
issuance, including without limitation all registration, filing
and
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AMEX fees, printing expenses and fees and disbursements of
counsel and accountants for Buyers or Parent.
1.03 ASSUMPTION OF LIABILITIES. Buyers shall not assume (and as
of the Closing the Company shall not have) any liabilities of Sellers or
the Company except Current Liabilities, and the Long Term Liabilities of
the Company set forth in SCHEDULE 1.03 under the heading "ASSUMED
LIABILITIES". SCHEDULE 1.03 also sets forth under the heading
"LIABILITIES PAID AT CLOSING", the amount required to be paid by the
Company (or Sellers) to Wells Fargo Bank, N.A. as of the Closing Date in
order to obtain free and clear title and ownership to all of the Assets
being conveyed hereunder. The Assumed Liabilities and the Liabilities
Paid at Closing together comprise the Long Term Liabilities of the
Company. The Liabilities Paid at Closing shall be paid directly by
Buyers, by wire transfer to Wells Fargo Bank, N.A., at Closing. Sellers
shall be solely responsible for seeing that any liens, mortgages or
encumbrances held by Wells Fargo Bank, N.A. or its successors on any
portion of the Assets are fully and promptly released following the
payment of the Liabilities Paid at Closing by Buyers.
1.04 ALLOCATION OF ASSETS AND PURCHASE PRICE. The Seller shall
convey all of the Assets relating to the California and Oregon portion
of the Business to PPC, all of the Assets relating to the Kentucky
portion of the Business to PPK and all of the Assets of the Florida
portion of the Business to PPF, pursuant to the bills of sale,
assignments, and deeds attached hereto as Exhibits A-1, A-2, A-3, B, C-1
and C-2. SCHEDULE 1.04 sets forth the allocation of the Purchase Price
among the Assets. Each of the Parties agrees to report this transaction
for federal and state tax purposes in accordance with such allocation of
the Purchase Price.
1.05 EXCISE AND PROPERTY TAXES. The Buyers shall pay all sales
and use taxes arising out of the transfer of the Assets and the Sellers
shall pay their portion, prorated as of the Closing Date (as defined
herein), of state and local real and personal property taxes of the
Company. Buyers shall not be responsible for any business, occupation,
withholding, or similar tax, or any taxes of any kind related to any
period before the Closing Date.
1.06 THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the law offices of
Best Best & Krieger, LLP, 800 North Haven, Suite 120, Ontario,
California 91764, commencing at 10:00 a.m. local time on April 21, 1998,
unless the Parties otherwise agree in writing.
1.07 TITLE ASSURANCES. Sellers shall furnish to the Buyers the
following title assurances:
(a) OWNERS TITLE POLICY. Sellers shall furnish to Buyers
an extended coverage owners policy of title insurance from a
title company reasonably acceptable to Buyers (the "Title
Company") in the agreed upon fair market value of the properties
and including comprehensive access, non-arbitration, going
concern, and zoning endorsements (where reasonably available from
the Title Company, insuring title to each parcel of the Land to
be in fee simple in the Buyers subject only to the exceptions
permitted by Section 1.07(b) hereof (the "Owners Policy").
Sellers shall
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deliver to Buyers a preliminary title commitment in respect of
each parcel of the Land, together with copies of all exception
instruments referenced therein, and any unrecorded leases, option
agreement, contracts and any other items affecting title which
are in the possession of, or known to, Sellers at least 10
business days prior to the Closing. Buyers shall advise Sellers
within 7 business days after actual receipt of all such
materials, what exceptions to title, if any, will be accepted by
Buyers.
(b) PERMITTED ENCUMBRANCES. The Owners Policy shall insure
Buyers' interest in the Land to be free and clear of all
encumbrances whatsoever except: (i) zoning ordinances and
regulations which do not, in Buyers' reasonable judgement,
materially and adversely affect Buyers' use of the Land for the
Business; (ii) real estate taxes and assessments, both general
and special, which are a lien but not yet due and payable at the
Closing Date; and (iii) easement, encumbrances, covenants,
conditions, reservations and restrictions of record, if any, that
do not materially and adversely affect Buyers' use of the Land
for the Business or which have been approved in writing by
Buyers. Sellers shall pay all of the costs associated with the
delivery of the Owners Policy to Buyers.
(c) SURVEY. Sellers shall obtain for Buyers' use and for
the use of the Title Company in connection with the issuance of
the Owners Policy, a current and complete survey of each parcel
of the Land, made on the ground by a competent registered
surveyor, showing: (i) the exact boundary lines of the Land; (ii)
the location thereon of all, if any, buildings, improvements,
water-courses, streams, roads, utilities, utility connections,
and easements now existing; (iii) the number of acres in each
parcel of the Land; (iv) the location of any buildings, fences or
other improvements which encroach on the Land; (v) the location
of any improvements on the Land which encroach on any neighboring
property or on any property which is subject to any easement or
right-of-way; (vi) all building lines established in respect of
the Land; and (vii) all public access to the Land, and
representing the boundaries of the Land are contiguous with the
boundaries of all adjoining parcels (the "Survey"). Prior to the
Closing, a copy of the Survey complying with the above
requirements shall be delivered to Buyers and the Title Company,
together with certification to each entity by the surveyor, which
certification complies with American Land Title Association
guidelines, and also together with such additional supporting
reports and other certificates as the Title Company may require
to enable the Title Company to delete its standard survey
exceptions from the Owners Policy. Sellers shall pay all costs of
the Survey.
1.08 DELIVERIES AT THE CLOSING. At the Closing, (a) the Sellers
will deliver to the Buyers the various certificates, instruments, and
documents referred to in Section 7.01 below, and (b) the Buyers will
deliver to the Sellers the various certificates, instruments, and
documents referred to in Section 7.02 below.
1.09 EFFECTIVE DATE OF TRANSACTION. The Parties hereto agree that
the effective date of the transactions contemplated hereby shall be as
of the Closing Date.
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2. POST CLOSING ADJUSTMENT.
2.01 CALCULATION OF NET WORKING CAPITAL AT CLOSING DATE. On or
before the date that is ninety (90) days after the Closing Date, Buyers'
accountants shall compute the amount of Net Working Capital of the
Company with respect to the Assets as of the Closing Date , and shall
provide Sellers a summary reflecting how such computations were made.
Sellers and their accountants shall have the opportunity to review such
computations.
2.02 PAYMENT OF ADJUSTMENT AMOUNTS. If the Net Working Capital of
the Company with respect to the Assets as of the Closing Date is greater
than zero (0), then Buyers shall, within ten (10) business days of such
computation by Buyers' independent public accountants, pay the Company,
by check, an amount equal to the positive amount of Net Working Capital.
If the Net Working Capital with respect to the Assets as of the Closing
Date is less than zero (0), then the Company, within ten (10) business
days of such computation, shall pay Buyers, by check, an amount equal to
the negative amount of Net Working Capital.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
3.01 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Sellers
represent and warrant to the Buyers that the statements contained in
this Section 3.01: (i) are correct and complete as of the date of this
Agreement; (ii) will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 3.01); and (iii) shall
survive the Closing.
(a) AUTHORIZATION OF TRANSACTION. Sellers have full power
and authority to execute and deliver this Agreement and to
perform their obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of Sellers, enforceable
in accordance with its terms and conditions. Except as set forth
in SCHEDULE 3.01 hereof, Sellers are not required to give any
notice to, make any filing with, or obtain any authorization,
consent, or approval of, any government or governmental agency in
order to consummate the transactions contemplated by this
Agreement.
(b) NONCONTRAVENTION. Except at provided in SCHEDULE 3.01,
neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which Sellers
are subject or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any material agreement,
contract, lease, license, instrument, or other arrangement to
which Sellers are a party or by which Sellers are bound or to
which the Assets are subject.
(8)
<PAGE>
(c) BROKERS' FEES. Sellers do not have any Liability or
obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this
Agreement for which the Buyers could become liable or obligated.
3.02 REPRESENTATIONS AND WARRANTIES OF THE BUYERS. The Buyers
represent and warrant to the Sellers that the statements contained in
this Section 3.02 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 3.02:
(a) ORGANIZATION OF THE BUYERS. PPC is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of California. PPK is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Kentucky. PPF is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Florida.
(b) AUTHORIZATION OF TRANSACTION. The Buyers have full
power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of the Buyers, enforceable
in accordance with its terms and conditions. The Buyers need not
give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement.
(c) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyers are
subject or any provision of their respective articles and bylaws
or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require
any notice under any material agreement, contract, lease,
license, instrument, or other arrangement to which the Buyers are
a party or by which they are bound or to which any material
amount of their assets are subject.
(d) BROKERS' FEES. The Buyers have no Liability or
obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this
Agreement for which Sellers could become liable or obligated.
(e) SECURITIES DOCUMENTS. Parent has filed all required
documents (the "Parent Securities Documents") with the SEC and
all other federal and state securities regulatory authorities
(the "Securities Authorities"). As of their respective dates, the
Parent Securities Documents complied in all material respects
with the requirements of the Securities Authorities and none of
the Parent Securities Documents contained any untrue statement of
a material fact or omitted to state a
(9)
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material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under
which they were made, not misleading.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date
of the most recent Parent Reports, there has not been any change,
event or development in or affecting Parent that constitutes or
would reasonably be expected to have a material adverse effect on
Parent or to delay or prevent the consummation of the
transactions contemplated hereby.
(g) ABSENCE OF LITIGATION. Except as set forth in the
Parent's Securities Documents, there are no suits, claims,
actions, proceedings or investigations pending or threatened
against Parent or any of its subsidiaries, or any properties or
rights of Parent or any of its subsidiaries, before any court,
arbitrator or other governmental entity, domestic or foreign,
that, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the Parent. Neither
Parent nor any of its subsidiaries nor any of their respective
properties is or are subject to any writ, judgment, injunction,
decree, determination or award having, or which could reasonably
be expected to have a material adverse effect on the Parent or to
delay or prevent the consummation of the transactions
contemplated hereby.
(h) DISCLOSURE. The representations and warranties
contained in this SECTION 3.02 do not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements and information
contained in this SECTION 3.02 not misleading.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.
Sellers represent and warrant to the Buyers that except as set forth in
the schedules to the subsections of this Section 4 delivered by the Sellers to
Buyers on the date hereof (such schedules hereinafter collectively referred to
as the "Disclosure Schedules" and individually as a "Disclosure Schedule") the
statements contained in this Section 4: (i) are correct and complete as of the
date of this Agreement; (ii) will be correct and complete as of the Closing
Date, including with respect to any assets acquired by, or transferred to, the
Company after the date hereof (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 4);
and (iii) shall survive the Closing. Nothing in the Disclosure Schedules shall
be deemed adequate to disclose an exception to a representation or warranty made
herein, however, unless the Disclosure Schedule sufficiently identifies the
exception and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other item itself).
4.01 ORGANIZATION, QUALIFICATION, AND POWER. The Company is a
limited partnership duly organized, validly existing, and in good
standing under the laws of the State of California, and is duly
authorized to conduct business and is in good standing under the laws of
each jurisdiction where such qualification is required. The Company has
full power
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and authority and all licenses, permits, and authorizations necessary to
carry on the business in which it is engaged and to own and use the
properties owned and used by it. SCHEDULE 4.01 hereto lists the general
partner of the Company, the federal tax ID numbers of the Company and
the Social Security Number of the Partners. Attached to SCHEDULE 4.01
are correct and complete copies of the Certificate of Limited
Partnership (LP-1) and partnership agreement of the Company (as amended
to date). The record books of the Company are correct and complete. The
Company is not in default under or in violation of any provision of its
partnership agreement.
4.02 CAPITALIZATION. The entire general and limited partnership
interests of the Company are as set forth in SCHEDULE 4.02; and no
partnership interests other than those reflected in such schedule as
being currently outstanding have ever been issued. All of the issued and
outstanding partnership interests have been duly authorized, are validly
issued, and are held of record by the Partners, in the percentages for
each Partner (a Partner's "Pro-Rata Share") as set forth in SCHEDULE
4.02,. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require the Company
to issue, sell, or otherwise cause to become outstanding any of its
partnership interests. There are no outstanding or authorized equity
appreciation, profit participation, or similar rights with respect to
the Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the partnership interests of the Company.
4.03 NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Company is subject or any provision of the partnership agreement of
the Company or (b) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other
arrangement to which the Company is a party or by which it is bound or
to which any of its Assets are subject (or result in the imposition of
any Security Interest upon any of its Assets). Except as set forth in
SCHEDULE 4.03, the Company is not required to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
4.04 BROKERS' FEES. Except as set forth in SCHEDULE 4.04, the
Company does not have any Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
4.05 TITLE TO ASSETS. The Company has good and marketable title
to all the Assets and interest in the Assets, whether real, personal,
mixed, tangible, or intangible, which constitute all the assets and
interests in assets that are used in the Business of Company. Except as
set forth in SCHEDULE 4.05, all the Assets are free and clear of
mortgages, liens, pledges, charges, encumbrances, equities, claims,
easements, rights of way, covenants, conditions, or restrictions, except
for: (i) the lien of current taxes not yet due and payable;
(11)
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and (ii) possible minor matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere
with the present or intended use of any of these assets, nor materially
impair business operations. All real property and tangible personal
property of Company is in good operating condition and repair, ordinary
wear and tear excepted. Company is in possession of all premises leased
to it from others. Neither the Partners, nor any general partner or
employee of the Company, nor any spouse, child, or other relative of any
of these persons, owns, or has any interest, directly or indirectly, in
any of the real or personal property owned by or leased to the Company
or any copyrights, patents, trademarks, trade names, or trade secrets
licensed by the Company. The Company does not occupy any real property
in violation of any law, regulation, or decree.
4.06 CUSTOMERS AND SALES. A correct and current list of all
customers of the Company together with summaries of the sales made to
each customer with a sales volume of more than $5,000 during the most
recent fiscal year is attached to this Agreement as SCHEDULE 4.06.
Except as indicated in that Schedule, neither the Company nor the
Partners has any information, nor is aware of any facts, indicating that
any of these customers intend to cease doing business with the Company
or materially alter the amount of the business that they are presently
doing with the Company.
4.07 NO SUBSIDIARIES OR EQUITY INVESTMENTS. The Company does not
have any subsidiaries, and does not control, directly or indirectly, or
have any direct or indirect equity participation in, any corporation,
partnership, trust, or other business association.
4.08 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 4.08 are
the following financial statements (collectively the "FINANCIAL
STATEMENTS"): (a) audited statement of assets, liabilities and partners'
interest, statement of revenue and expenses and changes in partners'
interest and statement of cash flows for the twelve months ended
December 31, 1995, 1996 and 1997 (the "MOST RECENT FISCAL YEAR END") for
the Company; and (ii) reviewed statement of assets, liabilities and
partners' interest, statement of revenue and expenses and changes in
partners' interest and statement of cash flows (the "MOST RECENT
FINANCIAL STATEMENTS") as of and for the one month ended January 31,
1998 (the "MOST RECENT FISCAL MONTH END") for the Company. The Financial
Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the
Company and the Assets as of such dates and the results of operations of
the Company for such periods, are correct and complete, and are
consistent with the books and records of the Company (which books and
records are correct and complete); PROVIDED, HOWEVER, that the Most
Recent Financial Statements are subject to normal year-end adjustments
(which will not be material individually or in the aggregate) and lack
footnotes and other presentation items. The Company has not changed its
accounting policies and practices in the past three years. No prior
period adjustment is reflected in the statements of revenue and expenses
and changes in partners' interest and cash flow contained in the
Company's Most Recent Financial Statements.
4.09 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the
Most Recent Fiscal Year End, there has not been any material adverse
change in the business, financial condition, operations, results of
operations, or future prospects of the Company. Without
(12)
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limiting the generality of the foregoing, except as set forth in
SCHEDULE 4.09, since such date there has been no:
(a) Transaction by the Company except in the Ordinary
Course of Business as conducted on that date;
(b) Capital expenditure by the Company exceeding $10,000;
(c) Material adverse change in the financial condition,
liabilities, assets, business, or prospects of the Company taken
as a whole;
(d) Destruction, damage to, or loss of any of the Assets
(whether or not covered by insurance) that materially and
adversely affects the financial condition, business, or prospects
of the Company;
(e) Labor trouble or other event or condition of any
character materially and adversely affecting the financial
condition, business, assets, or prospects of the Company;
(f) Change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization
policies or rates) by the Company;
(g) Revaluation by the Company of any of the Assets;
(h) Declaration, setting aside, or payment of a dividend
or other distribution in respect to the partnership interests of
the Company, or any direct or indirect redemption, purchase, or
other acquisition by Company of any of its partnership interests;
(i) Increase in the salary or other compensation payable
or to become payable by the Company to any of its employees, or
the declaration, payment, or commitment or obligation of any kind
for the payment, by the Company, of a bonus or other additional
salary or compensation to any such person;
(j) Sale or transfer of any of the Assets, except in the
Ordinary Course of Business;
(k) Amendment or termination of any contract, agreement,
or license to which the Company is a party, except in the
Ordinary Course of Business;
(l) Loan by the Company to any person or entity, or
guaranty by the Company of any loan;
(m) Mortgage, pledge, or other encumbrance of any of the
Assets;
(13)
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(n) Waiver or release of any right or claim of the Company
except in the Ordinary Course of Business;
(o) Other event or condition of any character that has or
might reasonably have a material and adverse effect on the
financial condition, business, assets, or prospects of the
Company;
(p) Issuance or sale by the Company of any partnership
interests; or
(q) Agreement by Company to do any of the things described
in the preceding clauses (a) through (p).
4.10 UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE
4.10, to the Knowledge of Sellers, the Company does not have any
Liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand
against the Company giving rise to any Liability), except for (i)
Liabilities set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) and (ii) Liabilities which have
arisen after the Most Recent Fiscal Month End in the Ordinary Course of
Business (none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
4.11 TAX MATTERS. To the Knowledge of Sellers, with respect to
the Company, (a) all Tax Returns and all similar filings required to be
filed on or before the Closing Date by the Company (true and correct
copies of which have been furnished to the Buyers) with respect to any
Taxes have been timely filed with the appropriate governmental agencies
in all jurisdictions in which such Tax Returns are required to be filed,
or are on a timely filed extension, and all such Tax Returns correctly
reflect the liability of the Company for Taxes for the periods,
properties or events covered thereby; (b) all Taxes payable with respect
to the Tax Returns, and all Taxes accruable with respect to events
occurring through the Closing Date, whether disputed or not, and whether
or not shown on any Tax Return, will have been paid in full prior to the
Closing Date, or an adequate accrual in accordance with GAAP is provided
with respect thereto on the Most Recent Balance Sheet; (c) no deficiency
in respect of any Taxes which has been assessed against the Company
remains unpaid and there are no unassessed Tax deficiencies or any
audits or investigations pending or threatened against the Company with
respect to any Taxes, (d) except for the 1997 tax year, which is
currently on extension, there is in effect no extension for the filing
of any Tax Return and the Company has not extended or waived the
application of any statute of limitations of any jurisdiction regarding
the assessment or collection of any Tax; (e) no claim has ever been made
by any Tax authority in a jurisdiction in which the Company does not
file Tax Returns that they are or may be subject to taxation by that
jurisdiction; (f) there are no liens for Taxes upon any Assets except
for liens for current Taxes not yet due; (g) no issues have been raised
in any examination by any Tax authority with respect to the Company
which, by application of similar principles, reasonably could be
expected to result in a proposed deficiency for any other period not so
examined; (h) the Company is not a party to any Tax allocation or
sharing agreement or otherwise under any obligation to indemnify any
person with respect to any Taxes; (i) the Company is not a party to any
joint venture, partnership or other arrangement
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that is treated as a partnership for federal income tax purposes; (j)
there are no accounting method changes or proposed accounting method
changes of the Company that could give rise to an adjustment under
section 481 of the Code for periods after the Closing Date; (k) there
are no requests for rulings in respect of any Tax pending between the
Company and any Tax authority; (l) the Company has never been a member
of any affiliated group as defined in Section 1504 of the Code; (m) the
Company has timely made all deposits required by law to be made with
respect to employees' withholding and other employment taxes; (n) the
Company has not filed any consent under Section 341(f) of the Code; and
(o) none of the Assets are treated as owned by any other person under
the "safe harbor lease" provisions of former Section 168(f)(8) of the
Code.
4.12 REAL PROPERTY. An accurate description of each parcel of
real property owned by or leased to the Company is attached to this
agreement as SCHEDULE 4.12. That Schedule contains a list of the
policies of title insurance issued to Company for these properties. To
the Knowledge of Sellers, all the leases listed in that Schedule are
valid and in full force, and there does not exist any default or event
that with notice or lapse of time, or both, would constitute a default
under any of these leases.
With respect to the Land (as defined herein):
(a) none of the Sellers, or to the Sellers' Knowledge, any
third party has ever conducted landfill operations on the
Land. The Land is fully licensed, permitted and authorized
for operation under, and in compliance with, all
Applicable Laws. The Land is fully in compliance with all
Applicable Laws and Environmental, Health and Safety Laws.
(b) the Land can be used after the Closing as it has been used
by Sellers prior the Closing without violating any
Applicable Law or private restriction, and such uses are
legal conforming uses. There are no proceedings or
amendments pending and brought by or, to the Knowledge of
Sellers, threatened by, any third party which would result
in a change in the allowable uses of the Land or which
would modify the right of the Company to use the Land as
contemplated after the Closing Date;
(c) Sellers have made available to Buyers all engineering,
geologic and other similar reports, documentation and maps
relating to the Land in the possession or control of
Sellers;
(d) Except as set forth in SCHEDULE 4.10 or SCHEDULE 4.12(D),
none of the Sellers or the Land is or, to the Knowledge of
Sellers ever has been, involved in any litigation or
administrative proceeding seeking to impose fines,
penalties or other liabilities or seeking injunctive
relief for violation of any Applicable Laws;
(e) to the Knowledge of Sellers, no Person, other than the
Company, has a present or future right to possession of
all or any part of the Land;
(15)
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(f) to the Knowledge of Sellers, no portion of the Land
contains any areas that could be characterized as
disturbed, undisturbed or man made wetlands or "waters of
the United States" pursuant to any Applicable Laws or the
procedural manuals of the Environmental Protection Agency,
U.S. Army Corps of Engineers or the California
Environmental Protection Agency (or similar Oregon or
Kentucky agencies), whether such characterization reflects
current conditions or historic conditions which have been
altered without the necessary permits or approvals;
(g) no work has been performed on the Land within 120 days of
the date hereof for which a mechanic's lien could be
filed;
(h) except as set forth in SCHEDULE 4.05, there are no levied
or pending special assessments affecting all or any part
of the Land owed to any governmental entity and, to the
Knowledge of Sellers, none is threatened;
(i) except as set forth in SCHEDULE 4.10, there are no pending
or, to the Knowledge of Sellers, threatened condemnation
or eminent domain proceedings affecting all or any part of
the Land;
(j) except as set forth in SCHEDULE 4.03, the Sellers have
provided to the government agencies requiring the same,
all material reports, notices, filings and other
disclosures required by Applicable Laws and all such
reports, notices, filings and other documents were
complete and accurate in all material respects at the time
provided to said governmental agencies;
(k) no liens with respect to environmental liability have been
imposed against the Land under CERCLA, any comparable
California, Oregon or Kentucky statute or other Applicable
Law and no facts or circumstances exist which could give
rise to same; and
(l) no portion of the Land is listed on the CERCLIS list or
the National Priorities List of Hazardous Waste Sites or
any similar list maintained by the State of California,
Oregon or Kentucky and none of the Sellers is listed as a
potentially responsible party under CERCLA, any comparable
California, Oregon or Kentucky statute or other Applicable
Law, and none of the Sellers has received a notice of such
a listing.
(16)
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4.13 INTELLECTUAL PROPERTY. The Company has not infringed, and is
not now infringing, on any trade name, trademark, service mark, or
copyright belonging to any other person, firm, or corporation. A
schedule of all trade names, trademarks, service marks, and copyrights
and their registrations, owned by Company or in which it has any rights
or licenses, together with a brief description of each, is attached to
this agreement as SCHEDULE 4.13. Except as set forth in that Schedule
(and excluding software subject to licensing restrictions), Company is
not a party to any license, agreement, or arrangement, whether as
licensor, licensee, or otherwise, with respect to any trademarks,
service marks, trade names, and copyrights necessary for its business as
now conducted by it (including without limitation those listed in that
Schedule), and that use does not, and will not, conflict with, infringe
on, or otherwise violate any rights of others.
4.14 PERSONAL PROPERTY.
(a) Attached as SCHEDULE 4.14 is a complete and accurate
list and a complete description as of the date hereof of all
personal property carried on the books of the Company which will
exist on the Closing Date (the "Personal Property"). All such
Personal Property is in good working order;
(b) The Company has good title to, or a valid leasehold
interest in, the Personal Property, free and clear of all
Security Interests, liens or other Adverse Claims;
(c) All leases set forth in Schedule 4.14 are in full
force and effect and constitute valid and binding agreements of
the parties thereto (and their successors) in accordance with
their respective terms. No default by Company, or any other party
to any of such leases exists, or would exist except for the
passage of time or delivery of a notice or both;
(d) All Personal Property is either owned by Company or
leased by Company under an agreement indicated on SCHEDULE 4.14.
4.15 CONTRACTS. Other than contracts cancelable on 60 days
notice, to the Knowledge of Sellers, SCHEDULE 4.15 lists the following
contracts and other agreements to which the Company is a party:
(a) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies,
products, or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over a
period of more than one year, result in a material loss to the
Company, or involve consideration in excess of $10,000;
(b) any agreement (or group of related agreements) under
which the Company has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $10,000 or under
(17)
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which the Company has imposed a Security Interest on any of its
Assets, tangible or intangible;
(c) any agreement with any of the Sellers and their
Affiliates, or regarding the advance of money to owners,
employees, officers, directors or agents of the Company or it
general partner;
(d) any profit sharing, option, purchase, equity
appreciation, deferred compensation, severance, or other plan,
agreement or arrangement for the benefit of current or former
owners, directors, officers, employees and independent
contractors; and any agreement for the employment or engagement
of any Person;
(e) any agreement concerning confidentiality or
noncompetition;
(f) any agreement concerning a partnership or joint
venture;
(g) any collective bargaining agreement; and
(h) any agreement under which the consequences of a
default or termination could have a material adverse effect on
the business, financial condition, operations, results of
operations, or future prospects of the Company; or any other
agreement (or group of related agreements) the performance of
which involves consideration in excess of $10,000.
With respect to each such agreement, and except as disclosed in
Schedule 4.15: (i) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (ii) the agreement
will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (iii) no
party is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration,
under the agreement; and (iv) no party has repudiated any
provision of the agreement.
4.16 HAZARDOUS MATERIALS; DISPOSAL SITES. Except as set forth in
SCHEDULE 4.16, and other than waste materials included in residential or
commercial waste that have in all respects been handled, processed and
treated in compliance with all Environmental Laws and all other
applicable laws (including laws related to the permissible types and
quantities of such waste material), to the Knowledge of Sellers, Sellers
have never generated, transported, stored, handled, recycled, reclaimed,
disposed of, or contracted for the disposal of, Hazardous Materials (as
hereinafter defined). As used herein, the term "Hazardous Materials"
includes, but is not limited to, (i) any petroleum or petroleum
products, natural gas, or natural gas products, radioactive materials,
asbestos, urea formaldehyde foam insulation, transformers or other
equipment that contains dielectric fluid containing levels of
polychlorinated biphenyls ("PCBs"), and radon gas; (ii) any chemicals,
materials, waste or substances defined as or included in the definition
of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes,"
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"toxic substances," "toxic pollutants," "contaminants," or "pollutants,"
or words of similar import, under any Environmental Laws (as hereinafter
defined); and (iii) any other chemical, material, waste or substance
which is in any way regulated by any federal, state or local government
authority, agency or instrumentality, including mixtures thereof with
other materials, and including any materials such as asbestos and lead;
and the term "Environmental Laws" includes, but is not limited to, any
federal, state or local statute, law, rule, regulation, ordinance, code,
policy or rule of common law now in effect and in each case as amended
to date and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree, or
judgment, relating to the environment, human health or safety, or
Hazardous Materials, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. ss.ss. 9601, ET SEQ. ("CERCLA"); The Hazardous
Materials Transportation Act, as amended, 49 U.S.C. ss.ss. 1801, ET
SEQ.; the Resource Conservation and Recovery Act of 1976, as amended, 42
U.S.C. ss.ss. 6901, ET SEQ.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. ss.ss. 1201 ET SEQ.; the Toxic Substances Control
Act, 15 U.S.C. ss.ss. 2601, ET SEQ.; the Clean Air Act, 42 U.S.C. ss.ss.
7401, ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. ss.ss. 3808, ET
SEQ.; the Federal Insecticide, Fungicide and Rodenticide Act, as
amended, 7 U.S.C. ss. 136, ET SEQ. Sellers have never owned, operated,
had an interest in, engaged in and/or leased a waste transfer,
recycling, treatment, storage or disposal facility, business or activity
other than the Business. To the Knowledge of Sellers, no employee,
contractor or agent of Sellers has, in the course and scope of
employment with Sellers, been exposed to Hazardous Materials in such a
manner as to be harmed thereby. Attached hereto as SCHEDULE 4.16 is a
complete list of all disposal sites at any time now or in the past
utilized by Sellers, none of which sites is listed on the CERCLA list or
the National Priorities List of hazardous waste sites. Sellers are not
listed as a potentially responsible party under CERCLA or any comparable
or similar U.S. federal or California, Oregon or Kentucky statute,
Sellers have not received notice of such a listing and Sellers do not
know of any facts or circumstances which could give rise to such a
listing. Sellers have at all times produced or received and, in each
case, retained all transportation documentation, including all
appropriate trip tickets, required by any, or necessary to evidence
compliance with, Environmental Laws in connection with the hauling or
disposal of municipal solid waste, and no such document indicates that
the Sellers have ever hauled or transported Hazardous Materials. The
Sellers have retained all documentation described in the preceding
sentence, all of which is currently maintained in their files and
records; such documentation shall constitute a part of the Business and
shall be transferred to the Buyers at the Closing.
4.17 PERMITS AND ENVIRONMENTAL MATTERS. Sellers (i) have all
permits necessary for or customary in connection with the operation of
the Business, none of which permits are or will be terminated or
otherwise adversely affected by the sale of Assets pursuant to this
Agreement (and, except as otherwise provided herein, such sale will not
require the approval of any agency or authority to continue the
effectiveness of such permits) and (ii) SCHEDULE 4.17 is an accurate
list and summary description as of the date hereof of all permits,
titles (including motor vehicles titles and current registrations), fuel
permits, licenses, franchises and other, certificates, owned or held by
the Company, none of which permits, titles, licenses, franchises and
certificates infringe on the rights of others and all of which are now
valid, in good standing and in full force and effect. All such permits,
titles, licenses,
(19)
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franchises and certificates required by law have been obtained, are in
good standing and are adequate for the operation of the Business.
4.18 REPORTS, ETC. Attached as SCHEDULE 4.18 is a description and
copies, as of the date of this Agreement, of all records,
correspondence, reports, notifications, permits, licenses, engineering
studies, environmental impact studies, assessments and audits and all
notifications from governmental agencies and any other person or entity
and any other documents relating to: (a) the Company's or Partners'
current and past conduct related to the Business and any current or past
liabilities associated therewith; (b) each actual, current, past and
possible violation of Applicable Laws, hereinafter defined, by the
Sellers, or any other party or otherwise relating to the Business, or
any operations or activities in connection therewith, and all, if any,
claims in respect thereof; (c) each actual, potential or threatened
claim or lawsuit against the Sellers, or any operation or activities in
connection therewith; (d) the discharge, leakage, spillage, transport,
disposal or release of any material into the environment by the Sellers
or any other party or otherwise relating to the Business or any
operations or activities in connection therewith; (e) the arrangement
for transport, disposal or release of material into the environment, or
any operations or activities in connection therewith; and (f) employee
health, public health or the environment related to the Business or any
operations or activities in connection therewith (collectively, the
"Environmental Documents").
4.19 APPLICABLE LAWS COMPLIANCE.
(a) The Company is, and at all times during its operation
has been, fully licensed, permitted and authorized under all
federal, state and local statutes, laws, rules, regulations,
orders, permits (including, without limitation, zoning
restrictions and land use requirements) and licenses affecting or
otherwise applicable to the Business and any operations or
activities in connection therewith (collectively, the "Applicable
Laws");
(b) All activities and operations conducted in connection
with the Business, whether by the Sellers or third parties, have
at all times been and continue to be conducted in compliance with
all Applicable Laws;
(c) Except as disclosed on SCHEDULE 4.10, none of the
Sellers is now nor has ever been involved in any litigation or
administrative proceedings seeking to impose fines, penalties or
other liabilities or seeking injunctive relieve for violation of
any Applicable Laws and there are no facts or circumstances that
would give rise to same;
(d) There have been no spills, leaks, deposits or other
releases into the environment or otherwise in connection with the
Business or operations or activities in connection therewith, of
any Hazardous Materials;
(20)
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(e) The Sellers have never conducted or participated in
any landfill, land farming, recycling, waste hauling or other
disposal operations other than the Business;
(f) Sellers have provided Buyers all reports, notices,
filings and other disclosures related to the Business required by
Applicable Laws to be filed by the Company with any government
agencies; and the Company have duly and timely filed all such
reports with such agencies;
(g) No liens with respect to environmental liability have
been imposed against any of the Assets under CERCLA, any
comparable California, Oregon or Kentucky, or other Applicable
Laws and no facts or circumstances exist which would give rise to
the same; and
(h) Except as disclosed on SCHEDULE 4.10, to the Knowledge
of Sellers, none of the Sellers is in default under any
Applicable Laws or under any order of any court or governmental
administrative body having jurisdiction over the Company, or any
operations or activities thereon or thereunder, and there are no
claims, actions, suits or proceedings, pending or threatened,
against or affecting the Sellers at law or in equity, or before
or by any administrative body having jurisdiction; no notice of
any claim, action, suit or proceeding, whether pending or
threatened, has been received; and there are no facts or
circumstances which would give rise to the same.
4.20 ENVIRONMENT, HEALTH, AND SAFETY.
(a) Except as disclosed in SCHEDULE 4.10, to the Knowledge
of Sellers, the Company and its predecessors and Affiliates have
complied with all Environmental, Health, and Safety Laws, and no
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply. Without
limiting the generality of the preceding sentence, to the
Knowledge of Sellers, the Company and its predecessors and
Affiliates have obtained and been in compliance with all of the
terms and conditions of all permits, licenses, and other
authorizations which are required under, and have complied with
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and
Safety Laws.
(b) Except as disclosed in SCHEDULE 4.10, to the Knowledge
of Sellers, the Company does not have any Liability (and its
respective predecessors and Affiliates have never handled or
disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or
facility in any manner that could form the basis for any present
or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand of the Company giving rise to
any Liability) for damage to any site, location, or body of water
(surface or subsurface), for any illness of or
(21)
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personal injury to any employee or other individual, or for any
reason under any Environmental, Health, and Safety Law.
(c) Except as disclosed on Schedule 4.10, to the Knowledge
of Sellers, all properties and equipment used by the Company and
its predecessors and Affiliates have been free of asbestos,
PCB's, methylene chloride, trichloroethylene, 1,2-trans-
dichloroethylene, dioxins, dibenzofurans, and Extremely
Hazardous Substances.
4.21 POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the any of the Sellers.
4.22 INSURANCE. Attached as SCHEDULE 4.22 are complete and
accurate copies as of the date hereof of all insurance policies carried
by the Company and an accurate list of all insurance loss runs and
workers' compensation claims received for the past three policy years
With respect to each such insurance policy, to the Knowledge of Seller:
(i) the policy is legal, valid, binding, enforceable, and in full force
and effect; (ii) neither the Company nor any other party to the policy
is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration, under the
policy; and (iii) no party to the policy has repudiated any provision
thereof. The Company has been covered during the past 10 years by
insurance in scope and amount customary and reasonable during the
aforementioned period. SCHEDULE 4.22 describes any self-insurance
arrangements affecting the Company.
4.23 LITIGATION. To the Knowledge of Sellers, SCHEDULE 4.23 sets
forth each instance in which the Company (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or
(ii) is a party or is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. To the Knowledge of
Sellers, none of the actions, suits, proceedings, hearings, and
investigations set forth in SCHEDULE 4.23 could result in any material
adverse change in the business, financial condition, operations, results
of operations, or future prospects of the Company. None of the Sellers
(and employees of the Company with responsibility for litigation
matters) has any Knowledge that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against the
Company. To the Knowledge of Sellers, except as set forth in SCHEDULE
4.23, no proceeding is pending or threatened, as to which any Assets are
or would be subject. To the Knowledge of Sellers, SCHEDULE 4.23 also
sets forth each instance in which the Company is now, or has at any time
in the last ten (10) years, been, a plaintiff, petitioner or intervenor,
or has provided any public comment or statement, in any action, suit,
proceeding, hearing or investigation.
4.24 EMPLOYMENT CONTRACTS. A list of all employment contracts and
collective bargaining agreements, and all pension, bonus, profit-
sharing, option, or other agreements or arrangements providing for
employee remuneration or benefits to which Company is a party or by
which Company is bound is attached to this agreement as SCHEDULE 4.24.
All these contracts and arrangements are in full force and effect, and
neither Company, nor any
(22)
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other party, is in default under them. There have been no claims of
defaults and there are no facts or conditions which if continued, or on
notice, will result in a default under these contracts or arrangements.
There is no pending or threatened labor dispute, strike, or work
stoppage affecting Company' Business.
4.25 EMPLOYEE BENEFITS. Except for the plans disclosed in
SCHEDULE 4.25 ("Plans"), the Company (a) does not currently sponsor or
maintain any employee benefit plan within the meaning of section 3(3) of
ERISA and (b) has not since its inception sponsored, maintained or
contributed to any qualified employee pension benefit plan within the
meaning of sections 3(2) of ERISA and 401 of the Code, in which any
employees of the Company are or were participants (whether or not on an
active or frozen basis). The Company does not currently contribute to,
nor have they since its inception contributed (or been obligated to
contribute) to, any multiemployer pension plan within the meaning of
section 3(37) of ERISA on behalf of any employees of the Company. The
Company has complied in all material respects with the Consolidated
Omnibus Budget Reconciliation Act of 1985, and does not currently have,
and since its inception has not had, any retiree medical plan.
4.26 GUARANTIES. The Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any
other Person.
4.27 CERTAIN BUSINESS RELATIONSHIPS. Except as set forth in
SCHEDULE 4.27, none of the Partners and their Affiliates has been
involved in any business arrangement or relationship with the Company
within the past 12 months, and none of the Partners and their Affiliates
owns any asset, tangible or intangible, which is used in the Business.
4.28 SECURITIES MATTERS. Sellers represent that they have
received the Prospectus covering the Parent Stock dated September 18,
1997, Prospectus Supplement No.1 and Prospectus Supplement No. 2, and a
copy of all documents incorporated therein by reference. The Sellers
further represent that they have been afforded an opportunity to ask
questions of, and receive responses from, officers or agents of Parent
and to investigate the business and affairs of Parent to their
satisfaction. The Sellers further represent that they are satisfied with
the results of their investigation and that they are relying on such
investigation, not on any particular representations made by Buyers
Parent, in their determination to invest in the Parent Stock. The
Sellers further represent that they are entirely familiar with the
nonhazardous liquid waste industry and that, in regard to an investment
in such industry, they are sophisticated investors and "accredited
investors" as such term is defined in the Securities Act.
4.29 SUFFICIENCY OF ASSETS. Except for the Excluded Assets and
the Company's existing BATF Permits, on the Closing Date the Buyers will
be acquiring all of the properties, rights and assets of every type and
description, real, personal and mixed, tangible and intangible, as have
been used or employed or held for use by the Company or its predecessors
in operating the Businesses during the past 12 months.
4.30 DISCLOSURE. To the Knowledge of Sellers, the representations
and warranties contained in this Section 4 do not contain any untrue
statement of a material fact or omit to
(23)
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state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading. To the Knowledge
of Sellers, all information or materials provided by the Sellers (or
their agents or employees) to Buyers or their agents or employees
in connection with Buyers' examination of the Business, assets and
prospects of the Company have, in each case, been true and correct.
5. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.01 GENERAL. Each of the Parties will use his or its reasonable
best efforts to take all action and to do all things necessary in order
to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in Section 7 below).
5.02 NOTICES AND CONSENTS. The Partners will cause the Company to
give any notices to third parties, and will cause the Company to use its
best efforts to obtain any third-party consents that the Buyers
reasonably may request in connection with the transactions contemplated
by this Agreement. Each of the Parties will (and the Partners will cause
the Company to) give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents, and
approvals of governments and governmental agencies in connection with
the transactions contemplated by this Agreement.
5.03 OPERATION OF BUSINESS. The Partners will not cause or permit
the Company to engage in any practice, take any action, or enter into
any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, the Partners will not cause or
permit the Company to (i) declare, set aside, or pay any distribution
with respect to its partnership interests, or (ii) otherwise engage in
any practice, take any action, or enter into any transaction of the sort
described in SECTION 4.09 above.
5.04 MAINTENANCE OF INSURANCE. The Company will continue to carry
its existing insurance, subject to variations in amounts required in the
Ordinary Course of Business. At the request of Buyers and at Buyers'
sole expense, the amount of insurance against fire and other casualties
which, at the date of this Agreement, Company carries on any of its
properties or in respect of its operations shall be increased by such
amount or amounts as Buyers shall specify.
5.05 PRESERVATION OF BUSINESS. The Partners will use their best
efforts to cause the Company to keep its Business and properties
substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees.
5.06 FULL ACCESS. The Partners will permit, and the Partners will
cause the Company to permit, representatives of the Buyers to have full
access at all reasonable times,
(24)
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and in a manner so as not to interfere with the normal business
operations of the Company, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the Company.
5.07 NOTICE OF DEVELOPMENTS. Each of the Parties shall use
reasonable best efforts (and in the case of the representations and
warranties set forth in Sections 3.01(c), 4.02 and 4.05 shall take all
necessary actions) to avoid any of their representations and warranties
becoming inaccurate between the date hereof and the Closing Date. Each
of the Sellers will give prompt written notice to the Buyers of any
adverse development resulting in the material inaccuracy of any of the
representations and warranties in SECTION 4 above. Each Party will give
prompt written notice to the others of any adverse development resulting
in the material inaccuracy of any of his, her or its own representations
and warranties in SECTION 3 above. If any representation or warranty of
any Party becomes inaccurate between the date hereof and the Closing
Date notwithstanding the reasonable best efforts (or, in the case of the
representations and warranties set forth in Sections 3.01(c), 4.02 and
4.05, all necessary actions) of the Party making such representation and
warranty, the recipient under this Agreement of such representation and
warranty shall have no obligation to consummate the Closing, but
(provided that the Party giving the representation and warranty has
properly notified the recipient pursuant to this Section 5.08), if such
recipient elects to waive (or is deemed to waive) as a condition
precedent to its obligation to consummate the Closing pursuant to
Section 7 below the inaccuracy of such representation and warranty, the
representation and warranty (except for the representations and
warranties set forth in Sections 3.01(c), 4.02 and 4.05) shall be deemed
to be amended, supplemented and corrected by the information contained
in the notice. Within ten business days of receipt of notice from any
Party of any event resulting in any representation and warranty of such
Party becoming inaccurate, the recipient of such representation and
warranty (other than the representations and warranties set forth in
Sections 3.01(c), 4.02 and 4.05) must either elect to terminate this
Agreement, or the recipient will be deemed to have waived as a condition
precedent to its obligation to close the inaccuracy of such
representation and warranty.
5.08 EXCLUSIVITY. The Partners will not (and the Partners will
not cause or permit the Company to) (a) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any partnership interest, or any substantial portion of
the Assets of, the Company or any other transaction or series of
transactions that would cause the representations and warranties of the
Sellers set forth in Section 4 to be incorrect in any respect, or would
otherwise prevent or hinder the transactions contemplated by this
Agreement, or (b) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt
by any Person to do or seek any of the foregoing. The Partners will not
vote their partnership interests in favor of any such acquisition. The
Partners will notify the Buyers immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the
foregoing.
(25)
<PAGE>
6 POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following the
Closing:
6.01 GENERAL. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, provided that any out-of-pocket expenses in
connection therewith shall be at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to
indemnification therefor under Section 8 below). The Sellers acknowledge
and agree that from and after the Closing the Buyers will be entitled to
possession of all documents, books, records (including Tax records),
agreements, and financial data of any sort relating to the Company.
6.02 TRANSITION. Sellers will take no action that is designed or
intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Company from
maintaining the same business relationships with the Buyers after the
Closing as it maintained with the Company prior to the Closing. Sellers
will refer all customer inquiries relating to the Business of the
Company to the Buyers from and after the Closing.
6.03 CONFIDENTIALITY. Sellers will treat and hold as such all of
the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver
promptly to the Buyers or destroy, at the request and option of the
Buyers, all tangible embodiments (and all copies) of the Confidential
Information which are in Sellers' possession. In the event that Sellers
are requested or required (by oral question or request for information
or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, Sellers will notify the Buyers promptly of the request or
requirement so that the Buyers may seek an appropriate protective order
or waive compliance with the provisions of this Section 6.03. If, in the
absence of a protective order or the receipt of a waiver hereunder,
Sellers are, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for
contempt, Sellers may disclose the Confidential Information to the
tribunal; PROVIDED, HOWEVER, that the Sellers shall use their reasonable
best efforts to obtain, at the reasonable request, and at the expense,
of the Buyers, an order or other assurance that confidential treatment
will be accorded to such portion of the Confidential Information
required to be disclosed as the Buyers shall designate. The foregoing
provisions shall not apply to any Confidential Information which is
generally available to the public immediately prior to the time of
disclosure.
6.04 TAX RETURNS AND FILINGS; PAYMENT OF TAXES. Sellers shall at
their cost and expense file all tax returns and other reports or filings
in respect of (a) operations of the Company and (b) resulting from or in
connection with the sale of Assets pursuant hereto (whether in
connection with any sales, transfer, stamp or documentary tax or
otherwise), and shall in each case retain full responsibility in respect
thereof.
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6.05 USE OF NAMES. Sellers agree that after the Closing Date they
shall not use or employ in any manner directly or indirectly the names
currently used by the Company or listed in SCHEDULE 4.13 other than
"Cucamonga Gold", and that Partners will take and cause to be taken all
necessary action by the Company, and any other persons in order to
change Company's names on or before the Closing Date.
6.06 BATF PERMITS. Sellers and Buyers each agree to do, perform,
and honor their obligations with respect to the BATF Permits (as defined
herein) set forth in Section 7.01(j) herein.
6.07 CCWD DISCHARGE FEE. Sellers have disclosed to Buyers the
receipt by the Company of an February 26, 1998 letter from the Cucamonga
County Water District ("CCWD") indicating a possible assessment by CCWD
of additional connection fees in the amount of $541,393.50 or more based
on an average daily flow of wastewater of 90,410 gallons/day (the
"Current Discharge Level"), which exceed the baseline level of 71,471
gallons/day (the "Baseline Discharge Level"). The Parties agree that
Sellers shall be responsible for, and shall promptly reimburse to and
indemnify Buyers from within 10 days of Buyers' written request, any
additional connection fees or other charges imposed by CCWD which are
based on or attributable to any wastewater discharge (i) occurring
before the Closing Date, or (ii) occurring after the Closing Date to the
extent such discharge is in excess of the Baseline Discharge Level but
does not exceed the Current Discharge Level. Buyers shall be responsible
for that portion of any additional connections fees or other charges
which are based on or attributable to wastewater discharge occurring
after the Closing Date which exceeds the Current Discharge Level (with
Seller responsible for that portion of the fees attributable to
discharge at or below the Current Discharge Levels). Notwithstanding
anything in this paragraph to the contrary, Sellers' liability to Buyers
under this Section 6.07 shall not exceed $541,393.50 for fees or charges
relating to wastewater discharge occurring after the Closing Date, but
shall not be limited for those relating to wastewater discharge
occurring before the Closing Date. Buyers agree to use their reasonable
efforts to minimize, avoid or reduce any additional connection fees or
other charges, including reasonable efforts to apply new technology and
techniques (such as a sprayer system) to reduce discharge for which
Sellers would be responsible hereunder, provided the same can be done
without undue burden or significant cost to Buyers, and with out
significant adverse impacts on the profitability of the Business
conducted at the Rancho Cucamonga plant. Any fees or charges which
Sellers reimburse to or indemnify Buyers from under this Section 6.07
shall not be treated by Buyers as a write-off or charge affecting EBITDA
for purposes of calculating the Contingent Stock Payment or Contingent
Cash Payment, to the extent of such reimbursement or indemnity.
7 CONDITIONS TO OBLIGATION TO CLOSE.
7.01 CONDITIONS TO OBLIGATION OF THE BUYERS. The obligation of
the Buyers to consummate the transactions to be performed by it in
connection with the Closing is subject
(27)
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to satisfaction of the following conditions:
(a) the representations and warranties set forth in
Section 3.01 and Section 4 above shall be true and correct at and
as of the Closing Date;
(b) the Sellers shall have performed and complied with all
of their covenants hereunder through the Closing;
(c) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, or (iii)
affect adversely the right of the Buyers to own the Assets and to
operate the Business (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(d) the Sellers shall have delivered to the Buyers a
certificate to the effect that each of the conditions specified
above in subsections (a) through (c) is satisfied in all
respects;
(e) Sellers shall have obtained the execution of and shall
have delivered to Buyers the Noncompetition Agreement in the
forms attached as Exhibit D;
(f) the Buyers shall have received from counsel to the
Sellers an opinion in form and substance as set forth in Exhibit
E attached hereto, addressed to the Buyers, and dated as of the
Closing Date;
(g) the Partners shall each have obtained the execution
of, and delivered to the Buyers, a spousal consent in the for
attached as Exhibit F;
(h) Sellers shall have delivered to Buyers, the bills of
sale and assignments in the forms attached hereto as Exhibits
A-1, A-2, A-3, and B, all duly executed by the parties thereto.
(i) Sellers shall have conveyed to Buyers fee title to the
Real Property by execution and delivery of statutory warranty
deeds in forms attached hereto as Exhibit C-1 and C-2 to Buyers
and Sellers shall have delivered to Buyers the title assurances
provided for in Section 1.07 in form and substance acceptable to
Buyers
(j) All necessary agreements and consents to the
consummation of the transactions contemplated by this Agreement,
or otherwise pertaining to the matters covered by it (including,
but not limited to, transfer of any franchises from Company to
Buyers), shall have been obtained by Sellers and delivered to
Buyers, except for the consents required from the United States
Department of Treasury, Bureau of
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Alcohol, Tobacco and Firearms (the "BATF") to operate the assets,
properties and Business of the Company in the manner in which
they are currently operated (collectively, the "BATF Permits"),
which shall be transferred in the manner provided in subsection
(k) below.
(k) Buyers shall have obtained all necessary BATF Permits
required for Buyers to operate the assets, properties and
Business of the Company in the manner in which they are currently
operated. Buyers and Sellers acknowledge Buyers will be unable to
obtain their own BATF Permits until after the Closing Date, but
anticipate that Buyer will be able to temporarily operate the
Business under Sellers' existing BATF Permits after Closing. The
condition to Closing set forth in this subsection (k) shall be
deemed satisfied on the Closing Date to the extent that (i)
Buyers can legally operate the Business under Sellers' existing
BATF Permits and (ii) Buyers determine, in their reasonable
discretion, that Buyers will be able to secure their own BATF
Permits to operate the Business within a reasonable time
following Closing. Buyers agree to use their reasonable best
efforts to secure both the right to temporarily operate under
Sellers' BATF Permits and to obtain Buyers' own BATF Permits as
soon as practicable including, without limitation, filing the
necessary bond(s) and submitting the necessary application(s) to
the BATF. Sellers agree to cooperate with Buyers in Buyers'
efforts to secure the BATF Permits including, without limitation,
(i) providing such documentation and information on the Company
or the Business in connection with Buyers' applications as may
reasonably be necessary or expedient to secure the BATF Permits,
and (ii) allowing Buyers to operate the Business under Seller's
BATF Permits, at no cost to Sellers, until such time as Buyers
have secured their own BATF Permits, provided that such use by
Buyers of Sellers BATF Permit is not prohibited under applicable
BATF laws. Seller's existing BATF Permits shall be canceled at
such time as the new BATF Permits issued to Buyers.
(l) all actions to be taken by the Sellers in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyers.
The Buyers may waive any condition specified in this Section 7.01 if it
executes a writing so stating at or prior to the Closing.
7.02 CONDITIONS TO OBLIGATION OF THE SELLERS. The obligation of
the Sellers to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) the representations and warranties set forth in
Section 3.02 above shall be true and correct at and as of the
Closing Date;
(b) the Buyers shall have performed and complied with all
of its covenants hereunder through the Closing;
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(c) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this
Agreement or (ii) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(d) the Buyers shall have delivered to the Sellers a
certificate to the effect that each of the conditions specified
above in subsections (a) through (c) is satisfied in all
respects;
(e) all actions to be taken by the Buyers in connection
with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers.
The Sellers may waive any condition specified in this Section 7.02 if
they execute a writing so stating at or prior to the Closing.
8 REMEDIES FOR BREACHES OF THIS AGREEMENT.
8.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES.
The representations, warranties, covenants and agreements set
forth in Sections 3.01(c), 4.02, 6.01, 6.02, 6.03, 6.04, 6.05 and
Section 11 will survive the Closing perpetually. The representations
warranties, covenants and agreements set forth in Sections 4.05, 4.11,
and 4.25 will survive the Closing until the expiration of all applicable
federal, state, local and foreign statutory periods of limitations
(after giving effect to any waiver, mitigation or extension of any such
statutory periods of limitations). All of the other representations,
warranties, covenants and agreements set forth in this Agreement or in
any certificate or other writing delivered pursuant to this Agreement
(and the indemnity obligations with respect thereto under Sections 8.02
and 8.03) will survive the Closing until the second anniversary of the
Closing; provided, however, that any indemnity obligations under
Sections 8.02 and 8.03 which are applicable to any representation,
warranty, covenant or agreement which itself survives for a specific
period of time under this Section 8.01 shall survive for a period of
time concurrent with the survival period of that representation,
warranty, covenant or agreement. Notwithstanding anything in this
Section 8.01 to the contrary, in the case of the Sellers, if any of the
Sellers had Knowledge as of the Closing of the inaccuracy of a
representation or warranty made by the Sellers, or in the case of the
Buyer, if the Buyer had Knowledge as of the Closing of the inaccuracy of
a representation or warranty made by the Buyer, such representations and
warranties shall survive the Closing indefinitely. Furthermore,
notwithstanding any provision to the contrary set forth in the preceding
sentences of this Section or elsewhere in this Agreement or any
certificate or other writing delivered pursuant to or in connection with
this Agreement, any representation , warranty, covenant or agreement in
respect of which indemnity may be sought under Section 8.02 or
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8.03 will survive the time at which such representation , warranty,
covenant or agreement would otherwise terminate pursuant to the
preceding sentences of this Section, if notice of the incorrectness or
breach of such representation, warranty, covenant or agreement giving
rise to such right to indemnity is given to the party from which
indemnity is sought prior to the time at which such representation,
warranty, covenant or agreement would otherwise terminate pursuant to
the preceding sentences of this Section. Any such notice must describe
the event, condition or contingency giving rise to the claimed
incorrectness or breach of such representation, warranty, covenant or
agreement and the Section or Sections or other divisions of this
Agreement or any certificate or other writing delivered pursuant to or
in connection with this Agreement upon which such right to indemnity is
based.
8.02 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYERS.
(a) In the event (i) the Sellers breach any of their
representations, warranties, agreements, covenants or conditions
contained herein, or (ii) the Buyers ever suffers any loss,
claim, cost or damage in connection with any Liability or
asserted claim arising in connection with operations or
activities of the Company or its predecessors (including claims
arising or alleged to arise in connection with environmental
matters), then the Sellers agree to indemnify the Buyers from and
against the entirety of any Adverse Consequences the Buyers may
suffer through and after the date of the claim for
indemnification resulting from, arising out of, relating to, in
the nature of, or caused by such breach, loss, claim, cost or
damage.
(b) Without limiting the generality of Section 8.02(b)
above, Sellers further agree to indemnify the Buyers from and
against the entirety of any Adverse Consequences the Buyers ever
suffers in connection with any Liability or asserted claim
resulting from, arising out of, caused by, or relating to (i) the
investigation by the United State Attorney for the Wester
District of Kentucky into possible violations of federal
environmental laws resulting from possible improper handling of
asbestos containing materials, or the subject matter of such
investigation, or (ii) the presence of asbestos on, in or under
any real property or improvements owned, leased or used by the
Company and to be conveyed (or assigned, in the case of leased or
used property) to the Buyers under this Agreement.
Notwithstanding anything in Section 8.05 herein to the contrary,
Sellers' indemnification obligations with respect to the matters
described in this Section 8.02(b) shall apply to all Liability of
Buyer without regard to whether or not such obligations exceeds,
the $100,000 aggregate amount described in Section 8.02(b).
8.03 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS. In
the event (i) the Buyers breach any of their representations,
warranties, agreements, covenants or conditions contained herein, or
(ii) the Sellers ever suffer any loss, claim, cost or damage in
connection with any Liability or asserted claim arising in connection
with operations or activities of the Business after the Closing Date
(including claims arising or alleged to arise in connection with
environmental matters), then the Buyers agree to indemnify the Sellers
from and against the entirety of any Adverse Consequences the Seller may
suffer through and after the date
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of the claim for indemnification resulting from, arising out of,
relating to, in the nature of, or caused by such breach, loss, claim,
cost or damage.
8.04 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against any other Party (the "Indemnifying Party") under this
Section 8, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; PROVIDED, HOWEVER, that no
delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel
of its choice satisfactory to the Indemnified Party so long as
(i) the Indemnifying Party notifies the Indemnified Party in
writing within 15 days after the Indemnified Party has given
notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (ii) the Indemnifying Party
provides the Indemnified Party with evidence acceptable to the
Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages, and does not seek
an injunction or other equitable relief which would have a
significant, material impact on the Business or the Buyers, (iv)
settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section
8.04(b) above, (i) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (ii) the Indemnified Party will
not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party, and (iii) the
Indemnifying Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnified Party.
(d) In the event any of the conditions in Section 8.04(b)
above is or becomes unsatisfied, however, (i) the Indemnified
Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the
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Third Party Claim in any manner it may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith), (ii) the
Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending against the
Third Party Claim (including attorneys' fees and expenses), and
(iii) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by
the Third Party Claim to the fullest extent provided in this
Section 8.
8.05 LIMITATION ON LIABILITY. The defense, indemnification and
hold harmless obligations set forth herein shall only apply to breaches
any representations, warranties, covenants and agreements discovered,
and for which a claim is asserted against the breaching Party in
writing, within time limits set forth in SECTION 8.01 above. The
defense, indemnification and hold harmless obligations set forth in this
SECTION 8 shall apply only after the aggregate amount of such
obligations exceeds $100,000, at which time the defense, indemnification
and hold harmless obligations shall be effective as to all amounts
including the first $100,000; provided, however, that such defense,
indemnification and hold harmless obligations shall not exceed, in the
aggregate, an amount equal to the Purchase Price. Notwithstanding
anything to the contrary contained herein, each Partner shall be liable
only for such Partner's Pro-Rata Share of the defense, indemnification
and hold harmless obligations set forth herein.
8.06 OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of,
any statutory, equitable, or common law remedy any Party may have for
breach of representation, warranty, or covenant.
9 TERMINATION.
9.01 TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement at any time prior to the Closing Date:
(a) by mutual written consent at any time prior to the
Closing;
(b) By Buyers if any of the conditions specified in
Section 7.01 has not been met or waived by Buyers at such time as
such condition is no longer capable of satisfaction (provided
Buyers are not otherwise in material breach of their
representations, warranties, covenants or agreements under this
Agreement, which breach is the direct and proximate cause of the
failed condition);
(c) By Sellers if any of the conditions specified in
Section 7.02 has not been met or waived by Sellers at such time
as such condition is no longer capable of satisfaction (provided
none of Sellers is otherwise in material breach of its respective
representations, warranties, covenants or agreements under this
Agreement, which breach is the direct and proximate cause of the
failed condition);
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(d) By Buyers if there has been a material breach on the
part of any of Sellers of any representation, warranty, covenant
or agreement by Sellers set forth in this Agreement, which
breach, if capable of cure, has not been cured within fifteen
(15) business days following receipt by Sellers of written notice
of such breach;
(e) By Sellers if there has been a material breach on the
part of Buyers of any representation, warranty, covenant or
agreement by Buyers set forth in this Agreement, which breach, if
capable of cure, has not been cured within fifteen (15) business
days following receipt by Buyers of written notice of such
breach; or
(f) By Buyers or Sellers upon written notice given in
compliance with this Agreement if any governmental authority of
competent jurisdiction shall have issued a final permanent order
enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby and, in any such case the time
for appeal or petition for reconsideration of such order shall
have expired without such appeal or petition being granted.
9.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement by any of Buyers or Sellers as provided above, this
Agreement shall forthwith become void and, except for termination
pursuant to Section 9.01(d) or 9.01(e), there shall be no
liability on the part of Buyers or Sellers or their respective
officers or directors; provided that Sections 3.01(a), 3.01(c),
3.02(b), 3.02(d), 4.01, 4.04 and this Section 9.02 and the
provisions of Section 11 shall survive the termination.
10 CERTAIN DEFINITIONS.
As used herein, the following terms have the definitions set forth or
referred to below:
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12-2 of the regulations
promulgated under the Securities Exchange Act.
"AGREEMENT" has the meaning set forth in the preface above.
"AMEX" means the American Stock Exchange.
"APPLICABLE LAWS" has the meaning set forth in Section 4.19 above.
"APPLICABLE RATE" means the base rate of interest announced from time to
time by The Chase Manhattan Bank, N.A. plus 3 additional points.
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"ASSETS" has the meaning set forth in Section 1.01 above.
"BUSINESS" means waste the resource recovery business engaged in by the
Company including, but not limited to processing the sugar and alcohol-bearing
liquid waste streams of breweries, soft drink manufacturers and food processors
into ethanol.
"BUYERS" has the meaning set forth in the preface above.
"CERCLA" has the meaning set forth in Section 4.16 above.
"CLOSING" has the meaning set forth in Section 1.06 above.
"CLOSING CASH PAYMENT" has the meaning set forth in Section 1.02(a)
above.
"CLOSING DATE" has the meaning set forth in Section 1.06 above.
"CLOSING STOCK PAYMENT" has the meaning set forth in Section 1.02(b)
above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the Business
and affairs of the Company that is not already generally available to the
public.
"CONTINGENT CASH PAYMENT" has the meaning set forth in Section 1.02(C)
above.
"CONTINGENT PAYMENT DATE" has the meaning set forth in Section 1.02(C)
above.
"CONTINGENT STOCK PAYMENT" has the meaning set forth in Section 1.02(d)
above.
"COMPANY" has the meaning set forth in the preface above; PROVIDED,
HOWEVER, that for purposes of the representations and warranties set forth in
Section 4 above, the "COMPANY" includes any subsidiary, affiliate or predecessor
of the Company in the event any Liability or obligation is imposed upon or
incurred by the Company in connection with the actions or operations of such
subsidiary, affiliate or predecessor and any after acquired property of the
Company including the Real Property.
"CURRENT ASSETS" means the amounts reflected as current assets of the
Company on its financial statements determined in accordance with GAAP and
includes, but is not limited to, items such as cash and cash equivalents,
accounts receivable (less reserves for doubtful accounts), short-term
investments, inventory and current prepaid assets.
"CURRENT LIABILITIES" means the amounts reflected as current liabilities
of the Company on its financial statements determined in accordance with GAAP
and includes, but is not limited to, items such as accounts payable, current
maturities of long-term debt, accrued expenses, and unpaid accrued taxes.
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"DISCLOSURE SCHEDULES" has the meaning set forth in Section 4 above.
"EBITDA" has the meaning set forth in Section 1.02(C) above.
"ENVIRONMENTAL DOCUMENTS" has the meaning set forth in Section 4.18
above.
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"ENVIRONMENTAL LAWS" has the meaning set forth in Section 4.16 above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" has the meaning set forth in Section 1.01(j) above.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4.08 above.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"HAZARDOUS MATERIALS" has the meaning set forth in Section 4.16 above.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8.04 above.
"INDEMNIFYING PARTY" has the meaning set forth in Section 8.04 above.
"KNOWLEDGE" means as to any Person, that which such Person actually
knows or should know after reasonable investigation.
"LAND" has the meaning set forth in Section 1.01(h) above.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
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"LONG TERM LIABILITIES" means all of the liabilities of the Company on
its financial statements determined in accordance with GAAP other than Current
Liabilities
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the
Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section
4.08 above.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in Section 4.08
above.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section 4.08
above.
"NET WORKING CAPITAL" means the difference between the Current Assets
and the Current Liabilities of the Company as of the date of computation.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"OWNERS POLICY" has the meaning set forth in Section 1.07(a) above.
"PARENT" has the meaning set forth in Section 1.02(b) above.
"PARENT SECURITIES DOCUMENTS" has the meaning set forth in Section
3.02(e) above.
"PARENT STOCK" has the meaning set forth in Section 1.02(b) above.
"PARTNERS" has the meaning set forth in the preface above.
"PARTY" has the meaning set forth in the preface above.
"PCBS" has the meaning set forth in Section 4.16 above.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"PERSONAL PROPERTY" has the meaning set forth in Section 4.14(a) above.
"PLANS" has the meaning set forth in Section 4.25 above.
"PPC" has the meaning set forth in the preface above.
"PPK" has the meaning set forth in the preface above.
"PPF" has the meaning set forth in the preface above.
(37)
<PAGE>
"PRO-RATA SHARE" has the meaning set forth in Section 4.02 above.
"PURCHASE PRICE" has the meaning set forth in Section 1.02 above.
"REAL PROPERTY" has the meaning set forth in Section 1.01(h) above.
"RESTRICTED STOCK" has the meaning set forth in Section 1.02(g) above.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES AUTHORITIES" has the meaning set forth in Section 3.02(e)
above.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable and (c) purchase
money liens and liens securing rental payments under capital lease arrangements.
"SELLERS" has the meaning set forth in the preface above.
"SURVEY" has the meaning set forth in Section 1.07(a) above.
"TAXES" means any taxes, duties, assessments, fees, levies or similar
governmental charges, together with any interest, penalties and additions to
tax, imposed by any taxing authority, wherever located (I.E. whether federal,
state, local, municipal or foreign), including without limitation all net
income, gross income, gross receipts, net receipts, sales, use, transfer,
franchise, privilege, profits, social security, disability, withholding,
payroll, unemployment, employment, excise, severance, property, windfall
profits, value added, AD VALOREM, occupation or any other similar governmental
charge or imposition.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including without limitation
any schedule or attachment thereto, any amendment thereof, and any estimated
report or statement.
"THIRD PARTY CLAIM" has the meaning set forth in SECTION 8.04 above.
"TITLE COMPANY" has the meaning set forth in Section 1.07(a) above.
"VALUATION PRICE" has the meaning set forth in Section 1.02(b) above.
11. GENERAL.
11.01 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(38)
<PAGE>
11.02 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.
11.03 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations
by or among the Parties, written or oral, to the extent they related in
any way to the subject matter hereof.
11.04 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either
this Agreement or any of his or its rights, interests, or obligations
hereunder without the prior written approval of the Buyers and the
Sellers; PROVIDED, HOWEVER, that the Buyers may (i) assign any or all of
their rights and interests hereunder to one or more of their Affiliates,
or any successor to all or any substantial part of the Business and
Assets of Buyers, and (ii) designate one or more of their Affiliates to
perform their obligations hereunder (in any or all of which cases the
Buyers nonetheless shall remain responsible for the performance of all
of their obligations hereunder).
11.05 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. This Agreement
(including all agreements, certificates, instruments, and documents
appearing as exhibits hereto or required hereunder) may be executed and
shall be binding upon the parties when executed and delivered by
facsimile (including counterparts of facsimiles). Any Party executing
and delivering this Agreement or any other documents required hereunder
by fax agrees to promptly follow up the fax delivery with a duly
executed original of the document executed by fax, which original shall
be delivered to the other Party by overnight courier.
11.06 HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.07 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed
to the intended recipient as set forth below:
If to the Sellers: C/O DWA of Belvedere Company
16 Maybridge Road, P.O. Box B
Belvedere, California 94920
(39)
<PAGE>
with a copy to:
Charles M. Thompson
Lippenberger, Thompson, Welch,
Soroko & Gilbert LLP
250 Montgomery Street, Suite 500
San Francisco, California 94104
If to the Buyers: U S Liquids, Inc.
411 N. Sam Houston Parkway East,
Suite 400
Houston, Texas 77060
Attention: President
with a copy to:
Marc E. Empey, Esq.
Best Best & Krieger LLP
39700 Bob Hope Drive, Suite 312
Rancho Mirage, California 92270
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any Party set forth
above may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving
the other Parties notice in the manner herein set forth.
11.08 APPOINTMENT OF AGENT. Sellers hereby irrevocably appoint
the law firm of Lippenberger, Thompson, Welch & Soroko LLP, 250
Montgomery Street, Suite 500, San Francisco, California 94104 as their
registered agent in the State of California to accept and acknowledge
service of process. Buyers hereby irrevocably appoint the law firm of
Best Best & Krieger LLP, 39700 Bob Hope Drive, Suite 312, Rancho Mirage,
California 92270 as their registered agent in the State of California to
accept and acknowledge service of process. The Parties agree that
service of process or notice in any such action, suit or proceeding
shall be effective if in writing and delivered to the address provided
in Section 11.07, in the manner prescribed in such section.
11.09 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
California without giving effect to any choice or conflict of law
provision or rule (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California.
(40)
<PAGE>
11.10 AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and
signed by the Buyers and Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
11.11 SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
11.12 EXPENSES. Each of the Parties will bear his or its own
costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
11.13 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law shall
be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including"
shall mean including without limitation. The Parties intend that each
representation, warranty, and covenant contained herein shall have
independent significance.
11.14 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each
of the Parties agrees that the other Parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which they may be entitled,
at law or in equity.
11.15 AUTHORITY. If any Party hereto is a corporation, trust,
estate, limited liability company or partnership, or general or limited
partnership, each individual executing this Agreement on behalf of such
entity represents and warrants that he or she is duly authorized to
execute and deliver this Agreement on its behalf.
(41)
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SELLERS:
Parallel Products
a California limited partnership
By: DWA of Belvedere Company
a California corporation
Its: General Partner
By: /s/ JAMES H. ALLEN
Name: James H. Allen
Title: President of General Partner
DWA of Belvedere Company
a California corporation
By: /s/ JAMES H. ALLEN
Name: James H. Allen
Title: President
Estate of David W. Allen
By: /s/ PETER B. ALLEN
Peter Allen, Executor
By: /s/ DONNA CALIMPONG
Donna Calimpong, Executor
David W. Allen Trust No. 1
By: /s/ JAMES H. ALLEN
James Allen, Trustee
By: /s/ JEAN A. SNYDER
Jean A. Snyder, Trustee
By: /s/ KIRK E. WALLACE
Kirk E. Wallace, Trustee
/s/ PETER B. ALLEN
Peter Allen
/s/ NEAL KOEHLER
Neal Koehler
/s/ RICHARD EASTMAN
Richard Eastman
(42)
<PAGE>
BUYERS:
USL Parallel Products of California,
a California corporation
By: /s/ DAVID TURKAL
Name: David Turkal
Title: Authorized Representative
Parallel Products of Kentucky, Inc.
a Kentucky corporation
By: /s/ DAVID TURKAL
Name: David Turkal
Title: Authorized Representative
Parallel Products of Florida, Inc.
a Florida corporation
By: /s/ DAVID TURKAL
Name: David Turkal
Title: Authorized Representative
The undersigned US Liquids, Inc., has read the foregoing
Agreement and agrees to be bound by the obligations expressly relating to it
contained therein.
US Liquids, Inc.,
a Delaware corporation
By: /s/ DAVID TURKAL
Name: David Turkal
Title: Authorized Representative
(43)
<PAGE>
FIRST ADDENDUM
TO
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
This First Addendum ("Addendum") is entered into as of April 21, 1998 by
and between USL Parallel Products of California, a California corporation
("PPC"), Parallel Products of Kentucky, Inc., a Kentucky corporation ("PPK"),
Parallel Products of Florida, Inc., a Florida corporation ("PPF" and
collectively with PPC and PPK, the "BUYERS"), Parallel Products, a California
limited partnership (the "Company"), DWA of Belvedere Company, a California
corporation and the Company's general partner, Estate of David W. Allen, David
W. Allen Trust No. 1, Peter Allen, Neal Koehler and Richard Eastman
(collectively the "Partners"). The Company and the Partners are referred to
collectively herein as the "SELLERS". The Buyers and Sellers are referred to
collectively herein as the "Parties."
The Parties hereby add the following provisions to the Agreement for
Purchase and Sale of Assets ("Agreement") among the Parties dated concurrently
herewith, which Agreement is incorporated herein by reference:
1. WELLS FARGO BANK PAYOFF. Sellers agree at their sole cost and expense
to be responsible for, and to promptly cause, the release, termination, and
reconveyance of all liens, mortgages, deeds of trust, security interests, and
monetary encumbrances against any of the Assets, which liens, etc. are held by
Wells Fargo Bank, its affiliates, successors, and assigns, following the payment
by Buyers of the wire transfer to Wells Fargo Bank described in Section 1.03 of
the Agreement.
2. KENTUCKY PROPERTY. Sellers shall cause the release from title, and
the removal as an exceptions to the Title Commitment dated April 17, 1998 issued
by First American Title Ins. Co. for the real property owned by the Company and
located at 1620 Bernhein Lane, Louisville, Kentucky, of the following matters:
(i) that certain mortgage dated June 8, 1995 to William Stephan
Reisz, Trustee, in the original principal amount of $100,000.
(ii) the references to existing leases appearing as Exceptions 6
& 7 of Schedule B, Section 2 of the Title Commitment.
3. SCHEDULE 4.12(D) DISCLOSURES. With respect to those exceptions set
forth in Schedule 4.12(d) of the Disclosure Schedule (excluding Item l (Schedule
4.23 cross reference) and Item 2.c. (CCWD)), Sellers represent and warrant to
the Buyers that the Company have taken all steps to resolve and have fully
complied with (including paying any applicable fines) all such governmental
orders, directives, letters, or notices disclosed.
4. DISTRIBUTION OF RESTRICTED STOCK BY ESTATE Buyers agree that the
Estate of David W. Allen shall have the right to make a one-time distribution of
the Restricted Stock to be received by the Estate under the Agreement to Bettye
B. Allen and to the David W. and Bettye B.
<PAGE>
Allen Trust, the beneficiaries of the Estate; provided, however, that said
beneficiaries shall receive the Restricted Stock subject to the restrictions and
with the same legends provided for in the Agreement with respect to Restricted
Stock.
5. TRANSFER TAXES. Buyers and Sellers agree to share equally, any
transfer taxes (but not other types of taxes) required to be paid in connection
with the conveyance of the two parcels of real property located in Kentucky and
California, respectively, from the Company to Buyers.
6. ASSIGNMENT FEE. Sellers have agreed to pay to the lessor (Pierre
Miramonte) of the real property located at 1620 Bernhein Lane, Louisville,
Kentucky Road (the lease to which is being assigned by Company to Buyers under
the Agreement), the sum of $75,000 in consideration for the lessor's consent to
the assignment of the lease and the lessors' agreement not to increase rent on
account of such assignment. Buyers have agreed to reimburse Sellers $25,000 of
that amount. Accordingly, the Parties agree that Buyers shall wire transfer the
sum of $75,000 to the lessor immediately following closing, of which $50,000
shall be deducted from the Closing Cash Payment due to Sellers at Closing.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in
Ontario, California, as of the date first above written.
SELLERS:
Parallel Products
a California limited partnership
By: DWA of Belvedere Company
a California corporation
Its: General Partner
By: /s/ JAMES H. ALLEN
Name: James H. Allen
Title: President of General Partner
DWA of Belvedere Company
a California corporation
By: /s/ JAMES H. ALLEN
Name: James H. Allen
Title: President
Estate of David W. Allen
By: /s/ PETER B. ALLEN
Peter Allen, Executor
By: /s/ DONNA CALIMPONG
Donna Calimpong, Executor
<PAGE>
David W. Allen Trust No. 1
By: /s/ JAMES H. ALLEN
James Allen, Trustee
By: /s/ JEAN A. SNYDER
Jean A. Snyder, Trustee
By: /s/ KIRK E. WALLACE
Kirk E. Wallace, Trustee
/s/ PETER ALLEN
Peter Allen
/s/ NEAL KOEHLER
Neal Koehler
/s/ RICHARD EASTMAN
Richard Eastman
BUYERS:
USL Parallel Products of California,
a California corporation
By: /s/ DAVID TURKAL
Name: David Turkal
Title: Authorized Representative
Parallel Products of Kentucky, Inc.
a Kentucky corporation
By: /s/ DAVID TURKAL
Name: David Turkal
Title: Authorized Representative
Parallel Products of Florida, Inc.
a Florida corporation
By: /s/ DAVID TURKAL
Name: David Turkal
Title: Authorized Representative
The undersigned US Liquids, Inc., has read the foregoing Addendum and agrees to
be bound by
<PAGE>
the obligations expressly relating to it contained therein, if any.
US Liquids, Inc.,
a Delaware corporation
By: /s/ DAVID TURKAL
Name: David Turkal
Title: Authorized Representative
EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
AMONG
U S LIQUIDS NORTHEAST, INC.
AND
U S LIQUIDS INC.
AND
WASTE STREAM ENVIRONMENTAL, INC.
AND
C. WESLEY GREGORY III, C. WESLEY GREGORY, JR. AND DONALD E. GORDON
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1. DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK..................... 1
1.1 Delivery of Shares.............................................. 2
1.2 Endorsement of Company Stock.................................... 2
2. PURCHASE PRICE....................................................... 2
2.1 Purchase Price.................................................. 2
2.2 Agreed Value of Parent Stock.................................... 2
2.3 Debt Adjustment to Purchase Price............................... 2
2.4 Net Working Capital Adjustment to Purchase Price................ 3
2.5 Contingent Additional Purchase Price............................ 4
3. LEASEHOLD TITLE ASSURANCE............................................ 5
3.1 Leasehold Title Policy.......................................... 5
3.2 Permitted Encumbrances.......................................... 5
3.3 Survey.......................................................... 5
4. CLOSING.............................................................. 6
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND COMPANY........... 6
5.1 Organization; Authority......................................... 6
5.2 Stock Ownership; Absence of Adverse Claims...................... 7
5.3 Capitalization.................................................. 7
5.4 Predecessor Entities; Trade Names............................... 7
5.5 No Subsidiaries................................................. 7
5.6 Financial Statements............................................ 7
5.7 Non-Balance Sheet Liabilities................................... 8
5.8 Accounts Receivable............................................. 8
5.9 Proprietary Rights; Environmental Documents..................... 8
5.10 Real Property; Reporting....................................... 9
5.11 Personal Property; New Projects................................ 10
5.12 Contracts...................................................... 11
5.13 Insurance Policies............................................. 12
5.14 Directors, Officers and Employees; Compensation................ 12
5.15 Employee Plans................................................. 12
5.16 Compliance with ERISA.......................................... 12
5.17 Compliance with Law; No Conflicts.............................. 13
5.18 Taxes.......................................................... 14
5.19 Litigation..................................................... 14
5.20 Absence of Price Renegotiation Contracts....................... 15
5.21 Conduct of Business Since Balance Sheet Date................... 15
<PAGE>
5.22 Bank Accounts; Depositories.................................... 16
5.23 Hazardous Materials............................................ 16
5.24 Storage Tanks.................................................. 17
5.25 Absence of Certain Business Practices.......................... 17
5.26 Complete Disclosure............................................ 17
6. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT................... 17
6.1 Corporate Organization.......................................... 17
6.2 Corporate Authority............................................. 17
6.3 No Conflicts.................................................... 17
6.4 Binding Agreement............................................... 18
6.5 Public Filings.................................................. 18
6.6 Parent Stock.................................................... 18
7. COVENANTS............................................................ 18
7.1 Access to Land and Records...................................... 18
7.2 Company Activities Prior to Closing............................. 19
7.3 Prohibited Activities Prior to Closing.......................... 19
7.4 Contact with Government Officials............................... 20
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND STOCKHOLDERS...... 21
8.1 Representations and Warranties.................................. 21
8.2 Consents........................................................ 21
8.3 No Adverse Proceeding........................................... 21
8.4 Noncompetition Agreements....................................... 21
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PARENT.............. 21
9.1 Representations and Warranties.................................. 21
9.2 Covenants....................................................... 22
9.3 No Adverse Proceeding........................................... 22
9.4 General Release................................................. 22
9.5 Consents........................................................ 22
9.6 Resignations.................................................... 22
9.7 Good Standing Certificates...................................... 22
9.8 Updated Agreements.............................................. 22
9.9 Noncompetition Agreements....................................... 22
9.10 Delivery of Company Stock...................................... 22
9.11 Environmental Review........................................... 23
9.12 Transferability of Permits..................................... 23
9.13 General........................................................ 23
9.14 Real Estate Lease.............................................. 23
10. POST CLOSING COVENANTS............................................... 23
10.1 Taxes.......................................................... 23
10.2 Closing Date Actions........................................... 24
<PAGE>
10.3 Further Assurance.............................................. 24
10.4 Transition..................................................... 24
10.5 Release of Personal Guaranties................................. 24
10.6 Financial Assurance............................................ 25
10.7 Securities Indemnity........................................... 25
10.8 Rule 144 Reporting............................................. 25
10.9 Survival....................................................... 26
11. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON STOCK......... 26
11.1 Registered Stock............................................... 26
11.2 Contractual Restriction........................................ 26
11.3 Contractual Restriction Legend................................. 26
11.4 General Legend................................................. 26
11.5 Compliance with Law............................................ 26
12. INDEMNIFICATION...................................................... 26
12.1 Indemnification by Stockholders and Company.................... 27
12.2 Indemnification by Buyer....................................... 27
12.3 Calculation of Damages......................................... 27
12.4 Time Limitations............................................... 27
12.5 Limitations on Amount of Stockholders' Liability............... 28
12.6 Procedure for Indemnification with Respect to Third Party
Claims......................................................... 28
12.7 Exclusive Remedy............................................... 29
12.8 Delivery of Contractually Restricted Stock to Satisfy
Obligations of Stockholders.................................... 29
13. TERMINATION OF AGREEMENT............................................. 29
13.1 Termination by Buyer........................................... 29
13.2 Termination by Stockholders.................................... 29
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION............................ 30
14.1 Nondisclosure by Stockholders.................................. 30
14.2 Nondisclosure by Parent........................................ 30
15. GENERAL.............................................................. 30
15.1 Assignment; Binding Effect; Amendment.......................... 30
15.2 Entire Agreement............................................... 31
15.3 Counterparts................................................... 31
15.4 No Brokers..................................................... 31
15.5 Expenses of Transaction........................................ 31
15.6 Notices........................................................ 31
15.7 Governing Law.................................................. 32
15.8 Appointment of Agent........................................... 33
15.9 No Waiver...................................................... 33
<PAGE>
15.10 Time of the Essence........................................... 33
15.11 Captions...................................................... 33
15.12 Severability.................................................. 33
15.13 Construction.................................................. 33
15.14 Standstill Agreement.......................................... 33
15.15 Contemporaneous Transaction Regarding Earth Blends, Inc....... 34
15.16 Schedules..................................................... 34
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is executed and
delivered as of April 21, 1998, among U S LIQUIDS NORTHEAST, INC., a Delaware
corporation ("Buyer"); U S LIQUIDS INC., a Delaware corporation ("Parent");
WASTE STREAM ENVIRONMENTAL, INC., a New York corporation ("Company"); and C.
WESLEY GREGORY III, C. WESLEY GREGORY, JR., and DONALD E. GORDON, the sole
stockholders of Company ("Stockholders");
WITNESSETH:
WHEREAS, Company operates a non-hazardous commercial waste
collection, transportation and processing business in the northeastern United
States (the "Business");
WHEREAS, as part of the Business, Company owns certain real property
located at 640 South Bridge Street in Holoyke, Massachusetts and more fully
described on Exhibit A, attached hereto and made a part hereof (the "Owned
Land");
WHEREAS, also as part of the Business, Company leases certain real
property located at 9293 Bonta Bridge Road in Jordan, New York and more fully
described on Exhibit B, attached hereto and made a part hereof (the "Jordan
Land"), pursuant to a lease (the "Jordan Lease") with 3 G's Realty Company, LLC
(the "Landlord");
WHEREAS, also as part of the Business, Company manages a fully
permitted facility for the processing of non-hazardous commercial waste (the
"Facility") pursuant to a Sludge Management Services Agreement between the
Company and The County of Onondaga dated September 29, 1992 (the "Onondaga
Contract") on certain real property located at 650 Hiawatha Boulevard, West, in
Syracuse, New York (the "Onondaga Land," together with the Owned Land and the
Jordan Land, the "Land");
WHEREAS, Stockholders own all of the issued and outstanding shares
of the capital stock of Company;
WHEREAS, Buyer is a wholly owned subsidiary of Parent;
WHEREAS, Buyer desires to acquire all of the issued and outstanding
shares of the capital stock of Company from Stockholders and Stockholders desire
to sell such interests to Buyer as set forth herein;
<PAGE>
NOW, THEREFORE, in consideration of Ten Dollars ($10) in hand paid,
the premises and of the mutual agreements, representations, warranties and
obligations herein contained, the parties hereby agree as follows:
10 DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK.
1.1 DELIVERY OF SHARES. Upon the terms and subject to the conditions set
forth in this Agreement, Stockholders shall, at the Closing (hereinafter
defined), sell, assign, transfer and deliver to Buyer certificates representing
the number of shares set forth opposite each Stockholder's name on Annex I
attached hereto and made a part hereof (the "Company Stock"), which certificates
represent all of the issued and outstanding capital stock of Company.
Stockholders shall transfer the Company Stock to Buyer free and clear of all
liens, security interests, encumbrances, adverse claims, pledges, charges,
voting trusts, equities and other restrictions on transfer of any nature
whatsoever, except for restrictions on transfer imposed by federal and state
securities laws (collectively, "Adverse Claims").
1.2 ENDORSEMENT OF COMPANY STOCK. Stockholders shall deliver at Closing
the certificates representing the Company Stock, duly endorsed in blank by
Stockholders or accompanied by stock powers duly endorsed in blank and with all
necessary transfer tax and other revenue stamps, acquired at Stockholders'
expense, affixed and cancelled. Stockholders, at their sole expense, agree to
cure (both before and after Closing) any deficiencies with respect to the
endorsement of the certificates or other documents of conveyance with respect to
the Company Stock or with respect to the stock powers accompanying the Company
Stock.
20 PURCHASE PRICE.
2.1 PURCHASE PRICE. Subject to Sections 2.3 and 2.4 below, in
consideration of the sale to Buyer in accordance with this Agreement of
certificates representing the Company Stock, Parent and Buyer shall be jointly
and severally obligated to pay to Stockholders:
(a) the sum of $2,389,000 at Closing in immediately available funds;
and
(b) that total number of shares of common stock of the Parent, $.01
par value per share, (the "Parent Stock") which shall have an aggregate
Agreed Value of $5,511,000 of which $1,377,750 will be contractually
restricted for a period of one year and $1,377,750 will be contractually
restricted for a period of two years, subject to adjustment in accordance
with Sections 2.3 and 2.4 below. The shares of Parent Stock to be issued
and distributed pursuant to this Section shall be determined pursuant to
Section 2.2. The consideration set forth in this Article 2 shall be
allocated among the Stockholders in accordance with Annex I attached
hereto and made a part hereof.
<PAGE>
2.2 AGREED VALUE OF PARENT STOCK. For purposes of this Agreement, the
"Agreed Value" per share of Parent Stock shall be the average of the closing
prices of a share of the common stock of Parent, $.01 par value per share, on
the American Stock Exchange as reported in THE WALL STREET JOURNAL for the five
trading days immediately preceding the six trading days immediately prior to the
Closing Date.
2.3 DEBT ADJUSTMENT TO PURCHASE PRICE. Attached hereto as Schedule 2.3 is
a listing of all of the actual debt of the Company for borrowed money (including
the current portion of such debt) (the "Debt") as of March 31, 1998. The parties
agree that the purchase price was determined as if the Debt was going to be
$3,152,000 on the Closing Date. On the Adjustment Date, the parties will
determine the amount of the Debt in connection with the balance sheet to be
prepared pursuant to Section 2.4 below. If the Debt is less than $3,152,000 on
the Closing Date, the consideration payable in Section 2.1 shall be increased by
an amount equal to the difference between $3,152,000 and the Debt. If the Debt
is more than $3,152,000 on the Closing Date, the consideration payable in
Section 2.1 shall be decreased by an amount equal to the difference between
$3,152,000 and the Debt. Any adjustment made pursuant to this Section 2.3 shall
be made to the Funds.
2.4 NET WORKING CAPITAL ADJUSTMENT TO PURCHASE PRICE. The parties agree
that the purchase price was determined as if the net working capital of Company,
together with Earth Blends, Inc. ("EBI," together with Company, the "Combined
Companies") was going to be $1.00 at the close of business on the Closing Date.
Accordingly, the parties agree that the purchase price set forth in this Article
2 shall be adjusted (up or down) on the Adjustment Date (as hereinafter defined)
to reflect the actual net working capital of the Combined Companies on the
Closing Date (the "Actual Net Working Capital"), as shown on the balance sheet
to be prepared in accordance with this Section 2.4. If the Actual Net Working
Capital of the Combined Companies so reflected is greater than $1.00, then the
purchase price paid pursuant to Section 2.1 shall be increased dollar for dollar
for each dollar the Actual Net Working Capital exceeds $1.00 on the Closing
Date. If the Actual Net Working Capital of the Combined Companies so reflected
is less than $1.00, then the purchase price paid pursuant to Section 2.1 shall
be decreased dollar for dollar for each dollar the Actual Net Working Capital
falls below $1.00 on the Closing Date. For purposes of this Agreement, Actual
Net Working Capital shall mean the aggregate current assets of the Combined
Companies on the Closing Date minus the aggregate of all current liabilities of
the Combined Companies on the Closing Date (excluding the sum of $200,000 paid
or payable to Mr. Jarrard and Mr. Ravenscroft), calculated in accordance with
generally accepted accounting principles applied consistently with the practices
used in the balance sheet of the Combined Companies as of March 31, 1998
("GAAP"), excluding the Debt and the current maturities of leases. Any
adjustment made pursuant to this Section 2.4 shall be made to the Funds.
In order to facilitate the contemplated adjustment to purchase price on
the Adjustment Date, on the Closing Date the parties will prepare and agree upon
an estimated net working capital balance
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for the Combined Companies as of March 31, 1998 (the "Estimated Working
Capital"). The amount of the Estimated Working Capital (positive or negative)
will be an adjustment to the purchase price on the Closing Date. In computing
the adjustment amounts provided for this Section, the party owing payment to the
other pursuant to this Section shall make such payment in cash.
On the date which is 60 days after the Closing Date (the "Adjustment
Date") the parties shall adjust the Purchase Price in accordance with this
Section 2.4 based on a balance sheet of the Combined Companies as of the Closing
Date, without giving effect to the transactions contemplated by this Agreement,
except the payment of the Estimated Working Capital (the "Closing Balance
Sheet"), prepared by Buyer in accordance with GAAP and delivered to
Stockholders, together with the supporting documentation for all current assets
and liabilities used to prepare such balance sheet, at least 21 days prior to
the Adjustment Date. No accounts receivable shall be written off in whole or in
part in connection with preparing such balance sheet and the reserves for
doubtful accounts for the Combined Companies will not exceed $20,000 as set
forth on the Estimated Working Capital balance sheet.
In the event of a dispute between the parties as to the Actual Net Working
Capital, the parties will have 30 days to resolve the dispute among themselves.
If the parties have not resolved such dispute within such 30-day period, then
the parties shall select an arbitrator who shall decide the dispute within 30
days after being selected. If the parties cannot agree on an arbitrator, then
Buyer and Stockholders (as a group) shall each select an arbitrator and the two
arbitrators so selected shall select a third arbitrator. The parties hereto each
agree to be bound by the decision of the arbitrator(s). In the event that three
arbitrators are chosen, a majority decision will be required. Each arbitrator
can be any natural person above the age of 18 and need not have any specific
qualification. All costs of the arbitration shall be split equally between Buyer
and Stockholders (as a group).
2.5 CONTINGENT ADDITIONAL PURCHASE PRICE. In addition to the consideration
payable pursuant to Section 2.1, Parent shall pay to Stockholders, each and any
of the following if, as and when the events described below occur:
(a) In the event that Company owns 100% of the Yarmouth Project (as
hereinafter defined):
(i) Company operates three units of equipment used for the
purpose of reprocessing non-hazardous commercial waste which Company
rents to third parties (the "Aunti-Hydro Project"). Parent will pay
to Stockholders an aggregate additional consideration of $600,000 in
immediately available funds if the EBITDA (as defined below) derived
from the Aunti-Hydro Project is greater than $194,000 for any
Payment Period (as defined below) within the period from January 1,
1998 to December 31, 2000
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(ii) Parent will pay to Stockholders an aggregate additional
consideration of $400,000 in immediately available funds if Company
(or the venture to which Company is a party) completes construction
of, and receives full and final permits and authorizations from any
governmental or regulatory agency that has jurisdiction over, the
non-hazardous waste processing facility located at Yarmouth,
Massachusetts (the "Yarmouth Project") on or before December 31,
2001.
(iii) Parent will pay to Stockholders an aggregate additional
consideration in unrestricted Parent Stock for the combined EBITDA
derived from the Aunti-Hydro Project and Company's portion of the
Yarmouth Project as follows:
(A) Parent Stock which shall have an aggregate Agreed
Value (as defined below) of $750,000 if the EBITDA derived from the
Yarmouth Project is greater than $504,000 for any Payment Period
within the period from January 1, 1998 to December 31, 2001; and
(B) the Parent Stock payable in (A) above plus Parent
Stock which shall have an aggregate Agreed Value (as defined below)
of $1,000,000 if the EBITDA derived from the Yarmouth Project is
greater than $704,000 for any Payment Period within the period from
January 1, 1998 to December 31, 2001.
(b) In the event that Company owns 50% of the Yarmouth Project:
(i) Company operates the Aunti-Hydro Project. Parent will pay
to Stockholders an aggregate additional consideration of $600,000 in
immediately available funds if the EBITDA derived from the
Aunti-Hydro Project is greater than $194,000 for any Payment Period
within the period from January 1, 1998 to December 31, 2000.
(ii) Parent will pay to Stockholders an aggregate additional
consideration of $300,000 in immediately available funds if Company
completes construction of, and receives full and final permits and
authorizations from any governmental or regulatory agency that has
jurisdiction over the Yarmouth Project on or before December 31,
2001.
(iii) Parent will pay to Stockholders an aggregate additional
consideration in unrestricted Parent Stock for the combined EBIDTA
derived from the Aunti-Hydro Project and Company's portion of the
Yarmouth Project as follows: Parent Stock which shall have an
aggregate Agreed Value (as defined below) of $875,000 if the EBITDA
derived from the Yarmouth Project is greater than $352,000 for any
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Payment Period within the period from January 1, 1998 to December
31, 2001.
(c) In the event that Company does not own the Yarmouth Project:
(i) Company operates the Aunti-Hydro Project. Parent will pay
to Stockholders an aggregate additional consideration of $600,000 in
immediately available funds if the EBITDA derived from the
Aunti-Hydro Project is greater than $194,000 for any Payment Period
within the period from January 1, 1998 to December 31, 2000.
(d) Parent will pay to Stockholders an aggregate additional
consideration in the amount of $500,000 in immediately available funds in
the event that the board of directors of Parent (the "Board") approves the
purchase of a 50% interest in Pocono Grow Fertilizer Corporation (the
"Pocono Grow Project"). Parent shall use its best efforts to complete its
evaluation of, and, if determined to be in the best interests of Parent,
to obtain the approval of the Board for, the Pocono Grow Project prior to
May 15, 1998.
(e) Any consideration that becomes due pursuant to this Section 2.5
will be paid by Parent to Stockholders within 30 days after the occurrence
of the event that gives rise to such consideration becoming due ("Payment
Date") in accordance with the percentages set forth in Annex I. For
purposes of this Section 2.5, the "Agreed Value" per share of Parent Stock
shall be the average of the closing prices of a share of the only class of
common stock of Parent, $.01 par value per share, on the American Stock
Exchange as reported in THE WALL STREET JOURNAL for the five trading days
immediately preceding the five trading days immediately prior to the
Payment Date, adjusted for any stock splits, stock dividends and other
capital expenditures between the first date of the valuation period and
the Payment Date.
(f) For purposes of this Agreement, "Payment Period" shall mean any
consecutive twelve calendar month period; provided, however that EBITDA
will be calculated only as of the end of any calendar month.
(g) For purposes of this Agreement, "EBITDA" shall mean earnings
before interest, income taxes, depreciation and amortization, consistently
applied in accordance with the proforma financial statements set forth in
Exhibit D, subject to 2% overhead costs. Parent will provide Stockholders
and their representatives with reasonable access to all books and records
needed to confirm the EBITDA calculation.
(h) Buyer agrees to cause Company to use its best efforts to (i)
consummate the purchase of the Aunti-Hydro assets substantially in
accordance withy the terms of the draft
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purchase agreement set forth in Schedule 5.4 and (ii) pursue the Yarmouth
Project substantially as contemplated by the memorandum of understanding
as a joint venture or, if the proposed joint venture is not consummated,
on its own.
30 LEASEHOLD TITLE ASSURANCE.
3.1 LEASEHOLD TITLE POLICY. Stockholders and Buyer will cooperate after
Closing to obtain an extended coverage leasehold policy of title insurance from
Stewart Title Insurance Company (the "Title Company") in the amount of
$1,320,000 with each of the Title Company's standard printed exceptions deleted
and including comprehensive, access, contiguity, non-arbitration, going concern,
non-imputation and zoning endorsements (to the extent such endorsements are
available in New York), insuring valid leasehold title to the Leased Land (as
defined in Section 9.14 below) in Buyer subject only to the exceptions permitted
by Section 3.2 hereof (the "Title Policy").
3.2 PERMITTED ENCUMBRANCES. The Title Policy shall insure Buyer's interest
in the Leased Land to be free and clear of all encumbrances whatsoever except:
(i) zoning ordinances and regulations which do not, in Buyer's judgment,
adversely affect Buyer's use of the Leased Land for its current uses; (ii) real
estate taxes and assessments, both general and special, which are a lien but are
not yet due and payable at the Closing Date; (iii) easements, encumbrances,
covenants, conditions, reservations and restrictions of record, if any, as shown
on Exhibit C; and (iv) the Real Estate Lease (as defined in Section 9.14 below).
Buyer shall pay all of the costs associated with the delivery of the Title
Policy.
3.3 SURVEY. Stockholders shall obtain for Buyer's use and for the use of
the Title Company in connection with the issuance of the Title Policy a current
and complete survey of the Leased Land made on the ground by a competent
registered surveyor, showing: (a) the exact boundary lines of the Leased Land;
(b) the location thereon of all, if any, buildings, improvements, and easements
now existing; (c) the number of acres in the Leased Land; (d) the location of
any buildings, fences or other improvements which encroach on the Leased Land;
(e) the location of any improvements on the Leased Land which encroach on any
neighboring property or on any property which is subject to any easement or
right-of-way; (f) all building lines established in respect of the Leased Land;
and (g) all public access to the Land, and representing that the boundaries of
the Leased Land are contiguous with the boundaries of all adjoining parcels (the
"Survey"). Stockholders shall pay all of the costs of the Survey.
40 CLOSING. Unless the parties agree otherwise, the closing of the within
contemplated transaction (the "Closing") shall take place on the date that is
within five business days after the completion, satisfaction or waiver of each
of the conditions to Closing set forth in Articles 8 and 9. The Closing shall
take place at a location mutually agreeable to Buyer and Stockholders. The date
on which the Closing occurs shall be referred to as the "Closing Date."
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50 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND COMPANY. Company as to the
time period before Closing only, and each Stockholder, jointly and severally,
represent and warrant to Buyer that the statements contained in this Section 5
except as set forth in the schedules to the subsections of this Section 5
delivered by Stockholders to Buyer on the date hereof (such schedules
hereinafter collectively referred to as the "Disclosure Schedules" and,
individually, as a "Disclosure Schedule"): (i) are correct as of the date of
this Agreement; (ii) will be correct as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this Section 5); and (iii) shall survive the Closing.
Wherever a representation or warranty herein is qualified as having been
made "to the best of Stockholders' knowledge", such phrase shall mean the
knowledge of any Stockholder, after reasonable inquiry.
5.1 ORGANIZATION; AUTHORITY.
(i) Company is a New York corporation duly organized, validly
existing and in good standing under the laws of the State of New York and
is now duly authorized, qualified and licensed under all laws,
regulations, ordinances and orders of public authorities to carry on its
businesses in the places and in the manner as conducted at the time such
activities were conducted except for where failure to be so authorized,
qualified or licensed would not have a material adverse affect on the
Business. Copies of the Company's Certificate of Incorporation (certified
by the Secretary of State of New York) and Bylaws (certified by the
Secretary of Company), each as amended, are attached hereto as Schedule
5.1(i).
(ii) Company has full legal right, power and authority (corporate
and otherwise) to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. All corporate action of
Company necessary to approve the sale of the Company Stock has been taken,
including director and shareholder approvals, if necessary.
(iii) Each Stockholder is competent and under no legal restraint or
duress and has the full legal right and capacity to enter into and perform
his obligations under this Agreement.
5.2 STOCK OWNERSHIP; ABSENCE OF ADVERSE CLAIMS. All of the issued and
outstanding shares of Company Stock are owned of record and beneficially by
Stockholders as set forth on Annex I and are free and clear of Adverse Claims,
except for restrictions on transfer imposed by federal and state securities
laws. This Agreement is the valid and binding obligation of Company and
Stockholders, enforceable against each of them in accordance with its terms.
5.3 CAPITALIZATION. The authorized capital stock of Company consists
solely of 200 shares of voting common stock, without par value, of which 100
shares are issued and outstanding. All of
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the issued and outstanding shares of Company Stock have been duly authorized and
validly issued, are fully paid and nonassessable (subject to the provisions of
Section 630 of the New York Business Corporation Law), were offered, issued,
sold and delivered by Company in compliance with all state and federal laws
concerning the issuance of securities and none of such shares were issued in
violation of the preemptive rights of any past or present stockholder. The stock
transfer records provided by Stockholders and Company to Buyer correctly set
forth all issuances, acquisitions and retirements of Company Stock since the
inception of Company. No subscriptions, options, warrants, puts, calls,
conversion rights or other commitments of any kind exist which obligate Company
to issue any of its authorized but unissued capital stock or otherwise relate to
the sale or transfer by Company of any securities of Company (whether debt or
equity).
5.4 PREDECESSOR ENTITIES; TRADE NAMES. Company is not directly or
indirectly participating in any manner in any joint venture, partnership or
other noncorporate entity. Except as set forth on Schedule 5.4, Company was
formed principally to operate the Business and has never conducted any other
significant unrelated business or activity. Set forth on Schedule 5.4 is a list
of the names of all predecessors of Company, all prior corporate names of
Company, and all trade names and "doing business as" names of Company, including
the names of all entities substantially all of the assets of which were
previously acquired by Company.
5.5 NO SUBSIDIARIES. Except as set forth on Schedule 5.5, Company has
never owned or controlled and does not now own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any partnership, corporation,
association or other business entity other than those of Company.
5.6 FINANCIAL STATEMENTS. Attached as Schedule 5.6 are copies of the
following financial statements of Company (together, the "Financial
Statements"):
(a) Company's balance sheet as of December 31, 1997, and a statement
of income and retained earnings for the year then ended (the "Balance
Sheet Date");
(b) Company's balance sheet as of March 31, 1998, and a statement of
income and retained earnings for the quarter then ended.
Except as set forth on Schedule 5.6, each of the Financial Statements has
been prepared in accordance with GAAP, applied on a consistent basis throughout
the periods indicated. Each of the balance sheets presents fairly the financial
condition of Company as of the date indicated thereon and each of such
statements of income presents fairly on an accrual basis the results of the
operations of Company for the period indicated thereon. Except as noted thereon,
the Financial Statements are consistent in all material respects with the books
and records of Company.
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5.7 NON-BALANCE SHEET LIABILITIES. Attached hereto as Schedule 5.7 is a
complete and accurate list as of the date hereof of all liabilities and
obligations of Company, excluding obligations arising under this Agreement,
which are not individually reflected in the Financial Statements dated the
Balance Sheet Date that are of the type required to be reflected as liabilities
on a balance sheet prepared in accordance with GAAP or described in the notes
thereto, except for liabilities incurred in the ordinary course of business
since the date of the Balance Sheet.
5.8 ACCOUNTS RECEIVABLE. Attached as Schedule 5.8 is a complete and
accurate list of all accounts and notes receivable of Company as of March 31,
1998, including receivables from and advances to employees and Stockholders and
also including all such accounts and notes receivable which are not reflected in
the Financial Statements, if any. Also attached as Schedule 5.8 is an aging of
all accounts receivable showing amounts due in 30 day aging categories.
5.9 PROPRIETARY RIGHTS; ENVIRONMENTAL DOCUMENTS.
(i) Attached as Schedule 5.9(i) is a complete and accurate list and
summary description as of the date noted thereon of all governmental
permits, titles, fuel permits, licenses, franchises, owned or held by
Company which are material to the operation of the principal business of
the Company, all of which are now valid, in good standing and in full
force and effect. Except as set forth on Schedule 5.9(i), such permits,
titles, licenses, and franchises, are adequate for the operation of the
Business as presently constituted.
(ii) The Company has, as of the date of this Agreement, made
available to Buyer for its inspection all presently held records,
correspondence, reports, notifications, permits, pending permit
applications, licenses and pending license applications, environmental
impact studies, assessments and audits and all written notifications from
governmental agencies and any other person or entity to Company of which
the Stockholders have knowledge relating to: (a) each actual and
threatened violation of Applicable Laws (hereinafter defined) by Company
or otherwise relating to the Land and all, if any, claims thereof; (b) the
present or past environmental compliance by Company; (c) the present or
past environmental condition of the Land; (d) the discharge, leakage,
spillage, transport, disposal or release of any material into the
environment by Company or otherwise relating to the Land; and (e) land use
and access approvals relative to any portion of the Land (collectively,
the "Environmental Documents").
(iii) The Company owns, or is validly licensed or otherwise has the
right to use, all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, service marks, service mark rights,
copyrights, know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process technology, plans,
drawings, blue prints, and other proprietary intellectual property rights
(collectively,
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"Intellectual Property Rights") that are material to the conduct of the
business of the Company. No claims are pending or, to the best of
Stockholders' knowledge, threatened that the Company is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right. To the best of Stockholders' knowledge, no
person is infringing the rights of the Company with the respect to any
Intellectual Property Right.
5.10 REAL PROPERTY; REPORTING.
(i) Except for land used to park vehicles and warehouse space at an
annual rent not exceeding $2,000, Company does not own, lease or otherwise
occupy, or have an interest in, or operate any real property other than
the Land. Company has good fee simple title to the Owned Land. Except as
set forth on Schedule 5.10(i):
(a) The Onondaga Land is, and at all times during operation of
the Facility has been, fully licensed, permitted and authorized for
the operation of the Facility under all Applicable Laws relating to
the protection of the environment, the Land and the conduct of the
Facility thereon (including, without limitation, all zoning
restrictions and land use requirements).
(b) The Jordan Land and the Owned Land are each fully
licensed, permitted and authorized for their respective current
uses.
(c) The Land is usable for its current uses and, to the best
of Stockholders' knowledge, can be used by Company after the Closing
for such uses without violating any Applicable Law or private
restriction, and such uses are legal conforming uses. There are no
proceedings or amendments pending and brought by or, to the best of
Stockholders' knowledge, threatened by, any third party which would
result in a change in the allowable uses of the Land or which would
modify the right of Company to use the Land for its current uses
after the Closing Date.
(d) Stockholders and Company have made available to Buyer all
engineering, geologic and other similar reports, documentation and
maps relating to the Land in the possession or control of
Stockholders or Company.
(e) To the best of Stockholders' knowledge, no third parties
have any rights to drill or explore for, collect, produce, mine,
excavate, deliver or transport oil, gas, coal, or other minerals in,
on, beneath, across, over, through, from or to any portion of the
Land.
(f) Neither Company, Stockholders nor, to the best of
Stockholders'
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knowledge the Land is involved in any litigation or administrative
proceeding seeking to impose fines, penalties or other liabilities
or seeking injunctive relief for violation of any Applicable Laws
relating to the environment.
(g) To the best of Stockholders' knowledge, no third party has
a present or future right to possession of all or any part of the
Owned Land.
(h) To the best of Stockholders' knowledge, no portion of the
Owned Land contains any areas that could be characterized as
disturbed, undisturbed or man made wetlands or as "waters of the
United States" pursuant to any Applicable Laws or the procedural
manuals of the Environmental Protection Agency, U.S. Army Corps of
Engineers or the Department of Natural Resources of the applicable
state, whether such characterization reflects current conditions or
historic conditions which have been altered without the necessary
permits or approvals.
(i) To the best of Stockholders' knowledge, there are no
mechanic's liens affecting the Land and no work has been performed
on the Land within 120 days of the date hereof for which a
mechanic's lien could be filed.
(j) There are no levied or pending special assessments
affecting all or any part of the Owned Land or Leased Land and, to
the best of Stockholders' knowledge, none is threatened.
(k) There are no pending or, to the best of Stockholders'
knowledge, threatened condemnation or eminent domain proceedings
affecting all or any part of the Land.
(ii) To the best of Stockholders' knowledge, Company has provided to
the government agencies requiring the same, all material reports, notices,
filings and other disclosures required by Applicable Laws and all such
reports, notices, filings and other documents were complete and accurate
in all material respects at the time provided to said government agencies.
5.11 PERSONAL PROPERTY; NEW PROJECTS.
(i) Attached as Schedule 5.11(i) is a complete and accurate list as
of the date noted thereon of all capital assets owned by Company and a
list of all lessors under leases providing for the payment of $5,000 or
more annually with respect to personal property of Company used in the
operation of the Business and including an indication as to which assets
were formerly owned by business or personal affiliates of Company. All of
the vehicles, machinery and other equipment of Company that are material
to the operation of the Business are in
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good working order and repair in all material respects, normal wear and
tear excepted;
(ii) Company has good title to, or a valid leasehold interest in,
the properties and assets used by it shown on its balance sheet dated the
Balance Sheet Date or acquired after the date thereof (except for personal
property sold since the Balance Sheet Date in the ordinary course of
business), whether or not located on the Land, including, without
limitation, the items of personal property listed on Schedules 5.11(i),
free and clear of all security interests, liens or other Adverse Claims,
except for the Debt, liens for current taxes not yet due, and minor
encumbrances, if any, none of which is substantial in amount, materially
detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of the Company;
(iii) all leases referred to on Schedule 5.11(i) are in full force
and effect and constitute valid and binding agreements of the parties
thereto (and their successors) in accordance with their respective terms.
No default by Company, or, to the best of Stockholders' knowledge, any
other party to any of such leases, exists or would exist except for the
passage of time or delivery of a notice or both;
(iv) all fixed assets used by Company that are material to the
operation of the Business are either owned by Company or leased by Company
under an agreement indicated on Schedule 5.11(i). Company's combined fixed
assets (together with the real property assets) constitute all of the real
and personal property reasonably necessary for and material to the
operation of the Business both by Company and by Buyer immediately
following the Closing.
5.12 CONTRACTS. Attached as Schedule 5.12 is a complete and accurate list
as of the date hereof of all of the following types of contracts, commitments
and other agreements to which Company is a party or by which Company or its
properties are bound: the ten largest waste treatment and processing contracts
and lists of customers with accounts, joint venture or partnership agreements,
contracts or collective bargaining arrangements with any labor organizations,
loan agreements, powers of attorney not otherwise related to a contractual
relationship (each of which shall be cancelled at the Closing), indemnity or
guaranty agreements not otherwise related to a contractual relationship,
mortgages, options to purchase land, agreements for the employment of any
individual, written agreements under which Company has advanced or loaned any
amount to one another or to Stockholders or any employee, officer or director of
Company, any guaranties by Company of the indebtedness of another, any agreement
concerning noncompetition and any other agreement not entered into in the
ordinary course of business under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations or prospects of Company. None of the agreements listed on
Schedule 5.12 have been modified, altered, terminated or otherwise amended in
any material respect and there have been no
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material waivers, oral agreements, representations or other statements with
relation to any such agreements except as described in Schedule 5.12. Except as
noted in Schedule 5.12, Company has complied in all material respects with all
obligations pertaining to it contained in such contracts, commitments and other
agreements, is not in material default thereunder and no notice of default has
been received nor will the consummation of the transactions contemplated by this
Agreement result in such a default. To the best of Stockholders' knowledge,
there is no default by any other party to any contract, commitment or other
agreement attached as Schedule 5.12.
5.13 INSURANCE POLICIES. Attached as Schedule 5.13 are complete and
accurate copies (except as noted thereon) as of the date hereof of all insurance
policies carried by Company. All insurance policies are in full force and effect
and shall remain in full force and effect through the Closing Date.
5.14 DIRECTORS, OFFICERS AND EMPLOYEES; COMPENSATION. Attached as Schedule
5.14 is a complete and accurate list of all officers, directors and employees of
Company and the rate of compensation (excluding bonus compensation) of each as
of the date hereof. Except as set forth on Schedule 5.12 or Schedule 5.14, each
employee of Company is an employee at will and there are no collective
bargaining agreements affecting any employee of Company. There is no pending or,
to the best of Stockholders' knowledge, threatened labor dispute involving
Company and any group of its employees nor has Company experienced any labor
interruptions over the past three years.
5.15 EMPLOYEE PLANS. Except as set forth on Schedule 5.12 or Schedule
5.15, Company has no group health plans, employee benefit plans, employee
welfare benefit plans, employee pension benefit plans, multi-employer plans or
multiple-employer welfare arrangements (as defined in Sections 3(3), (1), (2),
(37) and (40), respectively, of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (collectively, "Plans") which are currently
maintained and/or sponsored by Company, or to which Company currently
contributes, or has an obligation to contribute in the future (including,
without limitation, employment agreements and any other agreements containing
"golden parachute" provisions and deferred compensation agreements).
5.16 COMPLIANCE WITH ERISA. Neither Company, any Controlled Group Member
(as defined in Internal Revenue Code (the "Code") Section 414(n)(6)(B)), nor any
business, subsidiary, division or operation acquired by Company or a Controlled
Group Member in the last five years, ever have maintained or sponsored, or
contributed to, an employee pension benefit plan (as defined in ERISA Section
3(2)) which is subject to the provisions of Title IV of ERISA. Except for the
Plans, Company does not maintain or sponsor, nor is a contributing employer to,
a pension, profit-sharing, deferred compensation, stock option, employee stock
purchase or other employee benefit plan, employee welfare benefit plan, or any
other arrangement with its employees. Further, except as reflected in the
documents listed on Schedule 5.12 or Schedule 5.15:
(i) there have been no terminations, partial terminations or
discontinuance of contributions to any Qualified Plan without notice to
and approval by the Internal Revenue Service;
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(ii) with respect to Plans which qualify as "group health plans"
under Section 4980B of the Internal Revenue Code and Section 607(1) of
ERISA and related regulations (relating to the benefit continuation rights
imposed by "COBRA"), Company has complied (and on the Closing Date will
have complied), in all material respects with all reporting, disclosure,
notice, election and other benefit continuation requirements imposed
thereunder as and when applicable to such plans, and Company has no (and
will not incur any) direct or indirect liability and Company is not (and
will not be) subject to any loss, assessment, excise tax penalty, loss of
federal income tax deduction or other sanction, arising on account of or
in respect of any direct or indirect failure by Company any time prior to
the Closing Date to comply with any such federal or state benefit
continuation requirement, which is capable of being assessed or asserted
before or after the Closing Date directly or indirectly against Company
with respect to such group health plans;
(iii) Company has no (and as a result of this transaction will not
incur any) retiree health care obligations to its employees;
(iv) Company has no (and as a result of this transaction will not
incur any) severance pay obligation to its employees and no severance pay
will be due to any employee of Company as a result of the transaction
contemplated herein; and
(v) with respect to any Plan which qualifies as a group health plan,
such plan is fully insured and all premiums have been paid on a timely
basis or, to the extent such plan is not fully insured, all self insured
obligations have been met as of the Closing Date and are fully reflected
in the plan's financial statements. To the extent that any of Company's
group health plans are retrospectively rated, there are no liabilities
capable of assertion against Company in respect of claims already
incurred.
5.17 COMPLIANCE WITH LAW; NO CONFLICTS.
(i) To the best of Stockholders' knowledge and except as set forth
on Schedule 5.17, Company has in the past complied with, and is now in
compliance with, all federal, state and local statutes, laws, rules,
regulations, orders, licenses, permits (including, without limitation,
zoning restrictions and land use requirements) and all administrative and
judicial judgments, rulings, decisions and orders of any body having
jurisdiction over Company, the Business or the Land (the "Applicable
Laws"), except for possible noncompliance that is not likely, individually
or in the aggregate, to have a material adverse effect on the Company or
the Business. Neither Company nor any of the Stockholders have received
any written notice that Company is under investigation or other form of
review for imposition of sanctions with respect to any Applicable Law; and
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(ii) the execution, delivery and performance of this Agreement, the
consummation of any transactions herein referred to or contemplated hereby
and the fulfillment of the terms hereof and thereof will not:
(a) conflict with, or result in a breach or violation of the
Certificate of Incorporation or Bylaws of Company;
(b) except as set forth on Schedule 5.12, conflict with, or
result in a breach under any document, agreement or other instrument
listed on Schedule 5.12, or result in the creation or imposition of
any lien, charge or encumbrance on any properties of Company or any
of the Stockholders pursuant to: (A) any law or regulation to which
Company, or any of the Stockholders, or any of their respective
properties are subject, or (B) any judgment, order or decree to
which Company or any of the Stockholders is bound or any of their
respective properties are subject;
(c) provided the Company takes all actions required by
Applicable Law following the Closing Date, result in termination or
any impairment of any material permit, license, franchise,
contractual right or other authorization of Company; or
(d) require the consent of, or the filing with any
governmental authority or agency or any other third party prior to
the Closing Date in order to remain in full force and effect.
5.18 TAXES. Company has filed, or will file, in a timely manner all
federal, state, material local and other material tax returns due before the
Closing Date. Except as set forth on Schedule 5.18, there are no agreements to
extend the statutory period for the assessment of any taxes, examinations in
progress or claims against Company for federal, state, local and other taxes
(including penalties and interest) for any period or periods prior to and
including the date hereof and none shall exist as of the Closing Date. Except as
set forth on Schedule 5.18, no notice of any claim for taxes, whether pending or
threatened, has been received. The amounts shown as accruals for taxes on the
Financial Statements as of the respective dates thereof are sufficient in
accordance with GAAP as of such respective dates for the payment of all taxes of
the kinds indicated (including penalties and interest) for all fiscal periods
ended on or before such date. Copies of: (i) all tax examinations; (ii)
extensions of statutory limitations; and (iii) the federal, state, local and
other income tax returns and franchise tax returns of Company for its three
fiscal years ended December 31, 1996, are attached hereto as Schedule 5.18.
Company made a valid election under Subchapter S of the Code. Company has a
taxable year ended December 31. Company currently utilizes the accrual method of
accounting for income tax purposes.
5.19 LITIGATION. Except as set forth on Schedule 5.19, there is no claim,
litigation, action, suit
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or proceeding, investigation, formal arbitration, informal arbitration or
mediation, administrative, judicial or other review, pending and of which the
Company or any Stockholder has received notice or, to the best of Stockholders'
knowledge, threatened against Company or any of the Stockholders at law or in
equity, before any federal, state or local court or regulatory agency, or other
governmental or private authority that if resolved adversely to the Company
would have a material adverse affect on the Business or the Company; no notice
of any of the above has been received by Company or any of the Stockholders.
Also listed on Schedule 5.19 are all instances where Company is the plaintiff,
or complaining or moving party, under any of the above types of proceedings or
otherwise.
5.20 ABSENCE OF PRICE RENEGOTIATION CONTRACTS. Company is not currently a
party to any governmental contracts subject to unilateral retroactive price
redetermination or renegotiation rights of the government entity.
5.21 CONDUCT OF BUSINESS SINCE BALANCE SHEET DATE. Since the Balance Sheet
Date, there has not been any:
(i) material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income and business or prospects of
Company;
(ii) damage, destruction or loss (whether or not covered by
insurance) which, singly or in the aggregate, materially and adversely
affects the properties (whether owned or leased) or business of Company;
(iii) any material increase from prior years in the compensation,
bonus, sales commissions or fee arrangements payable or to become payable
by Company to any of its officers, directors, employees, consultants or
agents above the amounts shown on Schedule 5.14;
(iv) sale or transfer of, or any agreement to sell or transfer, any
material assets, property or rights of Company to any person not in the
ordinary course of the business of Company, including, without limitation,
all agreements with Stockholders or with affiliates of Company other than
EBI;
(v) purchase or acquisition by any third party of, or any agreement,
plan or other arrangement by any third party to purchase or acquire, any
property, rights or assets of Company other than in the ordinary course of
business;
(vi) waiver of any material rights or claims of Company;
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(vii) amendment to the Certificate of Incorporation or Bylaws of
Company;
(viii) any other material transaction outside the ordinary course of
business of Company; or
(ix) any action by Company, Stockholders, or any employee, officer
or agent of Company or Stockholders committing to do any of the foregoing.
5.22 BANK ACCOUNTS; DEPOSITORIES. Attached as Schedule 5.22 is a complete
and accurate list as of the date of this Agreement, of:
(i) the name of each financial institution in which Company has any
account or safe deposit box;
(ii) the names in which each account or box is held;
(iii) the type of each account; and
(iv) the name of each person authorized to draw on or have access to
each account or box.
5.23 HAZARDOUS MATERIALS. Except as set forth on Schedule 5.23, or in the
ordinary course of business of the Company in compliance in all material
respects with Applicable Law, Company has never owned, leased, had an interest
in, generated, transported, handled, recycled, reclaimed, disposed of, or
contracted for the disposal of, hazardous materials, hazardous wastes, hazardous
substances, toxic wastes or substances as those terms are defined by the
Resource Conservation and Recovery Act of 1976; the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"); the Clean Water Act; the
Toxic Substances Control Act; the Occupational Health and Safety Act; any
comparable or similar state statute affecting the Business; any other Applicable
Law; or the rules and regulations promulgated under any of the foregoing, as
each of the foregoing may have been amended (collectively, "Hazardous
Materials"). No liens with respect to environmental liability have been imposed
against Company or the Land under CERCLA, any comparable state statute affecting
the Business or other Applicable Law, and, to the best of Stockholders'
knowledge, no facts or circumstances exist which would give rise to the same. No
portion of the Land is listed on the CERCLIS list or the National Priorities
List of Hazardous Waste Sites or any similar list maintained by the State of New
York. Neither Company nor any Stockholder is listed as a potentially responsible
party under CERCLA, any comparable state statute or other Applicable Law, and
neither Company nor any Stockholder has received a written notice of such a
listing.
Set forth on Schedule 5.23 is a complete list of the names and addresses
of all disposal sites
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at any time now or in the past utilized by Company, none of which sites is
listed on the CERCLIS list or the National Priorities List of hazardous waste
sites or any comparable state list.
There have been no material spills, leaks, deposits or other releases into
the environment or onto the Land by Company of any Hazardous Materials and, to
the best of Stockholders' knowledge, Company has no material direct or
contingent liability or obligation for or in connection with any claimed
release, discharge or leak of any substance into the environment.
5.24 STORAGE TANKS. Except as set forth on Schedule 5.24, the Company has
not placed and, to the best of Stockholders' knowledge, the Land does not
contain any underground or above-ground storage tanks or transformers containing
Hazardous Materials, petroleum products or wastes or other hazardous substances
regulated by 40 CFR 280 or other Applicable Laws. All above and below ground
tanks currently in use on the Owned Land or Leased Land are being used and
maintained in accordance with all Applicable Laws in all material respects.
5.25 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Company nor
Stockholders have ever made, offered or agreed to offer anything of value to any
employees of any customers of Company for the purpose of attracting business to
Company or any foreign or domestic governmental official, political party or
candidate for government office or any of their respective employees or
representatives, nor have they otherwise taken any action which would cause it
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended.
5.26 COMPLETE DISCLOSURE. This Agreement and the schedules hereto do not
and will not include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading. If
Stockholders, or, prior to Closing, Company, becomes aware of any fact or
circumstance which would change a representation or warranty of Company or
Stockholders in this Agreement the party with such knowledge shall promptly give
written notice of such fact or circumstance to Buyer.
6. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT. Buyer and Parent
represent and warrant that the statements contained in this Section 6: (i) are
correct as of the date of this Agreement; (ii) will be correct as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 6); and (iii) shall survive
the Closing.
6.1 CORPORATE ORGANIZATION. Buyer is duly incorporated, validly existing
and in good standing under the laws of the State of New York. Parent is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Buyer and Parent are each duly authorized, qualified and licensed
under all applicable laws, regulations and ordinances of public authorities to
carry on their businesses in the places and in the manner as now conducted
except for where the
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failure to be so authorized, qualified or licensed would not have a material
adverse affect on such businesses.
6.2 CORPORATE AUTHORITY. The officers of Buyer and Parent executing this
Agreement have the corporate authority to enter into and bind Buyer and Parent
to the terms of this Agreement and Buyer and Parent have taken all necessary
corporate action to authorize the execution, delivery and, subject to receipt of
required regulatory approvals, performance of this Agreement. All corporate
action by Buyer and Parent necessary to approve the transaction, including both
director and shareholder approvals (if required), has been taken.
6.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the consummation of any transactions herein referred to or
contemplated hereby and the fulfillment of the terms hereof and thereof will
not:
(i) conflict with, or result in a breach or violation of the
Articles of Incorporation or Bylaws of Buyer or Parent;
(ii) conflict with, or result in a material breach under any
document, agreement or other instrument to which Buyer or Parent is a
party, or result in the creation or imposition of any lien, charge or
encumbrance on any properties of Buyer or Parent pursuant to: (A) any law
or regulation to which Buyer or Parent, or their respective property is
subject, or (B) any judgment, order or decree to which Buyer or Parent is
bound or their respective property is subject; or
(iii) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of
Buyer or Parent.
6.4 BINDING AGREEMENT. This Agreement is the binding and valid obligation
of Buyer or Parent, enforceable against them in accordance with its terms.
6.5 PUBLIC FILINGS. Parent has timely filed with the Securities and
Exchange Commission (the "SEC") all forms, reports and other documents required
to be filed by Parent pursuant to the Act. As of their respective dates, no such
form, report or other document contained, as of the date of its filing, a
material misstatement of fact or omitted to disclose any material fact necessary
to cause the information disclosed therein not to be misleading. Since the date
of the information provided in the most recent filing, there has been no
material adverse change in the assets, liabilities, results of operations,
financial condition or business of Parent, taken as a whole.
6.6 PARENT STOCK. The Parent Stock to be delivered to Stockholders in
connection with this Agreement, when delivered in accordance with the terms of
this Agreement, will constitute valid and
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legally issued shares, fully paid and nonassessable and will be registered and
free from any restriction on transfer other than restrictions imposed by the Act
or the regulations promulgated thereunder and the contractual restrictions set
forth in this Agreement.
7. COVENANTS.
7.1 ACCESS TO LAND AND RECORDS. Between the date of this Agreement and the
Closing Date, Stockholders will cause Company to afford to or obtain for the
officers and authorized representatives of Buyer access to all of the Land
(including, without limitation, for the purpose of performing all testing,
inspections and other procedures considered desirable by Buyer), sites, books
and records, including, without limitation, the Environmental Documents, at all
reasonable times and upon reasonable notice and will furnish Buyer with such
additional financial and operating data and other information as to the business
and properties, both current and former, of Company as Buyer may from time to
time reasonably request. Buyer agrees to repair all damage, if any, caused by
Buyer's entry onto the Land prior to Closing and to indemnify Company and
Stockholders from any claims, causes of action, liabilities or expenses of any
kind arising from the actions or omissions of Buyer, Parent or either of their
agents in entering onto the Land. Stockholders will cooperate, and will cause
Company to cooperate, with Buyer, its representatives, engineers, auditors and
counsel in the preparation of any documents or other material which may be
required in connection with any documents or materials required by any
governmental agency. Buyer will cause all information obtained in connection
with the negotiation and performance of this Agreement to be treated as
confidential in accordance with the provisions of Article 14 hereof.
7.2 COMPANY ACTIVITIES PRIOR TO CLOSING. Between the date of this
Agreement and the Closing Date, Stockholders will cause Company:
(i) to carry on its business in substantially the same manner as it
has heretofore and not to introduce any material new method of management,
operation or accounting;
(ii) to maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(iii) to perform its obligations under agreements relating to or
affecting its assets, properties or rights, including payment of debts as
they become due;
(iv) to keep in full force and effect present insurance policies or
other comparable insurance coverage with reputable insurers;
(v) to use reasonable efforts to maintain and preserve its business
organization intact, retain employees and maintain relationships with
suppliers, customers, consultants,
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independent contractors and others having business relations with Company;
(vi) to maintain compliance with all Applicable Laws;
(vii) to maintain and perform present debt and lease instruments in
accordance with their terms and not enter into new or amended debt or
lease instruments, without the prior written consent of Buyer;
(viii) to pay and provide salaries and commissions for all officers,
directors, employees and agents at levels no higher than those in effect
at the Balance Sheet Date;
(ix) to provide the interim financial statements required by Section
5.6; and
(x) to provide all reasonable assistance to Buyer to provide for an
orderly transfer of operating control of Company to Buyer.
7.3 PROHIBITED ACTIVITIES PRIOR TO CLOSING. Between the date of this
Agreement and the Closing Date, and except as otherwise permitted by this
Agreement, Stockholders will cause Company not, without the prior written
consent of Buyer (which consent shall not be unreasonably withheld or delayed):
(i) to amend the Articles of Incorporation or Bylaws of Company;
(ii) to change the authorized capital of Company or the equity
ownership of Company or grant any options, warrants, puts, calls,
conversion rights or commitments relating to the equity interests of
Company;
(iii) to declare or pay any dividend of Company or directly or
indirectly purchase, redeem or otherwise acquire or retire for value or
issue any shares of stock of Company;
(iv) to enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures in excess of an
aggregate of $5,000;
(v) to increase the compensation payable or to become payable to any
officer, director, stockholder, employee, consultant or agent, or make any
bonus or management fee payment to any such person;
(vi) to create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now owned
or hereafter acquired;
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(vii) to sell, assign, lease or otherwise transfer or dispose of any
property or equipment;
(viii) to negotiate to acquire any business or begin any new
business or project;
(ix) to merge or consolidate or agree to merge or consolidate with
or into any other corporation;
(x) to waive any of its rights or claims;
(xi) to breach or permit a breach of, amend or terminate, any
material agreement, or any permit, license or other agreement or right to
which Company is a party;
(xii) to enter into any other transaction outside the ordinary
course of its business or otherwise prohibited hereunder;
(xiii) to make any oral or written public announcement concerning
this transaction except as may be required by law, all of which
announcements, if any, shall be forwarded to Buyer for review and comment
at least seven days prior to dissemination; or
(xiv) to allow any other action or omission, or series of actions or
omissions, by Company or Stockholders that would cause a representation
and warranty of Company and Stockholders made in Section 5.21 of this
Agreement to be untrue on the Closing Date.
7.4 CONTACT WITH GOVERNMENT OFFICIALS. Company and Stockholders shall each
use their reasonable best efforts (provided that neither Company nor
Stockholders will be required to expend any funds in connection with such
efforts) to cooperate with Buyer in making contact with the appropriate
governmental agencies and officials having information about or jurisdiction
over Company, the Stockholders or the Land, including, without limitation,
environmental and land use agencies and officials in order to assist Buyer in
completing its regulatory evaluation of Company and the Land.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND STOCKHOLDERS. The
obligations of Stockholders and Company hereunder are subject to the completion,
satisfaction, or at their option, waiver, on or prior to the Closing Date, of
the following conditions.
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Buyer and Parent contained in this Agreement shall be accurate on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date; and each and all
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of the terms, covenants and conditions of this Agreement to be complied with and
performed by Buyer or Parent on or before the Closing Date shall have been duly
complied with and performed.
8.2 CONSENTS. All necessary notices to, consents of and filings with any
governmental authority or agency or other third party relating to the
consummation of the Closing or the other transactions contemplated herein to be
made or obtained by Buyer shall have been obtained and made.
8.3 NO ADVERSE PROCEEDING. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or, to the best of
Stockholders's knowledge, threatened to restrain or prohibit any of the
transactions contemplated by this Agreement.
8.4 NONCOMPETITION AGREEMENTS. Buyer shall have executed and delivered at
the Closing separate Noncompetition Agreements with each Stockholder (the
"Noncompetition Agreements"), in form and substance satisfactory to Buyer and
Stockholders.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PARENT. The obligations of
Buyer and Parent hereunder are subject to the completion, satisfaction or, at
their option, waiver, on or prior to the Closing Date, of the following
conditions.
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Stockholders and Company contained in this Agreement shall be accurate on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, and Buyer shall have received a
certificate from Stockholders to that effect, or setting forth any discrepancies
in such representations and warranties which have arisen since the date of this
Agreement. The foregoing notwithstanding, Company and Stockholders agree that no
limitation of any representation or warranty concerning the knowledge of Company
or Stockholders or any qualification of such representations and warranties set
forth in the certificate contemplated in the first sentence of this Section 9.1
shall restrict Buyer's right to terminate this Agreement if any representation
or warranty of Stockholders or Company is inaccurate as of the Closing Date;
provided, however, that if Parent and Buyer close on the transactions
contemplated by this Agreement after receipt of a certificate containing
discrepancies between the representations and warranties provided in this
Agreement and the contents of the certificate, the representations and
warranties in this Agreement shall thereby be modified to conform to the
contents of the certificate.
9.2 COVENANTS. Each and all of the terms, covenants and conditions of this
Agreement to be complied with and performed by Stockholders and Company on or
before the Closing Date shall have been duly complied with and performed.
9.3 NO ADVERSE PROCEEDING. No action or proceeding before a court or any
other
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governmental agency or body shall have been instituted or, to the best of
Buyer's knowledge, threatened to restrain or prohibit any of the transactions
contemplated by this Agreement, and no governmental agency or body shall have
taken any other action or made any request of Buyer as a result of which the
management of Buyer deems it inadvisable to proceed with the transactions
hereunder.
9.4 GENERAL RELEASE. Stockholders shall have delivered to Buyer an
instrument dated the Closing Date releasing Company, Parent and Buyer from any
and all claims of Stockholders against Company, Parent and Buyer arising out of
events which occurred prior to the Closing (but not including any claims
pursuant to this Agreement).
9.5 CONSENTS. All necessary notices to, consents of and filings with any
governmental authority or agency or other third party relating to the
consummation of the Closing or the other transactions contemplated herein to be
made or obtained by Company or Stockholders shall have been obtained and made.
9.6 RESIGNATIONS. Each officer and director of Company shall have
delivered to Buyer their written resignation.
9.7 GOOD STANDING CERTIFICATES. Stockholders shall have delivered to Buyer
certificates, dated as of a date no earlier than 10 days prior to the Closing
Date, duly issued by the appropriate governmental authority or authorities
showing that Company is in good standing in its state of incorporation.
9.8 UPDATED AGREEMENTS. Stockholders shall have delivered to Buyer a
schedule (Schedule 9.8) dated the Closing Date, listing all agreements entered
into by Company since the date of Schedule 5.12, which new agreements must have
been determined to be acceptable to Buyer.
9.9 NONCOMPETITION AGREEMENTS. The Noncompetition Agreements shall have
been executed and delivered by all parties thereto at the Closing.
9.10 DELIVERY OF COMPANY STOCK. Stockholders shall have delivered to Buyer
certificates representing all Company Stock, duly endorsed in blank by
Stockholders or accompanied by stock powers duly executed in blank and with all
necessary transfer tax and other revenue stamps affixed and cancelled at
Stockholders's expense, none of which certificates shall bear any restrictive
legend other than those related to compliance with the Act.
9.11 ENVIRONMENTAL REVIEW. Buyer, through its authorized representatives,
must have completed a review (including, without limitation, all testing,
inspections and other procedures, review of existing files of, and discussions
with, governmental agencies and officials having
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jurisdiction over Company) of the Land and the environmental and land use
practices, procedures, operations and activities of Company; the results of
which review, without limiting the generality of the foregoing, reflects
compliance with all Applicable Laws governing the Land and the operations of
Company, discloses no actual or probable violations, compliance problems,
required capital expenditures or other substantive environmental, land use or
real estate related concerns and are otherwise satisfactory in all respects to
Buyer in its sole discretion.
9.12 TRANSFERABILITY OF PERMITS. Buyer shall have determined, in its sole
discretion, that prior to, or as a result of, this transaction, all of the
permits required for the operation of the Business and the Facility have been
transferred to Buyer or can be transferred to Buyer and all consents required by
Applicable Laws for Buyer's use of such permits after Closing have been
obtained.
9.13 GENERAL. All actions taken by Stockholders and Company in connection
with the consummation of the transactions contemplated hereby and all
certificates, opinions and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Buyer.
9.14 REAL ESTATE LEASE. Company shall have terminated the Jordan Lease and
Buyer shall have executed a lease for the that portion of the Jordan Land
("Leased Land") that is mutually acceptable to Buyer and Landlord and upon terms
mutually satisfactory to Buyer and Landlord (the "Real Estate Lease").
10. POST CLOSING COVENANTS.
10.1 TAXES. (i) Stockholders irrevocably agree to indemnify Buyer against,
and to hold Buyer harmless from:
(a) any and all federal, state, local, and other taxes of
Company not provided for in the Closing Balance Sheet arising from
the audit, examination, review or other adjustment of tax
liabilities made pursuant to applicable law by appropriate
governmental agencies for periods ending prior to the Closing Date;
and
(b) any and all taxes, interest, penalties, additions to tax
(or additional amounts imposed with respect to any such interest,
penalties, or additions to tax) imposed with respect to any federal,
state, local, or other taxes of Company for periods ending before
the Closing Date.
(ii) Stockholders agree that they shall be responsible, at their
sole expense, for the preparation of Company's federal, state, local and
other income and franchise tax returns required by Applicable Law for the
short tax period beginning January 1, 1998 and ending on the Closing Date.
Buyer agrees to cooperate with Stockholders in the preparation of and
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cause the Company to execute such returns. Stockholders further agree that
they shall pay all taxes (including all penalties and interest, if any)
due for such tax period not provided for in the Closing Balance Sheet.
Prior to filing the returns provided for in this paragraph, Stockholders
agree to allow Buyer 10 business days to review and comment upon such
returns, approval of which will not unreasonably be withheld.
10.2 CLOSING DATE ACTIONS. Except as contemplated by this Agreement, Buyer
and Stockholders mutually agree that they shall not, and shall cause Company not
to, engage in an transaction outside the normal course of business on the
Closing Date.
10.3 FURTHER ASSURANCE. From time to time on and after the Closing and
without further consideration, the parties hereto shall each deliver or cause to
be delivered to any other party at such times and places as shall be reasonably
requested, such additional instruments as any of the others may reasonably
request for the purpose of carrying out this Agreement and the transaction
contemplated hereby. Stockholders, also without further consideration but also
without cost, agree to reasonably cooperate with Buyer and to use their
reasonable efforts to have the present officers and employees of Company
cooperate on and after the Closing Date in furnishing to Buyer information,
evidence, testimony, and other assistance in connection with obtaining all
necessary permits and approvals and in connection with any actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to all
periods prior to the Closing Date. Stockholders acknowledge and agree that, from
and after the Closing, Buyer shall be entitled to possession of all documents,
books, records (including tax records), agreements and financial and operating
data of any sort of Company. Buyer shall provide Stockholder access to the
records of the Company after Closing.
10.4 TRANSITION. Stockholders will not take any action that is designed or
intended to have the effect of discouraging any customer or business associate
of Company from maintaining the same business relationships with the Company
after the Closing that it maintained with Company before the Closing.
Stockholders will refer all customer inquiries relating to the Business to
Company or Buyer from and after the Closing.
10.5 RELEASE OF PERSONAL GUARANTIES. Buyer agrees to use its reasonable
efforts to have each of the Stockholders released, as promptly as possible but
no later than 30 days after the Closing Date, from any personal obligations
entered into by such Stockholder in connection with Debt that is not paid in
full at the Closing. Parent shall indemnify, defend and hold harmless
Stockholders for any loss or other matter suffered as a result of such personal
guaranties prior to release. If Buyer cannot obtain a release within 60 days,
Buyer will pay off the underlying obligation in full.
10.6 FINANCIAL ASSURANCE. Promptly after the Closing Date, but no later
than 90 days after the Closing Date, Buyer will replace the current bonding by
Company (which is in the form of bonds)
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with financial assurance of Buyer acceptable to the State of New York. Parent
shall indemnify, defend and hold harmless Stockholders and their spouses for any
loss or other matter suffered as a result of such financial assurances prior to
release.
10.7 SECURITIES INDEMNITY. For a period ending on the second anniversary
of the Closing Date, Parent will indemnify each Stockholder or transferee of
Parent Stock in a private transaction (each a "Holder"), and each person
controlling such Holder within the meaning of Section 15 of the Securities Act
of 1933 (the "Securities Act"), against all actual out-of-pocket expenses,
claims, losses, damages or liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, preliminary prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any registration
or qualification of Parent Stock or based on any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, unless any such statement or omission was made in reliance
upon, and in conformity with, written information furnished to the Parent by
such Holder; or any violation or any alleged violation by Parent of any rule or
regulation promulgated under the Securities Act or the Securities Exchange Act
of 1934 (the "Exchange Act") or any state securities law applicable to Parent in
connection with any registration or qualification of Parent Stock, and Parent
will reimburse each such Holder, each of its officers and directors, and each
person controlling such Holder, for any legal and any other actual out-of-pocket
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, as such expenses
are incurred. Parent shall not be liable to indemnify any Holder with respect to
any claims made against any Holder unless such Holder shall have notified Parent
in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon such Holder. Parent will be entitled to participate at its own expense in
the defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, and if, Parent elects to assume the defense, such
defense shall be conducted by counsel chosen by it. In the event Parent elects
to assume the defense of any such suit and retain such counsel, Holder may
retain additional counsel but shall bear the fees and expenses of such counsel
unless (i) Parent shall have specifically authorized the retaining of such
counsel or (ii) the parties to such suit include such Holder and Parent and such
Holder have been advised by counsel that one or more legal defenses may be
available to such Holder which may not be available to Parent, in which case
Parent shall not be entitled to assume the defense of such suit notwithstanding
their obligation to bear the fees and expenses of such counsel. Parent shall not
be liable to indemnify any person for any settlement of any such claim effected
without Parent's written consent. Parent shall not without the prior written
consent of such Holder effect any settlement of any pending or threatened
proceeding in respect of which any Holder is or could have been a party and
indemnity could have been sought hereunder by such Holder, unless such
settlement includes an unconditional release of such Holder from all liability
on claims that are the subject matter
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of such proceeding.
10.8 RULE 144 REPORTING. With a view to making available the exemption
provided by Rule 144 under the Securities Act, which may at any time permit the
sale of the Parent Stock to the public without registration in accordance with
such exemption, Parent agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times.
(b) File with the SEC in a timely manner all reports and other
documents required of Parent under the Exchange Act; and
(c) So long as a Holder owns any Parent Stock, to furnish to the
Holder forthwith upon request a written statement by Parent as to its
compliance with the reporting requirements of Rule 144 and of the Exchange
Act, a copy of the most recent annual or quarterly report of Parent, and
such other reports and documents of Parent and other information in the
possession of or reasonably obtainable by Parent as a Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration.
10.9 NO SECTION 338 ELECTION. Neither Buyer nor Parent nor the Company
shall make any election or deemed election under Section 338 of the Code, or
without the consent of Stockholders, under Section 338(h)(10) of the Code with
respect to the transactions contemplated by this Agreement. Buyer, Parent and
Stockholders agree that, for all tax purposes, none of them shall treat the
transactions contemplated by this Agreement as anything other than a sale by
Stockholders of all issued and outstanding capital stock of the Company.
10.10 POCONO GROW PROJECT. In the event that the Board does not approve
the Pocono Grow Project by May 15, 1998, Parent and Company mutually agree to
assign all rights to the Pocono Grow Project to Stockholders and permit
Stockholders to develop and operate the Pocono Grow Project and that such
operation shall be an exclusion to the Noncompetition Agreements. Company
further agrees that it shall supply the Pocono Grow Project with all sludge
generated from the Agreement dated July 19, 1996, between Company and the City
of Springfield, Massachusetts (the "Springfield Contract") for the entire term
of the Springfield Contract provided that: (i) the rate for sludge disposal does
not exceed $45.00 per ton; (ii) the rate paid by the City of Springfield to the
Company for disposal of sludge under the Springfield Contract is not less than
the rate as of the Closing Date; and (iii) the operating costs (including,
without limitation, transportation costs) shall not have increased in any
material manner so as to make continued delivery to the Pocono Grow Project
economically unfeasible.
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10.11 SURVIVAL. The covenants in this Article 10 shall survive the
Closing.
11. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON STOCK.
11.1 REGISTERED STOCK. Parent represents and warrants to Stockholders that
all of the shares of Parent Stock to be delivered to Stockholders pursuant to
this Agreement will be registered under the Securities Act prior to delivery to
Stockholders and, except for the Contractually Restricted Stock, will be freely
transferable under the Securities Act.
11.2 CONTRACTUAL RESTRICTION. Notwithstanding the above, Stockholders
agree to not sell or transfer the Parent Stock described in Section 2.1 for the
applicable time periods set forth therein (the "Contractually Restricted
Stock").
11.3 CONTRACTUAL RESTRICTION LEGEND.
(a) All one year Contractually Restricted Stock shall bear the
following legend:
THE SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED HEREBY HAS BEEN
CONTRACTUALLY RESTRICTED. THE HOLDER AGREES THAT SUCH SHARES MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF U S
LIQUIDS INC., UNTIL THE EXPIRATION OF SUCH RESTRICTION ON APRIL 20, 1999.
(b) All two year Contractually Restricted Stock shall bear the
following legend:
THE SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED HEREBY HAS BEEN
CONTRACTUALLY RESTRICTED. THE HOLDER AGREES THAT SUCH SHARES MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF U S
LIQUIDS INC., UNTIL THE EXPIRATION OF SUCH RESTRICTION ON APRIL 20, 2000.
11.4 GENERAL LEGEND. All Parent Stock shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
OF RULE 145(D) PROMULGATED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT
BE TRANSFERRED OR DISPOSED OF BY THE HOLDER WITHOUT COMPLIANCE WITH SAID
RULE.
11.5 COMPLIANCE WITH LAW. Stockholders covenant, warrant and represent
that none of the
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shares of Parent Stock will be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except in full compliance with the Act and
the rules and regulations promulgated thereunder.
12. INDEMNIFICATION.
12.1 INDEMNIFICATION BY STOCKHOLDERS AND COMPANY. Company and each
Stockholder agree that they will each, jointly and severally, indemnify, defend
(as to third party claims only), protect and hold harmless Buyer, its officers,
shareholders, directors, divisions, subdivisions, affiliates, subsidiaries,
parent, agents, employees, successors and assigns from and against all
liabilities, claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, penalties, losses, costs and expenses whatsoever (including
specifically, but without limitation, court costs, reasonable attorneys' fees
and expenses and expenses of investigation) (collectively, "Damages") incurred
as a result of or incident to: (a) any breach of, misrepresentation in, untruth
in or inaccuracy in the representations and warranties by Company or any
Stockholder (including, without limitation, those relating to Company's
environmental compliance), set forth herein or in the Schedules, Exhibits or
certificates attached hereto or delivered pursuant hereto; (b) nonfulfillment or
nonperformance of any agreement, covenant or condition on the part of
Stockholders or Company made in this Agreement; (c) the matters set forth in
Section 10.1; (d) the wrongful discharge claim of Raymond Baldwin to the extent
the Damages exceed the amounts paid from the escrow described in Section 12.9;
or (e) if true, any claim by a third party that would mean that a condition for
indemnification set forth in subsections (a) through (d) of this Section 12.1
had been satisfied.
12.2 INDEMNIFICATION BY BUYER. Parent and Buyer each agrees that it will
indemnify, defend, protect and hold harmless Stockholders, their respective
heirs, executors and personal representatives, from and against all Damages
incurred by Stockholders as a result of or incident to: (i) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties set forth herein, or in the Schedules or certificates attached hereto
or delivered pursuant hereto by Buyer; (ii) nonfulfillment or nonperformance of
any agreement, covenant or condition on the part of Buyer or Parent made in this
Agreement; incident to operations by Buyer and Parent after the Closing Date;
and (iv) any claim by a third party that, if true, would mean that a condition
for indemnification set forth in subsections (i) or (ii) of this Section 12.2
had been satisfied.
12.3 CALCULATION OF DAMAGES. The rights of an Indemnified Party (as
hereinafter defined) to indemnification and payment under Sections 10.1, 12.1
and 12.2 and the amount of any Damages incurred by an Indemnified Party shall be
reduced where the issue giving rise to any such Damages was provided or reserved
for in the Closing Balance Sheet or gave rise to the payment of a post-closing
adjustment amount as described in Section 2.4, by the amount of such reserve or
payment.
12.4 TIME LIMITATIONS. If the Closing occurs, no party will have no
liability (for
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indemnification under Section 12.1 or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, other than those in Section 5.2 and
Section 5.18, unless on or before the date two years after the Closing Date an
Indemnified Party notifies an Indemnifying Party of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by the
Indemnified Party. A claim for indemnification under Section 12.1 with respect
to Section 5.2 and Section 5.18 or any covenant or obligation not to be
performed and complied with prior to the Closing Date, or a claim for
indemnification under Section 10.1, may be made at any time.
12.5 LIMITATIONS ON AMOUNT OF STOCKHOLDERS' LIABILITY.
(a) The indemnification obligations set forth in this Agreement
shall apply only after the aggregate amount of such obligations exceed
$92,000 when combined with the EBI Agreement (as defined in Section
15.15), at which time the indemnification obligations shall be effective
only as to such amounts in excess of $92,000 and shall in no event exceed
a maximum of $9,200,000, when combined with the EBI Agreement.
(b) The aggregate liability (for indemnification or otherwise) of
any Stockholder to all Indemnified Parties with respect to the matters
described in this Article 12 shall not exceed his proportionate share of
the maximum liability described in Section 12.5(a) above, which
proportionate share shall be determined based upon the proportionate share
of the Restricted Stock received by each Stockholder.
12.6 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD PARTY CLAIMS.
(a) If any third party shall notify a party to this Agreement (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
that may give rise to a claim for indemnification against any other party
to this Agreement (the "Indemnifying Party") or if any party who may make
a claim for indemnification under this Agreement otherwise becomes aware
of any matter that may give rise to such a claim or wishes to make such a
claim (whether or not related to a Third Party Claim), then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified
Party in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the extent)
the Indemnifying Party is thereby prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against a Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing within a reasonable time
after the Indemnified Party has given notice of the Third Party Claim that
the
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Indemnifying Party will indemnify the Indemnified Party from and against
the entirety of any adverse consequences (which will include, without
limitation, all losses, claims, liens, and attorneys' fees and related
expenses) the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim, (ii)
the Indemnifying Party provides the Indemnified Party with reasonable
evidence acceptable to the Indemnified Party that the Indemnifying Party
will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (iii) the Third
Party Claim involves only monetary damages and does not seek an injunction
or equitable relief or involve the possibility of criminal penalties, and
(iv) the Indemnifying Party conducts the defense of the Third Party Claim
diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 12.3(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim and (ii)
the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnifying Party.
12.7 EXCLUSIVE REMEDY. Buyer and Parent acknowledge and agree that, from
and after the Closing, their sole and exclusive remedy with respect to any and
all claims relating to the subject matter of this Agreement shall be pursuant to
the indemnification provisions set forth in this Article 12. In furtherance of
the foregoing, Buyer and Parent hereby waive, from and after the Closing, to the
fullest extent permitted under applicable law, any and all rights, claims and
causes of action they may have against the Stockholders relating to the subject
matter of this Agreement arising under or based upon any federal, state, local
or foreign statute, law, ordinance, rule or regulation or otherwise.
12.8 DELIVERY OF CONTRACTUALLY RESTRICTED STOCK TO SATISFY OBLIGATIONS OF
STOCKHOLDERS. Any Stockholder may, at the option of such Stockholder, deliver
Contractually Restricted Stock owned by such Stockholder to an Indemnified Party
to satisfy the liability of such Stockholder for Damages under this Article 12.
The value of any Contractually Restricted Stock delivered pursuant to this
Section 12.8 shall equal the market value of the Parent Stock as of the date of
payment.
12.9 ESCROW. Stockholders agree that $100,000 of the purchase price
otherwise payable pursuant to Section 2.1 hereof shall be held by Harris Beach &
Wilcox in escrow, to be applied by the Buyer toward all or part of any loss
incurred by the Company related to the wrongful discharge claim for which
Stockholders are indemnifying Buyer pursuant to Section 12.1(f) hereof. Any loss
to Buyer in excess of $100,000 shall remain the responsibility of the
Stockholders in accordance with this Article 12.
13. TERMINATION OF AGREEMENT.
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13.1 TERMINATION BY BUYER. Buyer, by notice in the manner hereinafter
provided on or before the Closing Date, may terminate this Agreement in the
event of a breach by Stockholders or Company in the observance or in the due and
timely performance of any of the agreements or conditions contained herein on
their part to be performed, and such breach shall not have been cured on or
before the Closing Date.
13.2 TERMINATION BY STOCKHOLDERS. Stockholders may, by notice in the
manner hereinafter provided on or before the Closing Date, terminate this
Agreement in the event of a breach by Buyer in the observance or in the due and
timely performance of any of the covenants, agreements or conditions contained
herein on their part to be performed, and such breach shall not have been cured
on or before the Closing Date.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
14.1 NONDISCLOSURE BY STOCKHOLDERS. Stockholders recognize and acknowledge
that they have in the past, currently has, and in the future may possibly have,
access to certain confidential information of Company, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of Company and its businesses. Stockholders
agree that, except as may be required by Applicable Laws or other legal process
or in the course of their future employment by Company, they will not disclose
such confidential information to any person, firm, corporation, association or
other entity for any purpose or reason whatsoever, except to authorized
representatives of Parent unless such information becomes known to the public
generally through no fault of Stockholders. In the case of a disclosure required
by Applicable Laws or other legal process, Stockholders shall make no disclosure
without prior written notice to Parent. In the event of a breach or threatened
breach by Stockholders of the provisions of this Section, Parent shall be
entitled to an injunction restraining Stockholders from disclosing, in whole or
in part, such confidential information. Nothing herein shall be construed as
prohibiting Parent from pursuing any other available remedy for such breach or
threatened breach, including, without limitation, the recovery of damages. The
provisions of this Section shall apply at all times prior to the Closing Date
and for a period of one year following the Closing.
14.2 NONDISCLOSURE BY PARENT. Parent recognizes and acknowledges that it
has in the past, currently has, and prior to the Closing Date, will have access
to certain confidential information of Company, such as lists of customers,
operational policies, and pricing and cost policies that are valuable, special
and unique assets of Company and its businesses. Parent agrees that, except as
may be required by Applicable Laws or other legal process, it will not disclose
such confidential information to any person, firm, corporation, association, or
other entity for any purpose or reason whatsoever, prior to the Closing Date
without Stockholders's prior written consent. In the case of a disclosure
required by Applicable Laws or other legal process, Parent shall make no
disclosure without prior written notice to Stockholders. In the event of a
breach or threatened breach by Parent
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of the provisions of this Section, Stockholders shall be entitled to an
injunction restraining Parent from disclosing, in whole or in part, such
confidential information. Nothing contained herein shall be construed as
prohibiting Stockholders from pursuing any other available remedy for such
breach or threatened breach, including, without limitation, the recovery of
damages. The provisions of this Section shall apply at all times prior to the
Closing Date and for a period of one year following the termination of this
Agreement without a Closing having occurred.
15. GENERAL.
15.1 ASSIGNMENT; BINDING EFFECT; AMENDMENT. This Agreement and the rights
of the parties hereunder may not be assigned (except by operation of law or to
the transferee of Parent Stock in a private transaction among family members or
otherwise for estate planning purposes) and shall be binding upon and shall
inure to the benefit of the parties hereto, the successors of the corporate
parties hereto, and the respective heirs and legal representatives of
Stockholders. This Agreement, upon execution and delivery, constitutes a valid
and binding agreement of the parties hereto enforceable in accordance with its
terms and may be modified or amended only by a written instrument executed by
all parties hereto.
15.2 ENTIRE AGREEMENT. This Agreement is the final, complete and exclusive
statement and expression of the agreement among the parties hereto with relation
to the subject matter of this Agreement, it being understood that there are no
oral representations, understandings or agreements covering the same subject
matter as this Agreement. This Agreement supersedes, and cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous
discussions, correspondence, or oral or written agreements of any kind.
15.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
15.4 NO BROKERS. Company and Stockholders represent and warrant to Buyer
and Buyer represents to Stockholders and Company that the warranting party has
had no dealings with any broker or agent so as to entitle such broker or agent
to a commission or fee in connection with the within transaction. If for any
reason a commission or fee shall become due, the party dealing with such agent
or broker shall pay such commission or fee and agrees to indemnify and save
harmless each of the other parties from all claims for such commission or fee
and from all attorneys' fees, litigation costs and other expenses relating to
such claim.
15.5 EXPENSES OF TRANSACTION. Whether or not the transactions herein
contemplated shall be consummated: (i) Buyer will pay the fees, expenses and
disbursements of Buyer and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this
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Agreement and any amendments hereto and all other costs and expenses incurred in
the performance and compliance with all conditions to be performed by Buyer
under this Agreement; and (ii) Stockholders or the Company will pay personally
the fees, expenses and disbursements of Stockholders and Company and their
respective agents, representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement and any amendments hereto
and all other costs and expenses incurred in the performance and compliance with
all conditions to be performed by Stockholders and Company under this Agreement.
All such fees, expenses and disbursements of Stockholders and Company shall be
paid by Stockholders prior to the Closing so as not to become an obligation of
Buyer or shall be included as a current liability for purposes of the
calculation of Actual Net Working Capital set forth in Section 2.4. Stockholders
represents and warrants to Buyer that Stockholders has relied on his own
advisors for all legal, accounting, tax or other advice whatsoever with respect
to this Agreement and the transactions contemplated hereby.
15.6 NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, by overnight courier or
by delivering the same in person to such party.
(a) If to Buyer, addressed to it at:
U S Liquids Inc.
411 N. Sam Houston Parkway East
Houston, TX 77060
ATTN: W. Gregory Orr
with a copy to:
U S Liquids Inc.
411 N. Sam Houston Parkway East
Houston, TX 77060
ATTN: David Turkal
and a copy to:
Elaine A. Chotlos, Esq.
Baker & Hostetler LLP
3200 National City Center
1900 E. 9th Street
Cleveland, OH 44114-3485
<PAGE>
(b) If to Stockholders, addressed to them at:
C. Wesley Gregory III
1160 Lake Road
Webster, NY 14580
C. Wesley Gregory, Jr.
56 Moorland Road
Falmouth, MA 02540
Donald E. Gordon
4 Reservoir Circle, Suite 105
Baltimore, MD 21208
in each case with a copy to:
Gunther K. Buerman, Esq.
Harris Beach & Wilcox LLP
130 East Main Street
Rochester, NY 14604
Notice shall be deemed given and effective the day personally delivered (if
delivered during normal business hours on a business day, or on the next
business day if not so delivered), the day after being sent by overnight
courier, subject to signature verification, and three business days after the
deposit in the U.S. mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received, if
earlier. Any party may change the address for notice by notifying the other
parties of such change in accordance with this Section.
15.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York.
15.8 APPOINTMENT OF AGENT. Stockholders agrees to maintain an agent in the
State of New York to accept and acknowledge service of process for any New York
proceedings. Each Stockholder initially hereby appoints Gunther K. Buerman,
Esq., Harris Beach & Wilcox LLP, 130 East Main Street, Rochester, NY 14604, as
such agent and agrees to notify Buyer in the manner set forth in Section 15.8 of
any change in agent. Each party agrees that service of process or notice in any
such action, suit or proceeding shall be effective if in writing and delivered
to the address
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provided in Section 15.8 for such party, in the manner prescribed in such
Section.
15.9 NO WAIVER. No delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of or in any similar breach or default occurring later;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach of default occurring before or after that waiver.
15.10 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
15.11 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
15.12 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall, to the extent possible, be modified
in such manner as to be valid, legal and enforceable but so as most nearly to
retain the intent of the parties. If such modification is not possible, such
provision shall be severed from this Agreement. In either case the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
15.13 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means including, without limitation. The parties intend that
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not
breached shall not detract from or mitigate the fact the party is in breach of
the first representation, warranty or covenant.
15.14 STANDSTILL AGREEMENT. Unless and until this Agreement is terminated
pursuant to Article 13 hereof without the Closing having taken place,
Stockholders will not directly or indirectly solicit offers for Company Stock or
the assets of Company or a merger or consolidation involving Company from, or
respond to inquiries from, share information with, negotiate with or in any way
facilitate inquiries or offers from, third parties who express or who have
heretofore expressed an interest in acquiring Company by merger, consolidation
or other combination or acquiring any of
Company's assets; nor will they permit Company to do any of the foregoing.
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15.15 CONTEMPORANEOUS TRANSACTION REGARDING EARTH BLENDS, INC.
Stockholders, Parent and Buyer are contemporaneously with the execution and
delivery of this Agreement, entering into a Stock Purchase Agreement (the "EBI
Agreement") providing for the sale of all the capital stock of EBI. For the
purpose of this Agreement, matters shall be deemed material to the Company or
the Business only if they are material to the Company and EBI taken as a whole
or to the Business and the business of EBI taken as a whole.
15.16 SCHEDULES. The disclosures on any Schedule to this Agreement shall
be deemed disclosed for purposes of all Sections of and Schedules to this
Agreement to the extent that the relevance to such additional Section and/or
Schedule would be understood by a reasonable person familiar with this Agreement
and the Company reading the Schedules. The Balance Sheet and other historical
financial statements of the Company as of and for the year ended December 31,
1997 (including the notes thereto) are also incorporated by reference in all
Schedules. All matters set forth in such historical financial statements shall
be deemed disclosed for purposes of all Sections of and Schedules to this
Agreement to the extent that the relevance to such Section and/or Schedule would
be understood by a reasonable person familiar with this Agreement and the
Company reading such historical financial statements. The mere inclusion of a
matter on any Schedule shall not be deemed an admission by any Stockholder that
such matter (or any other matter of equal magnitude) represents a material fact,
event or circumstance or would result in a material adverse effect or material
adverse change. All matters referred to on the Schedules to the EBI Agreement
shall be deemed disclosed on the identically numbered Schedule to this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
U S LIQUIDS NORTHEAST, INC.
By: GLENN PRATT
Its: Vice President
U S LIQUIDS INC.
By: GLENN PRATT
Its: Authorized Representative
WASTE STREAM ENVIRONMENTAL, INC.
(EIN: 161-326-628)
By: C. WESLEY GREGORY III
Its: President
/s/ C. WESLEY GREGORY III
C. Wesley Gregory III
(SSN: ###-##-####)
/s/ C. WESLEY GREGORY, JR.
C. Wesley Gregory, Jr.
(SSN: ###-##-####)
/s/ DONALD E. GORDON
Donald E. Gordon
(SSN: ###-##-####)
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EXHIBIT 2.3
STOCK PURCHASE AGREEMENT
AMONG
U S LIQUIDS NORTHEAST, INC.
AND
U S LIQUIDS INC.
AND
EARTH BLENDS, INC.
AND
C. WESLEY GREGORY III, C. WESLEY GREGORY, JR. AND DONALD E. GORDON
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
..................................................................... 1
1. DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK..................... 1
1.1 Delivery of Shares.............................................. 1
1.2 Endorsement of Company Stock.................................... 1
2. PURCHASE PRICE....................................................... 2
2.1 Purchase Price.................................................. 2
2.2 Agreed Value of Parent Stock.................................... 2
3. INTENTIONALLY OMITTED................................................ 2
4. CLOSING.............................................................. 2
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND COMPANY........... 2
5.1 Organization; Authority......................................... 3
5.2 Stock Ownership; Absence of Adverse Claims...................... 3
5.3 Capitalization.................................................. 3
5.4 Predecessor Entities; Trade Names............................... 3
5.5 No Subsidiaries................................................. 4
5.6 Financial Statements............................................ 4
5.7 Non-Balance Sheet Liabilities................................... 4
5.8 Accounts Receivable............................................. 4
5.9 Proprietary Rights; Environmental Documents..................... 4
5.10 Real Property; Reporting....................................... 5
5.11 Personal Property; New Projects................................ 5
5.12 Contracts...................................................... 6
5.13 Insurance Policies............................................. 7
5.14 Directors, Officers and Employees; Compensation................ 7
5.15 Employee Plans................................................. 7
5.16 Compliance with ERISA.......................................... 7
5.17 Compliance with Law; No Conflicts.............................. 8
5.18 Taxes.......................................................... 9
5.19 Litigation..................................................... 9
5.20 Absence of Price Renegotiation Contracts....................... 10
5.21 Conduct of Business Since Balance Sheet Date................... 10
5.22 Bank Accounts; Depositories.................................... 10
5.23 Hazardous Materials............................................ 11
5.24 Storage Tanks.................................................. 11
5.25 Absence of Certain Business Practices.......................... 11
5.26 Complete Disclosure............................................ 12
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6. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT................... 12
6.1 Corporate Organization.......................................... 12
6.2 Corporate Authority............................................. 12
6.3 No Conflicts.................................................... 12
6.4 Binding Agreement............................................... 13
6.5 Public Filings.................................................. 13
6.6 Parent Stock.................................................... 13
7. COVENANTS............................................................ 13
7.1 Access to Records............................................... 13
7.2 Company Activities Prior to Closing............................. 13
7.3 Prohibited Activities Prior to Closing.......................... 14
7.4 Contact with Government Officials............................... 15
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND STOCKHOLDERS...... 15
8.1 Representations and Warranties.................................. 15
8.2 Consents........................................................ 16
8.3 No Adverse Proceeding........................................... 16
8.4 Noncompetition Agreements....................................... 16
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PARENT.............. 16
9.1 Representations and Warranties.................................. 16
9.2 Covenants....................................................... 16
9.3 No Adverse Proceeding........................................... 16
9.4 General Release................................................. 17
9.5 Consents........................................................ 17
9.6 Resignations.................................................... 17
9.7 Good Standing Certificates...................................... 17
9.8 Updated Agreements.............................................. 17
9.9 Noncompetition Agreements....................................... 17
9.10 Delivery of Company Stock...................................... 17
9.11 Environmental Review........................................... 17
9.12 Transferability of Permits..................................... 17
9.13 General........................................................ 18
10. POST CLOSING COVENANTS............................................... 18
10.1 Taxes.......................................................... 18
10.2 Closing Date Actions........................................... 18
10.3 Further Assurance.............................................. 18
10.4 Transition..................................................... 19
10.5 Release of Personal Guaranties................................. 19
10.6 Financial Assurance............................................ 19
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10.7 Securities Indemnity........................................... 19
10.8 Rule 144 Reporting............................................. 20
10.9 No Section 338 Election........................................ 20
10.10 .............................................................. 21
11. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON STOCK......... 21
11.1 Registered Stock............................................... 21
11.2 Contractual Restriction........................................ 21
11.3 Contractual Restriction Legend................................. 21
11.4 General Legend................................................. 21
11.5 Compliance with Law............................................ 21
12. INDEMNIFICATION...................................................... 22
12.1 Indemnification by Stockholders and Company.................... 22
12.2 Indemnification by Buyer....................................... 22
12.3 Calculation of Damages......................................... 22
12.4 Time Limitations............................................... 22
12.5 Limitations on Amount of Stockholders' Liability............... 23
12.6 Procedure for Indemnification with Respect to Third Party
Claims......................................................... 23
12.7 Exclusive Remedy............................................... 24
12.8 Delivery of Contractually Restricted Stock to Satisfy
Obligations of Stockholders.................................... 24
13. TERMINATION OF AGREEMENT............................................. 24
13.1 Termination by Buyer........................................... 24
13.2 Termination by Stockholders.................................... 24
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION............................ 25
14.1 Nondisclosure by Stockholders.................................. 25
14.2 Nondisclosure by Parent........................................ 25
15. GENERAL.............................................................. 25
15.1 Assignment; Binding Effect; Amendment.......................... 25
15.2 Entire Agreement............................................... 26
15.3 Counterparts................................................... 26
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15.4 No Brokers..................................................... 26
15.5 Expenses of Transaction........................................ 26
15.6 Notices........................................................ 26
15.7 Governing Law.................................................. 28
15.8 Appointment of Agent........................................... 28
15.9 No Waiver...................................................... 28
15.10 Time of the Essence........................................... 28
15.11 Captions...................................................... 28
15.12 Severability.................................................. 28
15.13 Construction.................................................. 28
15.14 Standstill Agreement.......................................... 29
15.15 Contemporaneous Transaction Regarding Earth Blends, Inc....... 29
15.16 Schedules..................................................... 29
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is executed and
delivered as of April ___, 1998, among U S LIQUIDS NORTHEAST, INC., a Delaware
corporation ("Buyer"); U S LIQUIDS INC., a Delaware corporation ("Parent");
EARTH BLENDS, INC., a New York corporation ("Company"); and C. WESLEY GREGORY
III, C. WESLEY GREGORY, JR., and DONALD E. GORDON, the sole stockholders of
Company ("Stockholders");
WITNESSETH:
WHEREAS, Company distribute N-Viro soil made by Waste Stream
Environmental, Inc. ("WSE") in the northeastern United States (the "Business");
WHEREAS, Stockholders own all of the issued and outstanding shares
of the capital stock of Company;
WHEREAS, Buyer is a wholly owned subsidiary of Parent;
WHEREAS, Buyer desires to acquire all of the issued and outstanding
shares of the capital stock of Company from Stockholders and Stockholders desire
to sell such interests to Buyer as set forth herein;
NOW, THEREFORE, in consideration of Ten Dollars ($10) in hand paid,
the premises and of the mutual agreements, representations, warranties and
obligations herein contained, the parties hereby agree as follows:
10 DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK.
1.1 DELIVERY OF SHARES. Upon the terms and subject to the conditions set
forth in this Agreement, Stockholders shall, at the Closing (hereinafter
defined), sell, assign, transfer and deliver to Buyer certificates representing
the number of shares set forth opposite each Stockholder's name on Annex I
attached hereto and made a part hereof (the "Company Stock"), which certificates
represent all of the issued and outstanding capital stock of Company.
Stockholders shall transfer the Company Stock to Buyer free and clear of all
liens, security interests, encumbrances, adverse claims, pledges, charges,
voting trusts, equities and other restrictions on transfer of any nature
whatsoever, except for restrictions on transfer imposed by federal and state
securities laws (collectively, "Adverse Claims").
1.2 ENDORSEMENT OF COMPANY STOCK. Stockholders shall deliver at Closing
the certificates
<PAGE>
representing the Company Stock, duly endorsed in blank by Stockholders or
accompanied by stock powers duly endorsed in blank and with all necessary
transfer tax and other revenue stamps, acquired at Stockholders' expense,
affixed and cancelled. Stockholders, at their sole expense, agree to cure (both
before and after Closing) any deficiencies with respect to the endorsement of
the certificates or other documents of conveyance with respect to the Company
Stock or with respect to the stock powers accompanying the Company Stock.
20 PURCHASE PRICE.
2.1 PURCHASE PRICE. In consideration of the sale to Buyer in accordance
with this Agreement of certificates representing the Company Stock, Parent and
Buyer shall be jointly and severally obligated to pay to Stockholders:
(a) the sum of $100,000 at Closing in immediately available funds;
and
(b) that total number of shares of common stock of the Parent, $.01
par value per share, (the "Parent Stock") which shall have an aggregate
Agreed Value of $0.00 of which $0.00 will be contractually restricted for
a period of one year and $0.00 will be contractually restricted for a
period of two years. The shares of Parent Stock to be issued and
distributed pursuant to this Section shall be determined pursuant to
Section 2.2. The consideration set forth in this Article 2 shall be
allocated among the Stockholders in accordance with Annex I attached
hereto and made a part hereof.
2.2 AGREED VALUE OF PARENT STOCK. For purposes of this Agreement, the
"Agreed Value" per share of Parent Stock shall be the average of the closing
prices of a share of the common stock of Parent, $.01 par value per share, on
the American Stock Exchange as reported in THE WALL STREET JOURNAL for the five
trading days immediately preceding the six trading days immediately prior to the
Closing Date.
30 INTENTIONALLY OMITTED.
40 CLOSING. Unless the parties agree otherwise, the closing of the within
contemplated transaction (the "Closing") shall take place on the date that is
within five business days after the completion, satisfaction or waiver of each
of the conditions to Closing set forth in Articles 8 and 9. The Closing shall
take place at a location mutually agreeable to Buyer and Stockholders. The date
on which the Closing occurs shall be referred to as the "Closing Date."
50 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND COMPANY. Company as to the
time period before Closing only, and each Stockholder, jointly and severally,
represent and warrant to Buyer that the statements contained in this Section 5
except as
<PAGE>
set forth in the schedules to the subsections of this Section 5 delivered by
Stockholders to Buyer on the date hereof (such schedules hereinafter
collectively referred to as the "Disclosure Schedules" and, individually, as a
"Disclosure Schedule"): (i) are correct as of the date of this Agreement; (ii)
will be correct as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 5); and (iii) shall survive the Closing.
Wherever a representation or warranty herein is qualified as having been
made "to the best of Stockholders' knowledge", such phrase shall mean the
knowledge of any Stockholder, after reasonable inquiry.
5.1 ORGANIZATION; AUTHORITY.
(i) Company is a New York corporation duly organized, validly
existing and in good standing under the laws of the State of New York and
is now duly authorized, qualified and licensed under all laws,
regulations, ordinances and orders of public authorities to carry on its
businesses in the places and in the manner as conducted at the time such
activities were conducted except for where failure to be so authorized,
qualified or licensed would not have a material adverse affect on the
Business. Copies of the Company's Certificate of Incorporation (certified
by the Secretary of State of New York) and Bylaws (certified by the
Secretary of Company), each as amended, are attached hereto as Schedule
5.1(i).
(ii) Company has full legal right, power and authority (corporate
and otherwise) to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. All corporate action of
Company necessary to approve the sale of the Company Stock has been taken,
including director and shareholder approvals, if necessary.
(iii) Each Stockholder is competent and under no legal restraint or
duress and has the full legal right and capacity to enter into and perform
his obligations under this Agreement.
5.2 STOCK OWNERSHIP; ABSENCE OF ADVERSE CLAIMS. All of the issued and
outstanding shares of Company Stock are owned of record and beneficially by
Stockholders as set forth on Annex I and are free and clear of Adverse Claims,
except for restrictions on transfer imposed by federal and state securities
laws. This Agreement is the valid and binding obligation of Company and
Stockholders, enforceable against each of them in accordance with its terms.
5.3 CAPITALIZATION. The authorized capital stock of Company consists
solely of 2,000,000 shares of voting common stock, $0.01 par value, of which 40
shares are issued and outstanding. All of the issued and outstanding shares of
Company Stock have been duly authorized and validly issued, are fully paid and
nonassessable (subject to the provisions of Section 630 of the New York
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Business Corporation Law), were offered, issued, sold and delivered by Company
in compliance with all state and federal laws concerning the issuance of
securities and none of such shares were issued in violation of the preemptive
rights of any past or present stockholder. The stock transfer records provided
by Stockholders and Company to Buyer correctly set forth all issuances,
acquisitions and retirements of Company Stock since the inception of Company. No
subscriptions, options, warrants, puts, calls, conversion rights or other
commitments of any kind exist which obligate Company to issue any of its
authorized but unissued capital stock or otherwise relate to the sale or
transfer by Company of any securities of Company (whether debt or equity).
5.4 PREDECESSOR ENTITIES; TRADE NAMES. Company is not directly or
indirectly participating in any manner in any joint venture, partnership or
other noncorporate entity. Except as set forth on Schedule 5.4, Company was
formed principally to operate the Business and has never conducted any other
significant unrelated business or activity. Set forth on Schedule 5.4 is a list
of the names of all predecessors of Company, all prior corporate names of
Company, and all trade names and "doing business as" names of Company, including
the names of all entities substantially all of the assets of which were
previously acquired by Company.
5.5 NO SUBSIDIARIES. Except as set forth on Schedule 5.5, Company has
never owned or controlled and does not now own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any partnership, corporation,
association or other business entity other than those of Company.
5.6 FINANCIAL STATEMENTS. Attached as Schedule 5.6 are copies of the
following financial statements of Company (together, the "Financial
Statements"):
(a) Company's balance sheet as of December 31, 1997, and a statement
of income and accumulated deficit for the year then ended (the "Balance
Sheet Date");
(b) Company's balance sheet as of March 31, 1998, and a statement of
income and retained earnings for the quarter then ended.
Except as set forth on Schedule 5.6, each of the Financial Statements has
been prepared in accordance with GAAP, applied on a consistent basis throughout
the periods indicated. Each of the balance sheets presents fairly the financial
condition of Company as of the date indicated thereon and each of such
statements of income presents fairly on an accrual basis the results of the
operations of Company for the period indicated thereon. Except as noted thereon,
the Financial Statements are consistent in all material respects with the books
and records of Company.
5.7 NON-BALANCE SHEET LIABILITIES. Attached hereto as Schedule 5.7 is a
complete and
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accurate list as of the date hereof of all liabilities and obligations of
Company, excluding obligations arising under this Agreement, which are not
individually reflected in the Financial Statements dated the Balance Sheet Date
that are of the type required to be reflected as liabilities on a balance sheet
prepared in accordance with GAAP or described in the notes thereto, except for
liabilities incurred in the ordinary course of business since the date of the
Balance Sheet.
5.8 ACCOUNTS RECEIVABLE. Attached as Schedule 5.8 is a complete and
accurate list of all accounts and notes receivable of Company as of March 31,
1998, including receivables from and advances to employees and Stockholders and
also including all such accounts and notes receivable which are not reflected in
the Financial Statements, if any. Also attached as Schedule 5.8 is an aging of
all accounts receivable showing amounts due in 30 day aging categories.
5.9 PROPRIETARY RIGHTS; ENVIRONMENTAL DOCUMENTS.
(i) Attached as Schedule 5.9(i) is a complete and accurate list and
summary description as of the date noted thereon of all governmental
permits, titles, fuel permits, licenses, franchises, owned or held by
Company which are material to the operation of the principal business of
the Company, all of which are now valid, in good standing and in full
force and effect. Except as set forth on Schedule 5.9(i), such permits,
titles, licenses, and franchises, are adequate for the operation of the
Business as presently constituted.
(ii) The Company has, as of the date of this Agreement, made
available to Buyer for its inspection all presently held records,
correspondence, reports, notifications, permits, pending permit
applications, licenses and pending license applications, environmental
impact studies, assessments and audits and all written notifications from
governmental agencies and any other person or entity to Company of which
the Stockholders have knowledge relating to: (a) each actual and
threatened violation of Applicable Laws (hereinafter defined) by Company
and all, if any, claims thereof; and (b) the present or past environmental
compliance by Company (collectively, the "Environmental Documents").
(iii) The Company owns, or is validly licensed or otherwise has the
right to use, all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, service marks, service mark rights,
copyrights, know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process technology, plans,
drawings, blue prints, and other proprietary intellectual property rights
(collectively, "Intellectual Property Rights") that are material to the
conduct of the business of the Company. No claims are pending or, to the
best of Stockholders' knowledge, threatened that the Company is infringing
or otherwise adversely affecting the rights of any person with regard to
any Intellectual Property Right. To the best of Stockholders' knowledge,
no person
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<PAGE>
is infringing the rights of the Company with the respect to any
Intellectual Property Right.
5.10 REAL PROPERTY; REPORTING.
(i) Company does not own, lease or otherwise occupy, or have an
interest in, or operate any real property.
(ii) To the best of Stockholders' knowledge, Company has provided to
the government agencies requiring the same, all material reports, notices,
filings and other disclosures required by Applicable Laws and all such
reports, notices, filings and other documents were complete and accurate
in all material respects at the time provided to said government agencies.
5.11 PERSONAL PROPERTY; NEW PROJECTS.
(i) Attached as Schedule 5.11(i) is a complete and accurate list as
of the date noted thereon of all capital assets owned by Company and a
list of all lessors under leases providing for the payment of $5,000 or
more annually with respect to personal property of Company used in the
operation of the Business and including an indication as to which assets
were formerly owned by business or personal affiliates of Company. All of
the vehicles, machinery and other equipment of Company that are material
to the operation of the Business are in good working order and repair in
all material respects, normal wear and tear excepted;
(ii) Company has good title to, or a valid leasehold interest in,
the properties and assets used by it shown on its balance sheet dated the
Balance Sheet Date or acquired after the date thereof (except for personal
property sold since the Balance Sheet Date in the ordinary course of
business), including, without limitation, the items of personal property
listed on Schedules 5.11(i), free and clear of all security interests,
liens or other Adverse Claims, except for the Debt, liens for current
taxes not yet due, and minor encumbrances, if any, none of which is
substantial in amount, materially detracts from the value or impairs the
use of the property subject thereto, or impairs the operations of the
Company;
(iii) all leases referred to on Schedule 5.11(i) are in full force
and effect and constitute valid and binding agreements of the parties
thereto (and their successors) in accordance with their respective terms.
No default by Company, or, to the best of Stockholders' knowledge, any
other party to any of such leases, exists or would exist except for the
passage of time or delivery of a notice or both;
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(iv) all fixed assets used by Company that are material to the
operation of the Business are either owned by Company or leased by Company
under an agreement indicated on Schedule 5.11(i). Company's combined fixed
assets (together with the real property assets) constitute all of the real
and personal property reasonably necessary for and material to the
operation of the Business both by Company and by Buyer immediately
following the Closing.
5.12 CONTRACTS. Attached as Schedule 5.12 is a complete and accurate list
as of the date hereof of all of the following types of contracts, commitments
and other agreements to which Company is a party or by which Company or its
properties are bound: joint venture or partnership agreements, contracts or
collective bargaining arrangements with any labor organizations, loan
agreements, powers of attorney not otherwise related to a contractual
relationship (each of which shall be cancelled at the Closing), indemnity or
guaranty agreements not otherwise related to a contractual relationship,
mortgages, options to purchase land, agreements for the employment of any
individual, written agreements under which Company has advanced or loaned any
amount to one another or to Stockholders or any employee, officer or director of
Company, any guaranties by Company of the indebtedness of another, any agreement
concerning noncompetition and any other agreement not entered into in the
ordinary course of business under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations or prospects of Company. None of the agreements listed on
Schedule 5.12 have been modified, altered, terminated or otherwise amended in
any material respect and there have been no material waivers, oral agreements,
representations or other statements with relation to any such agreements except
as described in Schedule 5.12. Except as noted in Schedule 5.12, Company has
complied in all material respects with all obligations pertaining to it
contained in such contracts, commitments and other agreements, is not in
material default thereunder and no notice of default has been received nor will
the consummation of the transactions contemplated by this Agreement result in
such a default. To the best of Stockholders' knowledge, there is no default by
any other party to any contract, commitment or other agreement attached as
Schedule 5.12.
5.13 INSURANCE POLICIES. Attached as Schedule 5.13 are complete and
accurate copies (except as noted thereon) as of the date hereof of all insurance
policies carried by Company. All insurance policies are in full force and effect
and shall remain in full force and effect through the Closing Date.
5.14 DIRECTORS, OFFICERS AND EMPLOYEES; COMPENSATION. Attached as Schedule
5.14 is a complete and accurate list of all officers, directors and employees of
Company and the rate of compensation (excluding bonus compensation) of each as
of the date hereof. Except as set forth on Schedule 5.12 or Schedule 5.14, each
employee of Company is an employee at will and there are no collective
bargaining agreements affecting any employee of Company. There is no pending or,
to the best of Stockholders' knowledge, threatened labor dispute involving
Company and any group of
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its employees nor has Company experienced any labor interruptions over the past
three years.
5.15 EMPLOYEE PLANS. Except as set forth on Schedule 5.12 or Schedule
5.15, Company has no group health plans, employee benefit plans, employee
welfare benefit plans, employee pension benefit plans, multi-employer plans or
multiple-employer welfare arrangements (as defined in Sections 3(3), (1), (2),
(37) and (40), respectively, of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (collectively, "Plans") which are currently
maintained and/or sponsored by Company, or to which Company currently
contributes, or has an obligation to contribute in the future (including,
without limitation, employment agreements and any other agreements containing
"golden parachute" provisions and deferred compensation agreements).
5.16 COMPLIANCE WITH ERISA. Neither Company, any Controlled Group Member
(as defined in Internal Revenue Code (the "Code") Section 414(n)(6)(B)), nor any
business, subsidiary, division or operation acquired by Company or a Controlled
Group Member in the last five years, ever have maintained or sponsored, or
contributed to, an employee pension benefit plan (as defined in ERISA Section
3(2)) which is subject to the provisions of Title IV of ERISA. Except for the
Plans, Company does not maintain or sponsor, nor is a contributing employer to,
a pension, profit-sharing, deferred compensation, stock option, employee stock
purchase or other employee benefit plan, employee welfare benefit plan, or any
other arrangement with its employees. Further, except as reflected in the
documents listed on Schedule 5.12 or Schedule 5.15:
(i) there have been no terminations, partial terminations or
discontinuance of contributions to any Qualified Plan without notice to
and approval by the Internal Revenue Service;
(ii) with respect to Plans which qualify as "group health plans"
under Section 4980B of the Internal Revenue Code and Section 607(1) of
ERISA and related regulations (relating to the benefit continuation rights
imposed by "COBRA"), Company has complied (and on the Closing Date will
have complied), in all material respects with all reporting, disclosure,
notice, election and other benefit continuation requirements imposed
thereunder as and when applicable to such plans, and Company has no (and
will not incur any) direct or indirect liability and Company is not (and
will not be) subject to any loss, assessment, excise tax penalty, loss of
federal income tax deduction or other sanction, arising on account of or
in respect of any direct or indirect failure by Company any time prior to
the Closing Date to comply with any such federal or state benefit
continuation requirement, which is capable of being assessed or asserted
before or after the Closing Date directly or indirectly against Company
with respect to such group health plans;
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(iii) Company has no (and as a result of this transaction will not
incur any) retiree health care obligations to its employees;
(iv) Company has no (and as a result of this transaction will not
incur any) severance pay obligation to its employees and no severance pay
will be due to any employee of Company as a result of the transaction
contemplated herein; and
(v) with respect to any Plan which qualifies as a group health plan,
such plan is fully insured and all premiums have been paid on a timely
basis or, to the extent such plan is not fully insured, all self insured
obligations have been met as of the Closing Date and are fully reflected
in the plan's financial statements. To the extent that any of Company's
group health plans are retrospectively rated, there are no liabilities
capable of assertion against Company in respect of claims already
incurred.
5.17 COMPLIANCE WITH LAW; NO CONFLICTS.
(i) To the best of Stockholders' knowledge and except as set forth
on Schedule 5.17, Company has in the past complied with, and is now in
compliance with, all federal, state and local statutes, laws, rules,
regulations, orders, licenses, permits (including, without limitation,
zoning restrictions and land use requirements) and all administrative and
judicial judgments, rulings, decisions and orders of any body having
jurisdiction over Company or the Business (the "Applicable Laws"), except
for possible noncompliance that is not likely, individually or in the
aggregate, to have a material adverse effect on the Company or the
Business. Neither Company nor any of the Stockholders have received any
written notice that Company is under investigation or other form of review
for imposition of sanctions with respect to any Applicable Law; and
(ii) the execution, delivery and performance of this Agreement, the
consummation of any transactions herein referred to or contemplated hereby
and the fulfillment of the terms hereof and thereof will not:
(a) conflict with, or result in a breach or violation of the
Certificate of Incorporation or Bylaws of Company;
(b) except as set forth on Schedule 5.12, conflict with, or
result in a breach under any document, agreement or other instrument
listed on Schedule 5.12, or result in the creation or imposition of
any lien, charge or encumbrance on any properties of Company or any
of the Stockholders pursuant to: (A) any law or
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regulation to which Company, or any of the Stockholders, or any of
their respective properties are subject, or (B) any judgment, order
or decree to which Company or any of the Stockholders is bound or
any of their respective properties are subject;
(c) provided the Company takes all actions required by
Applicable Law following the Closing Date, result in termination or
any impairment of any material permit, license, franchise,
contractual right or other authorization of Company; or
(d) require the consent of, or the filing with any
governmental authority or agency or any other third party prior to
the Closing Date in order to remain in full force and effect.
5.18 TAXES. Company has filed, or will file, in a timely manner all
federal, state, material local and other material tax returns due before the
Closing Date. Except as set forth on Schedule 5.18, there are no agreements to
extend the statutory period for the assessment of any taxes, examinations in
progress or claims against Company for federal, state, local and other taxes
(including penalties and interest) for any period or periods prior to and
including the date hereof and none shall exist as of the Closing Date. Except as
set forth on Schedule 5.18, no notice of any claim for taxes, whether pending or
threatened, has been received. The amounts shown as accruals for taxes on the
Financial Statements as of the respective dates thereof are sufficient in
accordance with GAAP as of such respective dates for the payment of all taxes of
the kinds indicated (including penalties and interest) for all fiscal periods
ended on or before such date. Copies of: (i) all tax examinations; (ii)
extensions of statutory limitations; and (iii) the federal, state, local and
other income tax returns and franchise tax returns of Company for its two fiscal
years ended December 31, 1996, are attached hereto as Schedule 5.18. Company
made a valid election under Subchapter S of the Code. Company has a taxable year
ended December 31. Company currently utilizes the accrual method of accounting
for income tax purposes.
5.19 LITIGATION. Except as set forth on Schedule 5.19, there is no claim,
litigation, action, suit or proceeding, investigation, formal arbitration,
informal arbitration or mediation, administrative, judicial or other review,
pending and of which the Company or any Stockholder has received notice or, to
the best of Stockholders' knowledge, threatened against Company or any of the
Stockholders at law or in equity, before any federal, state or local court or
regulatory agency, or other governmental or private authority that if resolved
adversely to the Company would have a material adverse affect on the Business or
the Company; no notice of any of the above has been received by Company or any
of the Stockholders. Also listed on Schedule 5.19 are all instances where
Company is the plaintiff, or complaining or moving party, under any of the above
types of proceedings or otherwise.
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5.20 ABSENCE OF PRICE RENEGOTIATION CONTRACTS. Company is not currently a
party to any governmental contracts subject to unilateral retroactive price
redetermination or renegotiation rights of the government entity.
5.21 CONDUCT OF BUSINESS SINCE BALANCE SHEET DATE. Since the Balance Sheet
Date, there has not been any:
(i) material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income and business or prospects of
Company;
(ii) damage, destruction or loss (whether or not covered by
insurance) which, singly or in the aggregate, materially and adversely
affects the properties (whether owned or leased) or business of Company;
(iii) any material increase from prior years in the compensation,
bonus, sales commissions or fee arrangements payable or to become payable
by Company to any of its officers, directors, employees, consultants or
agents above the amounts shown on Schedule 5.14;
(iv) sale or transfer of, or any agreement to sell or transfer, any
material assets, property or rights of Company to any person not in the
ordinary course of the business of Company, including, without limitation,
all agreements with Stockholders or with affiliates of Company other than
WSE;
(v) purchase or acquisition by any third party of, or any agreement,
plan or other arrangement by any third party to purchase or acquire, any
property, rights or assets of Company other than in the ordinary course of
business;
(vi) waiver of any material rights or claims of Company;
(vii) amendment to the Certificate of Incorporation or Bylaws of
Company;
(viii) any other material transaction outside the ordinary course of
business of Company; or
(ix) any action by Company, Stockholders, or any employee, officer
or agent of Company or Stockholders committing to do any of the foregoing.
5.22 BANK ACCOUNTS; DEPOSITORIES. Attached as Schedule 5.22 is a complete
and accurate
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list as of the date of this Agreement, of:
(i) the name of each financial institution in which Company has any
account or safe deposit box;
(ii) the names in which each account or box is held;
(iii) the type of each account; and
(iv) the name of each person authorized to draw on or have access to
each account or box.
5.23 HAZARDOUS MATERIALS. Except as set forth on Schedule 5.23, or in the
ordinary course of business of the Company in compliance in all material
respects with Applicable Law, Company has never owned, leased, had an interest
in, generated, transported, handled, recycled, reclaimed, disposed of, or
contracted for the disposal of, hazardous materials, hazardous wastes, hazardous
substances, toxic wastes or substances as those terms are defined by the
Resource Conservation and Recovery Act of 1976; the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"); the Clean Water Act; the
Toxic Substances Control Act; the Occupational Health and Safety Act; any
comparable or similar state statute affecting the Business; any other Applicable
Law; or the rules and regulations promulgated under any of the foregoing, as
each of the foregoing may have been amended (collectively, "Hazardous
Materials"). No liens with respect to environmental liability have been imposed
against Company under CERCLA, any comparable state statute affecting the
Business or other Applicable Law, and, to the best of Stockholders' knowledge,
no facts or circumstances exist which would give rise to the same. Neither
Company nor any Stockholder is listed as a potentially responsible party under
CERCLA, any comparable state statute or other Applicable Law, and neither
Company nor any Stockholder has received a written notice of such a listing.
Set forth on Schedule 5.23 is a complete list of the names and addresses
of all disposal sites at any time now or in the past utilized by Company, none
of which sites is listed on the CERCLIS list or the National Priorities List of
hazardous waste sites or any comparable state list.
There have been no material spills, leaks, deposits or other releases into
the environment by Company of any Hazardous Materials and, to the best of
Stockholders' knowledge, Company has no material direct or contingent liability
or obligation for or in connection with any claimed release, discharge or leak
of any substance into the environment.
5.24 STORAGE TANKS. Except as set forth on Schedule 5.24, the Company has
not placed any underground or above-ground storage tanks or transformers
containing Hazardous Materials,
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petroleum products or wastes or other hazardous substances regulated by 40 CFR
280 or other Applicable Laws. All above and below ground tanks currently in use
are being used and maintained in accordance with all Applicable Laws in all
material respects.
5.25 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Company nor
Stockholders have ever made, offered or agreed to offer anything of value to any
employees of any customers of Company for the purpose of attracting business to
Company or any foreign or domestic governmental official, political party or
candidate for government office or any of their respective employees or
representatives, nor have they otherwise taken any action which would cause it
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended.
5.26 COMPLETE DISCLOSURE. This Agreement and the schedules hereto do not
and will not include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading. If
Stockholders, or, prior to Closing, Company, becomes aware of any fact or
circumstance which would change a representation or warranty of Company or
Stockholders in this Agreement the party with such knowledge shall promptly give
written notice of such fact or circumstance to Buyer.
60 REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT. Buyer and Parent
represent and warrant that the statements contained in this Section 6: (i) are
correct as of the date of this Agreement; (ii) will be correct as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 6); and (iii) shall survive
the Closing.
6.1 CORPORATE ORGANIZATION. Buyer is duly incorporated, validly existing
and in good standing under the laws of the State of New York. Parent is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Buyer and Parent are each duly authorized, qualified and licensed
under all applicable laws, regulations and ordinances of public authorities to
carry on their businesses in the places and in the manner as now conducted
except for where the failure to be so authorized, qualified or licensed would
not have a material adverse affect on such businesses.
6.2 CORPORATE AUTHORITY. The officers of Buyer and Parent executing this
Agreement have the corporate authority to enter into and bind Buyer and Parent
to the terms of this Agreement and Buyer and Parent have taken all necessary
corporate action to authorize the execution, delivery and, subject to receipt of
required regulatory approvals, performance of this Agreement. All corporate
action by Buyer and Parent necessary to approve the transaction, including both
director and shareholder approvals (if required), has been taken.
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6.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the consummation of any transactions herein referred to or
contemplated hereby and the fulfillment of the terms hereof and thereof will
not:
(i) conflict with, or result in a breach or violation of the
Articles of Incorporation or Bylaws of Buyer or Parent;
(ii) conflict with, or result in a material breach under any
document, agreement or other instrument to which Buyer or Parent is a
party, or result in the creation or imposition of any lien, charge or
encumbrance on any properties of Buyer or Parent pursuant to: (A) any law
or regulation to which Buyer or Parent, or their respective property is
subject, or (B) any judgment, order or decree to which Buyer or Parent is
bound or their respective property is subject; or
(iii) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of
Buyer or Parent.
6.4 BINDING AGREEMENT. This Agreement is the binding and valid obligation
of Buyer or Parent, enforceable against them in accordance with its terms.
6.5 PUBLIC FILINGS. Parent has timely filed with the Securities and
Exchange Commission (the "SEC") all forms, reports and other documents required
to be filed by Parent pursuant to the Act. As of their respective dates, no such
form, report or other document contained, as of the date of its filing, a
material misstatement of fact or omitted to disclose any material fact necessary
to cause the information disclosed therein not to be misleading. Since the date
of the information provided in the most recent filing, there has been no
material adverse change in the assets, liabilities, results of operations,
financial condition or business of Parent, taken as a whole.
6.6 PARENT STOCK. The Parent Stock to be delivered to Stockholders in
connection with this Agreement, when delivered in accordance with the terms of
this Agreement, will constitute valid and legally issued shares, fully paid and
nonassessable and will be registered and free from any restriction on transfer
other than restrictions imposed by the Act or the regulations promulgated
thereunder and the contractual restrictions set forth in this Agreement.
70 COVENANTS.
7.1 ACCESS TO RECORDS. Between the date of this Agreement and the Closing
Date, Stockholders will cause Company to afford to or obtain for the officers
and authorized representatives of Buyer access to all sites, books and records,
including, without limitation, the
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Environmental Documents, at all reasonable times and upon reasonable notice and
will furnish Buyer with such additional financial and operating data and other
information as to the business and properties, both current and former, of
Company as Buyer may from time to time reasonably request. Stockholders will
cooperate, and will cause Company to cooperate, with Buyer, its representatives,
engineers, auditors and counsel in the preparation of any documents or other
material which may be required in connection with any documents or materials
required by any governmental agency. Buyer will cause all information obtained
in connection with the negotiation and performance of this Agreement to be
treated as confidential in accordance with the provisions of Article 14 hereof.
7.2 COMPANY ACTIVITIES PRIOR TO CLOSING. Between the date of this
Agreement and the Closing Date, Stockholders will cause Company:
(i) to carry on its business in substantially the same manner as it
has heretofore and not to introduce any material new method of management,
operation or accounting;
(ii) to maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(iii) to perform its obligations under agreements relating to or
affecting its assets, properties or rights, including payment of debts as
they become due;
(iv) to keep in full force and effect present insurance policies or
other comparable insurance coverage with reputable insurers;
(v) to use reasonable efforts to maintain and preserve its business
organization intact, retain employees and maintain relationships with
suppliers, customers, consultants, independent contractors and others
having business relations with Company;
(vi) to maintain compliance with all Applicable Laws;
(vii) to maintain and perform present debt and lease instruments in
accordance with their terms and not enter into new or amended debt or
lease instruments, without the prior written consent of Buyer;
(viii) to pay and provide salaries and commissions for all officers,
directors, employees and agents at levels no higher than those in effect
at the Balance Sheet Date;
(ix) to provide the interim financial statements required by Section
5.6; and
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(x) to provide all reasonable assistance to Buyer to provide for an
orderly transfer of operating control of Company to Buyer.
7.3 PROHIBITED ACTIVITIES PRIOR TO CLOSING. Between the date of this
Agreement and the Closing Date, and except as otherwise permitted by this
Agreement, Stockholders will cause Company not, without the prior written
consent of Buyer (which consent shall not be unreasonably withheld or delayed):
(i) to amend the Articles of Incorporation or Bylaws of Company;
(ii) to change the authorized capital of Company or the equity
ownership of Company or grant any options, warrants, puts, calls,
conversion rights or commitments relating to the equity interests of
Company;
(iii) to declare or pay any dividend of Company or directly or
indirectly purchase, redeem or otherwise acquire or retire for value or
issue any shares of stock of Company;
(iv) to enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures in excess of an
aggregate of $5,000;
(v) to increase the compensation payable or to become payable to any
officer, director, stockholder, employee, consultant or agent, or make any
bonus or management fee payment to any such person;
(vi) to create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now owned
or hereafter acquired;
(vii) to sell, assign, lease or otherwise transfer or dispose of any
property or equipment;
(viii) to negotiate to acquire any business or begin any new
business or project;
(ix) to merge or consolidate or agree to merge or consolidate with
or into any other corporation;
(x) to waive any of its rights or claims;
(xi) to breach or permit a breach of, amend or terminate, any
material agreement, or any permit, license or other agreement or right to
which Company is a party;
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(xii) to enter into any other transaction outside the ordinary
course of its business or otherwise prohibited hereunder;
(xiii) to make any oral or written public announcement concerning
this transaction except as may be required by law, all of which
announcements, if any, shall be forwarded to Buyer for review and comment
at least seven days prior to dissemination; or
(xiv) to allow any other action or omission, or series of actions or
omissions, by Company or Stockholders that would cause a representation
and warranty of Company and Stockholders made in Section 5.21 of this
Agreement to be untrue on the Closing Date.
7.4 CONTACT WITH GOVERNMENT OFFICIALS. Company and Stockholders shall each
use their reasonable best efforts (provided that neither Company nor
Stockholders will be required to expend any funds in connection with such
efforts) to cooperate with Buyer in making contact with the appropriate
governmental agencies and officials having information about or jurisdiction
over Company or the Stockholders, including, without limitation, environmental
and land use agencies and officials in order to assist Buyer in completing its
regulatory evaluation of Company.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND STOCKHOLDERS. The
obligations of Stockholders and Company hereunder are subject to the completion,
satisfaction, or at their option, waiver, on or prior to the Closing Date, of
the following conditions.
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Buyer and Parent contained in this Agreement shall be accurate on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date; and each and all of the terms, covenants
and conditions of this Agreement to be complied with and performed by Buyer or
Parent on or before the Closing Date shall have been duly complied with and
performed.
8.2 CONSENTS. All necessary notices to, consents of and filings with any
governmental authority or agency or other third party relating to the
consummation of the Closing or the other transactions contemplated herein to be
made or obtained by Buyer shall have been obtained and made.
8.3 NO ADVERSE PROCEEDING. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or, to the best of
Stockholders's knowledge, threatened to restrain or prohibit any of the
transactions contemplated by this Agreement.
8.4 NONCOMPETITION AGREEMENTS. Buyer shall have executed and delivered at
the Closing
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separate Noncompetition Agreements with each Stockholder (the "Noncompetition
Agreements"), in form and substance satisfactory to Buyer and Stockholders.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PARENT. The obligations of
Buyer and Parent hereunder are subject to the completion, satisfaction or, at
their option, waiver, on or prior to the Closing Date, of the following
conditions.
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Stockholders and Company contained in this Agreement shall be accurate on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, and Buyer shall have received a
certificate from Stockholders to that effect, or setting forth any discrepancies
in such representations and warranties which have arisen since the date of this
Agreement. The foregoing notwithstanding, Company and Stockholders agree that no
limitation of any representation or warranty concerning the knowledge of Company
or Stockholders or any qualification of such representations and warranties set
forth in the certificate contemplated in the first sentence of this Section 9.1
shall restrict Buyer's right to terminate this Agreement if any representation
or warranty of Stockholders or Company is inaccurate as of the Closing Date;
provided, however, that if Parent and Buyer close on the transactions
contemplated by this Agreement after receipt of a certificate containing
discrepancies between the representations and warranties provided in this
Agreement and the contents of the certificate, the representations and
warranties in this Agreement shall thereby be modified to conform to the
contents of the certificate.
9.2 COVENANTS. Each and all of the terms, covenants and conditions of this
Agreement to be complied with and performed by Stockholders and Company on or
before the Closing Date shall have been duly complied with and performed.
9.3 NO ADVERSE PROCEEDING. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or, to the best of
Buyer's knowledge, threatened to restrain or prohibit any of the transactions
contemplated by this Agreement, and no governmental agency or body shall have
taken any other action or made any request of Buyer as a result of which the
management of Buyer deems it inadvisable to proceed with the transactions
hereunder.
9.4 GENERAL RELEASE. Stockholders shall have delivered to Buyer an
instrument dated the Closing Date releasing Company, Parent and Buyer from any
and all claims of Stockholders against Company, Parent and Buyer arising out of
events which occurred prior to the Closing (but not including any claims
pursuant to this Agreement).
9.5 CONSENTS. All necessary notices to, consents of and filings with any
governmental
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authority or agency or other third party relating to the consummation of the
Closing or the other transactions contemplated herein to be made or obtained by
Company or Stockholders shall have been obtained and made.
9.6 RESIGNATIONS. Each officer and director of Company shall have
delivered to Buyer their written resignation.
9.7 GOOD STANDING CERTIFICATES. Stockholders shall have delivered to Buyer
certificates, dated as of a date no earlier than 10 days prior to the Closing
Date, duly issued by the appropriate governmental authority or authorities
showing that Company is in good standing in its state of incorporation.
9.8 UPDATED AGREEMENTS. Stockholders shall have delivered to Buyer a
schedule (Schedule 9.8) dated the Closing Date, listing all agreements entered
into by Company since the date of Schedule 5.12, which new agreements must have
been determined to be acceptable to Buyer.
9.9 NONCOMPETITION AGREEMENTS. The Noncompetition Agreements shall have
been executed and delivered by all parties thereto at the Closing.
9.10 DELIVERY OF COMPANY STOCK. Stockholders shall have delivered to Buyer
certificates representing all Company Stock, duly endorsed in blank by
Stockholders or accompanied by stock powers duly executed in blank and with all
necessary transfer tax and other revenue stamps affixed and cancelled at
Stockholders's expense, none of which certificates shall bear any restrictive
legend other than those related to compliance with the Act.
9.11 ENVIRONMENTAL REVIEW. Buyer, through its authorized representatives,
must have completed a review (including, without limitation, all testing,
inspections and other procedures, review of existing files of, and discussions
with, governmental agencies and officials having jurisdiction over Company) and
the environmental and land use practices, procedures, operations and activities
of Company; the results of which review, without limiting the generality of the
foregoing, reflects compliance with all Applicable Laws governing the operations
of Company, discloses no actual or probable violations, compliance problems,
required capital expenditures or other substantive environmental, land use or
real estate related concerns and are otherwise satisfactory in all respects to
Buyer in its sole discretion.
9.12 TRANSFERABILITY OF PERMITS. Buyer shall have determined, in its sole
discretion, that prior to, or as a result of, this transaction, all of the
permits required for the operation of the Business have been transferred to
Buyer or can be transferred to Buyer and all consents required by Applicable
Laws for Buyer's use of such permits after Closing have been obtained.
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9.13 GENERAL. All actions taken by Stockholders and Company in connection
with the consummation of the transactions contemplated hereby and all
certificates, opinions and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Buyer.
10. POST CLOSING COVENANTS.
10.1 TAXES. (i) Stockholders irrevocably agree to indemnify Buyer against,
and to hold Buyer harmless from:
(a) any and all federal, state, local, and other taxes of
Company not provided for in the Closing Balance Sheet arising from
the audit, examination, review or other adjustment of tax
liabilities made pursuant to applicable law by appropriate
governmental agencies for periods ending prior to the Closing Date;
and
(b) any and all taxes, interest, penalties, additions to tax
(or additional amounts imposed with respect to any such interest,
penalties, or additions to tax) imposed with respect to any federal,
state, local, or other taxes of Company for periods ending before
the Closing Date.
(ii) Stockholders agree that they shall be responsible, at their
sole expense, for the preparation of Company's federal, state, local and
other income and franchise tax returns required by Applicable Law for the
short tax period beginning January 1, 1998 and ending on the Closing Date.
Buyer agrees to cooperate with Stockholders in the preparation of and
cause the Company to execute such returns. Stockholders further agree that
they shall pay all taxes (including all penalties and interest, if any)
due for such tax period not provided for in the Closing Balance Sheet.
Prior to filing the returns provided for in this paragraph, Stockholders
agree to allow Buyer 10 business days to review and comment upon such
returns, approval of which will not unreasonably be withheld.
10.2 CLOSING DATE ACTIONS. Except as contemplated by this Agreement, Buyer
and Stockholders mutually agree that they shall not, and shall cause Company not
to, engage in an transaction outside the normal course of business on the
Closing Date.
10.3 FURTHER ASSURANCE. From time to time on and after the Closing and
without further consideration, the parties hereto shall each deliver or cause to
be delivered to any other party at such times and places as shall be reasonably
requested, such additional instruments as any of the others may reasonably
request for the purpose of carrying out this Agreement and the transaction
contemplated hereby. Stockholders, also without further consideration but also
without cost, agree
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to reasonably cooperate with Buyer and to use their reasonable efforts to have
the present officers and employees of Company cooperate on and after the Closing
Date in furnishing to Buyer information, evidence, testimony, and other
assistance in connection with obtaining all necessary permits and approvals and
in connection with any actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Closing
Date. Stockholders acknowledge and agree that, from and after the Closing, Buyer
shall be entitled to possession of all documents, books, records (including tax
records), agreements and financial and operating data of any sort of Company.
Buyer shall provide Stockholder access to the records of the Company after
Closing.
10.4 TRANSITION. Stockholders will not take any action that is designed or
intended to have the effect of discouraging any customer or business associate
of Company from maintaining the same business relationships with the Company
after the Closing that it maintained with Company before the Closing.
Stockholders will refer all customer inquiries relating to the Business to
Company or Buyer from and after the Closing.
10.5 RELEASE OF PERSONAL GUARANTIES. Buyer agrees to use its reasonable
efforts to have each of the Stockholders released, as promptly as possible but
no later than 30 days after the Closing Date, from any personal obligations
entered into by such Stockholder in connection with Debt that is not paid in
full at the Closing. Parent shall indemnify, defend and hold harmless
Stockholders for any loss or other matter suffered as a result of such personal
guaranties prior to release. If Buyer cannot obtain a release within 60 days,
Buyer will pay off the underlying obligation in full.
10.6 FINANCIAL ASSURANCE. Promptly after the Closing Date, but no later
than 90 days after the Closing Date, Buyer will replace the current bonding by
Company (which is in the form of bonds) with financial assurance of Buyer
acceptable to the State of New York. Parent shall indemnify, defend and hold
harmless Stockholders and their spouses for any loss or other matter suffered as
a result of such financial assurances prior to release.
10.7 SECURITIES INDEMNITY. For a period ending on the second anniversary
of the Closing Date, Parent will indemnify each Stockholder or transferee of
Parent Stock in a private transaction (each a "Holder"), and each person
controlling such Holder within the meaning of Section 15 of the Securities Act
of 1933 (the "Securities Act"), against all actual out-of-pocket expenses,
claims, losses, damages or liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, preliminary prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any registration
or qualification of Parent Stock or based on any omission (or alleged omission)
to state therein a material fact required to be stated therein or
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necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, unless any such statement or omission was made
in reliance upon, and in conformity with, written information furnished to the
Parent by such Holder; or any violation or any alleged violation by Parent of
any rule or regulation promulgated under the Securities Act or the Securities
Exchange Act of 1934 (the "Exchange Act") or any state securities law applicable
to Parent in connection with any registration or qualification of Parent Stock,
and Parent will reimburse each such Holder, each of its officers and directors,
and each person controlling such Holder, for any legal and any other actual
out-of-pocket expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, as
such expenses are incurred. Parent shall not be liable to indemnify any Holder
with respect to any claims made against any Holder unless such Holder shall have
notified Parent in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon such Holder. Parent will be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, and if, Parent elects to assume the
defense, such defense shall be conducted by counsel chosen by it. In the event
Parent elects to assume the defense of any such suit and retain such counsel,
Holder may retain additional counsel but shall bear the fees and expenses of
such counsel unless (i) Parent shall have specifically authorized the retaining
of such counsel or (ii) the parties to such suit include such Holder and Parent
and such Holder have been advised by counsel that one or more legal defenses may
be available to such Holder which may not be available to Parent, in which case
Parent shall not be entitled to assume the defense of such suit notwithstanding
their obligation to bear the fees and expenses of such counsel. Parent shall not
be liable to indemnify any person for any settlement of any such claim effected
without Parent's written consent. Parent shall not without the prior written
consent of such Holder effect any settlement of any pending or threatened
proceeding in respect of which any Holder is or could have been a party and
indemnity could have been sought hereunder by such Holder, unless such
settlement includes an unconditional release of such Holder from all liability
on claims that are the subject matter of such proceeding.
10.8 RULE 144 REPORTING. With a view to making available the exemption
provided by Rule 144 under the Securities Act, which may at any time permit the
sale of the Parent Stock to the public without registration in accordance with
such exemption, Parent agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times.
(b) File with the SEC in a timely manner all reports and other
documents required of Parent under the Exchange Act; and
(c) So long as a Holder owns any Parent Stock, to furnish to the
Holder forthwith
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upon request a written statement by Parent as to its compliance with the
reporting requirements of Rule 144 and of the Exchange Act, a copy of the
most recent annual or quarterly report of Parent, and such other reports
and documents of Parent and other information in the possession of or
reasonably obtainable by Parent as a Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing a Holder to
sell any such securities without registration.
10.9 NO SECTION 338 ELECTION. Neither Buyer nor Parent nor the Company
shall make any election or deemed election under Section 338 of the Code, or
without the consent of Stockholders, under Section 338(h)(10) of the Code with
respect to the transactions contemplated by this Agreement. Buyer, Parent and
Stockholders agree that, for all tax purposes, none of them shall treat the
transactions contemplated by this Agreement as anything other than a sale by
Stockholders of all issued and outstanding capital stock of the Company.
10.10 SURVIVAL. The covenants in this Article 10 shall survive the
Closing.
11. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON STOCK.
11.1 REGISTERED STOCK. Parent represents and warrants to Stockholders that
all of the shares of Parent Stock to be delivered to Stockholders pursuant to
this Agreement will be registered under the Securities Act prior to delivery to
Stockholders and, except for the Contractually Restricted Stock, will be freely
transferable under the Securities Act.
11.2 CONTRACTUAL RESTRICTION. Notwithstanding the above, Stockholders
agree to not sell or transfer the Parent Stock described in Section 2.1 for the
applicable time periods set forth therein (the "Contractually Restricted
Stock").
11.3 CONTRACTUAL RESTRICTION LEGEND.
(a) All one year Contractually Restricted Stock shall bear the
following legend:
THE SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED HEREBY HAS BEEN
CONTRACTUALLY RESTRICTED. THE HOLDER AGREES THAT SUCH SHARES MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF U S
LIQUIDS INC., UNTIL THE EXPIRATION OF SUCH RESTRICTION ON APRIL ___, 1999.
(b) All two year Contractually Restricted Stock shall bear the
following legend:
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THE SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED HEREBY HAS BEEN
CONTRACTUALLY RESTRICTED. THE HOLDER AGREES THAT SUCH SHARES MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF U S
LIQUIDS INC., UNTIL THE EXPIRATION OF SUCH RESTRICTION ON APRIL ___, 2000.
11.4 GENERAL LEGEND. All Parent Stock shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
OF RULE 145(D) PROMULGATED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT
BE TRANSFERRED OR DISPOSED OF BY THE HOLDER WITHOUT COMPLIANCE WITH SAID
RULE.
11.5 COMPLIANCE WITH LAW. Stockholders covenant, warrant and represent
that none of the shares of Parent Stock will be offered, sold, assigned,
pledged, hypothecated, transferred or otherwise disposed of except in full
compliance with the Act and the rules and regulations promulgated thereunder.
12. INDEMNIFICATION.
12.1 INDEMNIFICATION BY STOCKHOLDERS AND COMPANY. Company and each
Stockholder agree that they will each, jointly and severally, indemnify, defend
(as to third party claims only), protect and hold harmless Buyer, its officers,
shareholders, directors, divisions, subdivisions, affiliates, subsidiaries,
parent, agents, employees, successors and assigns from and against all
liabilities, claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, penalties, losses, costs and expenses whatsoever (including
specifically, but without limitation, court costs, reasonable attorneys' fees
and expenses and expenses of investigation) (collectively, "Damages") incurred
as a result of or incident to: (a) any breach of, misrepresentation in, untruth
in or inaccuracy in the representations and warranties by Company or any
Stockholder (including, without limitation, those relating to Company's
environmental compliance), set forth herein or in the Schedules, Exhibits or
certificates attached hereto or delivered pursuant hereto; (b) nonfulfillment or
nonperformance of any agreement, covenant or condition on the part of
Stockholders or Company made in this Agreement; (c) the matters set forth in
Section 10.1; or (d) if true, any claim by a third party that would mean that a
condition for indemnification set forth in subsections (a) through (c) of this
Section 12.1 had been satisfied.
12.2 INDEMNIFICATION BY BUYER. Parent and Buyer each agrees that it will
indemnify, defend, protect and hold harmless Stockholders, their respective
heirs, executors and personal representatives, from and against all Damages
incurred by Stockholders as a result of or incident to:
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(i) any breach of, misrepresentation in, untruth in or inaccuracy in the
representations and warranties set forth herein, or in the Schedules or
certificates attached hereto or delivered pursuant hereto by Buyer; (ii)
nonfulfillment or nonperformance of any agreement, covenant or condition on the
part of Buyer or Parent made in this Agreement; incident to operations by Buyer
and Parent after the Closing Date; and (iv) any claim by a third party that, if
true, would mean that a condition for indemnification set forth in subsections
(i) or (ii) of this Section 12.2 had been satisfied.
12.3 CALCULATION OF DAMAGES. The rights of an Indemnified Party (as
hereinafter defined) to indemnification and payment under Sections 10.1, 12.1
and 12.2 and the amount of any Damages incurred by an Indemnified Party shall be
reduced where the issue giving rise to any such Damages was provided or reserved
for in the Closing Balance Sheet or gave rise to the payment of a post-closing
adjustment amount as described in Section 2.4, by the amount of such reserve or
payment.
12.4 TIME LIMITATIONS. If the Closing occurs, no party will have no
liability (for indemnification under Section 12.1 or otherwise) with respect to
any representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, other than those in Section 5.2 and
Section 5.18, unless on or before the date two years after the Closing Date an
Indemnified Party notifies an Indemnifying Party of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by the
Indemnified Party. A claim for indemnification under Section 12.1 with respect
to Section 5.2 and Section 5.18 or any covenant or obligation not to be
performed and complied with prior to the Closing Date, or a claim for
indemnification under Section 10.1, may be made at any time.
12.5 LIMITATIONS ON AMOUNT OF STOCKHOLDERS' LIABILITY.
(a) The indemnification obligations set forth in this Agreement
shall apply only after the aggregate amount of such obligations exceed
$92,000 when combined with the WSE Agreement (as defined in Section
15.15), at which time the indemnification obligations shall be effective
only as to such amounts in excess of $92,000 and in shall in no event
exceed a maximum of $9,200,000, when combined with the WSE Agreement.
(b) The aggregate liability (for indemnification or otherwise) of
any Stockholder to all Indemnified Parties with respect to the matters
described in this Article 12 shall not exceed his proportionate share of
the maximum liability described in Section 12.5(a) above, which
proportionate share shall be determined based upon the proportionate share
of the Restricted Stock received by each Stockholder.
12.6 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD PARTY CLAIMS.
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(a) If any third party shall notify a party to this Agreement (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
that may give rise to a claim for indemnification against any other party
to this Agreement (the "Indemnifying Party") or if any party who may make
a claim for indemnification under this Agreement otherwise becomes aware
of any matter that may give rise to such a claim or wishes to make such a
claim (whether or not related to a Third Party Claim), then the
Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified
Party in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the extent)
the Indemnifying Party is thereby prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against a Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing within a reasonable time
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any adverse consequences (which will include,
without limitation, all losses, claims, liens, and attorneys' fees and
related expenses) the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim,
(ii) the Indemnifying Party provides the Indemnified Party with reasonable
evidence acceptable to the Indemnified Party that the Indemnifying Party
will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (iii) the Third
Party Claim involves only monetary damages and does not seek an injunction
or equitable relief or involve the possibility of criminal penalties, and
(iv) the Indemnifying Party conducts the defense of the Third Party Claim
diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 12.3(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim and (ii)
the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnifying Party.
12.7 EXCLUSIVE REMEDY. Buyer and Parent acknowledge and agree that, from
and after the Closing, their sole and exclusive remedy with respect to any and
all claims relating to the subject matter of this Agreement shall be pursuant to
the indemnification provisions set forth in this Article 12. In furtherance of
the foregoing, Buyer and Parent hereby waive, from and after the Closing, to the
fullest extent permitted under applicable law, any and all rights, claims and
causes of action they may have against the Stockholders relating to the subject
matter of this Agreement arising under or
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based upon any federal, state, local or foreign statute, law, ordinance, rule or
regulation or otherwise.
12.8 DELIVERY OF CONTRACTUALLY RESTRICTED STOCK TO SATISFY OBLIGATIONS OF
STOCKHOLDERS. Any Stockholder may, at the option of such Stockholder, deliver
Contractually Restricted Stock owned by such Stockholder to an Indemnified Party
to satisfy the liability of such Stockholder for Damages under this Article 12.
The value of any Contractually Restricted Stock delivered pursuant to this
Section 12.8 shall equal the market value of the Parent Stock as of the date of
payment.
13. TERMINATION OF AGREEMENT.
13.1 TERMINATION BY BUYER. Buyer, by notice in the manner hereinafter
provided on or before the Closing Date, may terminate this Agreement in the
event of a breach by Stockholders or Company in the observance or in the due and
timely performance of any of the agreements or conditions contained herein on
their part to be performed, and such breach shall not have been cured on or
before the Closing Date.
13.2 TERMINATION BY STOCKHOLDERS. Stockholders may, by notice in the
manner hereinafter provided on or before the Closing Date, terminate this
Agreement in the event of a breach by Buyer in the observance or in the due and
timely performance of any of the covenants, agreements or conditions contained
herein on their part to be performed, and such breach shall not have been cured
on or before the Closing Date.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
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14.1 NONDISCLOSURE BY STOCKHOLDERS. Stockholders recognize and acknowledge
that they have in the past, currently has, and in the future may possibly have,
access to certain confidential information of Company, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of Company and its businesses. Stockholders
agree that, except as may be required by Applicable Laws or other legal process
or in the course of their future employment by Company, they will not disclose
such confidential information to any person, firm, corporation, association or
other entity for any purpose or reason whatsoever, except to authorized
representatives of Parent unless such information becomes known to the public
generally through no fault of Stockholders. In the case of a disclosure required
by Applicable Laws or other legal process, Stockholders shall make no disclosure
without prior written notice to Parent. In the event of a breach or threatened
breach by Stockholders of the provisions of this Section, Parent shall be
entitled to an injunction restraining Stockholders from disclosing, in whole or
in part, such confidential information. Nothing herein shall be construed as
prohibiting Parent from pursuing any other available remedy for such breach or
threatened breach, including, without limitation, the recovery of damages. The
provisions of this Section shall apply at all times prior to the Closing Date
and for a period of one year following the Closing.
14.2 NONDISCLOSURE BY PARENT. Parent recognizes and acknowledges that it
has in the past, currently has, and prior to the Closing Date, will have access
to certain confidential information of Company, such as lists of customers,
operational policies, and pricing and cost policies that are valuable, special
and unique assets of Company and its businesses. Parent agrees that, except as
may be required by Applicable Laws or other legal process, it will not disclose
such confidential information to any person, firm, corporation, association, or
other entity for any purpose or reason whatsoever, prior to the Closing Date
without Stockholders's prior written consent. In the case of a disclosure
required by Applicable Laws or other legal process, Parent shall make no
disclosure without prior written notice to Stockholders. In the event of a
breach or threatened breach by Parent of the provisions of this Section,
Stockholders shall be entitled to an injunction restraining Parent from
disclosing, in whole or in part, such confidential information. Nothing
contained herein shall be construed as prohibiting Stockholders from pursuing
any other available remedy for such breach or threatened breach, including,
without limitation, the recovery of damages. The provisions of this Section
shall apply at all times prior to the Closing Date and for a period of one year
following the termination of this Agreement without a Closing having occurred.
15. GENERAL.
15.1 ASSIGNMENT; BINDING EFFECT; AMENDMENT. This Agreement and the rights
of the parties hereunder may not be assigned (except by operation of law or to
the transferee of Parent Stock in a private transaction among family members or
otherwise for estate planning purposes) and shall be binding upon and shall
inure to the benefit of the parties hereto, the successors of the corporate
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parties hereto, and the respective heirs and legal representatives of
Stockholders. This Agreement, upon execution and delivery, constitutes a valid
and binding agreement of the parties hereto enforceable in accordance with its
terms and may be modified or amended only by a written instrument executed by
all parties hereto.
15.2 ENTIRE AGREEMENT. This Agreement is the final, complete and exclusive
statement and expression of the agreement among the parties hereto with relation
to the subject matter of this Agreement, it being understood that there are no
oral representations, understandings or agreements covering the same subject
matter as this Agreement. This Agreement supersedes, and cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous
discussions, correspondence, or oral or written agreements of any kind.
15.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
15.4 NO BROKERS. Company and Stockholders represent and warrant to Buyer
and Buyer represents to Stockholders and Company that the warranting party has
had no dealings with any broker or agent so as to entitle such broker or agent
to a commission or fee in connection with the within transaction. If for any
reason a commission or fee shall become due, the party dealing with such agent
or broker shall pay such commission or fee and agrees to indemnify and save
harmless each of the other parties from all claims for such commission or fee
and from all attorneys' fees, litigation costs and other expenses relating to
such claim.
15.5 EXPENSES OF TRANSACTION. Whether or not the transactions herein
contemplated shall be consummated: (i) Buyer will pay the fees, expenses and
disbursements of Buyer and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments hereto and all other costs and expenses incurred in the performance
and compliance with all conditions to be performed by Buyer under this
Agreement; and (ii) Stockholders or the Company will pay personally the fees,
expenses and disbursements of Stockholders and Company and their respective
agents, representatives, accountants and counsel incurred in connection with the
subject matter of this Agreement and any amendments hereto and all other costs
and expenses incurred in the performance and compliance with all conditions to
be performed by Stockholders and Company under this Agreement. All such fees,
expenses and disbursements of Stockholders and Company shall be paid by
Stockholders prior to the Closing so as not to become an obligation of Buyer or
shall be included as a current liability for purposes of the calculation of
Actual Net Working Capital set forth in Section 2.4 of the WSE Agreement.
Stockholders represents and warrants to Buyer that Stockholders has relied on
his own advisors for all legal, accounting, tax or other advice whatsoever with
respect to this Agreement and the
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transactions contemplated hereby.
15.6 NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, by overnight courier or
by delivering the same in person to such party.
(a) If to Buyer, addressed to it at:
U S Liquids Inc.
411 N. Sam Houston Parkway East
Houston, TX 77060
ATTN: W. Gregory Orr
with a copy to:
U S Liquids Inc.
411 N. Sam Houston Parkway East
Houston, TX 77060
ATTN: David Turkal
and a copy to:
Elaine A. Chotlos, Esq.
Baker & Hostetler LLP
3200 National City Center
1900 E. 9th Street
Cleveland, OH 44114-3485
(b) If to Stockholders, addressed to them at:
C. Wesley Gregory III
1160 Lake Road
Webster, NY 14580
C. Wesley Gregory, Jr.
56 Moorland Road
Falmouth, MA 02540
Donald E. Gordon
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<PAGE>
4 Reservoir Circle, Suite 105
Baltimore, MD 21208
in each case with a copy to:
Gunther K. Buerman, Esq.
Harris Beach & Wilcox LLP
130 East Main Street
Rochester, NY 14604
Notice shall be deemed given and effective the day personally delivered (if
delivered during normal business hours on a business day, or on the next
business day if not so delivered), the day after being sent by overnight
courier, subject to signature verification, and three business days after the
deposit in the U.S. mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received, if
earlier. Any party may change the address for notice by notifying the other
parties of such change in accordance with this Section.
15.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York.
15.8 APPOINTMENT OF AGENT. Stockholders agrees to maintain an agent in the
State of New York to accept and acknowledge service of process for any New York
proceedings. Each Stockholder initially hereby appoints Gunther K. Buerman,
Esq., Harris Beach & Wilcox LLP, 130 East Main Street, Rochester, NY 14604, as
such agent and agrees to notify Buyer in the manner set forth in Section 15.8 of
any change in agent. Each party agrees that service of process or notice in any
such action, suit or proceeding shall be effective if in writing and delivered
to the address provided in Section 15.8 for such party, in the manner prescribed
in such Section.
15.9 NO WAIVER. No delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of or in any similar breach or default occurring later;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach of default occurring before or after that waiver.
15.10 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
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15.11 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
15.12 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall, to the extent possible, be modified
in such manner as to be valid, legal and enforceable but so as most nearly to
retain the intent of the parties. If such modification is not possible, such
provision shall be severed from this Agreement. In either case the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
15.13 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means including, without limitation. The parties intend that
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not
breached shall not detract from or mitigate the fact the party is in breach of
the first representation, warranty or covenant.
15.14 STANDSTILL AGREEMENT. Unless and until this Agreement is terminated
pursuant to Article 13 hereof without the Closing having taken place,
Stockholders will not directly or indirectly solicit offers for Company Stock or
the assets of Company or a merger or consolidation involving Company from, or
respond to inquiries from, share information with, negotiate with or in any way
facilitate inquiries or offers from, third parties who express or who have
heretofore expressed an interest in acquiring Company by merger, consolidation
or other combination or acquiring any of Company's assets; nor will they permit
Company to do any of the foregoing.
15.15 CONTEMPORANEOUS TRANSACTION REGARDING WASTE STREAM ENVIRONMENTAL,
INC. Stockholders, Parent and Buyer are contemporaneously with the execution and
delivery of this Agreement, entering into a Stock Purchase Agreement (the "WSE
Agreement") providing for the sale of all the capital stock of WSE. For the
purpose of this Agreement, matters shall be deemed material to the Company or
the Business only if they are material to the Company and WSE taken as a whole
or to the Business and the business of WSE taken as a whole.
15.16 SCHEDULES. The disclosures on any Schedule to this Agreement shall
be deemed
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disclosed for purposes of all Sections of and Schedules to this Agreement to the
extent that the relevance to such additional Section and/or Schedule would be
understood by a reasonable person familiar with this Agreement and the Company
reading the Schedules. The Balance Sheet and other historical financial
statements of the Company as of and for the year ended December 31, 1997
(including the notes thereto) are also incorporated by reference in all
Schedules. All matters set forth in such historical financial statements shall
be deemed disclosed for purposes of all Sections of and Schedules to this
Agreement to the extent that the relevance to such Section and/or Schedule would
be understood by a reasonable person familiar with this Agreement and the
Company reading such historical financial statements. The mere inclusion of a
matter on any Schedule shall not be deemed an admission by any Stockholder that
such matter (or any other matter of equal magnitude) represents a material fact,
event or circumstance or would result in a material adverse effect or material
adverse change. All matters referred to on the Schedules to the WSE Agreement
shall be deemed disclosed on the identically numbered Schedule to this
Agreement.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
U S LIQUIDS NORTHEAST, INC.
By:/s/ Glenn Pratt
Its: Vice President of U.S. Liquids
Northeast
U S LIQUIDS INC.
By: /s/ Glenn Pratt
Its: Authorized Representative
EARTH BLENDS, INC.
(EIN: _____________)
By:
Its:
/s/ C. Wesley Gregory III
------------------------------
C. Wesley Gregory III
(SSN: ###-##-####)
/s/ C. Wesley Gregory III
------------------------------
C. Wesley Gregory, Jr.
(SSN: ###-##-####)
/s/ Donald E. Gordon
------------------------------
Donald E. Gordon
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(SSN: ###-##-####)
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AGREEMENT AND PLAN OF REORGANIZATION
AMONG
US LIQUIDS, INC.
A DELAWARE CORPORATION
AMIGO ACQUISITION, INC.
A TEXAS CORPORATION
RAOUL GARZA
ALEX SALAS
AND
AMIGO DIVERSIFIED SERVICES, INC.,
A TEXAS CORPORATION
<PAGE>
TABLE OF CONTENTS
PAGE
1. THE MERGER...........................................................1
1.01 GENERAL.......................................................1
1.02 ARTICLES OF INCORPORATION; BYLAWS; BOARDS OF
DIRECTORS; OFFICERS...........................................2
1.03 CONVERSION AND EXCHANGE OF SHARES.............................3
1.04 LIABILITIES AND EXCLUDED ASSETS...............................5
1.05 THE CLOSING...................................................6
1.06 DELIVERIES AT THE CLOSING.....................................6
2. POST-CLOSING ADJUSTMENTS.............................................6
2.01 GENERAL......................................................6
2.02 CALCULATION OF NET WORKING CAPITAL AT CLOSING DATE...........6
2.03 PAYMENT OF ADJUSTMENT AMOUNTS.................................7
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION............7
3.01 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS............7
3.02 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY.......8
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY...............10
4.01 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER.............10
4.02 CAPITALIZATION...............................................11
4.03 NONCONTRAVENTION.............................................11
4.04 BROKERS' FEES................................................11
4.05 TITLE TO ASSETS..............................................11
4.06 NO SUBSIDIARIES OR EQUITY INVESTMENTS........................12
4.07 FINANCIAL STATEMENTS.........................................12
4.08 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END.............12
4.09 UNDISCLOSED LIABILITIES......................................13
4.10 TAX MATTERS..................................................13
4.11 REAL PROPERTY................................................14
4.12 INTELLECTUAL PROPERTY........................................16
4.13 TANGIBLE ASSETS..............................................17
4.14 CONTRACTS....................................................17
4.15 HAZARDOUS MATERIALS; DISPOSAL SITES..........................18
4.16 PERMITS AND ENVIRONMENTAL MATTERS............................19
4.17 REPORTS, ETC.................................................20
4.18 APPLICABLE LAWS COMPLIANCE...................................20
4.19 ENVIRONMENT, HEALTH, AND SAFETY..............................21
4.20 NOTES AND ACCOUNTS RECEIVABLE................................21
4.21 POWERS OF ATTORNEY...........................................22
4.22 INSURANCE....................................................22
<PAGE>
4.23 LITIGATION...................................................22
4.24 EMPLOYEES....................................................23
4.25 EMPLOYEE BENEFITS............................................23
4.26 GUARANTIES...................................................23
4.27 CERTAIN BUSINESS RELATIONSHIPS...............................23
4.28 SECURITIES MATTERS...........................................23
4.29 SUFFICIENCY OF ASSETS........................................24
5. PRE-CLOSING COVENANTS...............................................24
5.01 GENERAL......................................................24
5.02 NOTICES AND CONSENTS.........................................24
5.03 OPERATION OF BUSINESS........................................24
5.04 PRESERVATION OF BUSINESS.....................................25
5.05 FULL ACCESS..................................................25
5.06 NOTICE OF DEVELOPMENTS.......................................25
5.07 EXCLUSIVITY..................................................25
6. POST-CLOSING COVENANTS..............................................25
6.01 GENERAL......................................................25
6.02 TRANSITION...................................................26
6.03 CONFIDENTIALITY..............................................26
6.04 TAX RETURNS AND FILINGS......................................26
6.05 SAN ANTONIO LAND TRANSFER....................................26
7. CONDITIONS TO OBLIGATION TO CLOSE...................................27
7.01 CONDITIONS TO OBLIGATION OF PARENT...........................27
7.02 CONDITIONS TO OBLIGATION OF THE SHAREHOLDERS.................28
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.............................29
8.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES......29
8.02 INDEMNIFICATION PROVISIONS FOR BENEFIT OF PARENT.............30
8.03 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SHAREHOLDERS...30
8.04 LIMITATION ON LIABILITY......................................30
8.05 MATTERS INVOLVING THIRD PARTIES..............................30
8.05 DETERMINATION OF ADVERSE CONSEQUENCES........................31
8.06 OTHER INDEMNIFICATION PROVISIONS.............................31
9. TERMINATION.........................................................32
9.02 TERMINATION OF AGREEMENT.....................................32
9.02 EFFECT OF TERMINATION. .....................................33
10. CERTAIN DEFINITIONS.................................................33
11. GENERAL.............................................................36
11.01 INCORPORATION OF EXHIBITS AND SCHEDULES......................36
iii
<PAGE>
11.02 NO THIRD-PARTY BENEFICIARIES.................................36
11.03 ENTIRE AGREEMENT.............................................36
11.04 SUCCESSION AND ASSIGNMENT....................................36
11.05 COUNTERPARTS.................................................37
11.06 HEADINGS.....................................................37
11.07 NOTICES......................................................37
11.08 GOVERNING LAW................................................38
11.09 AMENDMENTS AND WAIVERS.......................................38
11.10 SEVERABILITY.................................................38
11.11 EXPENSES.....................................................38
11.12 CONSTRUCTION.................................................38
11.13 SPECIFIC PERFORMANCE.........................................38
11.14 LITIGATION EXPENSES..........................................39
11.15 ARBITRATION..................................................39
iv
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement"), is entered
into as of April __, 1998 by and among US Liquids, Inc., a Delaware corporation
("Parent"), Amigo Acquisition, Inc, a Texas corporation, a wholly owned
subsidiary of Parent ("Subsidiary"), Amigo Diversified Services, Inc., a Texas
corporation (the "Company"), and Raoul Garza and Alex Salas (the
"Shareholders"). Parent, Subsidiary, Company and the Shareholders are referred
to collectively herein as the "PARTIES."
The Shareholders own all of the outstanding capital stock of the
Company.
The respective boards of directors of Subsidiary and the Company (which
corporations are hereinafter referred to collectively as the "Constituent
Corporations") deem it advisable and in the best interests of Subsidiary and the
Company and their respective shareholders that Company merge with and into the
Subsidiary pursuant to a forward subsidiary merger (such transactions sometimes
being referred to herein as the "Merger") pursuant to this Agreement and the
applicable provisions of the laws of the State of Texas.
This Agreement contemplates the Merger will be accomplished through the
surrender of all of the outstanding shares of voting common stock of the Company
(the "Shareholder Stock") in exchange for that number of shares of common voting
stock (the "Parent Stock") of Parent set forth in Section 1.03 of this
Agreement, in a transaction intended to qualify for tax purposes as a
reorganization pursuant to Section 368 (a)(2)(D) of the Internal Revenue Code.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. THE MERGER.
1.01 GENERAL.
(a) EFFECT. At the Effective Time (as defined below), the
Company shall be merged with and into the Subsidiary pursuant to
Texas law. Thereupon, the corporate identity and existence of the
Subsidiary, with all its rights, privileges, immunities, powers
and purposes, shall continue unaffected and unimpaired by the
Merger, and the corporate identity and existence, with all the
rights, privileges, immunities, powers and purposes of the
Company shall be merged into the Subsidiary, as the corporation
surviving the Merger and the Subsidiary shall be fully vested
therewith. The separate identity, existence and corporate
organization of the Company shall cease upon the Merger becoming
effective as herein provided and thereupon the Subsidiary and the
Company shall each be a single corporation (herein sometimes
referred to as the "Surviving Corporation").
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(b) FILINGS. At the Closing, the Constituent Corporations
will cause all necessary documents and certificates necessary to
effect the Merger to be executed and attested and filed as
provided by Texas law (the "Merger Documents").
(c) EFFECTIVE TIME OF MERGER. The Merger shall be
effective immediately upon the filing of the Merger Documents
(the effective time of the Merger being referred to herein as the
"Effective Time").
(d) FURTHER ASSURANCES. If at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that
any further deeds, assignments or assurances in law or in or
equity or that any other things are necessary, desirable or
proper to vest, perfect or confirm of record or otherwise, in the
Surviving Corporation the title to any property or rights
acquired or to be acquired by the Surviving Corporation by reason
of, or as a result of, the Merger, the Constituent Corporations,
and their officers and directors shall and will execute and
deliver all such proper deeds, assignments and assurances in law
or equity and do all things necessary, desirable or proper to
vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of
this Agreement, and the officers and directors of the Constituent
Corporations and the officers and directors of the Surviving
Corporation are fully authorized in the name and on behalf of the
Constituent Corporations and the Surviving Corporation or
otherwise to take any and all such actions.
1.02 ARTICLES OF INCORPORATION; BYLAWS; BOARDS OF DIRECTORS;
OFFICERS.
(a) ARTICLES OF INCORPORATION. The Articles of
Incorporation of the Subsidiary, as in effect immediately prior
to the Effective Time, shall be, and may be separately certified
as, the Articles of Incorporation of the Surviving Corporation,
as the same may thereafter be amended from time to time in
accordance with Texas law.
(b) BYLAWS. The Bylaws of the Subsidiary, as in effect
immediately prior to the Effective Time, shall be the Bylaws of
the Surviving Corporation, as the same may thereafter be altered
or amended from time to time or until repealed in accordance with
Texas law, its Articles of Incorporation and said Bylaws.
(c) BOARDS OF DIRECTORS. The directors of the Subsidiary
shall serve as the directors of the Surviving Corporation,
subject to the provisions of the Articles of Incorporation and
Bylaws of the Surviving Corporation, until their successors are
elected and qualified.
(d) OFFICERS. The officers of the Subsidiary shall serve
as the officers of the Surviving Corporation, each such officer
to serve, subject to the provisions of the Articles of
Incorporation and Bylaws of the Surviving Corporation, until his
successor is elected and qualified.
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1.03 CONVERSION AND EXCHANGE OF SHARES. At the Effective Time,
the issued and outstanding shares of Subsidiary, the Shareholder Stock,
the Parent Stock and shall, by virtue of the Merger and without any
action on the part of any holder thereof, be converted and exchanged as
follows:
(a) SUBSIDIARY STOCK. Each outstanding share of common
stock of Subsidiary held of record by Parent will automatically
be converted into one fully paid and non-assessable share of
common stock of the Surviving Corporation.
(b) SHAREHOLDER STOCK. The Shareholder Stock shall be
converted into, and become exchangeable for:
(i) $5,200,000 worth of Parent's common stock (the
"Parent Stock") at a strike price of $20.85 per share (the
"Valuation Price"), for a total number of 249,400 shares
of common stock of Parent Stock; and
(ii) cash in the amount of $1,300,000 less the
amount of Long Term Liabilities as of the Closing (the
"Cash Payment"); and
(iii) The property described in Schedule 1.03
attached hereto and incorporated herein by reference (the
"In Kind Consideration").
In connection therewith, the Shareholders will surrender to
Parent for cancellation duly executed certificates in valid form
evidencing all of the Shareholder Stock, duly endorsed in blank
or accompanied by duly executed stock powers. The Parent Stock
and Cash Payment shall be divided and apportioned between the
shareholders so as to give each of such shareholders, as nearly
as is practicable without issuing fractional shares, such
percentage of such Parent Stock and Cash Payment as is specified
for each Shareholder in SECTION 1.03(B) of the Disclosure
Schedule (as defined herein).
(c) VALIDITY; OTHER MATTERS. The Parent Stock, when issued
and delivered as provided herein, will be duly authorized and
validly issued, fully paid, nonassessable and free of any
preemptive rights, and will be covered by a then-effective
registration statement under the Securities Act of 1933, as
amended (the "Securities Act"). Subsidiary shall file, or cause
Parent to file, with the American Stock Exchange ("AMEX") a
subsequent listing application such that the Parent Stock shall
be tradable on such exchange, immediately following the Closing.
(d) RESALE OF PARENT STOCK. For a period of one year after
the Closing Date, Sellers shall comply with the resale
requirements of Rule 145(d) under the Securities Act, more
specifically, the volume limitations, broker transactions, and
manner of sale provisions of Rule 144(e), (f) and (g),
respectively. Sellers agree that $1,000,000 worth (based on the
Valuation Price) of the Parent Stock (the "One-Year Restricted
Stock") shall not be sold assigned, exchanged, transferred,
encumbered, pledged, distributed or otherwise disposed of for a
period of one (1) year after
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issuance and an additional $1,000,000 worth (based on the
Valuation Price) of the Parent Stock (the "Two-Year Restricted
Stock") shall not be sold assigned, exchanged, transferred,
encumbered, pledged, distributed or otherwise disposed of for a
period of two (2) years after issuance.
(e) LEGEND. Shareholders acknowledge and agree that all
Parent Stock shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF RULE 145(D) PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AND MAY NOT BE TRANSFERRED OR
DISPOSED OF BY THE HOLDER WITHOUT COMPLIANCE WITH SAID
RULE.";
PROVIDED, HOWEVER, that pursuant to Rule 145(d) of the Securities
Act, on the first anniversary following the Closing Date, the
foregoing legend shall be removed from such certificates, and
Subsidiary (or Parent) shall issue a certificate without such
legend to the Shareholders upon request.
The One-Year Restricted Stock shall also bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
VOLUNTARILY SOLD, ASSIGNED, EXCHANGED, TRANSFERRED,
ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE
DISPOSED OF, AND ISSUER SHALL NOT BE REQUIRED TO GIVE
EFFECT TO ANY ATTEMPTED VOLUNTARY SALE, ASSIGNMENT,
EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION,
APPOINTMENT OR OTHER DISPOSITION OF ANY OF THESE SHARES,
DURING THE ONE-YEAR PERIOD ENDING ON [APPROPRIATE DATE].
The Two-Year Restricted Stock shall also bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
VOLUNTARILY SOLD, ASSIGNED, EXCHANGED, TRANSFERRED,
ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE
DISPOSED OF, AND ISSUER SHALL NOT BE REQUIRED TO GIVE
EFFECT TO ANY ATTEMPTED VOLUNTARY SALE,
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ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION OF ANY OF
THESE SHARES, DURING THE TWO-YEAR PERIOD ENDING ON
[APPROPRIATE DATE].
(f) EXPENSES OF ISSUANCE OF PARENT STOCK. With respect to
the initial issuance of the Parent Stock, Subsidiary (or Parent)
shall pay all customary fees, costs and expenses of such
issuance, including without limitation all registration, filing
and AMEX fees, printing expenses and fees and disbursements of
counsel and accountants for Subsidiary or Parent.
1.04 LIABILITIES AND EXCLUDED ASSETS. As of the Closing, Company
shall not have any liabilities of Shareholders or the Company except
Current Liabilities and the Long Term Liabilities of the Company set
forth in SECTION 1.04 of the Disclosure Schedule. SECTION 1.04 of the
Disclosure Schedule sets forth Shareholders' approximation of the Long
Term Liabilities including all amounts required to be paid under any
equipment leases in order for the Company to obtain free and clear title
and ownership to all of the assets of the Company (collectively, the
"Assumed Liabilities"). Within sixty (60) days after the Closing Date
Parent shall provide Shareholders with a report showing the actual
assumption or payoff amounts as of the Closing Date (the "Final Payoff
Report"). If the actual payoff amounts calculated as of the Closing Date
are greater than the amount set forth on SECTION 1.04 of the Disclosure
Schedule, then the difference shall be paid by Shareholders to Parent,
in Parent Stock, within five (5) days of Shareholders approval or deemed
approval of the Final Payoff Report. If the actual payoff amounts
calculated as of the Closing Date is less than the amount set forth on
SECTION 1.04 of the Disclosure Schedule, then the difference shall be
paid by Parent to Shareholders, in Parent Stock, within five (5) days of
Shareholders approval or deemed approval of the Final Payoff Report.
Shareholders agree to use their best efforts, in cooperation with
Subsidiary and Parent, to obtain statements from each of the lenders or
lessors of the equipment showing the final pay-off amount, on or before
Closing. Notwithstanding anything to the contrary herein, the Company
shall not have any Long Term Liabilities at the closing in excess of
$1,300,000.
If within thirty (30) days following the delivery of the Final Payoff
Report, Shareholders have not given Parent notice of their objection to
the Final Payoff Report (such notice must contain a statement of the
basis of Shareholders' objection), then the Final Payoff Report will be
deemed final. If Shareholders give such notice of objection, then the
issues in dispute will be submitted to Ernst & Young, certified public
accountants (the "Resolution Accountants") for resolution. If issues in
dispute are submitted to the Resolution Accountants for resolution, (i)
each party will furnish to the Resolution Accountants such work papers
and other documents and information relating to the disputed issues as
the Resolution Accountants may request and are available to that party
or its Affiliate (or its independent public accountants), and will be
afforded the opportunity to present to the Resolution
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Accountants any material relating to the determination and to discuss
the determination with the Resolution Accountants; (ii) the
determination by the Resolution Accountants, as set forth in a notice
delivered to both parties by the Resolution Accountants, will be binding
and conclusive on the Parties; and (iii) Parent and Shareholders will
each bear 50% of the fees of the Resolution Accountants for such
determination.
1.05 THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Akin,
Gump, Strauss, Hauer & Feld, L.L.P., NationsBank Plaza, 300 Convent
Street, Suite 1500, San Antonio, Texas 78205, commencing at 10:00 a.m.
local time on the third business day after the conditions to Closing set
forth in SECTION 7, below are satisfied, or such other date as the
Parties may agree to in writing (the "CLOSING DATE").
1.06 DELIVERIES AT THE CLOSING. At the Closing, (a) the
Shareholders will deliver to Parent the various certificates,
instruments, and documents referred to in SECTION 7.01 below, (b) Parent
will deliver to the Shareholders the various certificates, instruments,
and documents referred to in SECTION 7.02 below, (c) the Shareholders
will deliver to Parent stock certificates representing all of the
Shareholder Stock, endorsed in blank or accompanied by duly executed
assignment documents, (d) Parent will deliver to the Shareholders the
Cash Payment, certificates representing the Parent Stock and the In Kind
Consideration pursuant to SECTION 1.03 above, (e) Parent will deliver
the Parent's Legal Opinion (as defined and described in SECTION 7.02(G)
of this Agreement), and (f) Parent will deliver a tax representation
letter.
2. POST-CLOSING ADJUSTMENTS.
2.01 GENERAL. The parties acknowledge that the consideration
payable to the Shareholders hereunder was determined on the assumption
that the Company would have the same Net Working Capital as reflected in
the December 31, 1997 balance sheet of the Company attached hereto as
Schedule 2.01 (the "Year End Balance Sheet"). Therefore, the Parties
agree to make the post-closing adjustments as set forth in this SECTION
2.
2.02 CALCULATION OF NET WORKING CAPITAL AT CLOSING DATE. On or
before the date that is ninety (90) days after the Closing Date,
Parent's accountants shall compute the amount of Net Working Capital of
the Company as of the Closing Date (but without taking into account any
termination of leases, notes, consulting agreements or other
transactions effected in order to accomplish the Shareholders' exchange
of Shareholder Stock) in accordance with GAAP, and shall provide the
Shareholders a summary reflecting how such computations were made. The
Shareholders and their accountants shall have the opportunity to review
such computations.
If within thirty (30) days following the delivery of the Net Working
Capital computation (the "Computation"), Shareholders have not given
Parent notice of their objection to the Computation (such notice must
contain a statement of the basis of Shareholders' objection), then the
Computation will be deemed final. If Shareholders give such notice of
objection, then the issues in dispute will be submitted to the
Resolution Accountants for resolution. If
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issues in dispute are submitted to the Resolution Accountants for
resolution, (i) each party will furnish to the Resolution Accountants
such work papers and other documents and information relating to the
disputed issues as the Resolution Accountants may request and are
available to that party or its Affiliate (or its independent public
accountants), and will be afforded the opportunity to present to the
Resolution Accountants any material relating to the determination and to
discuss the determination with the Resolution Accountants; (ii) the
determination by the Resolution Accountants, as set forth in a notice
delivered to both parties by the Resolution Accountants, will be binding
and conclusive on the Parties; and (iii) Parent and Shareholders will
each bear 50% of the fees of the Resolution Accountants for such
determination.
2.03 PAYMENT OF ADJUSTMENT AMOUNTS. If the Net Working Capital as
of the Closing Date is greater than the Net Working Capital as of the
Year End Balance Sheet, then Parent shall, within five business days of
Shareholders' approval or deemed approval of the Computation, pay the
Shareholders, in cash, an amount equal to the positive amount on the
Closing Date. If the Net Working Capital as of the Closing Date is less
than the Net Working Capital as of the Year End Balance Sheet, then the
Shareholders, within five business days of Shareholders' approval or
deemed approval of the Computation, shall pay Parent, in cash an amount
equal to the negative amount on the Closing Date.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
3.01 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The
Shareholders jointly and severally represent and warrant to Parent that
the statements contained in this SECTION 3.01 are correct and complete
as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this SECTION
3.01):
(a) AUTHORIZATION OF TRANSACTION. The Shareholders have
full power and authority to execute and deliver this Agreement
and to perform their obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of
Shareholders, enforceable in accordance with its terms and
conditions. Except as set forth in SECTION 3.01(A) of the
Disclosure Schedule, Shareholders are not required to give any
notice to, make any filing with, or obtain any authorization,
consent, or approval of, any government or governmental agency in
order to consummate the transactions contemplated by this
Agreement.
(b) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Shareholders
are subject or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any material agreement,
contract, lease, license, instrument, or other arrangement to
which either of the
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Shareholders is a party or by which they are bound or to which
any material amount of their assets are subject.
(c) BROKERS' FEES. Shareholders do not have any Liability
or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by
this Agreement for which Subsidiary or Parent could become liable
or obligated.
(d) SHAREHOLDER STOCK. Shareholders hold of record and own
beneficially the number of shares of Shareholder Stock set forth
next to their names in SECTION 4.02 of the Disclosure Schedule,
free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws),
Taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands.
Shareholders are not a party to any option, warrant, purchase
right, or other contract or commitment that could require
Shareholders to sell, transfer, or otherwise dispose of any
capital stock of the Company (other than this Agreement).
Shareholders are not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any
capital stock of the Company.
3.02 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY.
Parent and Subsidiary jointly and severally represent and warrant to the
Shareholders that the statements contained in this SECTION 3.02 are
correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this SECTION 3.02):
(a) ORGANIZATION OF PARENT AND SUBSIDIARY. (i) Parent is
duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware. Parent has
all requisite corporate power to own and operate its properties
and assets and to carry on its business as presently conducted.
Parent is duly qualified to do business and is in good standing
in all jurisdictions where failure to qualify would have a
material adverse effect; (ii) Subsidiary is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of Texas.
(b) AUTHORIZATION OF TRANSACTION. Parent and Subsidiary
have been duly authorized by all necessary corporate action and
have full power and authority to execute and deliver this
Agreement and to perform their obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of
both Parent and Subsidiary, and is enforceable against both
Parent and Subsidiary in accordance with its terms and
conditions. Neither Parent nor Subsidiary need give any notice
to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
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(c) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Parent or
Subsidiary is subject or any provision of the charter or bylaws
of either Parent or Subsidiary or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate,
modify, or cancel, result in the creation or imposition of a
lien, charge or encumbrance or require any notice under any
material agreement, contract, lease, license, instrument, or
other arrangement to which Parent or Subsidiary is a party or by
which either is bound or to which any material amount of its
assets is subject, subject to Laws Affecting Creditors Rights (as
defined herein).
(d) BROKERS' FEES. Neither Parent nor Subsidiary has any
Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Shareholders could
become liable or obligated.
(e) PARENT STOCK. All of the issued and outstanding shares
of capital stock of the Parent have been duly authorized, are
validly issued, fully paid, and non-assessable. The Parent Stock,
upon its delivery to Shareholders at Closing, shall be duly
authorized, validly issued, fully paid and non-assessable, and
free of all claims liens, pledges, options, charges, Security
Interests, mortgages, deeds of trust, encumbrances or rights of
any third party of any nature whatsoever. The issuance of the
Parent Stock to Shareholders will not give rise to any preemptive
rights or rights of first refusal and will not violate any laws
to which the Parent or any its assets are subject.
(f) CAPITALIZATION OF PARENT. As of December 31, 1997, the
authorized capital stock of the Parent consists of preferred
stock, Series A 72 percent cumulative preferred stock and
30,000,000 shares of common stock, par value $.01 per share (the
"Common Stock"), of which 7,303,164 shares were issued and
outstanding. Except as set forth in the required forms, reports
and documents which Parent has filed with the SEC (collectively
the "SEC Reports"), at the Closing there will be not other
warrants, options, subscriptions or other rights or preferences
(including conversion or preemptive rights) outstanding to
acquire capital stock of the Parent or its subsidiaries, or
notes, securities or other instruments convertible into or
exchangeable for capital stock of the Parent, nor any
commitments, agreements or understandings by or with the Parent
with respect to the issuance thereof, nor any obligation to
repurchase or redeem any capital stock of the Parent. Except as
set forth in the SEC Reports, no shareholders of the Parent have
any right to require the registration of any securities of the
Parent or to participate in any such registration. All
outstanding securities of the Parent have been issued, in all
material respects, in full compliance or in compliance with an
exemption or exemptions from the registration and prospectus
delivery requirements of the Securities Act and from the
registration and qualification requirements of all applicable
state securities laws. The representations
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and warranties set forth in this Section 3.02(f) shall not apply
to any items which are not in the aggregate material to the
financial condition, results of operations or business of Parent
and its subsidiaries taken as a whole.
(g) PARENT'S SEC REPORTS. Parent has filed all required
SEC Reports, all of which complied when filed in all material
respects with all applicable requirements of the Securities Act
and the Exchange Act. None of such forms, reports or documents,
including, without limitation, any financial statements or
schedules included therein, when filed contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. The balance sheets (including
the related notes) included in Parent's Annual Report on Form
10-K for the year ended December 31, 1997 fairly presents the
consolidated financial position of Parent and its consolidated
subsidiaries as of the respective dates thereof and the other
related statements (including the related notes) included therein
fairly present the consolidated statements of income and
consolidated statements of cash flow of Parent and its
consolidated statements for the respective fiscal periods as of
the respective dates set forth therein. The representations and
warranties set forth in this Section 3.02(g) shall not apply to
any non-compliances, non-conforming filings, non-filings,
misstatements, omissions or failures to present fairly or conform
to generally accepted accounting principles which are not in the
aggregate material to the financial condition, results of
operations or business of Parent and its subsidiaries taken as a
whole.
(h) TAX MATTERS. Parent and Subsidiary make the
representation and warranties contained in the letter attached as
Exhibit " F " (the "Tax Representation Letter").
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.
The Shareholders jointly and severally represent and warrant to Parent
that the statements contained in this SECTION 4 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date, including with respect to any assets acquired by, or transferred to, the
Company after the date hereof (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this SECTION 4),
except as set forth in the disclosure schedule delivered by the Shareholders to
Parent on the date hereof (the "DISCLOSURE SCHEDULE"). Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Disclosure Schedule identifies the
exception in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Disclosure Schedule will be
arranged in sections corresponding to the numbered paragraphs contained in this
Agreement.
4.01 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The
Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State
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of Texas, and is duly authorized to conduct business and in good
standing under the laws of each jurisdiction where such failure to
qualify would have a material adverse effect. The Company has full
corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the business in which it is engaged
and in which it presently proposes to engage and to own and use the
properties owned and used by it. SECTION 4.01 of the Disclosure Schedule
lists the directors and officers of the Company and contains correct and
complete copies of the articles and bylaws of the Company (as amended to
date). The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of
the Company are correct and complete. The Company is not in default
under or in violation of any provision of its articles or bylaws.
4.02 CAPITALIZATION. The entire authorized and issued capital
stock of the Company and its tax identification number and the
Shareholders' Social Security Numbers and addresses are as set forth in
SECTION 4.02 of the Disclosure Schedule. All of the shares of issued and
outstanding Shareholder Stock have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by the
Shareholders as set forth in SECTION 4.02 of the Disclosure Schedule.
There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue,
sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the
Company.
4.03 NONCONTRAVENTION. Except as set forth in SECTION 4.03 of the
Disclosure Schedule, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Company is subject or any provision of the articles or bylaws of the
Company or (b) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, result in the
creation or imposition of a lien, charge or encumbrance or require any
notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Company is a party or by which it is
bound or to which any of its assets are subject which is material to the
Company (or result in the imposition of any Security Interest upon any
of its assets) subject to Laws Affecting Creditors Rights. Except as set
forth in SECTION 4.03 of the Disclosure Schedule, the Company is not
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
4.04 BROKERS' FEES. The Company does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
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4.05 TITLE TO ASSETS. Except for any liens set forth in SECTION
4.05 of the Disclosure Schedule the Company has good and marketable
title to, or a valid leasehold interest in, the properties and assets
used by it, located on its premises, or shown on the Most Recent Balance
Sheet or acquired after the date thereof, free and clear of all Security
Interests.
4.06 NO SUBSIDIARIES OR EQUITY INVESTMENTS. Except as set forth
in SECTION 4.06 of the Disclosure Schedule, the Company does not have
any subsidiaries, and does not control, directly or indirectly, or have
any direct or indirect equity participation in, any corporation,
partnership, trust, or other business association.
4.07 FINANCIAL STATEMENTS. Attached hereto as SECTION 4.07 of the
Disclosure Schedule are the following financial statements (collectively
the "FINANCIAL STATEMENTS"): (a) reviewed balance sheets and statements
of income, changes in stockholders' equity, and cash flow as of and for
the twelve months ended December 31, 1995 and 1996; (b) the unaudited
balance sheet and statement of income for the year ended December 31,
1997 (the "MOST RECENT FISCAL YEAR END") for the Company; and (c)
unaudited balance sheets and statements of income, changes in
stockholders' equity, and cash flow (the "MOST RECENT FINANCIAL
STATEMENTS") as of and for the three months ended March 31, 1998 (the
"MOST RECENT FISCAL MONTH END") for the Company. The Financial
Statements (including the notes thereto) have been prepared in
accordance with GAAP, applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the
Company as of such dates and the results of operations of the Company
for such periods and are consistent with the books and records of the
Company; PROVIDED, HOWEVER, that the unaudited Financial Statements are
subject to normal year-end adjustments and lack footnotes and other
presentation items. Except as set forth in SECTION 4.07 of the
Disclosure Schedule, the Company has not changed its accounting policies
and practices in the past three years. No prior period adjustment is
reflected in the statements of income, changes in stockholders' equity
and cash flow contained in the Company's Most Recent Financial
Statements.
4.08 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except as
set forth in SECTION 4.08 of the Disclosure Schedule, since the Most
Recent Fiscal Month End, there has not been any material adverse change
in the business, financial condition, operations, results of operations,
or to the best of Shareholders' Knowledge, future prospects of the
Company. Without limiting the generality of the foregoing, except as set
forth at SECTION 4.08 of the Disclosure Schedule, since such date:
(a) the Company has not sold, leased, transferred, or
assigned any material asset, and has not entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than
$10,000;
(b) the Company has not made any capital expenditure (or
series of related capital expenditures) involving more than
$10,000;
(c) the Company has not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or
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capitalized lease obligation either involving more than $10,000
singly or $25,000 in the aggregate;
(d) the Company has not delayed or postponed the payment
of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(e) there has been no change made or authorized in the
articles or bylaws of the Company, and the Company has not
issued, sold, or otherwise disposed of any of its capital stock,
or granted any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange, or exercise) any of
its capital stock;
(f) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital
stock (whether in cash or in kind);
(g) the Company has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its
property;
(h) the Company has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement,
and has not granted any increase in the base compensation of any
of its directors, officers, and Key Employees (as defined
herein), or adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and
employees; and
(i) the Company has not committed to any of the foregoing.
4.09 UNDISCLOSED LIABILITIES. Except as set forth in SECTION 4.09
of the Disclosure Schedule, the Company does not have any Liability (and
to the best of Shareholders' Knowledge there is no basis for any present
or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against the Company giving rise to any
Liability), except for (i) Liabilities reflected or reserved against in
the Most Recent Balance Sheet and (ii) Liabilities which have arisen
after the date of the Most Recent Balance Sheet in the Ordinary Course
of Business (none of which results from, arises out of, relates to, is
in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
4.10 TAX MATTERS. Except as set forth in SECTION 4.10 of the
Disclosure Schedule, with respect to the Company, (a) all Tax Returns
and all similar filings required to be filed on or before the Closing
Date by the Company (true and correct copies of which have been
furnished to Parent) with respect to any Taxes have been timely filed
with the appropriate governmental agencies in all jurisdictions in which
such Tax Returns are required to be filed, and all such Tax Returns
reflect the liability of the Company for Taxes in substantial compliance
with the Code for the periods, properties or events covered thereby; (b)
all Taxes payable with respect to the Tax Returns, and all Taxes
accruable with respect to events occurring through the date of the Most
Recent Balance Sheet, whether disputed or not, and
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whether or not shown on any Tax Return, will have been paid in full
prior to the Closing Date, or an adequate accrual is provided with
respect thereto on the Most Recent Balance Sheet; (c) no deficiency in
respect of any Taxes which has been assessed against the Company
remains unpaid and there are no unassessed Tax deficiencies or any
audits or investigations pending or threatened against the Company with
respect to any Taxes, (d) there is in effect no extension for the filing
of any Tax Return and the Company has not extended or waived the
application of any statute of limitations of any jurisdiction regarding
the assessment or collection of any Tax; (e) no claim has ever been made
by any Tax authority in a jurisdiction in which the Company does not
file Tax Returns that it is or may be subject to taxation by that
jurisdiction; (f) there are no liens for Taxes upon any asset of the
Company except for liens for current Taxes not yet due; (g) no issues
have been raised in any examination by any Tax authority with respect to
the Company which, by application of similar principles, reasonably
could be expected to result in a proposed deficiency for any other
period not so examined; (h) the Company is not a party to any Tax
allocation or sharing agreement or otherwise under any obligation to
indemnify any person with respect to any Taxes; (i) the Company is not a
party to any joint venture, partnership or other arrangement that is
treated as a partnership for federal income tax purposes; (j) there are
no accounting method changes or proposed accounting method changes of
the Company that could give rise to an adjustment under section 481 of
the Code for periods after the Closing Date; (k) there are no requests
for rulings in respect of any Tax pending between the Company and any
Tax authority; (l) the Company has never been a member of any affiliated
group as defined in Section 1504 of the Code; (m) the Company has timely
made all deposits required by law to be made with respect to employees'
withholding and other employment taxes; (n) the Company has not filed
any consent under Section 341(f) of the Code; and (o) none of the assets
of the Company are treated as owned by any other person under the "safe
harbor lease" provisions of former Section 168(f)(8) of the Code.
4.11 REAL PROPERTY. SECTION 4.11 of the Disclosure Schedule lists
and describes briefly all real property owned, leased or subleased to
the Company. The Shareholders have delivered to Parent correct and
complete copies of the leases and subleases listed in SECTION 4.11 of
the Disclosure Schedule (as amended to date). With respect to each lease
and sublease listed in SECTION 4.11 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(b) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on
identical terms immediately following the consummation of the
transactions contemplated hereby;
(c) to the Knowledge of Shareholders, no party to the
lease or sublease is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or
acceleration thereunder;
(d) no party to the lease or sublease has repudiated any
provision thereof;
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(e) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(f) to the Knowledge of Shareholders, with respect to each
sublease, the representations and warranties set forth in
SUBSECTIONS (A) THROUGH (E) above are true and correct with
respect to the underlying lease;
(g) the Company has not assigned, transferred, conveyed,
mortgaged, conveyed by deed of trust, or encumbered any interest
in the leasehold or subleasehold;
(h) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations in all material respects;
(i) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities; and
With respect to the Land:
(k) none of the Company or the Shareholders, or to the
Shareholders' Knowledge, any third party has ever conducted
landfill operations on the Land. The Land is fully licensed,
permitted and authorized for operation under all Applicable Laws;
(l) the Land can be used after the Closing as it has been
used by the Company prior the Closing without violating any
Applicable Law or private restriction, and such uses are legal
conforming uses. There are no proceedings or amendments pending
and brought by or, to the Knowledge of Shareholders, threatened
by, any third party which would result in a change in the
allowable uses of the Land or which would modify the right of the
Company to use the Land as contemplated after the Closing Date;
(m) Shareholders have made available to Parent all
engineering, geologic and other similar reports, documentation
and maps relating to the Land in the possession or control of
Shareholders;
(n) none of the Company, the Shareholders or the Land is
or, to the Knowledge of Shareholders ever has been, involved in
any litigation or administrative proceeding seeking to impose
fines, penalties or other liabilities or seeking injunctive
relief for violation of any Applicable Laws;
(o) to the Knowledge of Shareholders, no Person, other
than the Company, has a present or future right to possession of
all or any part of the Land;
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(p) no portion of the Land contains any areas that could
be characterized as disturbed, undisturbed or man made wetlands
or "waters of the United States" pursuant to any Applicable Laws
or the procedural manuals of the Environmental Protection Agency,
U.S. Army Corps of Engineers or the Texas Natural Resources
Conservation Commission, whether such characterization reflects
current conditions or historic conditions which have been altered
without the necessary permits or approvals;
(q) no work has been performed on the Land within 120 days
of the date hereof for which a mechanic's lien could be filed;
(r) there are no levied or pending special assessments
affecting all or any part of the Land owed to any governmental
entity and, to the Knowledge of Shareholders, none is threatened;
(s) there are no pending or, to the Knowledge of
Shareholders, threatened condemnation or eminent domain
proceedings affecting all or any part of the Land;
(t) the Shareholders have provided to the government
agencies requiring the same, all material reports, notices,
filings and other disclosures required by Applicable Laws and all
such reports, notices, filings and other documents were complete
and accurate in all material respects at the time provided to
said governmental agencies;
(u) no liens with respect to environmental liability have
been imposed against the Land under CERCLA, any comparable Texas
statute or other Applicable Law and, to the Knowledge of
Shareholders, no facts or circumstances exist which is reasonably
likely to give rise to same; and
(v) no portion of the Land is listed on the CERCLIS list
or the National Priorities List of Hazardous Waste Sites or any
similar list maintained by the State of Texas and none of the
Company or Shareholders is listed as a potentially responsible
party under CERCLA, any comparable Texas statute or other
Applicable Law, and none of the Company or Shareholders has
received a notice of such a listing.
4.12 INTELLECTUAL PROPERTY.
(a) The Company owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of its Business. Each item
of Intellectual Property owned or used by the Company immediately
prior to the Closing hereunder will be owned or available for use
by the Company on identical terms and conditions immediately
subsequent to the Closing hereunder. The Company has taken all
reasonably necessary action to maintain and protect each item of
Intellectual Property that it owns or uses.
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(b) to the Knowledge of the Shareholders, the Company has
not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property
rights of third parties, and none of the Shareholders and the
directors and officers (and employees with responsibility for
Intellectual Property matters) of the Company has ever received
any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation
(including any claim that the Company must license or refrain
from using any Intellectual Property rights of any third party).
To the Knowledge of any of the Shareholders and the directors and
officers (and employees with responsibility for Intellectual
Property matters) of the Company, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(c) SECTION 4.12 of the Disclosure Schedule identifies
each patent or registration which has been issued to the Company
with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which
the Company has made with respect to any of its Intellectual
Property, and identifies each license, agreement, or other
permission which the Company has granted to any third party with
respect to any of its Intellectual Property. The Shareholders
have delivered to Parent correct and complete copies of all such
patents, registrations, applications, licenses, agreements, and
permissions (as amended to date). SECTION 4.12 of the Disclosure
Schedule also identifies each trade name or unregistered
trademark used by the Company in connection with the Business.
4.13 TANGIBLE ASSETS. SECTION 4.13 of the Disclosure schedule
lists all personal property and other tangible assets of the Company.
The Company owns or leases all buildings, machinery, equipment, and
other tangible assets necessary for the conduct of its Business. Each
material tangible asset has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it
presently is used. For purposes of this representation, "material
tangible asset" will be a tangible asset with a net book value, net of
deprecation, of greater than $10,000.
4.14 CONTRACTS. Except as otherwise specified therein, SECTION
4.14 of the Disclosure Schedule lists the following contracts and other
agreements to which the Company is a party:
(a) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for
lease payments in excess of $10,000 per annum;
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies,
products, or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over a
period of more than one year, result in a material loss to the
Company, or involve consideration in excess of $10,000;
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(c) any agreement (or group of related agreements) under
which the Company has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $10,000 or under which the Company has
imposed a Security Interest on any of its assets, tangible or
intangible;
(d) any agreement with any of the Shareholders or their
Affiliates, or regarding the loaning of money to employees,
directors or agents of the Company;
(e) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other
plan, agreement or arrangement for the benefit of current or
former directors, officers, employees and independent
contractors; and any agreement for the employment or engagement
of any Person;
(f) any material agreement concerning confidentiality or
noncompetition;
(g) any agreement concerning a partnership or joint
venture;
(h) any collective bargaining agreement; and
(i) any agreement under which the consequences of a
default or termination reasonably likely to have a material
adverse effect on the business, financial condition, operations,
results of operations, or future prospects of the Company; or any
other agreement (or group of related agreements) the performance
of which involves consideration in excess of $10,000.
The Shareholders have delivered to Parent a correct and complete copy of
each written agreement listed in SECTION 4.14 of the Disclosure Schedule
(as amended to date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in SECTION 4.14 of the
Disclosure Schedule. With respect to each such agreement, subject to
Laws Affecting Creditors Rights: (i) the agreement is legal, valid,
binding, enforceable, and in full force and effect; (ii) the agreement
will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms immediately following the
consummation of the transactions contemplated hereby; (iii) no party is
in breach or default, and to Shareholders' Knowledge, no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (iv) no party has repudiated any provision of the
agreement.
4.15 ENVIRONMENTAL MATTERS, HAZARDOUS MATERIALS.
(a) HAZARDOUS MATERIALS OPERATIONS. The Company's business
operations include providing services in facilities
decontamination, closure and restoration, emergency response,
hydrocarbon recycling, storage tank management, ground water
remediation and soil remediation. In the course of providing
theses services, the Company manages (E.G., generation, storage,
transport and/or recycling of) petroleum products, hazardous
wastes, and hazardous materials. In the normal and customary
course of
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operations, the Company has experienced and is expected to
experience the release of DE MINIMUS quantities of these
materials that have no material adverse effect on the company.
(b) COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company has been, and is
operated in compliance with, all Environmental Laws (as
hereinafter defined) and all permits related to Environmental
Laws, except where the failure to be in compliance would not
have a material adverse effect on the Company. As used herein,
the term "Environmental Laws" includes, but is not limited to,
any federal, state or local statute, law, rule, regulation,
ordinance, code, policy or rule of common law now in effect
relating to the environment, human health or safety, or
Hazardous Materials (as hereinafter defined) including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42
U.S.C.ss.ss.9601, ET SEQ. ("CERCLA"); the Hazardous Materials
Transportation Act, as amended, 49 U.S.C.ss.ss.1801, ET SEQ.;
the Resource Conservation and Recovery Act of 1976, as amended,
42 U.S.C.ss.ss.6901, ET SEQ.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C.ss.ss.1201, ET SEQ.; the Toxic
Substances Control Act, 15 U.S.C. ss.ss.2601, ET SEQ.; the Clean
Air Act, 42 U.S.C.ss.ss.7401, ET SEQ.; the Safe Drinking Water
Act, 42 U.S.C.ss.ss.3g08, ET SEQ.; the Federal Insecticide,
Fungicide and Rodenticide Act, as amended, 7 U.S.C.ss.136, ET
SEQ.; and the term "Hazardous materials" includes, but is not
limited to, (i) any petroleum or petroleum products, natural
gas, or natural gas products, radioactive materials, asbestos,
urea formaldehyde foam insulation, transformers or other
equipment that contains dielectric fluid containing levels of
polychlorinated biphenyls ("PCBs"), and radon gas; (ii) any
chemicals, materials, waste or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous waste," "restricted
hazardous wastes," "toxic substances," or "toxic pollutants."
(c) EXISTENCE OF AN ACTION. Except as disclosed in Section 4.15 of
Company's Disclosure Schedule, the Company has not received any
notice from any Governmental Authority or other person alleging
or concerning any material claim against the Company under any
Environmental Law, whether for personal injuries or property
damages. Except as disclosed in Section 4.15 of Company's
Disclosure Schedule, there is no action pending or, to the
knowledge of the Company, threatened affecting the Company
alleging or concerning any material claim under any
Environmental Law, whether for personal injuries or property
damages, nor does the Company have any knowledge of any fact or
condition that could give rise to such a claim.
(d) ENVIRONMENTAL PERMITS. The Company is in possession of, and in
compliance with, all material permits required under the
Environmental Laws with respect to the operation of its
business. There are no actions pending or, to the Knowledge of
the Company, threatened which seek to modify, revoke or deny
renewal of any of such permit. The Company has no Knowledge of
any fact or condition that is reasonably likely to give rise to
any action to modify, revoke or deny renewal of any of such
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permit. The consummation of the transactions contemplated by
this Agreement will not violate, alter, impair, or invalidate,
in any respect, any such permit.
(e) MISCELLANEOUS. Without in any way limiting the generality of the
foregoing, to the knowledge of the Company, none of the off-site
locations where the Company has transported, released,
discharged, stored, disposed or arranged for the disposal of
Hazardous Materials has been identified as a facility that is
subject to an existing claim under any Environmental Law or is
the subject of any threatened claim by any person.
4.16 PERMITS AND ENVIRONMENTAL MATTERS. The Company has all
permits necessary for or customary in connection with the operation of
the Business, none of which permits are or will be terminated or
otherwise adversely affected by the Merger (and, except as set forth in
SECTION 4.03 of the Disclosure Schedule, the Merger will not require the
approval of any agency or authority to continue the effectiveness of
such permits). SECTION 4.16 of the Disclosure Schedule contains a
complete and accurate list and summary description as of the date hereof
of all permits, titles (including motor vehicles titles and current
registrations), fuel permits, licenses, franchises and other,
certificates, owned or held by the Company, to the extent such relate to
the Business or operation thereof, none of which permits, titles,
licenses, franchises and certificates infringe on the rights of others
and all of which are now valid, in good standing and in full force and
effect. Except as set forth in SECTION 4.16 of the Disclosure Schedule,
all such permits, titles, licenses, franchises and certificates required
by law have been obtained, are in good standing and are adequate for the
operation of the Business.
4.17 REPORTS, ETC. The Company has made available to Parent at
the Company's offices, a description and copies, as of the date of this
Agreement, of all material notifications, permits, licenses, engineering
studies, environmental impact studies, assessments and audits and all
notifications from governmental agencies relating to: (a) each actual
and current material violation of Applicable Laws, hereinafter defined,
by the Company relating to the Business, or any operations or activities
in connection therewith, and all, if any, claims in respect thereof; (b)
the discharge, leakage, spillage, transport, disposal or release of any
Hazardous Waste (as defined herein)into the environment by the Company,
the Shareholders or otherwise relating to the Business or any operations
or activities in connection therewith; and (c) employee health, public
health or the environment related to the Business or any operations or
activities in connection therewith (collectively, the "Environmental
Documents").
4.18 APPLICABLE LAWS COMPLIANCE. Except as set forth in
SECTION 4.18 of the Disclosure Schedule:
(a) The Company and the Land are fully licensed, permitted
and authorized under all federal, state and local statutes, laws,
rules, regulations, orders, permits (including, without
limitation, zoning restrictions and land use requirements) and
licenses affecting or otherwise applicable to the Business and
any operations or activities in connection therewith
(collectively, the "Applicable Laws");
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(b) All activities and operations conducted in connection
with the Business, by the Company have complied with all
Applicable Laws;
(c) None of the Company or the Shareholders is now nor has
ever been involved in any litigation or administrative
proceedings seeking to impose fines, penalties or other
liabilities or seeking injunctive relieve for violation of any
Applicable Laws and there are no facts or circumstances that
would give rise to same;
(d) No liens with respect to environmental liability have
been imposed against any assets of the Company under the CERCLA,
any comparable Texas, or other Applicable Laws and no facts or
circumstances exist which would give rise to the same; and
(e) None of the Company or the Shareholders is in default
under any Applicable Laws or under any order of any court or
governmental administrative body having jurisdiction over the
Company, or any operations, and there are no claims, actions,
suits or proceedings, pending or to the Knowledge of Shareholders
threatened, against or affecting the Company or the Shareholders
at law or in equity, or before or by any administrative body
having jurisdiction; no notice of any claim, action, suit or
proceeding, whether pending or threatened, has been received
which, if adversely determined would have a material adverse
effect; and there are no facts or circumstances which would give
rise to the same.
4.19 HEALTH AND SAFETY. Except as set forth in SECTION 4.19 of
the Disclosure Schedule:
(a) The Company has complied with all Health and Safety
Laws, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply.
Without limiting the generality of the preceding sentence, the
Company and has obtained and been in compliance with all of the
terms and conditions of all permits, licenses, and other
authorizations which are required under, and have complied with
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Health and Safety Laws.
(b) To Shareholders' knowledge, the Company does not have
any for any illness of or personal injury to any employee or
other individual, or for any reason under any Health and Safety
Law.
4.20 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of the Company are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims,
are collectible, and will be collected in accordance with their terms at
their recorded amounts, net of reserves.
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4.21 POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the Company.
4.22 INSURANCE. SECTION 4.22 of the Disclosure Schedule sets
forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and
workers' compensation coverage and bond and surety arrangements) to
which the Company has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past three years:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and
amount (including a description of how deductibles and ceilings
are calculated and operate) of coverage; and
(e) a description of any retroactive premium adjustments
or other loss- sharing arrangements.
With respect to each such insurance policy for the current year: (i) the
policy is legal, valid, binding, enforceable, and in full force and
effect; (ii) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms immediately
following the consummation of the transactions contemplated hereby;
(iii) none of the Company or any other party to the policy is in breach
or default (including with respect to the payment of premiums or the
giving of notices), and to Shareholders' Knowledge, no event has
occurred which, with notice or the lapse of time, would constitute such
a breach or default, or permit termination, modification, or
acceleration, under the policy; and (iv) to Shareholders' Knowledge, no
party to the policy has repudiated any provision thereof. The Company
has been covered since its inception by insurance in scope and amount
customary and reasonable for the business in which it has engaged during
the aforementioned period. SECTION 4.22 of the Disclosure Schedule
describes any self-insurance arrangements affecting the Company.
4.23 LITIGATION. SECTION 4.23 of the Disclosure Schedule sets
forth each instance in which any of the Company (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or
(ii) is a party or, to the Knowledge of the Shareholders and the
directors and officers (and employees with responsibility for litigation
matters) of the Company, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator. None of the actions,
suits, proceedings, hearings, and investigations set forth in SECTION
4.23 of the Disclosure Schedule is reasonably likely to result in any
material adverse change in the business, financial
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condition, operations, results of operations, or future prospects of the
Company. Except as set forth in SECTION 4.23 of the Disclosure Schedule,
no proceeding is pending or, to the Knowledge of Shareholders
threatened, as to which any assets of the Company are or would be
subject.
4.24 EMPLOYEES. SECTION 4.24 of the Disclosure Schedule sets
forth a complete and accurate list of all officers, directors and Key
Employees (as defined herein) of the Company, and the rate of
compensation (and the portions thereof attributable to salary, bonus and
other compensation, respectively) of each such person. "Key Employees"
shall be those employees of the Company which are listed in SECTION 4.24
of the Disclosure Schedule. To the Knowledge of the Shareholders and the
directors and officers of the Company no executive, Key Employee, or
group of employees has given notice of their intention to terminate
employment with the Company. The Company is not a party to or bound by
any collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective
bargaining disputes. The Company has not committed any unfair labor
practice. None of the Shareholders and the directors and officers of the
Company has any Knowledge of any organizational effort presently being
made or threatened by or on behalf of any labor union with respect to
employees of the Company.
4.25 EMPLOYEE BENEFITS. Except for the plans disclosed in SECTION
4.25 of the Disclosure Schedule ("Plans") which shall be terminated
prior to the Closing, the Company (a) does not currently sponsor or
maintain any employee benefit plan within the meaning of section 3(3) of
ERISA and (b) has not since its inception sponsored, maintained or
contributed to any qualified employee pension benefit plan within the
meaning of sections 3(2) of ERISA and 401 of the Code, in which any
employees of the Company are or were participants (whether or not on an
active or frozen basis). The Company does not currently contribute to,
nor has it since its inception contributed (or been obligated to
contribute) to, any multi-employer pension plan within the meaning of
section 3(37) of ERISA on behalf of any employees of the Company. The
Company has complied in all material respects with the Consolidated
Omnibus Budget Reconciliation Act of 1985, and does not currently have,
and since its inception has not had, any retiree medical plan.
4.26 GUARANTIES. The Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any
other Person.
4.27 CERTAIN BUSINESS RELATIONSHIPS. Except as set forth in
SECTION 4.27 of the Disclosure Schedule, none of the Shareholders and
their Affiliates has been involved in any business arrangement or
relationship with the Company within the past 12 months (other than as
employees), and none of the Shareholders and their Affiliates owns any
asset, tangible or intangible, which is used in the Business.
4.28 SECURITIES MATTERS. Shareholders represent that they have
received the Prospectus covering the Parent Stock dated September 18,
1997, Prospectus Supplement No.1 and Prospectus Supplement No. 2, and a
copy of all documents incorporated therein by reference. The
Shareholders further represent that they have been afforded an
opportunity to ask questions of, and receive responses from, officers or
agents of Parent and to investigate
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the business and affairs of Parent to their satisfaction. The
Shareholders further represent that they are satisfied with the results
of their investigation and that they are relying on such investigation,
not on any particular representations made by Subsidiary or Parent, in
their determination to invest in the Parent Stock. The Shareholders
further represent that they are entirely familiar with the nonhazardous
liquid waste and nonhazardous oilfield waste industries as a result of
their positions with the Company and that, in regard to an investment in
such industry, they are sophisticated investors and "accredited
investors" as such term is defined in the Securities Act. The
Shareholders further represent that they understand that although the
Parent Stock which they are receiving pursuant to this Agreement will be
registered under the Securities Act of 1933, as amended, based on their
relationship to the Company they will be subject to certain limitations
in their ability to dispose of such Parent Stock under applicable rules
of the SEC.
4.29 SUFFICIENCY OF ASSETS. As of the Closing Date the Company
will have all of the properties, rights and assets of every type and
description, real, personal and mixed, tangible and intangible, have
been used or employed or held for use by the Company or its predecessors
or Affiliates in operating the Business during the past 12 months, other
than property sold or otherwise disposed of in the Ordinary Course of
Business and consistent with past practices.
5. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.01 GENERAL. Each of the Parties will use its reasonable efforts
to take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set
forth in SECTION 7 below). In the event the Closing does not take place,
Parent will treat and hold as such all of the Confidential Information,
refrain from using any of the Confidential Information except in
connection with this Agreement, and deliver promptly to the Shareholders
or destroy, at the request and option of the Shareholders, all tangible
embodiments (and all copies) of the Confidential Information which are
in its possession.
5.02 NOTICES AND CONSENTS. The Shareholders will cause the
Company to give any notices to third parties, and will use reasonable
efforts to cause the Company to obtain any third-party consents, that
Parent reasonably may request in connection with the transactions
contemplated by this Agreement. Each of the Parties will (and the
Shareholders will cause the Company to) give any notices to, make any
filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the transactions contemplated by this
Agreement. Neither Party shall be required to pay any material sum or to
incur any material obligation in order to obtain a consent.
5.03 OPERATION OF BUSINESS. The Shareholders will not cause or
permit the Company to engage in any practice, take any action, or enter
into any transaction outside the
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Ordinary Course of Business. Without limiting the generality of the
foregoing, the Shareholders will not cause or permit the Company to (i)
declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase, or otherwise acquire
any of its capital stock, or (ii) otherwise engage in any practice, take
any action, or enter into any transaction of the sort described in
SECTION 4.08 above.
5.04 PRESERVATION OF BUSINESS. The Shareholders use reasonable
efforts to cause the Company to keep its business and properties
substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees.
5.05 FULL ACCESS. The Shareholders will permit, and the
Shareholders will cause the Company to permit, representatives of Parent
to have full access at all reasonable times, and in a manner so as not
to interfere with the normal business operations of the Company, to all
premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to the Company.
5.06 NOTICE OF DEVELOPMENTS. The Shareholders will give prompt
written notice to Parent of any material adverse development causing a
breach of any of the representations and warranties in SECTION 4 above.
Each Party will give prompt written notice to the others of any material
adverse development causing a breach of any of its own representations
and warranties in SECTION 3 above.
5.07 EXCLUSIVITY. For a period commencing on the date hereof
until the Closing, or the termination of this Agreement, the
Shareholders will not (and the Shareholders will not cause or permit the
Company to) (a) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any
capital stock or other voting securities, or any substantial portion of
the assets of, the Company (including any acquisition structured as a
merger, consolidation, or share exchange) or any other transaction or
series of transactions that would cause the representations and
warranties of the Company set forth in SECTION 4 to be incorrect in any
respect, or would otherwise prevent or hinder the transactions
contemplated by this Agreement, or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist
or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The
Shareholders will not vote their Shareholder Stock in favor of any such
acquisition structured as a merger, consolidation, or share exchange.
The Shareholders will notify Parent immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the
foregoing.
6. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following the
Closing:
6.01 GENERAL. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other
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Party reasonably may request, provided that any out-of-pocket expenses
in connection therewith shall be at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to
indemnification therefor under SECTION 8 below). The Shareholders
acknowledge and agree that from and after the Closing Parent will be
entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the
Company.
6.02 TRANSITION. Shareholders will take no action that is
designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of the Company
from maintaining the same business relationships with the Company after
the Closing as it maintained with the Company prior to the Closing.
Shareholders will refer all customer inquiries relating to the Business
to Parent from and after the Closing.
6.03 CONFIDENTIALITY. Shareholders will treat and hold as such
all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement or
their employment with the Company, and deliver promptly to Parent or
destroy, at the request and option of Parent, all tangible embodiments
(and all copies) of the Confidential Information which are in its
possession. In the event that Shareholders are requested or required (by
oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, Shareholders
will notify Parent promptly of the request or requirement so that Parent
may seek an appropriate protective order. If, in the absence of a
protective order, Shareholders are, on the advice of counsel, compelled
to disclose any Confidential Information to any tribunal or else stand
liable for contempt, Shareholders may disclose the Confidential
Information to the tribunal. The foregoing provisions shall not apply to
any Confidential Information which is generally available to the public
immediately prior to the time of disclosure.
6.04 TAX RETURNS AND FILINGS; PAYMENT OF TAXES. Shareholders
agree to timely pay all taxes for which they are primarily liable in
connection with the transfer of Shareholder Stock and the receipt of
Parent Stock and other consideration in exchange therefor.
7. CONDITIONS TO OBLIGATION TO CLOSE.
7.01 CONDITIONS TO OBLIGATION OF PARENT. The obligation of Parent
to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in
SECTION 3.01 and SECTION 4 above shall be true and correct at and
as of the Closing Date;
(b) the Shareholders and Company shall have performed and
materially complied with all of their covenants hereunder through
the Closing, Shareholders and the Company shall have revoked all
prior authorizations with respect to bank accounts
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and credit lines, and Shareholders and Company shall have
revoked all powers of attorney;
(c) no action, suit, or proceeding shall be pending before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement, (ii) cause
any of the transactions contemplated by this Agreement to be
rescinded following consummation, (iii) affect adversely the
right of Parent to own the Shareholder Stock and to control the
Company, or (iv) affect adversely the right of the Company to own
its assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(d) the Shareholders shall have delivered to Parent a
certificate to the effect that each of the conditions specified
above in SUBSECTIONS (A) THROUGH (C) is satisfied in all material
respects;
(e) Shareholders shall have executed and delivered to
Parent Noncompetition Agreements in the forms attached as Exhibit
A;
(f) Parent shall have received from counsel to the
Shareholders an opinion in form and substance as set forth in
Exhibit B attached hereto, addressed to the Parent, and dated as
of the Closing Date;
(g) Shareholders shall have obtained the execution of, and
delivered to Parent a Spousal Consent in the form attached as
Exhibit C;
(h) Parent shall have received the resignations, effective
as of the Closing, of each director and officer of the Company;
(i) All necessary consents of and filings with any
governmental authority relating to the consummation of the
transactions contemplated herein shall have been obtained and
made, including, without limitation, all consents for, and
filings relating to, the transfer of any franchise agreements,
licenses, permits necessary for or customary with the operation
of the Business, and no action or proceeding shall have been
instituted or threatened to restrain or prohibit the consummation
of the transaction contemplated herein, and no governmental
authority or body shall have taken any other action or made any
request of Subsidiary or Parent as a result of which Subsidiary
or Parent deems it inadvisable to proceed with the transactions
hereunder;
(j) Shareholders shall have delivered to Parent an
instrument dated the Closing Date releasing Company from any and
all claims of Shareholders against Company arising prior to
Closing;
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(k) Parent, through its authorized representatives, must
have completed a satisfactory due diligence review of Company and
the Business, including, without limitation, the compliance with
federal, state and local laws and regulations governing the
respective operations of Company and the Business; and
(l) Shareholders and Company shall have taken all such
further actions, and delivered to Parent all such further
instruments, certificates, and other documents as Parent shall
reasonably request in writing (such request being received at
least two days (2) prior to the Closing Date) to fully evidence
or effect the transactions contemplated by this Agreement. All
actions to be taken by Shareholders and Company in connection
with consummation of the transactions contemplated hereby and all
instruments, certificates, and other documents required to effect
the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Parent.
Parent may waive any condition specified in this SECTION 7.01 if it
executes a writing so stating at or prior to the Closing.
7.02 CONDITIONS TO OBLIGATION OF THE SHAREHOLDERS. The obligation
of the Shareholders to consummate the transactions to be performed by
them in connection with the Closing is subject to satisfaction of the
following conditions:
(a) the representations and warranties set forth in
SECTION 3.02 above shall be true and correct at and as of the
Closing Date;
(b) Parent shall have performed and complied with all of
its covenants hereunder through the Closing;
(c) no action, suit, or proceeding shall be pending before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement or (ii) cause
any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(d) Parent shall have delivered to the Shareholders a
certificate to the effect that each of the conditions specified
above in SUBSECTIONS (A) THROUGH (C) is satisfied in all
respects;
(e) Parent shall have obtained the execution of, and
delivered to the Shareholders, the Employment Agreements in the
forms attached hereto as Exhibit D and Exhibit E;
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(f) No action or proceeding shall have been instituted or
threatened to restrain or prohibit the consummation of the
transaction contemplated herein, and no governmental authority or
body shall have taken any other action (including, but not
limited to, a decision on tax treatment of the transaction) or
made any request of Shareholders or Company as a result of which
Shareholders or Company deem it inadvisable to proceed with the
transaction hereunder;
(g) Parent shall have delivered to Shareholders the Parent
Stock, the Cash Payment and a legal opinion of Parent's counsel
in the form attached hereto as Exhibit G (the "Parent's Legal
Opinion");
(h) Parent shall execute and deliver the Tax
Representation Letter; and
(i) all actions to be taken by Parent in connection with
consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Shareholders.
The Shareholders may waive any condition specified in this SECTION 7.02
if they execute a writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
8.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES.
The representations, warranties, covenants and agreements set
forth in Sections 3.01(c), 3.02(d), 4.02, 4.04, 4.05, 4.10, 4.25, 6.01,
6.02, 6.03, 6.04 and Sections 8, 11 and 12 will survive the Closing
until the expiration of all applicable federal, state, local and foreign
statutory periods of limitations (after giving effect to any waiver,
mitigation or extension of any such statutory periods of limitations).
All of the other representations, warranties, covenants and agreements
set forth in this Agreement or in any certificate or other writing
delivered pursuant to this Agreement (and the indemnity obligations with
respect thereto under Sections 8.02 and 8.03) will survive the Closing
until the second anniversary of the Closing. Notwithstanding the
foregoing, in the case of the Shareholders, if either of the
Shareholders had Knowledge as of the Closing of the inaccuracy of a
representation or warranty made by the Shareholders, or in the case of
the Parent or Subsidiary, if the Parent or Subsidiary had Knowledge as
of the Closing of the inaccuracy of a representation or warranty made by
the Parent or Subsidiary, such representations and warranties shall
survive the Closing indefinitely. Furthermore, notwithstanding any
provision to the contrary set forth in the preceding sentences of this
Section or elsewhere in this Agreement or any certificate or other
writing delivered pursuant to or in connection with this Agreement, any
representation , warranty, covenant or agreement in respect of which
indemnity may be sought under Section 8.02 or 8.03 will survive the time
at which such representation , warranty, covenant or agreement would
otherwise terminate pursuant to the preceding sentences of this Section
if notice of the incorrectness or breach of such representation,
warranty, covenant or agreement giving rise to such right to indemnity
is given to the party from which indemnity
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is sought prior to the time at which such representation, warranty,
covenant or agreement would otherwise terminate pursuant to the
preceding sentences of this Section. Any such notice must describe the
event, condition or contingency giving rise to the claimed incorrectness
or breach of such representation, warranty, covenant or agreement and
the Section or Sections or other divisions of this Agreement or any
certificate or other writing delivered pursuant to or in connection with
this Agreement upon which such right to indemnity is based.
8.02 INDEMNIFICATION PROVISIONS FOR BENEFIT OF PARENT.
(a) In the event (i) the Shareholders breach any of their
representations, warranties and covenants contained herein , and
(ii) the Company or Parent suffer any loss, claim, cost or change
in connection with the litigation disclosed in Section 4.23 of
the Disclosure Schedule without regard to the Threshold Amount
(as defined herein), then the Shareholders jointly and severally
agree to indemnify Parent from and against the entirety of any
Adverse Consequences Parent or Company may suffer through and
after the date of the claim for indemnification resulting from,
arising out of, relating to, in the nature of, or caused by such
breach, loss, claim, cost or damage.
(b) Shareholders jointly and severally agree to indemnify
Parent from and against the entirety of any Adverse Consequences
Parent may suffer resulting from, arising out of, relating to, in
the nature of, or caused by any Liability of the Company for the
unpaid Taxes of any Person (other than the Company) under Treas.
Reg. ss.1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or
otherwise.
8.03 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SHAREHOLDERS.
In the event Subsidiary or Parent breaches any of its representations,
warranties, and covenants contained herein, then Subsidiary and Parent
agree to indemnify the Shareholders from and against the entirety of any
Adverse Consequences the Shareholders may suffer through and after the
date of the claim for indemnification resulting from, arising out of,
relating to, in the nature of, or caused by such breach, loss, claim,
cost or damage.
8.04 LIMITATION ON LIABILITY. The defense and/or indemnification
obligations set forth in SECTION 8.02 shall apply only after the
aggregate amount of such obligations exceeds $100,000 (the "Threshold
Amount"), at which time the defense and/or indemnification obligations
shall be effective as to all amounts including the first $100,000;
provided, however, that such defense or indemnification shall not
exceed, in the aggregate, an amount equal to $6,500,000. Shareholders
shall have the option (providing they are reasonably qualified to do
so), of providing, within a reasonable time, in accordance with
Environmental Laws, remedial actions to cure breaches regarding
environmental matters before paying any amounts for which they are
liable pursuant to the terms of this Agreement.
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8.05 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against any other Party (the "Indemnifying Party") under this
SECTION 8, then the Indemnified Party shall promptly notify the
Indemnifying Party thereof in writing; PROVIDED, HOWEVER, that no
delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent that)
the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel
of its choice reasonably acceptable to the Indemnified Party so
long as the Indemnifying Party provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that
the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (ii) the Third Party Claim
involves only money damages and does not seek an injunction or
other equitable relief, (iii) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the
good faith judgment of the Indemnified Party, likely to establish
a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (iv)
the Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with SECTION
8.04(B) above, (i) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (ii) the Indemnified Party will
not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party, and (iii) the
Indemnifying Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnified Party,
unless (A) there is no finding or admission of any violation of
law or any violation of the rights of the Indemnified Party and
no effect or any other laws that may be made against the
Indemnifying Party, and (B) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Party.
(d) Notwithstanding the foregoing, if an Indemnified Party
determines in good faith that there is a reasonable probability
that a Third Party Claim may adversely affect it other than as a
result of monetary damages for which it would be entitled under
this Agreement, the Indemnified Party may, by notice to the
Indemnifying Party, assume the exclusive right to defend,
compromise, or settle such Third Party Claim, but the
Indemnifying Party will not be bound by any determination of any
Third Party Claim so defended or any compromise or settlement
effected without its consent, which may not be unreasonably
withheld.
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8.05 DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
include interest at the Applicable Rate from the date any sums were
expended by the party to be indemnified hereunder in determining Adverse
Consequences for purposes of this SECTION 8.
8.06 OTHER INDEMNIFICATION PROVISIONS. Shareholders hereby agree
that they will not make any claim for indemnification against the
Company by reason of the fact that they were a director, officer,
employee, or agent of the Company or was serving at the request of the
Company as a partner, trustee, director, officer, employee, or agent of
another entity (whether such claim is for judgments, damages, penalties,
fines, costs, amounts paid in settlement, losses, expenses, or otherwise
and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit,
proceeding, complaint, claim, or demand brought by Parent against
Shareholders (whether such action, suit, proceeding, complaint, claim,
or demand is pursuant to this Agreement, applicable law, or otherwise).
9. TERMINATION.
9.01 TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement at any time prior to the Closing Date:
(a) By mutual written consent at any time prior to the
Closing;
(b) By Parent if any of the conditions specified in
SECTION 7.01 has not been met or waived by Parent (provided that
Parent is not otherwise in material breach of its
representations, warranties, covenants or agreements under this
Agreement);
(c) By Shareholders if any of the conditions specified in
SECTION 7.02 has not been met or waived by Shareholders (provided
Shareholders are not otherwise in material breach of their
representations, warranties, covenants or agreements under this
Agreement);
(d) By Parent if there has been a material breach on the
part of Shareholders of any representation, warranty, covenant or
agreement by Shareholders set forth in this Agreement, which
breach, if capable of cure, has not been cured within five (5)
business days following receipt by Shareholders of written notice
of such breach, unless such breach has been waived in writing by
Parent and Subsidiary in which case such waiver shall constitute
a waiver for all purposes, including indemnification and such
breach shall be accepted as a condition of the Business;
(e) By Shareholders if there has been a material breach on
the part of Subsidiary or Parent of any representation, warranty,
covenant or agreement by Subsidiary or Parent set forth in this
Agreement, which breach, if capable of cure, has not been cured
within five (5) business days following receipt by Parent of
written notice of such breach; or
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(f) By Parent or Shareholders upon written notice given in
compliance with this Agreement if any governmental authority of
competent jurisdiction shall have issued a final permanent order
enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby and, in any such case the time
for appeal or petition for reconsideration of such order shall
have expired without such appeal or petition being granted.
9.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or Shareholders as provided above, this
Agreement shall forthwith become void and, except for termination
pursuant to Section 9.01(d) or 9.01(e), there shall be no liability on
the part of Subsidiary, Parent or Shareholders; provided that SECTIONS
3.01(A), 3.01(C), 3.02(B), 3.02(D) , 4.01, 4.04, 5.01 and this SECTION
9.02 and the provisions of SECTION 11 shall survive the termination.
10. CERTAIN DEFINITIONS.
As used herein, the following terms have the definitions set forth or
referred to below:
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12-2 of the regulations
promulgated under the Securities Exchange Act.
"APPLICABLE LAWS" has the meaning set forth in SECTION 4.18 above.
"APPLICABLE RATE" means the base rate of interest announced from time to
time by Chemical Bank, N.A. plus 3 additional points.
"BUSINESS" means the fuel oil processing, blending, and recycling
services of the Company performed under name Alamo Petroleum Exchange, the
emergency response, asbestos and lead abatement, and liquid disposal services of
the Company performed under the name Alamo Environmental, and other businesses
engaged in by the Company.
"CLOSING" has the meaning set forth in SECTION 1.05 above.
"CLOSING DATE" has the meaning set forth in SECTION 1.05 above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the preface above; PROVIDED,
HOWEVER, that for purposes of the representations and warranties set forth in
SECTION 4 above, the "COMPANY" includes
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any subsidiary of the Company in the event any liability or obligation is
imposed upon or incurred by the Company in connection with the actions or
operations of such subsidiary.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Company that is not already generally available to
the public.
"CURRENT ASSETS" means the amounts reflected as current assets of the
Company on its financial statements determined in accordance with GAAP and
includes, but is not limited to, items such as cash and cash equivalents,
accounts receivable (less reserves for doubtful accounts), short-term
investments, inventory and current prepaid assets.
"CURRENT LIABILITIES" means the amounts reflected as current liabilities
of the Company on its financial statements determined in accordance with GAAP
and includes, but is not limited to, items such as accounts payable, current
maturities of long-term debt, accrued expenses, and unpaid accrued taxes.
"DISCLOSURE SCHEDULE" has the meaning set forth in SECTION 4 above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 4.07 above.
"GAAP" means United States generally accepted accounting principles as
in effect on the date hereof.
"HEALTH AND SAFETY LAWS" means the Occupational Safety and Health Act of
1970, each as amended, together with all other laws (including rules,
regulations and codes) of federal, state, local, and foreign governments (and
all agencies thereof) concerning public health and safety, or employee health
and safety.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 8.04 above.
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 8.04 above.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations- in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and
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supplier lists, pricing and cost information, and business and marketing plans
and proposals), (d) all computer software (including data and related
documentation), (e) all other proprietary rights, and (f) all copies and
tangible embodiments thereof (in whatever form or medium).
"KNOWLEDGE" means as to any Person, that which such Person actually
knows; and with respect to the Shareholders such actual knowledge as
Shareholders have obtained in interviews with Key Employees.
"LAND" means all real property owned or leased by the Company including,
but not limited to all real property listed in SECTION 4.11 of the Disclosure
Schedule.
"LAWS AFFECTING CREDITORS' RIGHTS" means any bankruptcy, fraudulent
conveyance or transfer, insolvency, moratorium, reorganization, or other law
affecting the enforcement of creditors rights generally, and any general
principles of equity.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"LONG TERM LIABILITIES" means all of the liabilities of the Company on
its financial statements determined in accordance with GAAP other than Current
Liabilities.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the
Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in SECTION
4.07 above.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in SECTION 4.07
above.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in SECTION 4.07
above.
"NET WORKING CAPITAL" means the difference between the Current Assets
and the Current Liabilities of the Company as of the date of computation.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice.
.
"PARENT STOCK" has the meaning set forth in the preface above.
"PARTY" has the meaning set forth in the preface above.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
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"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmens',
and similar liens, (b) liens for Taxes not yet due and payable and (c) purchase
money liens and liens securing rental payments under capital lease arrangements.
"SHAREHOLDERS" has the meaning set forth in the preface above.
"SHAREHOLDER STOCK" means any and all shares of the Company.
"TAXES" means any taxes, duties, assessments, fees, levies or similar
governmental charges, together with any interest, penalties and additions to
tax, imposed by any taxing authority, wherever located (I.E. whether federal,
state, local, municipal or foreign), including without limitation all net
income, gross income, gross receipts, net receipts, sales, use, transfer,
franchise, privilege, profits, social security, disability, withholding,
payroll, unemployment, employment, excise, severance, property, windfall
profits, value added, AD VALOREM, occupation or any other similar governmental
charge or imposition.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including without limitation
any schedule or attachment thereto, any amendment thereof, and any estimated
report or statement.
"THIRD PARTY CLAIM" has the meaning set forth in SECTION 8.04 above.
11. GENERAL.
11.01 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
11.02 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.
11.03 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations
by or among the Parties, written or oral, to the extent they related in
any way to the subject matter hereof.
11.04 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either
this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of Parent and the Shareholders;
PROVIDED, HOWEVER, that Parent may (i) assign any or all of its rights
and interests hereunder to one or more of its Affiliates, or any
successor to all or any substantial part of the business and assets of
Parent, and (ii) designate one or more of its Affiliates to perform its
obligations
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hereunder (in any or all of which cases Parent nonetheless shall remain
responsible for the performance of all of its obligations hereunder).
11.05 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.06 HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.07 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed
to the intended recipient as set forth below:
If to the Shareholders: Raoul Garza
14922 Tropical Wind
San Antonio, Texas 78233
and
Alex Salas
4302 Glenover
San Antonio, Texas 78217
With a copy to:
Alan Schoenbaum
Akin, Gump, Strauss, Hauer & Feld,
L.L.P.
300 Convent Street, Suite 1500
San Antonio, Texas 78205
If to Subsidiary or Parent: US Liquids Inc.
411 N. Sam Houston Pkwy. E., Suite
400
Houston, Texas 77060
with a copy to:
Marc E. Empey, Esq.
Best Best & Krieger LLP
39700 Bob Hope Drive, Suite 312
Rancho Mirage, California 92270
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Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any Party set forth
above may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving
the other Parties notice in the manner herein set forth.
11.08 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Texas
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Texas or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
State of Texas.
11.09 AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and
signed by Parent and Shareholders. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.
11.10 SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
11.11 EXPENSES. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby. The
Shareholders agree that the Company has not borne, and the Company will
not bear, any of the Shareholders' costs and expenses (including any of
its legal fees and expenses) in connection with this Agreement or any of
the transactions contemplated hereby.
11.12 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law shall
be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including"
shall mean including without limitation. The Parties intend that each
representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that
there exists another representation, warranty, or covenant relating to
the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
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11.13 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each
of the Parties agrees that the other Parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which they may be entitled,
at law or in equity.
11.14 LITIGATION EXPENSES. The Parties agree that, in the case of
any dispute arising over the terms of this Agreement, the prevailing
party shall be entitled to receive as a component of its recovery all of
its costs and expenses of litigation (including, without limitation,
costs of investigation, attorneys' fees and expenses, and court costs).
11.15 ARBITRATION. The Parties agree that any controversy or
claim arising out of or relating to this Agreement, or any breach
thereof, shall be settled by binding arbitration in accordance with the
Commercial Arbitration rules of the American Arbitration Association in
San Antonio, Bexar County, Texas, and judgement upon the award rendered
by the arbitrator may be entered in any court having jurisdiction
thereof, and shall not be appealable.
SIGNATURE PAGE TO FOLLOW
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SIGNATURE PAGE OF
AGREEMENT AND PLAN OF REORGANIZATION
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
PARENT:
US Liquids, Inc.
a Delaware corporation
By: /s/ C. ERIC WARDEN
Name: C. Eric Warden
Title: Attorney-in-fact
SUBSIDIARY:
Amigo Acquisition, Inc.
a Texas corporation
By: /s/ C. ERIC WARDEN
Name: C. Eric Warden
Title: Attorney-in-fact
COMPANY:
Amigo Diversified Services, Inc.
a Texas corporation
By: /s/ ALEX SALAS
Name: Alex Salas
Title: ____________________________
SHAREHOLDERS:
/s/ RAOUL GARZA
Raoul Garza
/s/ ALEX SALAS
Alex Salas
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