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Exhibit 2.1
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made and entered into as of December
22, 2000, by and between York Supply, Ltd., a Texas limited partnership
("Buyer"), June Supply Corp., a Nevada corporation ("Seller"), and Enviro-Clean
of America, Inc., a Nevada corporation ("Parent").
This Agreement sets forth the terms and conditions upon which the
Seller will sell and convey to Buyer, and Buyer will purchase from the Seller,
all of the assets of the Seller described in this Agreement. As used in this
Agreement, capitalized terms not otherwise defined have the meanings ascribed to
them in Article I.
In consideration of the mutual agreements contained herein, intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01. Definitions. For all purposes of this Agreement, except as
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otherwise expressly provided or unless the context otherwise requires:
"1999 Agreement" means that one certain Stock Purchase Agreement dated
August 31, 1999, as amended by that one certain Amendment Agreement dated March
24, 2000, each by and among Enviro-Clean of America, Inc., June Supply Corp.,
June Supply-San Antonio, Inc. and Michael Rose and Alan Stafford pursuant to
which Michael Rose and Alan Stafford sold to Enviro-Clean of America, Inc. and
conveyed to June Supply Corp. all of the issued and outstanding capital stock of
June Supply-San Antonio, Inc.
"Agreement" means this Asset Purchase Agreement and any collateral or
ancillary agreements, documents, exhibits or schedules referred to in this Asset
Purchase Agreement.
"Assets" means all assets of the Seller used in connection with the
Business, as such assets are described in Section 2.01 below.
"Assumed Liabilities" means those certain liabilities of the Seller
being assumed by the Buyer pursuant to the terms of this Agreement, as such
liabilities are set forth in Section 2.02 below.
"Business" means Seller's business of the wholesale and retail sale of
janitorial, plumbing, electrical and swimming pool products to apartment
communities and business entities in Bexar County, Texas, throughout South Texas
and in the Dallas/Fort Worth, Texas metroplex.
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"Buyer" means York Supply, Ltd., a Texas limited partnership.
"Closing" means the closing referred to in Section 2.05 of this
Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Financial Statements" means the financial statements of the Seller
referred to in Section 3.05 of this Agreement.
"Parent" means Enviro-Clean of America, Inc., Nevada corporation, which
owns beneficially and of record all issued and outstanding shares of capital
stock of the Seller.
"Retained Liabilities" means those liabilities of the Seller which will
be retained by the Seller and which will continue to be liabilities of the
Seller following the Closing, as such liabilities are described in Section 2.03
below.
"Seller" means June Supply Corp., a Nevada corporation.
"Seller's knowledge" or "to the knowledge of the Seller" means to the
actual, but not constructive, knowledge of Randall K. Davis.
"Seller Ownership Period" means that period of time from August 31,
1999, through the Closing Date when the Parent owned the capital stock of the
Seller and the Seller contemporaneously owned and operated the Business.
"Tax," and, with correlative meaning, "Taxes," means, with respect to
or concerning the Seller, (i) any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding on amounts paid to or by the Seller,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
governmental authority responsible for the imposition of any such tax (domestic
or foreign), and (ii) liability of the Seller with respect to the payment of any
amounts described in (i) as a result of any express or implied obligation to
indemnify any other person.
Certain terms used in this Agreement are defined only in the Section
where that term is first used. The plural of any defined term shall have a
meaning correlative to such defined term.
ARTICLE II
PURCHASE AND SALE OF ASSETS; CLOSING
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2.01. Purchase and Sale of Asset. Subject to the terms and conditions
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of this Agreement, at the Closing, the Seller agrees to sell, transfer, convey,
assign and deliver to Buyer, and Buyer agrees to purchase, acquire and accept
from the Seller, free and clear of all liens, charges or encumbrances of
whatsoever nature, all of the assets of Seller of any kind, character, or
description, known or unknown, whether accrued, absolute, or otherwise (and
regardless of whether reflected on Seller's Financial Statements), all as they
exist on the Closing Date, including without limitation:
(a) All right, title and interest of Seller in and to all of
Seller's inventory, wherever located, including raw material, work in process,
and finished goods;
(b) All of Seller's cash, cash on hand, cash on deposit,
accounts, accounts receivable, trade receivables and notes receivable;
(c) All of Seller's fixtures, machinery, equipment, furniture,
and supplies;
(d) All right, title and interest of Seller in and to all
prepaid rentals and other prepaid expenses, bonds and deposits (including those
for health insurance);
(e) All vehicles owned or leased by Seller;
(f) All Business records including all drawings, bills of
materials and lists, vendor agreements and lists, credit files, sales records,
warranty records, inventory records, product literature and marketing studies;
(g) All licenses, permits, trade names, trademarks, patents, and
other intellectual property used in connection with the Business of Seller, if
any, including without limitation:
1) All goodwill associated therewith; and
2) All right, title, and interest in and to the names "June Supply,"
"June Supply-San Antonio" and "June Supply-Dallas;"
(h) All other books and records associated with the Business of
Seller (but excluding Seller's corporate minute books and related corporate
records);
(i) To the extent assignable, all rights of Seller under the
contracts and leases entered into by Seller in connection with the Business (the
"Assumed Contracts"); and
(j) All customer, distributor and supplier files and mailing
lists of the Seller.
All of the assets referenced above and being purchased under this
Agreement are collectively referred to herein as the "Assets."
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2.02. Assumption of Liabilities. On the Closing Date, Buyer shall assume,
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pay, perform, and discharge only those charges, debts, obligations, contracts,
agreements, and liabilities of Seller specifically referenced in this Section
2.03 (the "Assumed Liabilities"). The Assumed Liabilities shall include, but
shall not be limited to:
(a) All liabilities of the Seller on the Financial Statements;
(b) Accounts payable;
(c) Accrued employee vacation and sick pay;
(d) Warranty claims;
(e) The automobile lease on the newly acquired van (the "Van") being
used by the Seller in the Dallas/Fort Worth market;
(f) All liabilities under the Assumed Contracts, to the extent the
liabilities or claims arise either prior to or subsequent to the Seller
Ownership Period; and
(g) All other liabilities of the Seller, whether fixed or contingent,
known or unknown, arising out of the operation of the Business either prior to
or subsequent to the Seller Ownership Period; save and except for any Retained
Liabilities.
2.03. Liabilities to be Retained by Seller. Seller shall retain only the
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following Seller liabilities (the "Retained Liabilities"):
(a) Federal and state income taxes and state franchise taxes due and
payable for periods within the Seller Ownership Period, which shall be paid from
funds of the Parent rather than from any funds of the Seller;
(b) Professional fees owed by Seller with regard to this transaction
and/or this Agreement, which shall be paid from funds of the Parent rather than
from any funds of the Seller;
(c) Any liabilities owed by Seller to Seller's shareholders or its
affiliates; and
(d) All other liabilities of the Seller, whether fixed or contingent,
known or unknown, arising directly out of an act of the Parent during the Seller
Ownership Period; save and except for any Assumed Liabilities.
2.04. Consideration. As payment in full for the Assets, subject to the
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terms and conditions of this Agreement, and in reliance on the representations,
warranties and agreements of the Seller contained herein, Buyer shall deliver to
the Seller at Closing an amount equal to One Million Four Hundred Thousand and
No/100 Dollars ($1,400,000.00) (the "Purchase Price"). The Purchase Price shall
be payable by the
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Buyer to the Seller by bank check or wire transfer of immediately available
funds to the account(s) of the Seller designated by the Seller in writing at
least 2 business days prior to the Closing Date.
2.05. Closing. The Closing of the transactions contemplated by this
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Agreement will take place at the offices of Oppenheimer, Blend, Harrison & Tate,
Inc., counsel to the Buyer, at 711 Navarro, Sixth Floor, San Antonio, Texas, or
at such other location or by such other means as counsel for the parties may
agree, including exchange of signatures via express mail, at 9:30 am. on a date
not later than December 22, 2000.
2.06. Deliveries at Closing.
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(a) At the Closing, the Seller will deliver to Buyer:
(i) a Bill of Sale, Assignment and Assumption Agreement in the
form attached as Schedule 2.06(a)(i) (the "Bill of Sale") effecting the transfer
of the Assets by Seller to Buyer and the assumption by Buyer from Seller of the
Acquired Liabilities;
(ii) the Mutual Release (as hereinafter defined); and
(iii) the full payoff amount, by bank check, to pay in full the
outstanding principal balance of $270,707.08, and all accrued but unpaid
interest on, the Stafford Note, as defined in Section 6.01 below.
(b) At the Closing, the Buyer will deliver to the Seller:
(i) the Purchase Price by bank check or wire transfer of
immediately available funds to the account(s) of the Seller designated by the
Seller in writing at least 2 business days prior to the Closing Date; and
(ii) the Mutual Release.
(c) At the Closing, conditioned upon the Seller's receipt of a Mutual
Release from Michael Rose, the Seller will deliver to Michael Rose the full
payoff amount, by bank check, to pay in full the outstanding principal balance
of $270,707.08, and all accrued but unpaid interest on, the Rose Note, as
defined in Section 6.01 below.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND PARENT
The Seller and the Parent hereby jointly and severally represent, warrant
and covenant to Buyer as set forth below in this Article III. All
representations and warranties in this Article III are deemed to be made by the
Seller and the Parent on, and be effective as of, both the date hereof and the
Closing Date.
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3.01. Corporate Organization; Power, Etc. Seller is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Nevada and has full corporate power and authority to carry on the Business as it
is now being conducted and to own the Assets it now owns and is duly qualified
or licensed to do business as a foreign corporation and is in good standing in
each other jurisdiction in which it owns or leases any real property or in which
the nature of the Business transacted by it makes such licensing or
qualification necessary.
3.02. No Affiliates. The Seller does not own, directly or indirectly, any
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capital stock or other equity securities of any corporation, partnership,
limited liability company, trust, joint venture or other entity nor have any
direct or indirect equity or ownership interest in any business.
3.03. Authorization of Agreements, Validity, Etc. The execution, delivery
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and performance by the Seller and Parent of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
requisite corporate action and will not violate any provision of law, any order
of any court or other agency of government, the Certificate of Incorporation or
By-laws of the Seller or Parent, any judgment, award or decree or any indenture,
agreement or other instrument to which the Seller or the Parent is a party, or
by which either of them or any of their properties or assets is bound or
affected, or result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument,
or result in the creation of imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the Assets of the Seller. This Agreement has
been duly executed and delivered by the Seller and Parent and constitutes the
legal, valid and binding agreement of the Seller and Parent enforceable in
accordance with its terms, except that such enforcement may be subject to
traditional equitable remedies, bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditor's rights.
3.04 No Violation. Neither the execution and delivery of this Agreement nor
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the consummation of the transactions contemplated hereby will violate or be in
conflict with, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any security interest, lien or other encumbrance upon any Assets
under any agreement or commitment to which the Seller is a party or by which the
Seller is bound, or to which the Assets are subject.
3.05. Financial Statements; No Undisclosed Liabilities. The Financial
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Statements for the Seller as of and for the fiscal year ended December 31, 1999,
and as of and for the nine months ended September 30, 2000, have been delivered
to the Buyer. Said Financial Statements are true, accurate and complete in all
material respects, have been prepared in accordance with generally accepted
accounting principles, as determined by the American Institute of Certified
Public Accountants, consistently applied for all periods concerned and present
fairly the financial condition of the Seller as of such dates and the results of
operations of the Seller for such periods.
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3.06. Accounts Receivable. To the Seller's knowledge, all accounts
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receivable of the Seller represent sales actually made in the ordinary course of
business.
3.07. Inventory. To the Seller's knowledge, all inventory of the Seller
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consists of a quality and quantity usable and salable in the ordinary course of
business.
3.08. Conduct of the Business. To Seller's knowledge, since December 31,
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1999, and through the Closing Date,
(a) the Business has been conducted only in the ordinary and usual
course consistent with past practice;
(b) there has not been any material damage, destruction or loss,
whether or not covered by insurance, which would adversely affect the Assets or
the Business;
(c) there has not been any agreements, commitments or transactions to
sell, transfer, assign or encumber the Assets, nor has there been any actual
sale, transfer or other disposal of any of the Assets, except in the ordinary
course of business;
(d) there has not been any incurrence or assumption, whether directly
or by way of any guarantee or otherwise, of any obligations or liabilities,
affecting the Assets or the Business, except in the ordinary course of business;
(e) there has not been any dividends or other distribution (whether
in cash, stock or property or any combination thereof) declared, set aside or
paid in respect of Seller's capital stock which are or may be payable out of the
Assets;
(f) there has not been any agreement, whether in writing or
otherwise, to take any action the performance of which would change the
representations contained in this Section 3.08 in the future so that any such
representation would not be true in all material respects as of the Closing.
3.09. Title to Properties; Encumbrances. To the Seller's knowledge, except
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as set forth on the Financial Statements and except for the Van, the Seller has
good, valid and marketable title to all the Assets, subject to no mortgages,
security interests, liens, pledges, conditional sale agreements, or encumbrances
of any nature whatsoever. In the aggregate, the Assets presently owned, leased
or licensed by the Seller include all rights, properties and other assets
reasonably necessary to permit the Seller to conduct the Business in all
material respects in the same manner as the Business has been conducted prior to
the date hereof.
3.10. Intellectual Property. To Seller's knowledge, Seller is not
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infringing upon any patent, trademark, service mark, or copyright belonging to
any other person. Further, no claim of infringement is presently pending, nor
has any such claim been made against Seller with respect to Seller's Business.
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3.11. Legal Compliance. To the Seller's knowledge, the Seller has complied
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with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state and local governments (and all agencies thereof), except where
the failure to comply would not have a material adverse effect upon the
financial condition of the Seller taken as a whole. The Seller has not received
any notification of any asserted present or past failure by the Seller to comply
with such laws, rules or regulations.
3.12. Plant and Equipment. The Parent has not received notification that
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the Seller, the Assets or the Business are in violation of any applicable
building, zoning, anti-pollution, health or other law, ordinance or regulation
in respect of its plants or structures or their operations and no such violation
exists.
3.13. Intentionally Omitted.
3.14. Contracts and Commitments.
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(a) To the Seller's knowledge, except as set forth on the Financial
Statements and except for the Van, none of the Assumed Liabilities constitutes
an agreement or contract to make any single capital expenditure or commitment in
excess of $10,000 for additions to property, plant or equipment or to make
aggregate capital expenditures and commitments in excess of $10,000 (on a
consolidated basis) for additions to property, plant or equipment;
(b) To the Seller's knowledge, except as set forth on the Financial
Statements and except for the Van, none of the Assumed Liabilities constitutes a
purchase contract or commitment that continues for a period of more than twelve
(12) months or that is in excess of the normal, ordinary and usual requirements
of the Business or that is at an excessive price;
(c) To the Seller's knowledge, the Seller is not in material default
under or in violation of, nor is there any basis for any valid claim of material
default under or violation of, any Assumed Liability;
(d) To the Seller's knowledge, there are no agreements that would
restrict the Buyer from carrying on the Business anywhere in the world;
(e) To the Seller's knowledge, except as set forth on the Financial
Statements and except for the Van, there are no debt obligations for borrowed
money, including guarantees of or agreements to acquire any such debt obligation
of others that encumber or otherwise effect the Assets; the Assets are not
subject to any debt or obligation of the Seller or the Parent, including debts
or obligations as guarantor, surety, co-signer, endorser, co-maker, indemnitor
or otherwise in respect of the obligation of any person, corporation,
partnership, joint venture, association, organization or other entity or granted
or extended any power of attorney.
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3.15. Agreements in Full Force and Effect. To the Parent's knowledge, all
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contracts, agreements, plans, leases, policies and licenses referred to in this
Agreement as Assumed Liabilities are valid and in full force and effect.
3.16. Intentionally Omitted.
3.17. Litigation. To the Parent's knowledge, there is no action, suit,
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inquiry, proceeding or investigation by or before any court or governmental or
other regulatory or administrative agency or commission pending or threatened
against or involving in any material respect the Seller or the Assets or which
questions or challenges the validity of this Agreement or any action taken or to
be taken pursuant to this Agreement or in connection with the transactions
contemplated hereby; nor, to the Parent's knowledge, is there any valid basis
for any such action, proceeding or investigation. To the Parent's knowledge, the
Assets are not subject to any judgment, order or decree entered in any lawsuit
or proceeding which may have an adverse effect on the Business.
3.18. Environmental Protection. The Parent is not aware of, nor has the
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Parent received notice of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent continued compliance, or which may give rise to any
common law or legal liability, or otherwise form the basis of any claim, action,
suit, proceeding, hearing or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, or hazardous or
toxic material or waste.
3.19. Good Title Conveyed, Etc. The Seller has complete and unrestricted
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power and the unqualified right to sell, assign, transfer and deliver the Assets
to Buyer, and upon consummation of the transactions contemplated by this
Agreement, Buyer will acquire, good, valid and marketable title to the Assets to
be transferred to Buyer hereunder, free and clear of all mortgages, pledges,
liens, security interests, conditional sales agreements, encumbrances or charges
of any kind, except as set forth on the Financial Statements and except for the
Van
3.20. Taxes. The Seller has duly and timely filed or caused to be filed
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all federal, state, local and foreign income, franchise, excise, payroll, sales
and use, property and withholding tax returns, reports, estimates and
information and other statements or returns (collectively "Returns") required to
be filed by or on behalf of it pursuant to any applicable federal, state, local
or foreign tax laws for all years and periods for which such Tax Returns have
become due. All such Returns were believed by the Seller to be materially
correct as filed and to correctly reflect any Tax or Taxes required to be paid
or collected by (or allocable to or collectible from) the Seller. Such Returns
correctly reflect any Taxes required to be paid or collected by the Seller. The
Seller has paid or will pay prior to Closing all Taxes, or where payment is not
yet due, has established or will establish, consistent with past practice, an
adequate reserve on its books and records for the payment of all Taxes with
respect to any taxable period ending on or prior to the Closing Date.
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3.21. Disclosure. No representations or warranties by the Seller or the
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Parent in this Agreement and no statement contained in any document (including,
without limitation, the Financial Statements) or certificate, furnished or to be
furnished by the Seller to Buyer or any of its representatives pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Seller and Parent as follows:
4.01. Authorization; Etc. Buyer has full power and authority to enter into
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this Agreement and to carry out the transactions contemplated hereby. This
Agreement is a valid and binding agreement of Buyer enforceable in accordance
with its terms except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
4.02. Validity. This Agreement has been duly executed and delivered by
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Buyer and constitutes the legal, valid and binding obligation of Buyer,
enforceable against him in accordance with its terms.
4.03. No Violation. Neither the execution and delivery of this Agreement
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nor the consummation of the transactions contemplated hereby will violate or be
in conflict with, or constitute a default under, or cause the acceleration of
the maturity of any debt or obligation pursuant to, any agreement or commitment
to which Buyer is a party or by which Buyer is bound, or violate any statute or
law or any judgment, decree, order, regulation or rule of any court or
governmental authority.
4.04. Litigation. To the Buyer's knowledge, there is no action, suit,
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inquiry, proceeding or investigation by or before any court or governmental or
other regulatory or administrative agency or commission pending or threatened
against or involving Buyer, or which questions or challenges the validity of
this Agreement or any action taken or to be taken by Buyer pursuant to this
Agreement or in connection with the transactions contemplated hereby.
4.05. Retained Liabilities. To the Buyer's actual knowledge, the Retained
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Liabilities are limited to those liabilities described in Section 2.03 of this
Agreement and, in connection therewith, the Buyer does not anticipate that the
personal property taxes of the Seller for the calendar year ending December 31,
2000, will be materially different
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from the personal property taxes of the Seller for the calendar year ended
December 31, 1999.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Prior to the signing and Closing of this Agreement, the following
conditions precedent shall have been satisfied or waived:
5.01. Intentionally Omitted.
5.02. Intentionally Omitted.
5.03. Consents Obtained. All consents from third parties, including
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without limitation all lenders and secured parties, required to consummate the
transactions contemplated hereby shall have been obtained by Buyer.
5.04. No Government Proceeding or Litigation. No suit, action,
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investigation, inquiry or other proceeding-by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened against the Seller which questions the validity or legality of any of
the transactions contemplated by this Agreement.
5.05. No Injunction. On the Closing Date there shall be no effective
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threatened injunction, writ, preliminary restraining order or any
order of any nature issued by a court of competent jurisdiction directing that
the transactions provided for herein or any of them not be consummated as so
provided or imposing any conditions on the consummation of the transaction
contemplated hereby which the Buyer deems unacceptable in its sole discretion.
5.06. Buyer's Financing. Buyer shall have completed and obtained
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any required financing for Buyer's purchase of the Assets.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
6.01. Payment of Existing Notes. At Closing, the Seller shall pay in
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full the entire remaining principal balance of $270,707.08, and all accrued but
unpaid interest on, that one certain Promissory Note dated April 1, 2000, in the
original principal amount of $437,500.00, payable by the Seller to the Buyer and
delivered in connection with the closing of the 1999 Agreement, as amended (the
"Stafford Note"). Also at Closing, and conditioned upon Seller's receipt of a
Mutual Release from Michael Rose, the Seller shall pay in full the entire
remaining principal balance of $270,707.08, and all accrued but unpaid interest
on, that one certain Promissory Note dated April 1, 2000, in the original
principal amount of $437,500.00, payable by the Seller to the Michael Rose and
delivered in connection with the closing of the 1999 Agreement, as amended (the
"Rose Note").
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6.02. Mutual Release. At Closing, the Buyer shall enter into and deliver
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to the Seller and Parent, and the Seller and Parent shall enter into and deliver
to Buyer, a mutual release in the form attached hereto as Schedule 6.02 (the
"Mutual Release"). Also at Closing, the Buyer shall use its best efforts to
cause Michael Rose to enter into and deliver to the Seller and Parent a Mutual
Release and, contemporaneously with its receipt thereof, the Seller and Parent
shall enter into and deliver a Mutual Release to Michael Rose.
6.03. Survival of Obligations. Notwithstanding any provisions of this
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Agreement or of any agreement, document, certificate or other instrument
delivered in connection with the terms of this Agreement, including, without
limitation, the Mutual Releases, the obligations of the Seller and the Parent to
issue to Buyer and Michael Rose, and the rights of Buyer and Michael Rose to
receive, additional Purchase Price Shares, as such term is defined in the 1999
Agreement, pursuant to the terms and conditions of the 1999 Agreement including,
without limitation, Section 2.02 thereof, shall survive the Closing of the
transactions contemplated by this Agreement.
6.04 Name Change. Effective immediately following Closing, Seller shall
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take all necessary and required actions, and Parent shall cause Seller to take
all necessary and required actions, to either (i) change the corporate name of
Seller to a name that does not include the term "June Supply," or (ii) effect
the corporate dissolution of the Seller.
6.05. Intentionally Omitted.
6.06. Further Assurances. After the Closing, the Seller shall from time to
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time, at the reasonable request of Buyer, without cost or expense to Buyer,
execute and deliver such other instruments of conveyance and transfer and take
such other reasonable actions as are contemplated by this Agreement.
6.07. Employment of Employees by Seller. Neither the Seller nor any
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affiliate of the Seller shall employ or offer employment to any employee of the
Seller in any business during a period of three years following the Closing
without the prior written consent of Buyer.
6.08. Release of Liens. At Closing, Alan Stafford and Michael Rose shall
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execute and deliver to Seller those documents, including forms UCC-3, reasonably
requested by Seller or Parent to cause the liens held by Alan Stafford and
Michael Rose on the issued and outstanding capital stock of Seller to be
released.
6.09. Reliance. Except as otherwise represented, warranted or set forth in
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this Agreement, the Buyer specifically agrees that it has purchased the Assets
and assumed the Assumed Liabilities "as is," "where is" and "with all faults"
and defects, both latent and patent, known or unknown. Further, Buyer
specifically agrees that it is not relying upon any oral discussions between its
representatives and any other representative of Seller or Parent in entering
into this Agreement. Buyer agrees that it has performed a due diligence review
of the Assets, Assumed Liabilities and of the financial condition and prospects
of the Business in making Buyer's voluntary decision to enter into this
<PAGE>
Agreement. Further, Buyer specifically agrees that it will not hold Parent or
Seller, or their employees, agents or owners, responsible for any information
about Seller that Buyer did not know at the time it entered into this Agreement
as Buyer agrees that nothing Seller or Parent, or its agents, employees or
owners, said or did, save and except for the agreements, covenants,
representations and warranties specifically set forth within this Agreement,
induced Buyer into entering into this Agreement.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.01. Investigations; Survival of Warranties. The respective
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representations, warranties and covenants of the Seller, the Parent and the
Buyer contained herein or in any certificates or other documents delivered prior
to or at the Closing shall not be deemed waived or otherwise affected by any
investigation made by any party hereto. Each and every such representation,
warranty, covenant and agreement shall survive for a period of two (2) years
after the date such representation and warranty is deemed made, except that (i)
the tax representations, warranties, covenants and agreements in Article VIII
shall survive and be enforceable indefinitely, (ii) other covenants and
agreements to be performed subsequent to the Closing, including without
limitation those covenants contained in Articles V and VI above, shall survive
and be enforceable for period of the applicable statute of limitations, and
(iii) nothing in the foregoing shall be deemed to diminish any Indemnifying
Party's (as hereinafter defined) indemnification obligations to an Indemnified
Party respecting (a) any matter for which written notice to the Indemnifying
Party has been given prior to the end of the applicable indemnification period,
and (b) claims for indemnification for tax matters and common law fraud, which
shall survive for the duration of the applicable statutes of limitations.
7.02. Indemnification.
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(a) The Seller and the Parent jointly and severally agree to save
harmless, defend and indemnify Buyer, and any of Buyer's their respective
officers, directors, agents, attorneys, accountants, or other representatives of
such parties against, and hold them harmless from any and all liabilities, of
every kind, nature and description, fixed or contingent (including, without
limitation, reasonable counsel fees, expert witness fees, and expenses in
connection with any action, claim or proceeding relating to such liabilities)
arising out of or relating to a breach of any of the representations and
warranties or covenants contained in this Agreement.
(b) The Seller and the Parent jointly and severally agree to save
harmless, defend and indemnify Buyer, and any of Buyer's their respective
officers, directors, agents, attorneys, accountants, or other representatives of
such parties against, and hold them harmless from any and all liabilities, of
every kind, nature and description, fixed or contingent (including, without
limitation, reasonable counsel fees, expert witness fees, and expenses in
connection with any action, claim or proceeding relating to such liabilities)
arising out of or relating to (i) any and all Taxes owed by the Seller for the
period during the Seller Ownership Period, and (ii) any and all Taxes owed by
the Seller or the Seller arising out of the consummation of the transactions
contemplated hereby.
<PAGE>
For purposes of the indemnity in this Section 7.02(b), any interest, penalty or
additional charge included in Taxes shall be deemed to be a Tax for the period
in which the item is based that gives rise to the interest, penalty or
additional charge, and not for any other period.
(c) The Buyer agrees to save harmless, defend and indemnify the
Seller and the Parent and their respective officers, directors, agents,
attorneys, accountants, or other representatives against, and hold them harmless
from any and all liabilities, of every kind, nature and description, fixed or
contingent (including, without limitation, reasonable counsel fees, expert
witness fees, and expenses in connection with any action, claim or proceeding
relating to such liabilities) arising out of a breach of any of the
representations and warranties or covenants contained herein and arising out of
a breach of any of the representations and warranties contained in the 1999
Agreement to the extent that the Buyer's indemnity obligations for the same are
not released pursuant to the Mutual Release described in Section 2.06 above.
7.03 Injunctive Relief. Notwithstanding the provisions of Section 7.04
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hereof, in the event of a breach or threatened breach by the Seller or the
Parent, on the one hand, or the Buyer on the other hand, of the provisions of
this Agreement, the Buyer on the one hand, or the Seller on the other hand,
shall be entitled in order to maintain the status quo ante pending the outcome
of any arbitration pursuant to Section 7.04 hereof to seek an injunction or
similar equitable relief restraining the other party or the Seller, as the case
may be, from committing or continuing any such breach or threatened breach or
granting specific performance of any act required to be performed by the other
party or the Seller, as the case may be, under any such provision. The parties
hereto hereby consent to the jurisdiction of the federal courts located in San
Antonio, Texas and the Texas state courts located in the City of San Antonio for
any proceedings under this Section 7.03. The parties hereto agree that the
availability of arbitration in Section 7.04 hereof shall not be used by any
party as grounds for the dismissal of any injunctive actions instituted by the
Buyer pursuant to this Section 7.03.
7.04. Dispute Resolution - Arbitration. The parties shall attempt
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amicably to resolve disagreements by negotiating with each other. In the event
that the matter is not amicably resolved through negotiation, any controversy,
dispute or disagreement arising out of or relating to this Agreement (a
"Controversy") shall be submitted to final binding arbitration. The arbitration
proceedings shall be conducted by a single arbitrator (the "Arbitrator") in San
Antonio, Texas pursuant to the rules of the American Arbitration Association
(the "Rules"). In the event that the parties cannot agree as to the Arbitrator
to be named, each party to the Controversy shall appoint one arbitrator and
those two arbitrators shall select the Arbitrator.
7.05. Procedure. If any party shall desire relief of any nature
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whatsoever from any other party as a result of any Controversy, such party will
initiate such arbitration proceedings within a reasonable time, but in no event
more than one (1) year after the facts underlying said Controversy first arise
or become known to the party seeking relief (whichever is later). The failure of
such party to institute such proceedings within said period shall be deemed a
full waiver of any claim for such relief. Arbitrator may award
<PAGE>
the prevailing party its costs for the arbitration proceeding, including its
reasonable attorneys' fees and costs. The parties agree that the decision and
award of the Arbitrator shall be final and conclusive upon the parties, in lieu
of all other legal, equitable or judicial proceedings between them, and that no
appeal or judicial review of the award or decision of the Arbitrator shall be
taken, but that such award or decision may be entered as a judgment and enforced
in any court having jurisdiction over the party against whom enforcement is
sought.
7.06. Limitation on Claims. The Buyer shall not be entitled to make any
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claim under this Article VII unless and until the amount of such claim is
reasonably believed by the Buyer to be $10,000 or more or the aggregate of all
claims for misrepresentation or breach of warranty made by the claimant, shall
exceed $20,000, provided, however, that the limitation described in this
paragraph shall not be applicable to the Seller's and Parent's Tax
indemnification obligation described in Section 7.02(b) above or for Seller's
and Parents indemnification obligations arising out of a breach of the
representation set forth in Section 3.20 above. A single claim which exceeds
$10,000 may be collected from the first dollar owed through the total amount of
such claim. Multiple claims each of which is less than $10,000 but which in the
aggregate exceed $20,000 may be collected from dollar $10,001 through the total
amount of such claim. The aggregate obligation of the Seller to indemnify Buyer
under this Agreement shall be limited to the amount of the Purchase Price
received by Seller pursuant to this Agreement.
7.07. Settlement of Third Party Claims. Should any claim be made by a
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person or entity not a party to this Agreement with respect to any matter
covered by the indemnities contained in this Article VII, including without
limitation, any claim by a governmental body in connection with the audit of any
federal, state or local tax return, the party or parties being indemnified (the
"Indemnified Party"), on not less than 30 days' notice to the party making the
indemnification (the "Indemnifying Party"), may make settlement (including
payment in full) of such claim and such settlement shall be binding upon all
parties hereto for the purposes hereof, unless within said 30-day period the
Indemnifying Party shall have requested the Indemnified Party to contest such
claim at the expense of the Indemnifying Party. In such event, the Indemnified
Party shall, upon posting of the bond or alternative security described below,
comply with such request and the Indemnifying Party shall have the right to
direct the defense of such claim or any litigation based thereon at the
Indemnifying Party's expense through counsel of its own choosing on condition
that such counsel agrees to look solely to the Indemnifying Party for payment of
its fees. If the Indemnifying Party does retain counsel on such terms, then the
Indemnified Party shall not be entitled to indemnification under the next
sentence of this paragraph for the cost of any separate counsel it may retain in
the matter. In the event the Indemnifying Party shall so request the Indemnified
Party to contest such claim, the Indemnifying Party shall first furnish to the
Indemnified Party as indemnity against the contested claim a bond in the amount
of the third party claim plus the amount of any expenses reasonably likely to be
incurred by the Indemnified Party in contesting, defending and litigating the
same. In no event shall the Indemnifying Party or its counsel, without the prior
written consent of the Indemnified Party, settle or compromise any claim or
consent to the entry of any judgment which does not include as an
<PAGE>
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party a release from all liability in respect of such claim.
7.08. Remedies Cumulative. The remedies provided in this Article
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VII shall be cumulative and shall not preclude assertion by any party hereto of
any other rights or the seeking of and other remedies against the other party
hereto.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01. Amendments, Supplements, Etc. At any time this Agreement may be
----------------------------
amended or supplemented by such additional agreements, articles or certificates,
as may be determined by the parties hereto to be necessary, desirable or
expedient to further the purposes of this Agreement, or to clarify the intention
of the parties hereto, or to add to or modify the covenants, terms or conditions
hereof or to effect or facilitate any governmental approval or acceptance of
this Agreement or to effect or facilitate the filing or recording of this
Agreement or the consummation of any of the transactions contemplated hereby.
Any such instrument must be in writing and signed by both parties.
8.02. Waiver of Compliance. Any failure of the Seller or the Buyer to
--------------------
comply with any obligation, covenant, agreement or condition herein may be
expressly waived in writing by the Seller or the Buyer, respectively, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
8.03. Expenses; Transfer Taxes, Etc. Whether or not the transaction
-----------------------------
contemplated by this Agreement shall be consummated, the Seller agrees that all
fees and expenses incurred by it in connection with this Agreement shall be
borne by the Seller and Buyer agrees that all fees and expenses incurred by him
in connection with this Agreement shall be borne by the Buyer, including,
without limitation as to the Seller or Buyer, all fees of counsel, actuaries and
accountants.
8.04. Notices. All notices, requests, demands and other communications
-------
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed, certified or registered mail
with postage prepaid:
(a) If to the Seller, to:
Enviro-Clean of America, Inc.
1023 Morales Street
San Antonio, Texas 78207
Attention: Randall K. Davis, President
with a copy to:
<PAGE>
White & Davis, P.C.
5002 West Avenue
San Antonio, Texas 78213
Attention: Jeffrey R. Davis, Esq.
or to such other person or address as Seller shall furnish to
the Buyer in writing.
(b) If to Buyer, to:
York Supply, Ltd.
4335 Vance Jackson
San Antonio, Texas 78230
Attention: Alan Stafford, President of General Partner
with a copy to:
Oppenheimer, Blend, Harrison & Tate, Inc.
711 Navarro, 6th Floor
San Antonio, Texas 78205-1796
Attn: Jerome B. Cohen, Esq.
or to such other person or address as Buyer shall furnish to the Seller in
writing.
8.05. Assignment; Merger. This Agreement and all of the provisions
------------------
hereof shall be binding upon and inure to the benefit of the parties hereto.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other parties, except by operation of law.
8.06. Intentionally Omitted.
8.07. Governing Law. THIS AGREEMENT AND THE LEGAL RELATIONS AMONG
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THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO ITS CONFLICTS OF LAW DOCTRINE.
8.08. Counterparts. This Agreement may be executed simultaneously in
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two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.09. Headings. The headings of the Sections and Articles of this
--------
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
8.10. Entire Agreement. This Agreement, including the exhibits and
----------------
schedules hereto and the other documents and certificates delivered pursuant to
the terms hereof, set
<PAGE>
forth the entire agreement and understanding of the parties hereto in respect of
the subject matter contained herein, and supersede all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto.
8.11. Third Parties. Except as specifically set forth or referred to
-------------
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or corporation other than the parties hereto
and their successors or assigns, any rights or remedies under or by reason of
this Agreement.
8.12. Severability. Should any provision of this Agreement be held by a
------------
court or arbitration panel of competent jurisdiction to be enforceable only if
modified, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties
hereto with any such modification to become a part hereof and treated as though
originally set forth in this Agreement. The parties further agree that any such
court or arbitration panel is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing such unenforceable
provision from this Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending provision, adding
additional language to this Agreement, or by making such other modifications as
it deems warranted to carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The parties expressly
agree that this Agreement as modified by the court or the arbitration panel
shall be binding upon and enforceable against each of them. In any event, should
one or more of the provisions of this Agreement be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and if such provision or provisions
are not modified as provided above, this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been set forth herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be affixed hereto, all as
of the day and year first above written.
Seller:
JUNE SUPPLY CORP.
By: ________________________________
Randall Davis, President
Parent:
ENVIRO-CLEAN OF AMERICA, INC.
By: ________________________________
Randall Davis, President
<PAGE>
Buyer:
YORK SUPPLY, LTD.
By: York Supply Management Company, Inc.,
General Partner
By: ________________________________
Alan Stafford, President
