FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended: June 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 0-19009
AMETECH, Inc.
_____________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Oklahoma 73-0766924
_______________________ __________________________________
(State of Incorporation) (I.R.S. Employer Identification No.)
1813 Southeast 25th
Oklahoma City, Oklahoma 73129
________________________ ________
(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone Number, Including Area Code:
(405) 677-8781
______________
Indicate by check mark whether the Registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for the shorter period of that the Registrant has
had to file the reports), and (2) has been subject to the filing requirements
for the past 90 days. YES X NO
____ _____
As of August 11, 1995, the Registrant had 13,744,083 shares of common
stock issued and outstanding (excluding 115,000 shares of common stock held
as treasury stock).
<PAGE>
<TABLE>
FORM 10-Q OF AMETECH, INC.
TABLE OF CONTENTS
PART I
<CAPTION>
Page
<S> <C>
Item 1. Financial Statements................................... 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................................... 13
PART II
Item 5. Other Information...................................... 19
Item 6. Exhibits and Reports on Form 8-K....................... 19
SIGNATURES ..................................................... 20
</TABLE>
<PAGE>
<TABLE>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1995 1994
__________ ___________
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,000 $ 45,000
Accounts receivable 3,543,000 3,420,000
Prepaid expenses 593,000 144,000
Other 276,000 245,000
___________ ___________
Total Current Assets 4,413,000 3,854,000
___________ ___________
PROPERTY AND EQUIPMENT, at cost,
net of accumulated depreciation of
$8,886,000 and $8,203,000 at
June 30, 1995 and December 31, 1994,
respectively:
Transportation equipment 8,729,000 7,446,000
Buildings and other 2,005,000 1,995,000
___________ ___________
10,734,000 9,441,000
___________ ___________
OTHER ASSETS, net of accumulated
amortization of $293,000 and
$263,000 at June 30, 1995 and
December 31, 1994,respectively 185,000 264,000
___________ ___________
$15,332,000 $13,559,000
=========== ===========
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<CAPTION>
June 30, December 31,
1995 1994
__________ ____________
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,748,000 $ 1,083,000
Current maturities of long-term obligations 2,770,000 2,579,000
___________ ___________
Total Current Liabilities 4,518,000 3,662,000
___________ ___________
DEFERRED INCOME TAXES 960,000 894,000
___________ ___________
LONG-TERM OBLIGATIONS, net of current
maturities 4,488,000 3,717,000
___________ ___________
STOCKHOLDERS' EQUITY:
Common stock of $.01 par value at June 30,
1995, and December 31, 1994; 25,000,000
shares authorized at June 30, 1995, and
December 31, 1994; 13,854,617 and
13,806,382 shares issued at June 30,
1995, and December 31,1994, respec-
tively 139,000 138,000
Additional paid-in capital 2,979,000 2,970,000
Retained earnings 2,357,000 2,287,000
___________ ___________
5,475,000 5,395,000
Less Treasury Stock (115,000 shares at
June 30, 1995 and December 31, 1994),
at cost 109,000 109,000
___________ ___________
Total Stockholders' Equity 5,366,000 5,286,000
___________ ___________
$15,332,000 $13,559,000
=========== ===========
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended June 30,
___________________________
1995 1994
___________ ___________
<S> <C> <C>
REVENUES $ 4,501,000 $ 3,571,000
COSTS AND EXPENSES:
Operating costs 3,185,000 2,348,000
General and administrative expense 599,000 623,000
Depreciation and amortization 443,000 491,000
Interest expense 165,000 102,000
Other expense (income), net (4,000) (26,000)
___________ ___________
4,388,000 3,538,000
___________ ___________
EARNINGS BEFORE INCOME TAXES 113,000 33,000
___________ ___________
INCOME TAX EXPENSE (BENEFIT):
Current 22,000 27,000
Deferred 25,000 (28,000)
___________ ___________
47,000 (1,000)
___________ ___________
NET EARNINGS 66,000 34,000
RETAINED EARNINGS AT BEGINNING
OF PERIOD 2,291,000 2,149,000
___________ ___________
RETAINED EARNINGS AT END OF PERIOD $ 2,357,000 $ 2,183,000
=========== ===========
EARNINGS PER COMMON SHARE:
Earnings per common share $ 0.00 $ 0.00
=========== ===========
Weighted average shares outstanding 13,731,119 13,648,106
=========== ===========
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<CAPTION>
Six Months Ended June 30,
___________________________
1995 1994
___________ ___________
<S> <C> <C>
REVENUES $ 8,297,000 $ 6,813,000
COSTS AND EXPENSES:
Operating costs 5,899,000 4,612,000
General and administrative expense 1,138,000 1,170,000
Depreciation and amortization 875,000 982,000
Interest expense 299,000 180,000
Other expense (income), net (33,000) (63,000)
___________ ___________
8,178,000 6,881,000
___________ ___________
EARNINGS (LOSS) BEFORE INCOME TAXES 119,000 (68,000)
___________ ___________
INCOME TAX EXPENSE (BENEFIT):
Current (17,000) 28,000
Deferred 66,000 (72,000)
___________ ___________
49,000 (44,000)
___________ ___________
NET EARNINGS (LOSS) 70,000 (24,000)
RETAINED EARNINGS AT BEGINNING
OF PERIOD 2,287,000 2,207,000
___________ ___________
RETAINED EARNINGS AT END OF PERIOD $ 2,357,000 $ 2,183,000
=========== ===========
EARNINGS PER COMMON SHARE:
Earnings per common share $ 0.01 $ 0.00
=========== ===========
Weighted average shares outstanding 13,719,727 13,633,861
=========== ===========
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
<TABLE>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended June 30,
___________________________
1995 1994
___________ ___________
<S> <C> <C>
Cash Flows From Operating Activities:
Cash collected from customers $ 8,102,000 $ 6,464,000
Interest paid (305,000) (180,000)
Interest received 32,000 42,000
Cash paid to employees and other
suppliers of goods and services (6,667,000) (5,789,000)
Income taxes refunded (paid) (92,000) 60,000
___________ ___________
Net Cash Provided by Operating
Activities 1,070,000 597,000
___________ ___________
Cash Flows From Investing Activities:
Additions to property and equipment (2,309,000) (1,252,000)
Proceeds from disposal of equipment 93,000 2,000
Proceeds from sale of subsidiary 18,000 7,000
Payments received on notes receivable 112,000 93,000
Permit acquisition costs - (20,000)
___________ ___________
Net Cash Used in Investing Activities (2,086,000) (1,170,000)
___________ ___________
Cash Flows From Financing Activities:
Proceeds of long-term debt 1,937,000 1,182,000
Payments on long-term debt (975,000) (610,000)
Sale of unissued stock 10,000 13,000
___________ ___________
Net Cash Provided by Financing
Activities 972,000 585,000
___________ ___________
Net Increase (Decrease) in Cash and
Cash Equivalents (44,000) 12,000
___________ ___________
Cash and Cash Equivalents at Beginning
of Year 45,000 19,000
___________ ___________
Cash and Cash Equivalents at End
of Period $ 1,000 $ 31,000
=========== ===========
<FN>
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
1. The financial statements include the accounts of the Company and its
subsidiaries, all of which are wholly-owned. All significant
intercompany transactions are eliminated.
The Consolidated Balance Sheet as of June 30, 1995 and the related
Statements of Operations and Retained Earnings and Statements of Cash
Flows for the three and six month periods ended June 30, 1995 and 1994
are unaudited. In the opinion of management, all adjustments necessary
for a fair presentation of such financial statements have been included.
Such adjustments consisted of normal, recurring items. Interim results
are not necessarily indicative of results for a full year. The financial
statements Company's annual financial statements and notes; therefore,
these financial statements should be read in conjunction with the notes
to the financial statements contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994, which are incorporated
herein by reference.
2. EARNINGS PER SHARE
Earnings per common share is based upon the weighted average number of
common shares outstanding during the respective three and six-month
periods. All outstanding stock options are considered anti-dilutive and
are not included in the calculation for earnings per share.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
3. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
The reconciliation of net earnings (loss) to net cash provided by
operating activities for the three and six months ended June 30, 1995
and 1994, is as follows:
<TABLE>
<CAPTION>
Six months ended June 30,
_____________________________
1995 1994
__________ __________
<S> <C> <C>
Net Earnings (Loss) $ 70,000 $ (24,000)
Adjustments to reconcile net income
(loss) to cash provided by operating
activities
Depreciation and amortization 875,000 982,000
Deferred income taxes 66,000 (72,000)
Increase in accounts receivable (194,000) (348,000)
Increase in prepaid expenses (449,000) (198,000)
Increase In other assets (31,000) (18,000)
Loss on sale of property 11,000 4,000
Gain on sale of subsidiary (35,000) (20,000)
Increase in accounts payable
and accrued liabilities 727,000 291,000
Write-off of bad debts 25,000 -
Other 5,000 -
__________ __________
Net Cash Provided by Operating Activities $1,070,000 $ 597,000
========== ==========
</TABLE>
4. CHANGE IN ACCOUNTING ESTIMATE
Effective January 1, 1995, the Company elected to change the estimated
useful life for tractors from seven to ten years to more closely
approximate the useful life of such assets. The effect of this change
was to increase net income for the six months ended June 30, 1995 by
$128,000 ($.01 per share), summarized as follows:
Effect of life of tractors $217,000
Less: Tax effect of change 89,000
________
Increase in net income $128,000
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
5. COMMITMENTS AND CONTINGENCIES
On January 3, 1992, seven individual plaintiffs filed a Petition against
the Company's transportation subsidiary, Environmental Transportation
Services, Inc. ("ETS"), and Dyna-Turn of Oklahoma Incorporated ("Dyna-
Turn"), in the District Court of Oklahoma County. The seven plaintiffs,
who were employees at a waste incineration facility in Miami, Oklahoma,
claim that Dyna-Turn generated solid waste which was contaminated with
toxic and hazardous chemicals, and that this solid waste was transported
by ETS to the incineration facility for disposal. The plaintiffs claim
that Dyna-Turn and ETS were engaged in ultra-hazardous activities during
the generation and transportation of the waste, were negligent during
the generation and transportation of the waste, and failed to warn the
plaintiffs of the hazardous nature of the waste or of its harmful side
effects.
The plaintiffs claim they sustained personal injuries and lost earnings
and are seeking unspecified actual damages in excess of $10,000 and
punitive damages.
In March 1993, the Company learned that its insurance carrier had denied
coverage for the plaintiffs' claims. The Company has instructed its
attorneys to vigorously defend the litigation. The case is in its early
stages and involves facts yet unknown to the Company. The Company
believes that ETS has valid defenses to the plaintiffs' claims, but at
this stage of litigation, the Company is unable to determine the amount
of its potential exposure to loss, if any.
At June 30, 1995, the Company had purchase commitments totaling
approximately $1,300,000 relating to equipment for which delivery will
take place in 1996.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
6. SUBSEQUENT EVENTS
Effective July 20, 1995, the Company's wholly owned transportation
subsidiary, Environmental Transportation Services, Inc. ("ETS"),
purchased from Smith Systems Transportation, Inc. ("SST") certain of
SST's transportation-related assets, which consisted primarily of
assets comprising the hazardous waste transportation activities of SST,
for approximately $519,000. Pursuant to the agreement between ETS and
SST, ETS is to also pay to SST an amount equal to 4% of net revenues
collected and received by ETS from certain of SST's existing customers
at time of closing, with certain limited exceptions, during the period
of the first three years from the date of the agreement. ETS did
not assume any of the debts, liabilities or obligations of SST as a
result of the purchase of the assets.
On August 17, 1995, the Company, through its wholly owned transportation
subsidiary, ETS, consummated the acquisition of all of the outstanding
capital stock of Dwight Trucking, Inc. ("Dwight"), located in Bakersfield,
California. Dwight is a hazardous and non-hazardous waste transporter.
Although the transaction was consummated on August 17, 1995 (the "Closing
Date"), the parties contracted that the transaction was to be deemed
effective as of July 1, 1995, for all purposes. The purchase price for
the stock of Dwight was approximately $1,272,029 ("Purchase Price"),
which consisted of (i) $973,000, (ii) approximately $160,657, which
represented the aggregate amount of cash held by Dwight as of the
closing, less cash (a) relating to services rendered or performed by
Dwight on or after July 1, 1995, and (b) which constitutes deposits for
future services, trust funds, escrow accounts or which is owned by
parties other than Dwight,(iii) approximately $108,244, which
represented an amount equal to ordinary and necessary business expenses
of Dwight paid by Dwight after June 30, 1995, to the Closing Date,
(iv) approximately $55,229, which represented an amount equal to the
outstanding receivables of Dwight as of June 30, 1995, not collected
by Dwight as of the Closing Date (the "Receivables"), less (v) the
liabilities of Dwight set forth on Dwight's balance sheet dated June 30,
1995. At the Closing Date the Company paid approximately $1,216,800 of
the Purchase Price, with approximately $55,229 of the Purchase Price,
being an amount equal to the Receivables, to be paid in installments on
or before the fifth business day of each month following the Closing
Date. The amount of each installment shall be equal to the Receivables
actually collected, in good funds, after the Closing Date by Dwight
during the previous month. If any Receivables have not been collected
by July 31, 1996, Dwight is to assign, without recourse and any
representations or warranties, the unpaid Receivables in full
satisfaction of the Company's obligation to pay the balance of the
Purchase Price. In addition, the Company leased from the sellers of
the stock of Dwight the transportation terminal located in Bakersfield,
California, utilized by Dwight, for a period of five years, at a rental
of $2,900 per month, with an option to extend for another five-year term
at a rental of $2,900 per month adjusted for cumulative increase in the
consumer price index for the Southern California Region from commence-
ment of the initial five-year lease term.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Quarter Ended June 30, 1995 Compared to Quarter Ended June 30, 1994
Net income for the quarter ended June 30, 1995 was $66,000, as compared to
$34,000 in net income for the quarter ended June 30, 1994. This increase
in net income of $32,000 was attributable to a higher gross margin (revenues
less operating costs) of $93,000, lower general and administrative expenses
of $24,000 and decreased depreciation expense of $48,000. These increases
in net income were partially offset by an increase in interest expense of
$63,000.
Total revenues were $4,501,000 and $3,571,000 for the quarters ended June 30,
1995 and 1994, respectively. This increase was largely due to increases in
transportation and related revenues of $570,000 and to increases in project
and other non-transportation revenues of $360,000.
Transportation and related revenues were $4,022,000 and $3,452,000 for the
second quarters of 1995 and 1994, respectively. Transportation revenue
increased $513,000 which was attributable to an increase in miles generated
in the second quarter of 1995. The Company's transportation fleet logged
2,233,000 miles in the second quarter ended June 30, 1995, as compared to
1,854,000 miles for the same quarter of 1994. This increase in mileage
resulted from an increase of 24 tractors from 1994 to 1995. This increase
in volume was partially offset by a decrease in the running mile rate of
$.04 per mile, resulting from increased competition. Revenues from roll-off
box rental decreased by $3,000 and other transportation revenues increased
$60,000 due largely to an increase in trailer rental revenue.
Project and other non-transportation revenues increased by $360,000 due to
an increase of $227,000 in revenues generated by the Company's remediation
subsidiary due to a project started in March 1995 and to $178,000 in
revenues recorded in the second quarter of 1995 by the Company's non-
hazardous waste processing facility located in Florida, which began
operation in May 1994.
Operating costs increased $837,000, from $3,185,000 in the second quarter of
1995 to $2,348,000 for the same quarter last year. This represents an
increase of 5 percentage points when expressed as a percentage of total
revenues.
<PAGE>
Operating costs related to transportation services were $2,806,000 and
$2,219,000 for the quarters ended June 30, 1995 and 1994, respectively.
These amounts represent 69.8% and 64.3% of transportation and related
revenues for the respective second quarters of 1995 and 1994. This
increase in the percentage of operating costs to revenues resulted from
the lower running mile rate as discussed earlier and to increased operating
costs for trailer rental and owner/operator expenses.
Operating costs associated with the Company's non-hazardous waste processing
facility in Florida increased $109,000 for the second quarter of 1995. This
facility did not become operational until May 1994, and incurred only $30,000
in operating costs for the second quarter of 1994.
Operating costs incurred by the Company's remediation subsidiary increased
$204,000 from 1994 to 1995 due to a single remediation project that started
in March 1995.
General and administrative expenses decreased $24,000 due largely to the
reduction in force which occurred in the fourth quarter of 1994.
Depreciation expense decreased $48,000 from 1994 to 1995 due to the Company
changing the estimated useful life for its tractors from seven (7) years
to ten (10) years to more closely approximate the useful life of such assets.
This change was effective January 1, 1995.
Interest expense increased $63,000 due to increased debt and higher interest
rates.
Six Months Ended June 30, 1995, compared to Six Months Ended June 30, 1994.
Net income was $70,000 for the six months ended June 30, 1995, as compared
to a net loss of $24,000 for the same period last year. This increase in
net income is due to an increase in the gross margin of $197,000 as well as
decreases in general and administrative expense and depreciation expense of
$32,000 and $107,000, respectively. These increases in net income were
partially offset by or increase in 0 interest expense of $119,000.
Total revenues increased $1,484,000 from 1994 to 1995. This increase is due
to an increase in transportation and related revenues of $969,000 and an
increase in project an other non-transportation revenues of $620,000. These
increases in revenue were partially offset by a decrease in waste brokerage
revenue of $105,000.
<PAGE>
Transportation and related revenues were $7,578,000 and $6,609,000 for 1995
and 1994, respectively. This increase was caused largely by an increase in
transportation revenues of $830,000 and an increase in trailer rental income
of $249,000. These increases were partially offset by reduced sub-contract
and trip-lease revenues of $187,000.
Transportation revenues increased from $5,220,000 for the first half of 1994
to $6,050,000 for the first half of 1995. This increase was due to increased
volume in 1995. The Company's transportation fleet logged 4,244,000 miles in
1995 as compared to 3,526,000 miles in 1994. This increase in volume was
attributable to an increase of 20 tractors in 1995. This increase in volume
was partially offset by a $.06 per mile decrease in the running mile rate
due to increased competition.
Waste brokerage revenue decreased from $112,000 in the first half of 1994 to
$7,000 for the first half of 1995. The Company continues to de-emphasize
its brokerage business due to the low margins and the potential liability
related to the brokerage business.
Project and other revenues increased by $620,000 due largely to an increase
of $307,000 in revenues generated by the Company's remediation subsidiary on
a single remediation project started in March 1995, and to $335,000 in
revenues recorded in the first half of 1995 by the Company's non-hazardous
waste processing facility located in Florida, which began operation in May
1994.
Operating costs were $5,899,000 and $4,612,000 for the six month periods
ended June 30, 1995 and June 30, 1994, respectively. This increase of
$1,287,000 relates to an increase of 3.4 percentage points when expressed
as a percentage of total revenues.
Operating costs related to transportation services increased $967,000,
from $4,388,000 in 1994 to $5,355,000 in 1995. When expressed as a
percentage of transportation and related revenues, operating costs were
66.4% and 70.7% of revenues for 1994 and 1995, respectively. This
increase in the percentage of operating costs from 1994 to 1995 is
attributable to the lower running mile rate as discussed earlier and to
increases in owner/operator expenses and equipment rental costs.
Operating costs attributable to waste brokerage services decreased $79,000
due to the reason mentioned earlier.
The Company's remediation subsidiary incurred increased expenses in 1995 of
$278,000 due to the project mentioned earlier.
Operating expenses related to the Company's non-hazardous waste processing
facility in Florida increased $196,000 from 1994 to 1995. This facility did
not begin operations until May 1994.
<PAGE>
General and administrative expenses decreased $32,000 from 1994 to 1995 due
largely to the reduction in force which occurred in the fourth quarter of
1994. This reduction was partially offset by an increase in general and
administrative expenses for the Florida facility.
Depreciation expense decreased $107,000 from 1994 to 1995 due to the Company
changing the estimated useful life for its tractors from seven (7) years to
ten (10) years to more closely approximate the useful life of such assets.
This change was effective January 1, 1995.
Interest expense increased $119,000 due to increased debt and higher interest
rates.
Liquidity and Capital Resources
Working capital decreased from $192,000 at December 31, 1994 to a negative
$105,000 at June 30, 1995. This decrease resulted from cash used to fund
certain capital expenditures that are not financed through the Company's
existing equipment financing sources and to increase current maturities of
long-term debt.
In April 1995, the Company renewed its revolving line of credit under
substantially the same terms as before. This line of credit is (1)
collateralized by accounts receivable, inventories and contract rights;
(2) limited to $2,000,000; and (3) expires in April 1996. The revolving
line of credit provides for advances at 80% of eligible receivables and
bears an annual interest rate of the national prime rate plus 1%, 2% or 3%,
depending on cash flow ratio. The amounts borrowed under this line of
credit were $902,000 and $994,000 at June 30, 1995, and December 31, 1994,
respectively. As of June 30, 1995, the Company had approximately $882,000
of unused available borrowing capacity, based on eligible collateral, under
its revolving line of credit. Management expects that this line of credit
will be renewed upon its expiration in April 1996, but there is no assurance
that this will occur. If it is not renewed, such could have a material
adverse effect on the Company's liquidity.
In March 1995, the Company entered into a third amended agreement with an
equipment lender which was made a part of an existing agreement between the
Company and this lender. Under the original equipment lending agreement,
the Company had refinanced a majority of its transportation equipment with
this lender in September 1993. The third amended agreement with the
equipment lender provides for additional equipment financing for up to
approximately $2,200,000 of equipment purchases. The terms under this
third amendment are substantially the same as those contained in the
original agreement. At June 30, 1995, the Company had borrowed $525,000
under this agreement.
<PAGE>
Pursuant to the terms of the equipment lending agreement, the Company was
to maintain a cash flow ratio of 1.25 to 1. At June 30, 1995, the Company's
cash flow ratio was 1.19 to 1. The agreement has been amended to provide
that the Company will maintain a cash flow ratio of 1.10 to 1 or greater.
The Company made capital expenditures of $2,309,000 in the first six months
of 1995 which consisted primarily of transportation equipment. These
purchases were funded with the above lender as well as other equipment
lenders which have done business with the Company in the past.
Effective July 20, 1995, the Company, through its wholly owned transportation
subsidiary, Environmental Transportation Services, Inc. ("ETS"), purchased
from Smith Systems Transportation, Inc. ("SST") certain of SST's
transportation-related assets, which consisted primarily of assets
comprising the hazardous waste transportation activities of SST. The
Company paid approximately $519,000 for such assets, with approximately
$495,000 borrowed by the Company under its equipment line of credit and the
balance paid from working capital. In additioin, ETS agreed that for a
period of three (3) years from July 20, 1995, to pay SST an amount equal to
4% of the net revenues collected and received by ETS from certain of SST's
existing customers at the time of such acquisition, with certain limited
exceptions, which will be paid from ETS' working capital. ETS did not
assume any of the debts, obligations or liabilities of SST in connection
with the acquisition of the assets. ETS leased one (1) of the terminals
previously utilized by SST, located in Denver, Colorado.
On August 17, 1995, ETS, the Company's wholly-owned transportation subsidiary,
acquired all of the outstanding capital stock of Dwight Trucking, Inc.
("Dwight"), located in Bakersfield, California. Dwight is a hazardous waste
transporter. Although the transaction was consummated on August 17, 1995
(the "Closing Date"), the parties agreed that for all purposes the
transaction was to be deemed effective as of July 1, 1995 ("Effective Date").
The purchase price for the stock of Dwight was approximately $1,272,029
("Purchase Price"), which consisted of (i) $973,000, (ii) approximately
$160,657, which represented the aggregate amount of cash held by Dwight as
of the closing, less cash (a) relating to services rendered or performed by
Dwight on or after July 1, 1995, and (b) which constitutes deposits for
future services, trust funds, escrow accounts or which is owned by parties
other than Dwight, (iii) approximately $108,244, which represented an amount
equal to ordinary and necessary business expenses of Dwight paid by Dwight
from July 1, 1995, to the closing, (iv) 55,229, which represented an amount
equal to the outstanding receivables of Dwight as of June 30, 1995, not
collected as of the Closing Date (the "Receivables"), less (v) the
liabilities of Dwight set forth on Dwight's balance sheet, dated June 30,
1995. At the Closing Date the Company paid approximately $1,216,800 of
the Purchase Price, with approximately $160,651 being from cash held by
Dwight, $233,144 from working capital and the balance through borrowings
under the Company's equipment line of credit. Approximately $55,229 of the
Purchase Price, being an amount equal to the Receivables, is to be paid in
installments on or before the fifth business day of each month following
the Closing Date. The amount of each installment shall be equal to the
Receivables actually collected, in good funds, after the Closing Date by
Dwight during the previous month. If any Receivables have not been collected
by July 31, 1996, Dwight is to assign, without recourse and any
representations or warranties, the unpaid Receivables in full satisfaction
of the Company's obligation to pay the balance of the Purchase Price. In
addition, the Company leased from the sellers of the stock of Dwight the
transportation terminal located in Bakersfield, California, for a period of
five years, at a rental of $2,900 per month, with an option to extent for
another five-year term, at a rental of $2,900 per month adjusted for
cumulative increase in the consumer price index for the Southern California
Region from commencement of the lease to the termination of the initial
five-year lease term.
<PAGE>
Management expects these acquisitions to have a positive impact on the
financial condition of the Company but there are no assurances to that
effect.
After completion of the acquisition of assets from SST and the purchase of
the capital stock of Dwight, the Company had approximately $542,000 of
unused available borrowing capacity, based on eligible collateral as of
July 31, 1995, under its revolving line of credit.
The Company currently has executed purchase orders totalling approximately
$1,300,000 for transportation equipment and will take delivery of this
equipment in 1996. The Company anticipates financing this equipment
through various lenders with which it has had a favorable relationship in
the past. Some of this equipment is being purchased in anticipation of
increased customer demand for the Company's services. If the customer
demand does not materialize, it could have a material adverse effect on the
Company's liquidity.
The Company believes that its present lines of credit and collection of
receivables should be sufficient to enable the Company to meet its presently
foreseeable working capital and capital expenditures requirements for 1995.
<PAGE>
PART II
OTHER INFORMATION
Item 5. Other Information
On July 20, 1995, the Company's wholly owned subsidiary, Environmental
Transportation Services, Inc. ("ETS"), acquired certain assets from Smith
Systems Transportation, Inc. ("SST"). On August 17, 1995, effective as of
July 1, 1995, ETS acquired all of the outstanding stock of Dwight Trucking,
Inc. ("Dwight"). See Note 6 "Subsequent Events" to Notes to Consolidated
Financial Statements and Item 2 "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity & Capital
e acquisition of all of the outstanding capital stock of Dwight.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Asset Purchase Agreement, dated July 20, 1995, between Environ-
mental Transportation Services, Inc. and Arthur Smith & Son
Trucking, Inc., Monte Smith and Mary Smith. The Agreement
contains a list of omitted schedules, which schedules the
Company agrees to furnish to the Commission upon request.
2.2 Stock Purchase Agreement, dated August 17, 1995, between
Environmental Transportation Services, Inc. and Dale Dwight and
Sam Dwight. The Agreement contains a list of omitted schedules,
which schedules the Company agrees to furnish to the Commission
upon request.
27 Financial Data Schedule
(b) Reports on Form 8-K
No report on Form 8-K was filed by the Company during the quarter for
which this report was filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has caused the undersigned,
duly authorized, to sign this report on its behalf on the 21st day of
August, 1995.
AMETECH, Inc.
By /s/ Carl B. Anderson, Jr.
______________________________
Carl B. Anderson, Jr.
Chief Executive Officer
By /s/ Kerry Willingham
______________________________
Kerry Willingham
Vice President of Finance
ISTE:\A-C\AMETECH\10Q\10Q-695.3
Exhibit No. 2.1
to Form 10-Q
For the Period Ended June 30, 1995
__________________________________
AMETECH, INC.
__________________________________
ASSET PURCHASE AGREEMENT
by and among
ENVIRONMENTAL TRANSPORTATION SERVICES, INC.
and
ARTHUR E. SMITH & SON TRUCKING, INC.,
MONTE SMITH,
and
MARY C. SMITH
July 20, 1995
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
ARTICLE 1: DEFINITIONS 1
1.1 "AET" 1
1.2 "Affiliates" 1
1.3 "Assets" 1
1.4 "Bill of Sale" 2
1.5 "Chem Waste" 2
1.6 "Contract" 2
1.7 "Clean Harbors" 2
1.8 "Ensco" 2
1.9 "Environmental Laws" 2
1.10 "Existing Customers" 2
1.11 "ERISA" 2
1.12 "Governmental Authority" 2
1.13 "Lienholder" 2
1.14 "Liens" 3
1.15 "Lease" 3
1.16 "Person" 3
1.17 "Release Commitment" 3
1.18 "Returns" 3
1.19 "Rocky Mountain Region" 3
1.20 "Rollins" 3
1.21 "Taxes" 3
ARTICLE 2: PURCHASE AND SALE 3
2.1 Purchase of Assets 3
2.2 Purchase Price and Payment of Purchase Price 4
2.3 Commission 4
2.4 Exclusive Right to Use of Bins 5
2.5 No Assumption of Liabilities 6
2.6 Employees 6
2.7 Bulk Sales Law Compliance 6
ARTICLE 3: CLOSING 7
3.1 Closing Date 7
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF SELLER
AND SHAREHOLDERS 7
4.1 Organization and Standing 7
4.2 Capital Stock 7
4.3 Power, Authority and Validity 7
4.4 Compliance With Obligations 8
4.5 Schedules to this Agreement 8
4.6 Absence of Liabilities 8
4.7 Title to the Property 8
4.8 Contracts 8
4.9 Environmental Matters 8
4.10 Competition 9
4.11 Obligations to Employees 9
4.12 Litigation 10
4.13 No Violation or Breach 10
4.14 Real Property; Leases 10
4.15 Insurance 11
4.16 Continuation of Business Relationships 11
4.17 Condition of Assets 11
4.18 Tax Returns 11
4.19 Ensco Contract 11
ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF BUYER 12
5.1 Organization and Standing 12
5.2 Power, Authority and Validity 12
5.3 No Breach of Statute or Contract, Governmental Authorization 12
ARTICLE 6: DELIVERIES OF SELLER AND SHAREHOLDER 12
6.1 Title to Assets 12
6.2 Opinion of Counsel 13
6.3 Certificates of Good Standing 13
6.4 Secretary's Certificate 13
6.5 Consents 13
6.6 Possession of Assets 13
6.7 Officer and Shareholders' Certificate 13
6.8 Release Commitments 13
6.9 Other Deliveries 13
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 7: DELIVERIES OF BUYER 14
7.1 Purchase Price 14
7.2 Opinion of Counsel 14
7.3 Certificates of Good Standing 14
7.4 Secretary's Certificate 14
7.5 Officer's Certificate 14
ARTICLE 8: CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER 14
8.1 Representations and Warranties of Seller 14
8.2 Covenants of Seller and Shareholders 15
8.3 No Litigation 15
8.4 Loss, Damage or Destruction 15
8.5 Consents and Approvals 15
8.6 Execution of Documents 15
8.7 Release of Liens and Encumbrances 15
8.8 Transfer of Contract 15
8.9 Permits 15
8.10 Deliveries 16
8.11 Opinion of Counsel 16
8.12 Financing 16
8.13 Allocation of Purchase Price 16
8.14 Payment of ETS Receivables 16
ARTICLE 9: CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER 16
9.1 Representations and Warranties 16
9.2 Opinion of Counsel 16
9.3 Secretary's Certificate 17
9.4 Covenants of Buyer 17
9.5 Execution of Documents 17
ARTICLE 10: INDEMNIFICATION 17
10.1 Indemnification by Seller 17
10.2 Indemnification by Buyer 18
10.3 Notices and Defense of Claims 18
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 11: COVENANT NOT TO COMPETE AND DISCLOSE 18
11.1 Covenant Not to Compete and Disclose 18
11.2 Confidential Information and Agreement Not to
Solicit Employees and Customers 19
11.3 Injunctive Relief 19
ARTICLE 12: MISCELLANEOUS 20
12.1 Receipts and Liabilities 20
12.2 Notices 20
12.3 Brokers 21
12.4 Amendment 21
12.5 Governing Law 21
12.6 Headings 21
12.7 Entire Agreement 21
12.8 Waiver 21
12.9 Binding Effect 21
12.10 Expenses 21
12.11 Severability and Reformation 21
</TABLE>
Schedule 1 Assets
Schedule 2 Contracts
Schedule 3 Existing Customers
Schedule 4 Seller's Bins
Schedule 5 Lease
Exhibit "A" Bill of Sale and Assignment
Exhibit "B" Opinion of Seller's Counsel
Exhibit "C" Opinion of Buyer's Counsel
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is entered into this 20th day
of July, 1995, by and between ENVIRONMENTAL TRANSPORTATION SERVICES INC., an
Oklahoma corporation ("Buyer"); ARTHUR E. SMITH & SON TRUCKING, INC., a
Nebraska corporation ("Seller"); MONTE and MARY C. SMITH, husband and wife
(collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, the Seller is in the business of transporting hazardous and non-
hazardous waste;
WHEREAS, the Shareholders are the holders and owners of all of the issued
and outstanding capital stock of Seller;
WHEREAS, all parties hereto desire Buyer to purchase from Seller, and
Seller to sell to Buyer, all of the "Assets" (as defined below), upon and
subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and the respective
covenants and agreements contained herein, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the following meanings, unless the context
otherwise indicates, both for purposes of this Agreement and all Exhibits
and Schedules:
1.1 "AET" refers to AET, Inc.
1.2 "Affiliates" has the same meaning as under Rule 405 of the Securities Act
of 1933, as amended.
1.3 "Assets" means: (i) all assets listed in Schedule 1 attached hereto;
(ii) the Contract; (iii) all customer lists, vendor lists and standard
forms owned or used by the Seller; (iv) all permits, licenses and approvals
held or filed by or issued to the Seller under the Environmental Laws or
under any other laws; (v) the Lease, and (vi) the goodwill associated with
the Assets. Without limiting the foregoing, the "Assets" shall not
include the 36 bins currently owned by Seller and leased to Clean
<PAGE>
Harbors, Inc. The parties agree and acknowledge that inventory is not a
part of the Assets and no inventory is being acquired for resale by Buyer
from the Seller.
1.4 "Bill of Sale" shall mean the Bill of Sale in substantially the form
attached as Exhibit "A".
1.5 "Chem Waste" refers to Chemical Waste Management.
1.6 "Contract" means the Seller's contract with Ensco, which is listed in
Schedule 2.
1.7 "Clean Harbors" refers to Clean Harbors, Inc.
1.8 "Ensco" refers to Ensco, Inc., an Arkansas corporation.
1.9 "Environmental Laws" means any and all federal, state and local
environmental, health and safety laws, codes and ordinances and all rules
and regulations promulgated thereunder, including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes (as those terms are more particularly defined by
applicable federal, state and local environmental health and/or safety
statutes and regulations, as is and as hereafter amended) into the
environment (including, without limitation, air, surface water, ground
water, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or
industrial, solid, toxic or hazardous substances or wastes.
Environmental Laws include, without limitation, (i) the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. Section 9601, et seq.; and (ii) the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 6901, et seq.
1.10 "Existing Customers" shall have the meaning set forth in Section 2.3
of this Agreement.
1.11 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
1.12 "Governmental Authority" means any agency, instrumentality, department,
commission, court, tribunal or board of any government, whether foreign
or domestic and whether national, federal, state, provincial or local.
1.13 "Lienholder" means any individual or entity holding, or having an
enforceable interest in, a Lien.
<PAGE>
1.14 "Liens" mean all security interests, liens, mortgages, claims, charges,
pledges, restrictions, equitable interests, easements, property rights
or encumbrances of any nature.
1.15 "Lease" means the Commercial Property Lease, dated June 15, 1994,
between Seller and Summit Transportation Systems, Inc., relating to
certain property located at 6600 - 6650 Smith Road, Denver, Colorado,
which is listed in Schedule 5.
1.16 "Person" means any natural person, corporation, business trust, joint
venture, association, company, firm, partnership, or other entity or
government or Governmental Authority.
1.17 "Release Commitment" means the irrevocable written commitment of any
Lienholder to release and terminate its Lien interest and to file or
cause to be filed or delivered to Buyer all instruments necessary to
evidence the termination of its Lien interest within two (2) calendar
days after payment to Lienholder of the amounts owing by Seller in
connection with such Lien, which amount is set forth in the Release
Commitment, and which such Release Commitment is in form and content
satisfactory in all respects to the Buyer.
1.18 "Returns" mean all returns, declarations, reports, estimates,
information returns and statements required to be filed with or
supplied to any taxing authority in connection with any Taxes.
1.19 "Rocky Mountain Region" means the states of Colorado, Montana, Nebraska,
New Mexico, North Dakota, South Dakota, Utah, and Wyoming.
1.20 "Rollins" refers to Rollins Environmental Services.
1.21 "Taxes" mean all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, excise, real
and personal property, sales, transfer, license, payroll and franchise
taxes, imposed by any Governmental Authority and shall include any
interest, penalties or additions to tax attributable to any of the
foregoing.
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase of Assets. Subject to the terms and conditions of this
Agreement, and in consideration of the obligations set forth herein,
at the Closing (as hereafter defined), Buyer agrees to purchase the
<PAGE>
Assets and Seller agrees to sell, convey, assign, transfer and deliver
the Assets to Buyer free and clear of all liens, debts, claims,
encumbrances, mortgages, pledges and security interests, except for any
Lien for which the Lienholder has issued to the Buyer a Release
Commitment that has been delivered to the Buyer on or prior to the
Closing.
2.2 Purchase Price and Payment of Purchase Price. Subject to the terms and
conditions of this Agreement and in consideration of the Seller's sale,
conveyance, assignment, transfer and delivery of good and marketable
title to the Assets to Buyer, free and clear of any and all liens, debts,
claims, encumbrances, mortgages, pledges, and security interest (except
for any Lien for which the Lienholder has issued to the Buyer a Release
Commitment that has been delivered to the Buyer on or prior to the
Closing) a Release Commitment that has been delivered to the Buyer on or
prior to the Closing) at the Closing, Buyer shall pay to Seller the
amount equal to Five Hundred Nineteen Thousand Dollars ($519,000.00),
less the sum of all amounts to be paid pursuant to the terms of any
and all Release Commitments (the "Purchase Price"), representing a
Purchase Price of Twenty-One Thousand Eight Hundred Fifty-One and
54/100 Dollars ($21,8541.54), which Purchase Price is payable in cash
or corporate check.
2.3 Commission. Buyer agrees to pay to Seller a Commission in an amount
equal to four percent (4%) of the Net Revenues (as defined below)
collected and received by Buyer from the Existing Customers (as defined
below) for services rendered during the period of the first three (3)
years from the date of this Agreement by Buyer for the Existing Customers
(the "Commission"), except as otherwise provided herein and subject to
the following:
(i) For purposes of this Section 2.3, "Existing Customers" means the
corporations and other entities listed on Schedule 3 attached hereto,
and their successors and assigns, except any such successors or
assigns for which Buyer is rendering services prior to the date of
such succession or assignment;
(ii) With respect to the following Existing Customers, the Commission
is payable only with respect to delivery and/or pick-up
transportation services from or to the Rocky Mountain Region: (a)
Ensco, (b) Chem-Waste, (c) Rollins, and (d) AET;
(iii) The Commission, if due, shall be paid within thirty (30) days
following the end of each calendar quarter during the three (3) year
period from the date of this Agreement, with the first payment, if
any Commissions are due, to be made on or before October 30, 1995;
(iv) Upon prior written notice to Buyer, Seller shall have the right
exercisable within one (1) year of each quarterly payment of
Commission to audit, at Seller's sole cost and expense and during
Buyer's reasonable business hours, the books and records of Buyer
<PAGE>
pertaining only to services rendered by Buyer to the Existing
Customers for which the Commission is based. The failure to
exercise the right to audit such books and records within one (1)
year following a quarterly payment shall constitute a binding and
conclusive acceptance of the Commission paid for the period relating
to such quarterly payment.
(v) Upon the written agreement of Buyer and Seller, Schedule 3 may be
amended from time to time to add or remove an entity from the list
of Existing Customers; and,
(vi) For the purposes of this Agreement, the term "Net Revenues" shall
mean the actual invoice price collected by the Buyer from the
Existing Customers (except as otherwise provided above) less
discounts allowed and any sales tax, excise tax, duty, municipal,
county, state or federal fees or other amounts paid by Buyer on, or
as a result of, such invoice or as a result of amounts collected on
such invoice; provided, however, Net Revenues shall not include
amounts collected or received as a result of the Buyer leasing its
bins to the Existing Customers.
2.4 Exclusive Right to Use of Bins. Subject to the terms and conditions set
forth in this Section 2.4, Seller hereby grants Buyer the exclusive
right to transport the thirty-six (36) bins (as defined below) owned by
Seller and listed in Schedule 4 (the "Seller's Bins"), at the
transportation rates set forth in Schedule 4. In consideration of the
foregoing grant, Buyer hereby agrees that Buyer shall not lease bins
owned by Buyer to customer facilities located within a 150-mile radius
of Denver, Colorado (the "Territory") until all of the Seller's bins have
been leased. Notwithstanding the foregoing, Buyer and Seller agree
that: (i) Buyer may lease its bins to customers for which the Seller's
Bins are considered not suitable or not fit to accommodate the
requirements of any such customers, and (ii) if Seller has bins
available for lease and Buyer wishes to lease Seller's Bins to Buyer's
customer within the Territory, then the Seller shall charge Buyer a
rental rate of One Hundred Seventy-Five Dollars ($175.00) per month per
bin. The terms and conditions of this Section 2.4 shall terminate upon
the earlier of two (2) years from the Closing Date, or the date on which
the Seller's Bins are sold by Seller to a party that is not an Affiliate
of the Seller or the Shareholders in a bona fide transaction at a
reasonable commercial price; provided, however, in the event either
party to this Agreement is in default of a material term or condition of
this Agreement, and such default is not cured within 30 days from
receipt of written notice from the non-defaulting party to this
Agreement of such default, the non-defaulting party shall have the
right, exercisable by written notice to the defaulting party, to
terminate the obligations of the parties under this Section 2.4.
<PAGE>
2.5 No Assumption of Liabilities. The parties hereto acknowledge and agree
that Buyer does not assume and shall not be liable for any liability,
obligation or indebtedness of Seller or the Shareholders. Seller and
the Shareholders shall, jointly and severally, pay, discharge and
satisfy, at their own cost and expense, any and all debts, obligations
and liabilities of the Seller (whether known or unknown, absolute or
contingent). Seller and the Shareholders shall, jointly and severally,
defend, indemnify and hold harmless the Buyer and all of Buyer's
officers, directors, employees, agents or affiliates from, against and
in respect of any claims, actions, suits, judgments, liabilities,
damages, costs, expenses (including, but not limited to, reasonable
attorneys' fees) now or hereafter made against or incurred or suffered
by the Buyer or any of its officers, directors, employees, agents or
Affiliates as a result of, or due to, or in connection with any or all
debts, liabilities or obligations of the Seller or any of the
Shareholders. Nothing contained in this Section 2.5 shall relieve or
release Seller or the Shareholders from any obligation under any
covenants, warranties or agreements contained in this Agreement.
2.6 Employees. Buyer does not guarantee employment for any employees of
Seller for any period after the Closing Date, except as otherwise
provided in this Agreement.
2.7 Bulk Sales Law Compliance. Seller agrees to pay and discharge all
claims of creditors which may be asserted against Buyer by reason of
Seller's noncompliance with the provisions of the bulk sales law of any
state which may require bulk sales law compliance on account of the
provisioins herein and the transactions contemplated hereby and to
indemnify and hold Buyer harmless from and against claims suffered
or incurred by Buyer by reason of, or arising out of (a) the failure
of Seller to pay or discharge the same when done or (b) such non-
compliance with any applicable bulk sales law. The parties agree and
acknowledge that no inventory is being acquired for resale.
2.8 Purchase of Existing Customer. In the event a customer of Buyer (the
"Acquiring Party"), other than an Existing Customer, acquires control
of an Existing Customer for whom the Commission is being paid pursuant
to Section 2.3 of this Agreement as of the date of such acquisition
of control (the "Acquired Party"), the Buyer and Seller hereby agree
to meet within a reasonable time following such acquisition of control
to make a good faith effort to negotiate a mutually satisfactory
arrangement with respect to the manner or amount of future royalty or
other payment, if any, which should be paid to Seller for revenues
received by Buyer from the Acquiring Party on sales attributable
to the business conducted by the Acquired Party prior to the acquisition
of control. For purposes of this Section 2.8, the phrase "acquires
control" means the acquisition by the Acquiring Party of (i) more than
50% of the outstanding voting stock or voting interests of an Existing
Customer or (ii) all or substantially all of the assets of an Existing
Customer.
<PAGE>
ARTICLE 3
CLOSING
3.1 Closing Date. The transfer of the Assets and the closing of the
transactions contemplated herein (the "Closing") shall occur at the
offices of Conner & Winters, City Bank Tower, Suite 950, 204 North
Robinson, Oklahoma City, Oklahoma, at 10:00 a.m. on or before Thursday,
July 20, 1995, or at such other place and/or later date as agreed upon
by the parties in writing (the "Closing Date").
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
Seller and the Shareholders, jointly and severally, represent and
warrant to Buyer, as of the Closing Date, the following:
4.1 Organization and Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nebraska. Seller is qualified to do business the State of Colorado, and
in each and every other jurisdiction in which Seller is required to so
qualify.
4.2 Capital Stock. All of the issued and outstanding shares of the Seller's
capital stock are owned of record and beneficially by the Shareholders.
There are no outstanding or authorized subscriptions, options, warrants,
calls, rights, commitments or any other agreements of any character with
respect to the Seller's capital stock.
4.3 Power, Authority and Validity. This Agreement has been duly authorized,
executed and delivered by the Board of Directors of the Seller and the
Shareholders and all instruments required hereunder to be delivered by
Seller at the Closing shall be duly authorized by all necessary
corporate action on the part of the Seller and duly and validly executed
and delivered by Seller and the Shareholders. All requisite corporate
actions necessary to close and consummate the transactions contemplated
by this Agreement have been taken. This Agreement constitutes the valid
and binding agreement of Seller and the Shareholders enforceable against
them in accordance with its terms, and all instruments required under
this Agreement to be executed and delivered by Seller or the
Shareholders at Closing shall constitute valid and binding agreements of
Seller or the Shareholders, enforceable against Seller or the
Shareholders in accordance with their terms.
<PAGE>
4.4 Compliance With Obligations. The Seller, or the Shareholders, is not
or is not alleged to be in default under, or in breach of any term or
provision of, any contract, agreement, lease, license, permit,
commitment, instrument or obligation affecting or relating to the
Assets or which might result in Seller not being able to convey or
transfer to Buyer good and marketable title to the Assets, free and
clear of any claims, liens, encumbrances or title defects, or cause
an adverse effect on Seller's business and/or the value of the Assets
to Buyer. To the best of Seller's knowledge, no other party to any
contract, agreement, lease, license, commitment, instrument or
obligation to which Seller or any of the Shareholders is a party is in
default thereunder or in breach of any term or provision thereof which
might result in Seller not being able to convey or transfer to Buyer
good and marketable title to the Assets, or cause a material adverse
effect on Seller's business and/or the value of the Assets to Buyer.
To the best of Seller's and the Shareholders' knowledge after due and
diligent inquiry, there exists no condition or event which, after
notice or lapse of time or both, would constitute a default by Seller
or any other party to any such contract, agreement, lease, license,
commitment, instrument or obligation.
4.5 Schedules to this Agreement. All of the Schedules to this Agreement are
true and correct as of their respective dates in all material respects.
4.6 Absence of Liabilities. There are no liabilities or obligations of
Seller of any nature, whether accrued, absolute, contingent or otherwise,
which adversely affect the Assets being transferred or Seller's ability
to deliver marketable title to such Assets, free and clear of any and
all liens, encumbrances, claims, debts, mortgages, pledges, or security
interest, charges or conditional sales contracts, except for any Lien
to be released pursuant to the terms of a Release Commitment delivered
to Buyer on or prior to the Closing.
4.7 Title to the Property. Seller has good and marketable title to all of
the Assets, free and clear of all mortgages, pledges, conditional sales
contracts, liens, encumbrances, security interests or charges, except
for any Lien to be released pursuant to the terms of a Release
Commitment delivered to Buyer on or prior to the Closing.
4.8 Contracts. Seller has no contract or commitment affecting the Assets
extending beyond the Closing Date, except as otherwise set forth in
Schedule 2 attached hereto.
4.9 Environmental Matters. Seller has complied in all material respects
with all Environmental Laws with respect to the operation of Seller's
business and/or Seller's operation, use or ownership of the Assets.
Seller has also complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in those
laws or contained in any regulation, code, plan, order, decree, judgment,
<PAGE>
injunction, notice or demand letter issued, entered, promulgated or
approved thereunder with respect to the operation of Seller's business,
and Buyer's ownership of the Assets. Neither the Seller nor any of the
Shareholders are aware of, and have not received notice of, any past,
present, or future events, conditions, circumstances, activities,
practices, incidents, actions or plans concerning the Seller's business
and/or Seller's operation or use or ownership of the Assets that may
interfere with or prevent compliance or continued compliance with
those laws or any regulation, code, plan, order, decree, judgment,
injunction, notice, or demand letter issued, entered, promulgated, or
approved thereunder, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, demand,
suit, proceeding, hearing, study or investigation, based on or related
to the processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or
threatened release into the environment of any pollutant, contaminant,
chemical, or industrial, toxic, or hazardous substance or waste. There
is no civil, criminal or administrative action, suit, demand, claim,
hearing, notice, or demand letter, notice of violation, investigation,
or proceeding pending or, to the best of Seller's knowledge threatened,
against Seller or any use or operation of the Assets or Seller's
business, nor to the best of Seller's and the Shareholders' knowledge
is there any basis for same with respect to the operation of Seller's
business, and/or Seller's use, operation or ownership of the Assets
relating in any way to those laws or any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
4.10 Competition. Neither the Shareholders nor the Seller nor any of its
officers or employees have entered into any agreement now in effect
relating to Seller's business or the Assets containing any prohibition
or restriction of competition or solicitation of customers with any
person, corporation, partnership, firm, association or business
organization, entity or enterprise that could adversely affect the
value of the Assets to Buyer.
4.11 Obligations to Employees. There are no written or oral contracts of
employment between Seller and any of its employees. There are no
pension, bonus, profit sharing or retirement plans to be assumed by
Seller covering any of Seller's employees. All obligations of Seller,
whether arising by operation of law, by contract or by custom, for
payments to trusts or other funds or to any government agency or to
any individual director, officer or employee (or his heirs, legatees
or legal representatives) with respect to unemployment compensation
benefits, employment severance payments, profit sharing, pension or
retirement benefits or Social Security benefits have been paid, or
adequate accruals for such payments have been made, by Seller on, or
prior to the date hereof. All legally enforceable obligations of
Seller, whether arising by operation of law, by contract or custom,
for bonuses, salary, employment severance payments, or other forms of
compensation which are, or may become, payable to its directors,
<PAGE>
officers, agents and employees have been paid, or adequate accruals
for such payments have been made, by Seller on, or prior to the date
hereof. All legally enforceable obligations of Seller, whether
arising from or in connection with any employee benefit plan maintained
or established for employees of Seller. The terms of Seller's employee
benefit plan or plans, if any, comply with the ERISA and the Internal
Revenue Code of 1986, as amended, and all reporting and disclosure
requirements of ERISA with respect to any such employee benefit plan
have been met; and in the event of termination of any pension plan,
attributable to employees of Seller, Buyer will have will have no
liability with respect to providing benefits provided for under such
pension plan.
4.12 Litigation. There is no litigation or proceeding pending, or to the
knowledge of Seller and the Shareholder threatened, against the Seller
or relating to the Assets in any judicial, quasi-judicial or
administrative forum. Seller and the Shareholder do not know nor do
they have reasonable grounds to know of any basis for any such actions,
and there are no outstanding judgments, orders or restrictions affecting
the Seller or the Assets.
4.13 No Violation or Breach. The execution, delivery and performance of
this Agreement by Seller or the Shareholders will not result in any
breach or violation of any laws, statutes, local ordinances, state or
federal regulations, court or administrative orders, or rulings, nor
will the execution, delivery and performance of this Agreement result
in any breach or violation of Seller's Certificate of Incorporation
or Bylaws or any agreement, contract, mortgage, security agreement,
indenture, pledge agreement, note, bond, lease, license, or other
instrument to which Seller is a party, by which Seller is, or the
Shareholders may be, bound or any Assets may be subject or effected,
which breach or violation could result in Seller not being able to
convey or transfer to Buyer good and marketable title to the Assets
or have a material adverse effect on Seller's business and/or the
Assets.
4.14 Real Property; Leases. Schedule 5 attached hereto sets forth a true
and complete list of the lease of premises executed by or binding upon
Seller as lessee, sublessee, tenant or assignee which is an Asset,
setting forth a brief description of the premises covered thereby,
the amount of rental payable thereunder, and the term (including any
extensions available) thereunder. Buyer hereby assumes all rental
payments with respect to the Lease listed on Schedule 5 due after
the Closing Date; provided, how incurred prior to the Closing Date,
including, but not limited to, any obligations arising under any
Environmental Laws. All consents of any landlord or any other party
that are required under the Lease in order to assign the Lease to
Buyer and to keep the Lease in full force and effect without being
terminable after the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have
been delivered to Buyer. A true and complete copy of the Lease
<PAGE>
required to be listed on Schedule 5, including all amendments, addenda,
waivers, and all other documents affecting the tenants' rights
thereunder, has been delivered to Buyer.
4.15 Insurance. Seller has maintained in full force and effect present
policies of liability insurance necessary to afford insurance coverage
against claims made by any third party against Seller for personal
injury or property damage which would adversely affect the value of
the Assets to Buyer.
4.16 Continuation of Business Relationships. For a period of three (3)
years from the date of this Agreement, Seller agrees to use its best
efforts to assist Buyer in maintaining the working relationship which
Seller has developed with the Existing Customers, its vendors, and
suppliers and distributors.
4.17 Condition of Assets. Except as set forth on Schedule 1, all of the
items of property and equipment comprising the Assets is, in all
material respects, in good operating condition, ordinary wear and tear
excepted, and Seller has maintained such items in good operating
condition. Casualty losses to such property and equipment are covered
by existing insurance.
4.18 Tax Returns. Seller has (i) timely filed, or caused to be timely filed,
all Returns required to be filed by Seller as of the date hereof, and
all such Returns are complete and accurate and comply in all respects
with all applicable legal requirements; and (ii) paid when due and
payable all Taxes. The Assets are not subject to any federal or state
tax lien.
4.19 Ensco Contract. A true and complete copy of that certain contract
between Smith Systems Transportation, Inc., a Nebraska corporation
("SST") and wholly owned subsidiary of the Seller and Ensco, dated
February 10, 1994 (the "Ensco Contract") listed on Schedule 2,
including all amendments, addenda, waivers and all other binding
documents affecting the Seller's and SST's rights thereunder, have
been delivered to Buyer. The Ensco Contract is in full force and
effect, and binding on the respective parties thereto, and no default
exists under the terms and conditions thereof. All consents of any
party that are required under the Ensco Contract in order to assign
the Ensco Contract to Buyer and to keep the Ensco Contract in full
force and effect without being terminable after the execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been delivered to Buyer.
<PAGE>
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants as follows:
5.1 Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Oklahoma.
5.2 Power, Authority and Validity. Buyer has full right, power and
corporate authority to enter into this Agreement and to perform the
transactions contemplated hereby, and this Agreement is valid and
binding upon and enforceable against Buyer in accordance with its terms.
The execution, delivery and the performance of this Agreement by Buyer
have been duly and validly authorized and approved by all requisite
action on the part of Buyer.
5.3 No Breach of Statute or Contract, Governmental Authorization. Neither
the execution and delivery of this Agreement by the Buyer, nor
compliance with the terms and provisions of this Agreement by Buyer
violates any law, statute, rule or regulation of any governmental
authority, domestic or foreign, or conflicts with, or results in, a
breach of any of the terms, conditions or provisions of any judgment,
order, injunction, decree or ruling of any court or governmental agency
or authority to which the Buyer is subject.
ARTICLE 6
DELIVERIES OF SELLER AND SHAREHOLDER
Seller and Shareholders, as appropriate, hereby agree to deliver to
Buyer on or prior to the Closing Date the following:
6.1 Title to Assets. All conveyances, assignments, bills of sale,
certificates of title, approvals, consents and any and all further
instruments, including, but not limited to, the Bill of Sale and
Assignment in substantially the form as Exhibit "A" attached hereto
and certificates of title as to each and every vehicle, tractor or
trailer that is part of the Assets, as may be necessary or proper,
in the sole discretion of Buyer, to complete the conveyance, transfer
and assignment of the Assets provided for herein and to convey to
Buyer such title to the Assets as Seller is obligated hereunder to
convey, all in form and substance reasonably satisfactory to Buyer,
<PAGE>
duly and validly executed by the Seller and/or Shareholders, as
appropriate, in a manner satisfactory to the Buyer.
6.2 Opinion of Counsel. The opinion of counsel for the Seller and the
Shareholder is to be delivered pursuant to Section 8.12.
6.3 Certificates of Good Standing. Good standing and tax certificates (or
analogous documents), dated as closely a practicable to the Closing Date,
from the appropriate authorities in the Seller's jurisdiction of
incorporation and each jurisdiction in which Seller is required to be
qualified to do business.
6.4 Secretary's Certificate. A Certificate of the Secretary or Assistant
Secretary of Seller setting forth the copy of the resolutions adopted by
the Board of Directors and Stockholders of Seller authorizing and
approving the execution, delivery and performance of this Agreement and
the transactions contemplated herein, and authorizing all necessary and
proper corporate action to enable Seller to comply with the terms and
conditions of this Agreement, in form and substance reasonably
satisfactory to counsel for Buyer.
6.5 Consents. All consents required in connection with the execution and
delivery of this Agreement and the transactions contemplated thereby,
including, but not limited to, any consent of landlord required in
connection with the Lease.
6.6 Possession of Assets. Possession of the Assets, including, but not
limited to, all books, records, and other documents relating to the
Assets.
6.7 Officer and Shareholders' Certificate. A certificate, dated the
Closing Date, that all of the Seller's and Shareholders'
representations and warranties contained herein are true and correct
as of the Closing Date and that the Seller and the Shareholders have
complied with and performed all of their obligations, agreements and
comments contained herein, in form and substance reasonably
satisfactory to counsel for Buyer.
6.8 Release Commitments. Any and all Release Commitments required to be
delivered pursuant to Section 8.7 hereof.
6.9 Other Deliveries. Such other duly authorized and executed documents
or instruments as Buyer or its counsel may reasonably request.
<PAGE>
ARTICLE 7
DELIVERIES OF BUYER
Buyer agrees to deliver to Seller on the Closing Date the following:
7.1 Purchase Price. The Purchase Price to be delivered pursuant to Section
2.2 hereof.
7.2 Opinion of Counsel. The opinion of counsel for Buyer is to be delivered
pursuant to Section 9.2 hereof.
7.3 Certificates of Good Standing. Certificates of Good Standing and tax
certificates (or analogous documents), dated as closely as practicable
to the Closing Date, from the appropriate authorities in Buyer's
jurisdiction of incorporation, showing Buyer to be in good standing
and to have paid all franchise taxes due in such jurisdiction.
7.4 Secretary's Certificate. A Certificate of the Secretary or an Assistant
Secretary of Buyer setting forth a copy of the resolutions adopted by
the Board of Directors of Buyer authorizing and approving the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby in form and substance reasonably satisfactory to
counsel for Seller.
7.5 Officer's Certificate. A certificate, dated the Closing Date, that all
of the Buyer's representations and warranties contained herein are true
and correct as of the Closing Date and that the Buyer has complied with
and performed all of its obligations, agreements and comments contained
herein, in form and substance reasonably satisfactory to counsel for
Seller.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer hereunder at the Closing shall be subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions, unless Buyer shall have expressly waived such conditions in
writing to Seller:
8.1 Representations and Warranties of Seller. The representations,
warranties, covenants, agreements and other statements of Seller and the
Shareholders set forth in Article 4 are true and correct at and as of
the Closing Date.
<PAGE>
8.2 Covenants of Seller and Shareholders. Seller and the Shareholders shall
have performed all of its obligations and agreements hereunder to be
performed at or prior to the Closing.
8.3 No Litigation. No suit, action, legal or administrative proceeding,
investigation, inquiry or request for information by any administrative
agency, governmental body or private party shall have been instituted
or threatened which question the validity or legality of this Agreement
or the transactions contemplated by this Agreement, or could affect or
question the title of Seller to the Assets, or could result in a material
adverse effect to Seller's business or the value of the Assets to Buyer.
8.4 Loss, Damage or Destruction. There shall not have been any loss,
damage or destruction, in a material amount, to or of any of the Assets,
whether or not covered by insurance, nor shall the Assets have been
adversely affected in any way as a result of any fire, accident or other
casualty, or civil strife, riot or act of God or the public enemy and
there shall have been no development in the business of Seller since the
date of the Balance Sheet which would have a material adverse effect on
the value of such business.
8.5 Consents and Approvals. All consents from third parties required to
consummate the transactions provided for in this Agreement shall have
been obtained, or substantially equivalent benefits provided; and Seller
shall have obtained all authorizations and approvals of landlords,
regulatory bodies or officials, if any, or any other party necessary to
permit the consummation of the sale of the Assets and transfer of good
and marketable title to same.
8.6 Execution of Documents. The valid and binding execution and delivery
by Seller and the Shareholders at Closing of all documents and
instruments identified herein and attached hereto, including, but not
limited to, the documents and instruments referred to in Article 6
hereof.
8.7 Release of Liens and Encumbrances. On or before the Closing Date,
Seller shall have obtained and delivered to Buyer valid and binding
releases or Release Commitments (in a form satisfactory to Buyer) with
respect to all Liens affecting the Assets.
8.8 Transfer of Contract. The Contract shall be in full force and effect
and all consents, approvals, and authorizations necessary to assign the
Contract shall have been obtained, and the Contract shall be validly
assigned to Buyer.
8.9 Permits. All permits or other authorizations required to operate the
Assets by Buyer and transport waste (hazardous and non-hazardous) in
the states that Seller presently operates such or transports waste into
<PAGE>
under or pursuant to the Environmental Laws, the Federal Department of
Transportation, or any state regulatory body shall have been validly
transferred and assigned to Buyer or Buyer shall have otherwise obtained
such permits and authorizations.
8.10 Deliveries. Buyer shall have received the deliveries to be made by
Seller pursuant to Article 6.
8.11 Opinion of Counsel. Buyer shall have received an opinion of counsel
for Seller, dated the Closing Date, substantially in the form of Exhibit
"F" hereto.
8.12 Financing. Buyer shall have obtained financing for the payment of
the Purchase Price and shall use its reasonable efforts to obtain such
financing on such terms and subject to such conditions which are
satisfactory to Buyer.
8.13 Allocation of Purchase Price. Buyer and Seller shall have coordinated
the preparation and filing of their respective asset acquisition
statements on Form 8594, Asset Acquisition Statement under Section 1060
("Form 8594"), and, if required by Section 1060 of the Internal Revenue
Code of 1986, as amended, or the regulations promulgated thereunder,
so that the information reflected on such forms shall be consistent.
8.14 Payment of ETS Receivables. Prior to, or contemporaneously with, the
Closing, Seller shall pay to Buyer all amounts outstanding as of the
Closing Date for services rendered by Buyer to Seller or Seller's agents
and assigns on or before the Closing Date.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
AND THE SHAREHOLDERS
The obligations of Seller and the Shareholders at the Closing shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, unless Seller shall have expressly waived such
conditions in writing to Buyer:
9.1 Representations and Warranties. The representations and warranties of
Buyer contained in this Agreement shall be true and correct on and as of
the Closing Date.
9.2 Opinion of Counsel. Seller shall have received an opinion of Conner &
Winters, a Professional Corporation, dated the Closing Date,
substantially in the form of Exhibit "C" hereto.
<PAGE>
9.3 Secretary's Certificate. Seller shall have received from Buyer a
Certificate of the Secretary or Assistant Secretary of Buyer setting forth
a copy of the resolutions adopted by the Board of Directors of Buyer
authorizing and approving the execution, delivery and performance of this
Agreement and the transactions contemplated herein, and authorizing all
necessary and proper corporate action to enable Buyer to comply with the
terms and conditions of this Agreement.
9.4 Covenants of Buyer. Buyer shall have performed all of its obligations
and agreements hereunder to be performed at or prior to the Closing.
9.5 Execution of Documents. The valid and binding execution and delivery
by Buyer at Closing of all documents and instruments identified herein
and attached hereto, including, but not limited to, the documents and
instruments referred to in Article 7 hereof.
ARTICLE 10
INDEMNIFICATION
Seller and the Shareholders, jointly and severally, agree to provide
indemnification to the respective party as follows:
10.1 Indemnification by Seller. Seller and the Shareholders, jointly and
severally, shall indemnify and defend and hold harmless the Buyer and
its officers, directors, employees and Affiliates, from and against and
in respect of (a) claims, actions, suits, judgments, costs, expenses
(including, but not limited to, reasonable attorneys' fees) and liabilities
incurred or which may be incurred by Buyer, any of its officers, directors,
employees or Affiliates with respect to or in connection with or arising out
of Seller's ownership and/or operation of the Assets which accrue or relate
to occurrences on or prior to the Closing Date, and (b) any damage, expense,
cost, expenses (including, but not limited to, reasonable attorneys' fees),
loss or deficiency resulting from any or all misrepresentation or breach of
representation or warranty or nonfulfillment of any agreement on the part of
Seller or Shareholders under this Agreement, or from any misrepresentation
in or omission from any certificate or other instrument furnished or to be
furnished by Seller or the Shareholders to Buyer hereunder. In addition,
Seller and Shareholders, jointly and severally, will indemnify, defend and
hold harmless Buyer and its officers, directors, employees and Affiliates
from and against any and all claims, demands, suits, actions, liabilities,
debts and obligations (and any and all expenses and costs incurred in
connection with or in defending against same) arising out of or in
connection with (i) the failure or alleged failure of Seller and/or Buyer
to comply with any bulk sales law, as set forth in Section 2.8 herein, in
<PAGE>
respect of sale and transfer of the Assets pursuant to this Agreement; or
(ii) any liabilities or obligations of the Seller.
10.2 Indemnification by Buyer. Buyer shall indemnify and defend and hold
harmless the Shareholders and Seller from and against and in respect of
claims, actions, suits, judgments, costs, expenses (including, but not
limited to, reasonable attorney's fees) and liabilities brought against
the Shareholders and/or Seller as a result of Buyer's operation of the
Assets which accrue or relate solely to Buyer's actions after the Closing
Date.
10.3 Notices and Defense of Claims. The party seeking indemnification
under this Article 10 (the "Indemnitee") shall give the indemnifying party
under this Article 10 (the "Indemnitor") prompt notice of any claims of
third parties as to which the Indemnitee shall seek indemnification
hereunder, and the Indemnitee shall forward to the Indemnitor any letter
of claim, demand, summons, notice or complaint regarding claims of third
parties. Indemnitee shall afford Indemnitor an opportunity to defend,
at Indemnitor's expense, and Indemnittee shall have the right to participate,
at its expense, and with counsel of its own choosing, in such defense. If
Indemnitor shall not defend against any such claim on a timely basis,
Indemnitee may defend against such claim using counsel selected by
Indemnitee, but at Indemnitor's expense. Indemnitee will not make any
settlement or payment with respect to any such claim without first obtaining
written approval of Indemnitor, which approval shall not be unreasonably
withheld, and if Indemnitor shall fail to respond to such request for approval
within thirty (30) days after each written request therefore, it shall
conclusively be presumed that such approval is given. Indemnitee
and Indemnitor agree mutually to cooperate with one another in the
defense against such claims. Seller and Shareholders agree that their
respective rights under this Article 10 shall be represented by the same
counsel for both Seller and Shareholders.
ARTICLE 11
COVENANT NOT TO COMPETE AND DISCLOSE
11.1 Covenant Not to Compete and Disclose. In connection with, and as
consideration for, the purchase of the Assets from Seller and the goodwill
in connection therewith, the Seller and each of the Shareholders hereby
agree that each shall not, for a period of three (3) years from the date
of this Agreement within the Rocky Mountain Region, directly or indirectly,
by or for Seller or any of the Shareholders, or as an agent of another, or
through others as its or their agents, or by and through any joint venture,
partnership, corporation or other business entity in which Seller or any of
the Shareholders own, manage, operate, control, or be connected with as an
<PAGE>
officer, employee, partner, director or consultant that competes with the
Buyer in the transportation of hazardous waste and non-hazardous waste;
provided, however, that this Section 11.1 shall not apply to the Seller's
Bins which are transported by the Buyer pursuant to the terms of Section
2.4. For purposes of this Agreement, the term "hazardous waste" shall have
the same meaning as defined in the Resource Conservation and Recovery Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
11.2 Confidential Information and Agreement Not to Solicit Employees and
Customers. Except with respect to information which becomes publicly known
other than through the Seller or the Shareholders, or is required to be
disclosed by law or the order of a court of competent jurisdiction, Seller
and each of the Shareholders hereby agree that each will not, for a period
of three (3) years from the date of this Agreement, directly or indirectly,
by or for itself, or as an agent of another, or through others as its or
their agents, or by or through any joint venture, partnership, corporation,
or other business entity in which any of them may own, manage, operate,
control or be connected with as an officer, employee, partner, director or
consultant, has a direct or indirect interest:
(i) use or disclose for Seller's or either of the Shareholders' benefit or
the benefit of any other person or entity any customer lists, or identify
any customers of Seller; or,
(ii) use or disclose any proprietary, secret or confidential information,
knowledge or data relating to the Buyer or Seller and their respective
businesses; or,
(iii) solicit or induce, or in any manner attempt to solicit or induce,
any person employed by, or as an agent of, the Buyer to terminate his or her
employment or agency with the Buyer; or,
(iv) solicit or induce, or in any manner attempt to solicit or seek to
induce, or to bring about, promote, facilitate, or encourage (i) the
discontinuance of any of the services of the Buyer by any past or present
suppliers or customers of the Seller or (ii) any suppliers or customers of
Seller not to use the services of the Buyer or be a supplier or customer
to the Buyer.
11.3 Injunctive Relief. Seller and each of the Shareholders acknowledge
that the provisions of this Agreement are reasonable and necessary for the
protection of the Buyer and that the Buyer will be irrevocably damaged if
such covenants and provisions are not specifically enforced. Accordingly,
the Seller and each of the Shareholders agree that, in addition to any
other rights or relief to which the Buyer may be entitled, at law or in
equity, in the form of actual or punitive damages, the Buyer shall be
<PAGE>
entitled to seek and obtain injunctive relief from a court of competent
jurisdiction (without posting of a bond therefor) for the purposes of
restraining Seller or either of the Shareholders from any actual or
threatened breach of the provisions and covenants contained herein. Such
right to injunctive relief shall be cumulative and in addition to any other
remedies that the Buyer may have at law or in equity. If it becomes
necessary for the Buyer to bring legal action against Seller or either of
the Shareholders as a result of Seller's or either of the Shareholders'
breach of any of the covenants contained in expenses in connection therewith
(including, but not limited to, reasonable attorney's fees).
ARTICLE 12
MISCELLANEOUS
12.1 Receipts and Liabilities. All monies, proceeds, receipts, accounts
receivable and income attributable to the Assets for all periods of time on
or after the Closing Date, shall be the sole property and entitlement of
Buyer, and to the extent received by Seller, Seller shall hold such in trust
for Buyer and shall fully disclose, account for and transmit same to Buyer
promptly.
12.2 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been
duly given if delivered or mailed, first-class postage prepaid, to the
following at the addresses indicated:
To Buyer: Environmental Transportation Services, Inc.
1813 Southeast 25th Street
Post Office Box 36118
Oklahoma City, Oklahoma 73136
Attention: President
To Seller: Arthur E. Smith & Son Trucking, Inc.
2405 Waneka Lake Trail
Lafayette, Colorado 80026
Attention: Monte Smith
To Shareholders: Monte and Mary C. Smith
2405 Waneka Lake Trail
Lafayette, Colorado 80026
<PAGE>
or to any other address that Buyer, Seller, or the Shareholders shall
designate in writing.
12.3 Brokers. Each party represents and warrants that all negotiations
related to this Agreement have been carried on by the parties without the
intervention of any broker. Each party agrees to indemnify, and hold the
other party harmless against any claims for fees or commissions employed or
alleged to have been employed by such party.
12.4 Amendment. This Agreement shall not be amended, altered or terminated
except by a writing executed by each party.
12.5 Governing Law. This Agreement shall be governed in all respects by the
law of the State of Oklahoma.
12.6 Headings. The paragraph headings used in this Agreement are included
solely for convenience, and shall not in any way affect the meaning or
interpretation of this Agreement.
12.7 Entire Agreement. This Agreement sets forth the entire understanding
of the parties; further, this Agreement shall supersede and/or replace any
oral or written Agreements relating to this subject matter entered into by
the parties before the date of this Agreement, including that certain
Letter Agreement dated May 10, 1995.
12.8 Waiver. The waiver by any party of any breach or breaches of any
provision of this Agreement shall not operate as or be construed to be a
waiver of any subsequent breach of any provision of this Agreement.
12.9 Binding Effect. This Agreement, inclusive of its terms and provisions,
shall survive the Closing and shall be binding on and inure to the benefit
of, and be enforceable by, the respective heirs, legal representatives,
successors, and assigns of the parties pursuant to its terms.
12.10 Expenses. Except as otherwise expressly provided herein, the parties
to this Agreement shall pay their own expenses and costs (including, without
limitation, all attorney's fees) incurred in connection with this Agreement
and the transactions contemplated hereby.
12.11 Severability and Reformation. The parties hereto intend all provisions
of this Agreement to be enforced to the fullest extent permitted by law.
Accordingly, should a court of competent jurisdiction determine that the
scope of any provision contained herein is too broad to be enforced as
written, the parties intend that the court should reform the provision to
such narrower scope as it determines to be enforceable. If, however, any
<PAGE>
provision of this Agreement is held to be illegal, invalid or unenforceable
under present or future law, such provision shall be fully severable, and
this Agreement shall be construed and enforced as if such illegal, invalid
or unenforceable provision were never a part hereof, and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance.
Buyer, Seller, and the Shareholders have executed this Agreement as of
the 20th day of July, 1995.
ENVIRONMENTAL TRANSPORTATION
SERVICES, INC.
("Buyer")
By: /s/ Kerry Willingham
Name: Kerry Willingham
Title: Vice President - Finance
ARTHUR E. SMITH & SON TRUCKING, INC.
("Seller")
By: /s/ Monte W. Smith
Name: Monte W. Smith
Title: President
MONTE SMITH and MARY C. SMITH
("Shareholders")
/s/ Monte Smith
Monte Smith, individually
/s/ Mary C. Smith
Mary C. Smith, individually
ISTE:\A-C\AMETECH\10Q\10Q-EX2.1AP
Exhibit No. 2.2
to Form 10-Q
For the Period Ended June 30, 1995
__________________________________
AMETECH, INC.
__________________________________
STOCK PURCHASE AGREEMENT
by and among
ENVIRONMENTAL TRANSPORTATION SERVICES, INC.,
an Oklahoma corporation
("Buyer")
and
DALE DWIGHT and SAM DWIGHT,
both individuals
("Shareholders")
August 17, 1995
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TABLE OF CONTENTS
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1. Definitions 1
1.1 "Affiliates" 1
1.2 "Balance Sheet Liabilities" 1
1.3 "Closing" and "Closing Date" 1
1.4 "Corporate Cash" 2
1.5 "Environmental Laws" 2
1.6 "Governmental Authority" 2
1.7 "Liabilities" 2
1.8 "Liens" 2
1.9 "Permitted Encumbrances" 2
1.10 "Post-Effective Date Revenues" 3
1.11 "Receivables" 3
1.12 "Reimbursable Expenses" 3
1.13 "Subsidiaries" 3
1.14 "Taxes" 3
1.15 "Transportation Laws" 3
2. Sale and Conveyance of Shares 3
3. Purchase Price; Payment of Purchase Price 4
3.1 Purchase Price 4
3.2 Payment of Purchase Price 4
4. Standby Letter of Credit 5
4.1 Use of Proceeds 5
4.2 Method of Draw 5
4.3 Shareholders' Right to Pay 5
4.4 Attorney Fees 6
5. Delivery of Post-Effective Date Revenues 6
6. Delivery of Shares 6
7. Value of Shares 6
8. Closing Date 6
9. Representations and Warranties of the Shareholders 6
9.1 Organization of Dwight Trucking 6
9.2 Capital Stock of Dwight Trucking 7
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9.3 Shareholders 7
9.4 Ownership Interests in Securities 7
9.5 Financials 8
9.5.1 Financial Statements 8
9.5.2 Liabilities 8
9.5.3 Transactions Since June 30, 1995 8
9.6 Tax and Other Returns and Reports 9
9.6.1 Tax Returns 9
9.6.2 Payment of Taxes 9
9.6.3 Waiver of Statute of Limitations 9
9.6.4 Tax Deficiencies 9
9.7 Property 10
9.7.1 Assets 10
9.7.2 Real Property 10
9.7.3 Leases 10
9.7.4 Notice 10
9.7.5 Personal Property 10
9.7.6 Inventories 10
9.7.7 Notice from Insurance Carrier 10
9.8 Agreements, Contracts and Commitments 11
9.8.1 Contracts 11
9.8.2 Written List 12
9.9 No Breach of Statute or Contract; Governmental Authorizations 13
9.9.1 No Violation 13
9.9.2 Permits and Licenses 14
9.9.3 Reports 14
9.9.4 Violation of Law 14
9.9.5 Environmental Laws and Transportation Laws 14
9.9.6 Other Permits 15
9.10 No Litigation or Adverse Effects 15
9.11 Patents, Trademarks, etc. 15
9.12 Ability to Conduct the Business 16
9.13 Insurance 16
9.14 Completeness of Documents Furnished by Dwight Trucking 16
9.15 Disposition of Assets 16
9.16 Obligations to Employees 16
9.17 Condition of Plant, Machinery and Equipment 16
9.18 Stock Redemptions 17
9.19 Indebtedness of Shareholders, etc. 17
9.20 Sensitive Payments 17
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9.21 Books of Account 17
9.22 Bank Accounts; Powers of Attorney 17
10. Representations and Warranties of Buyer 17
10.1 Organization, etc. 17
10.2 Authorization, Execution and Delivery of Agreement 18
10.3 No Breach of Statute or Contract, Governmental Authorizations 18
10.4 Broker's or Finder's Fees 18
10.5 Purchase for Investment, etc 18
10.6 Best Efforts 19
12. Conditions and Transactions Contemplated by Agreement;
Abandonment of Agreement 19
12.1 Closing Conditions of Buyer 19
12.1.1 Standby Letter of Credit 19
12.1.2 Post-Effective Date Revenues 19
12.1.3 Representations and Warranties of Shareholders to be
True and Compliance With Covenants 20
12.1.4 Third Party Consents 20
12.1.5 No Material Adverse Change 20
12.1.6 No Change from Effective Date 20
12.1.7 Statutory Requirements; Litigation 20
12.1.8 Opinion of Counsel of Shareholders 21
12.1.9 Due Diligence 23
12.1.10 Stock Certificates 23
12.1.11 No Liens on Assets 24
12.1.12 Minute Books and Stock Ledgers 24
12.1.13 Good Standing Certificates 24
12.1.14 Resignation of Directors 24
12.1.15 Termination of Stock Purchase Agreement 24
12.1.16 Lease Agreement 24
12.2 Conditions to Obligations of Shareholders 24
12.2.1 Resolutions of Board of Directors 24
12.2.2 Representations and Warranties of Buyer to be True 25
12.2.3 Opinion of Counsel of Buyer 25
12.2.4 Lease Agreement 26
13. Indemnification 26
13.1 By the Shareholders 26
13.2 Expiration of Indemnification 27
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13.3 Limitation on Indemnification 27
13.4 Exceptions to Sections 13.2 and 13.3 27
13.5 Notices and Defense of Claims 27
14. General 28
14.1 Expenses 28
14.2 Amendment 28
14.3 Survival 28
14.4 Governing Law and Jurisdiction 28
14.4.1 Governing Law. 28
14.4.2 Jurisdiction 28
14.5 Notices 29
14.6 Successors and Assigns 29
14.7 Invalidity and Severability 29
14.8 Headings 29
14.9 Entire Agreement 29
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Schedules and Exhibit:
Schedule 1 - Stock Ownership
Schedule 2 - Reimbursable Expenses
Schedule 3 - Stock Redemptions
Schedule 4 - Receivables
Schedule 5 - Tax Deficiencies
Schedule 6 - Notices; Personal Property
Schedule 7 - Contracts
Schedule 8 - Permits and Licenses, Reports, Violations
Schedule 9 - Litigation
Schedule 10 - Patents, Trademarks, etc.
Schedule 11 - Plant, Machinery and Equipment; Indebtedness of Shareholders
Schedule 12 - Bank Accounts; Powers of Attorney
Schedule 13 - Transactions Since June 30, 1995
Schedule 14 - Insurance
Schedule 15 - Permitted Encumbrances
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), is executed this 17th day
of August, 1995, but shall be deemed to be effective for all purposes as of
the close of business on June 30, 1995 (the "Effective Date"), by and among
Environmental Transportation Services, Inc., an Oklahoma corporation
("Buyer"); Dale Dwight, an individual ("Dale"); and Sam Dwight, an individual
("Sam") (Dale and Sam are referred to herein individually as a "Shareholder"
and collectively as the "Shareholders").
W I T N E S S E T H:
WHEREAS, the Shareholders are the owners of record and beneficially of all
of the issued and outstanding shares of Common Stock ("Common Stock"), of
Dwight Trucking, Inc., a California corporation ("Dwight Trucking"), with
each Shareholder owning the number of shares of Common Stock listed opposite
his or her name on Schedule 1 hereto;
WHEREAS, the only class of shares of capital stock of Dwight Trucking
issued and outstanding is the Common Stock as listed on Schedule 1, and
there are no other shares of capital stock of Dwight Trucking issued and
outstanding; and,
WHEREAS, each of the Shareholders desire to sell, assign, transfer and
convey to Buyer, and Buyer desires to purchase and acquire from each of the
Shareholders, the shares of Common Stock of Dwight Trucking listed on
Schedule 1 hereto.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and other valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:
1. Definitions. For the purposes of this Agreement, the following terms
shall have the respective meanings set forth below:
1.1 "Affiliates". The term "Affiliates" has the same meaning as under
Rule 405 of the Securities Act of 1933, as amended.
1.2 "Balance Sheet Liabilities". The term "Balance Sheet Liabilities"
means all Liabilities set forth on the Balance Sheet of Dwight Trucking,
dated June 30, 1995.
1.3 "Closing" and "Closing Date". The terms "Closing" and "Closing Date"
have the same meaning as defined in Section 8 hereof.
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1.4 "Corporate Cash". The term "Corporate Cash" means the aggregate
amount of cash held in the bank accounts of Dwight Trucking as of the close
of business on August 11, 1995, except cash which constitutes deposits for
future service, trust funds, escrow accounts, or which is owned by any
individual or entity other than Dwight Trucking, less cash relating to
Post Effective Date Revenues.
1.5 "Environmental Laws". The term "Environmental Laws" as used herein
means all federal, state, local and foreign environmental, health and safety
laws, codes and ordinances and all rules and regulations promulgated
thereunder, including, without limitation, laws, rules and regulations
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals, or industrial, solid, toxic or hazardous substances
or wastes. Environmental Laws include, without limitation (i) the Federal
Water Pollution Control Act ("FWPCA"), 33 U.S.C. Section 1251 et seq.; (ii) the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section 9601 et seq.; (iii) the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et seq.; (iv) Hazardous Materials
Transportation Act, 49 U.S.C. Section 7401 et seq.; (vi) the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq.; (vii) the Safe Drinking Water Act,
42 U.S.C. Section 201 et seq., and (viii) rules and regulations promulgated
under all of the above.
1.6 "Governmental Authority". The term "Governmental Authority" as used
herein means any agency, instrumentality, department, commission, court,
tribunal or board of any government, whether foreign or domestic and whether
national, federal, state, provincial or local.
1.7 "Liabilities". The term "Liabilities" has the meaning set forth in
Section 13.1 hereof.
1.8 "Liens". The term "Liens" means all security interests, liens,
mortgages, claims, charges, pledges, restrictions, equitable interests,
easements, property rights or encumbrances of any nature.
1.9 "Permitted Encumbrances". The term "Permitted Encumbrances" means (i)
liens listed on Schedule 15 attached hereto; (ii) liens for taxes not yet
delinquent or being contested in good faith by appropriate proceedings; and,
(iii) such technical imperfections of title and easements, if any, which do
not in the sole discretion of Buyer, when considered together, detract
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materially from the value of, or interfere with, the present or presently
proposed use of, any such property.
1.10 "Post-Effective Date Revenues". The term "Post-Effective Date
Revenues" has the meaning set forth in Section 5 of this Agreement.
1.11 "Receivables". The term "Receivables" means all outstanding accounts
receivable of Dwight Trucking as of the close of business on the Effective
Date and listed on Schedule 4, attached hereto, that have not been collected
by Dwight Trucking as of the Closing.
1.12 "Reimbursable Expenses". The term "Reimbursable Expenses" means the
ordinary and necessary business expenses of Dwight Trucking paid by Dwight
Trucking during the period from the Effective Date through the Closing Date
which have been accepted by the Buyer as ordinary and necessary business
expenses and are listed on Schedule 2, attached hereto.
1.13 "Subsidiaries". A "subsidiary" with respect to any corporation
referred to in this Agreement shall mean a corporation (or equivalent legal
entity under foreign law) of which the Buyer, Dwight Trucking or any other
corporation referred to in this Agreement, as the case may be, owns directly
or indirectly 50% or more of the outstanding stock the holders of which are
ordinarily and generally, in the absence of contingencies, entitled to vote
for the election of a majority of the directors.
1.14 "Taxes". The term "Taxes" shall mean all taxes, charges, fees, levies
or other assessments, including, without limitation, income, gross receipts,
excise, real and personal property, sales, transfer, license, payroll and
franchise taxes, imposed by any Governmental Authority and shall include any
interest, penalties or additions to tax attributable to any of the foregoing.
1.15 "Transportation Laws". The term "Transportation Laws" as used herein
means all federal, state, local and foreign laws, codes and ordinances and
rules and regulations relating to the transportation of waste (hazardous
and nonhazardous) including, but not limited to the rules and regulations
promulgated by the United States Department of Transportation and any
analogous state laws.
2. Sale and Conveyance of Shares. Subject to the terms and conditions of
this Agreement, at the Closing, the Shareholders shall sell, assign,
transfer, and convey to the Buyer, and the Buyer shall purchase from the
Shareholders, all of the issued and outstanding capital stock of Dwight
Trucking (the "Shares"), free and clear of any and all Liens.
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3. Purchase Price; Payment of Purchase Price.
3.1 Purchase Price. Subject to the terms and conditions of this Agreement,
the aggregate purchase price for the purchase of the Shares is the amount
equal to the sum of (i) Nine Hundred Seventy-Three Thousand and 00/100
Dollars ($973,000.00), plus (ii) One Hundred Sixty Thousand Six Hundred
Fifty-Six and 71/100 Dollars ($160,656.71), being an amount equal to the
Corporate Cash, plus (iii) One Hundred Eight Thousand Two Hundred Forty-Four
and 21/100 Dollars ($108,244.21), being an amount equal to the Reimbursable
Expenses, plus (iv) Fifty-Five Thousand Two Hundred Twenty-Eight and 53/100
Dollars ($55,228.53), being an amount equal to the Receivables, less (v)
Twenty Five Thousand One Hundred and no/100 Dollars ($25,100.00), being an
amount equal to the Balance Sheet Liabilities, representing an aggregate
Purchase Price of One Million Two Hundred Seventy-Two Thousand Twenty-Nine
and 45/100 Dollars ($1,272,029.45) (the "Purchase Price").
3.2 Payment of Purchase Price. Subject to the terms and conditions of
this Agreement, at the Closing, Buyer shall pay to Shareholders One Million
Two Hundred Sixteen Thousand Eight Hundred and 92/100 Dollars
($1,216,800.92), representing the Purchase Price less that portion of the
Purchase Price representing the Receivables. This amount shall be paid by
wire transfer of immediately available as follows:
Bank: San Joaquin Bank
ABA No.: 122238048
Account Name: Dale Dwight and Sam Dwight
Account No.: 021 701769
Subject to the following conditions of this Section 3.2, the balance of the
Purchase Price, Fifty-Five Thousand Two Hundred Twenty-Eight and 53/100
Dollars ($55,228.53), which represents that portion of the Purchase Price
relating to the Receivables, shall be paid, in installments, on or before
the fifth business day of each month following the month of Closing. The
amount of each monthly installment shall be an amount equal to Receivables
actually collected, in good funds, after the Closing Date by Dwight Trucking
during the previous month. On July 31, 1996, if any amount of the Purchase
Price relating to the Receivables remains outstanding, Buyer shall satisfy
the payment of the balance of the Purchase Price by assigning, without
recourse and without any representation or warranty relating to such
Receivables, to Shareholders those Receivables remaining uncollected at that
time, and Shareholders shall accept such assignment, without recourse and
without any representation or warranty, of such remaining uncollected
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Receivables in full and complete satisfaction of Buyer's obligation to pay
the balance of the Purchase Price.
4. Standby Letter of Credit. At the Closing, the Shareholders shall have
established and delivered to the Buyer an irrevocable standby letter of
credit in favor of the Buyer, as beneficiary, issued by a national bank or
state chartered bank (the "Bank"), which Bank must be satisfactory to Buyer,
in the amount of One Hundred Twenty-Five Thousand and 00/100 Dollars
($125,000.00) (the "Letter of Credit"). The Letter of Credit shall be
effective as of the Closing Date and shall expire as of the close of business
of the Bank on the first anniversary of the Closing Date. The terms of the
Letter of Credit are to be satisfactory to Buyer and the Shareholders, and
shall provide, among other things, as follows:
4.1 Use of Proceeds. The Buyer may, at any time on or prior to the
termination of the Letter of Credit, draw on the Letter of Credit to pay any
and all (i) Liabilities or (ii) any claims, demands, damages, penalties,
fines, losses, orders (judicial or administrative), decrees, liabilities,
obligations, debts, costs and expenses (including, without limitation,
reasonable attorneys' and/or accountants' fees) incurred, suffered or which
may be incurred or suffered by Buyer as a result of or in connection with
or due to misrepresentation, omission or breach of any representation or
warranty, or failure to comply with any covenant or agreement, given or made
by the Shareholders in this Agreement.
4.2 Method of Draw. Buyer may, from time to time during the term of the
Letter of Credit and subject to the terms set forth in this Section and in
Section 4.3 below, draw on the Letter of Credit by the satisfaction of the
following conditions: (i) delivery to the Bank of a sight draft specifying
the amount to be drawn and (ii) a signed statement which provides a brief
description of the payment obligation for which the draw is made.
4.3 Shareholders' Right to Pay. Prior to making a draw on the Letter of
Credit pursuant to Sections 4.1 and 4.2 above, Buyer shall give Shareholders
written notice of Buyer's intention to draw on the Letter of Credit, which
notice shall set forth a brief description of the payment obligation for
which the draw is to be made. During the period from the date of
Shareholders' receipt of such notice until the earlier of (a) the expiration
of one hundred twenty (120) days or (b) two days preceding the termination
date of the Letter of Credit, Shareholders shall have the right to pay or
otherwise finally settle such claim; provided, however, Buyer shall have
the right to immediately draw on the Letter of Credit (x) if Shareholders
shall not have finally settled such claim within one hundred twenty (120)
days from the date of such notice, or (y) as of the day preceding the
termination date of the Letter of Credit if the Letter of Credit is to
terminate prior to the expiration of such one hundred twenty (120) day
period.
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4.4 Attorney Fees. In the event either party to this Agreement institutes
legal proceedings against the other in connection with or arising out of
(i) Buyer's right to draw on the Letter of Credit under this Section 4 or
(ii) Shareholders' right to pay under Section 4.3 hereof, the non-prevailing
party agrees to pay all reasonable attorneys' fees, court costs, and expenses
to the prevailing party.
5. Delivery of Post-Effective Date Revenues. At the Closing, Shareholders
shall deliver to Buyer all checks, deposits, cash and other amounts received
by Dwight Trucking for services rendered or performed or any other matter
performed or arising after the Effective Date (the "Post-Effective Date
Revenues").
6. Delivery of Shares. At the Closing, Shareholders shall execute, endorse
and deliver to Buyer, in form, manner and substance satisfactory to Buyer
and with the signatures guaranteed by a bank or investment banking firm
reasonably acceptable to Buyer, all of the stock certificates representing
the Shares, duly and validly endorsed for transfer to Buyer, free and clear
of any and all Liens.
7. Value of Shares. Buyer and each of the Shareholders acknowledge and
agree that (i) Dwight Trucking is a closely held corporation in which there
is no active market for the stock of Dwight Trucking, and (ii) the Purchase
Price represents the reasonably equivalent value of the Shares listed on
Schedule 1 owned by each of the Shareholders, being based on the fair value
of such shares as agreed to by the parties.
8. Closing Date. The conveyance of the Common Stock of Dwight Trucking and
the closing of the transactions contemplated herein (the "Closing") shall
occur on August 17, 1995, at 10:00 a.m., or at such other later date as
agreed upon by the parties in writing (the "Closing Date"); provided,
however, that the parties hereto agree that the Agreement shall be deemed
effective for all purposes as of the Effective Date.
9. Representations and Warranties of the Shareholders. The Shareholders,
jointly and severally, represent and warrant to Buyer as of the Closing
Date, the following:
9.1 Organization of Dwight Trucking. Dwight Trucking is a corporation duly
organized, validly existing and in good standing under the laws of
California. Dwight Trucking does not have any Subsidiaries. Dwight
Trucking has the corporate power to own its assets, properties and to carry
on its business as is now being conducted. Dwight Trucking is duly
qualified and in good standing as a foreign corporation in each jurisdiction
in which the nature of the business conducted by it or the character of the
property owned, leased or used by it makes such qualification necessary,
except for any states wherein the failure to be so qualified will not have a
material adverse effect on Dwight Trucking's financial condition.
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9.2 Capital Stock of Dwight Trucking. As of the date of this Agreement,
the authorized capital stock of Dwight Trucking consists of 10,000 shares of
Common Stock, $1 par value, of which 2,000 shares are issued and outstanding
and all of such issued and outstanding shares of Common Stock are issued to
the Shareholders in the amounts set forth opposite his or her name on
Schedule 1 hereto. No shares of Common Stock are held in treasury. There
are no outstanding options, warrants or other rights to subscribe for or
purchase from Dwight Trucking any capital stock of Dwight Trucking or
securities convertible into or exchangeable for capital stock of Dwight
Trucking. The issued and outstanding shares of Common Stock are (i)
validly authorized and issued, (ii) fully paid and nonassessable and (iii)
free and clear of any and all liens, charges, pledges, security, interest
or other encumbrances. Subsequent to June 30, 1995, Dwight Trucking has
not declared or paid any dividend, or declared or made any distribution on
any of its capital stock which has not been lawfully paid or distributed,
or authorized the creation or issuance of, or issues, or authorized or
effected any split-up or any other recapitalization of, any of its capital
stock, or directly or indirectly redeemed, purchased or otherwise acquired
any of its outstanding capital stock or agreed to take any such action.
There are no outstanding contractual obligations of Dwight Trucking to
repurchase, redeem or otherwise acquire any outstanding shares of capital
stock of Dwight Trucking.
9.3 Shareholders. Each of the Shareholders has full power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated herein. This Agreement constitutes the valid and binding
agreement and obligation of the Shareholders, enforceable in accordance
with its terms, subject to bankruptcy, insolvency and other laws of similar
import, and the Shareholders have taken all action required by law, and
any other action required, to effect the transactions contemplated by this
Agreement. The Shareholders own all of the issued and outstanding capital
stock of Dwight Trucking, which consists of 2,000 shares of Common Stock,
with each Shareholder owning the shares of Common Stock set forth opposite
his or her name on Schedule 1 hereto. The Shareholders have not granted,
and do not have outstanding, any agreements, warrants, options or rights
to sell or otherwise dispose any of the Common Stock (other than pursuant
to the terms of this Agreement). All of the issued and outstanding capital
stock of Dwight Trucking is free and clear of all liens, charges, pledges,
security interests or other encumbrances.
9.4 Ownership Interests in Securities. Dwight Trucking possesses no equity
or ownership interests in any bonds or debentures of other business
enterprises.
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9.5 Financials.
9.5.1 Financial Statements. Dwight Trucking has previously furnished the
Buyer a true and correct copy of the unaudited (i) Balance Sheets of Dwight
Trucking as of December 31, 1994 and June 30, 1995; and (ii) the related
statements of income and retained earnings for those same periods. The
above-referenced Financial Statements of Dwight Trucking, as furnished to
Buyer, fairly present the financial condition and results of operation of
Dwight Trucking as of the date thereof. All of the financial statements
described in this Section 9.5.1 are herein referred to as the "Financial
Statements". For purposes of this Agreement, Financial Statements shall
be deemed to include any notes to such financial statements.
9.5.2 Liabilities. As of June 30, 1995, Dwight Trucking does not have
any Liabilities or obligations, either accrued, absolute, contingent, known
or unknown, or otherwise, which in the aggregate exceed $10,000 and which
are not been reflected in the Balance Sheet of Dwight Trucking, dated
June 30, 1995 (the "Balance Sheet"), except such Liabilities that, in the
aggregate, do not exceed $10,000.
9.5.3 Transactions Since June 30, 1995. Except as set forth on Schedule
13, between June 30, 1995, and the date of this Agreement, Dwight Trucking
has not engaged in any material transaction not in the ordinary and normal
course of business and, except as set forth on such Schedule 13, there has
not been, occurred or arisen since June 30, 1995:
9.5.3.1 any material adverse change in the financial condition or in
the operations of the business of Dwight Trucking from that shown on the
Financial Statements; or
9.5.3.2 any damage or destruction in the nature of a casualty loss, or
interference with its business from such loss or from any labor dispute or
court or governmental action, order or decree, whether covered by insurance
or not, materially and adversely affecting the properties or business of
Dwight Trucking; or
9.5.3.3 any increase, except increases given in accordance with prior
practice, in the compensation payable or to become payable by Dwight
Trucking to any of Dwight Trucking's employees or any increase in the
benefits, regardless of amount, in any bonus, insurance, pension or other
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plan, program, payment or arrangement with respect to employee benefits
made to, for or with any officers or employees; or
9.5.3.4 any extraordinary loss or losses (as defined in Opinions No. 9
and No. 30 of the Accounting Principles Board of American Institute of
Certified Public Accountants) suffered by Dwight Trucking which, in the
aggregate, exceed $10,000, or any waiver by Dwight Trucking of any rights
the aggregate value of which exceeds $10,000; or
9.5.3.5 to Shareholders knowledge, any other event, condition or state
of facts (other than the general state of the national economy and proposed
federal legislation or regulation) of any character which would materially
and adversely affect the results of operations or business or financial
condition of Dwight Trucking.
9.6 Tax and Other Returns and Reports.
9.6.1 Tax Returns. All federal, state, local and foreign tax returns and
tax reports required to be filed by Dwight Trucking (including any
extensions) have been timely filed with the appropriate governmental
agencies in all jurisdictions in which such returns and reports are
required to be filed.
9.6.2 Payment of Taxes. All federal, state, local and foreign income,
profits, franchise, sales, use, occupation, property, excise and other taxes
(including interest and penalties), due from Dwight Trucking (i) have been
fully paid or adequately reflected as a liability on the Financial
Statements, or (ii) are being contested in good faith by appropriate
proceedings.
9.6.3 Waiver of Statute of Limitations. No waivers of statutes of
limitation in respect of any tax returns or tax reports have been given or
requested.
9.6.4 Tax Deficiencies. To the best of Shareholders' knowledge, there
are no potential tax deficiencies which may arise from issues which have
been raised or which have not yet been raised but which might reasonably be
expected to be raised by the Internal Revenue Service ("IRS") or any other
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taxing authority that have not been disclosed on Schedule 5 and may
reasonably be expected to have a material adverse effect on Dwight Trucking.
9.7 Property.
9.7.1 Assets. Dwight Trucking owns or leases all of the assets used by it
in the operation or conduct of its business, or required by Dwight Trucking
for the normal conduct of its business.
9.7.2 Real Property. Dwight Trucking owns no real property or any interest
therein.
9.7.3 Leases. Except for the Leases set forth in Schedule 6, there are no
leases of real or personal property executed by or binding upon Dwight
Trucking as lessee, sublessee, tenant or assignee.
9.7.4 Notice. Except as set forth on Schedule 6, Dwight Trucking has not
received notice of (i) any violation of any zoning, use, occupancy, or
building code; or (ii) any claim including civil penalties of any
environmental statute, ordinance, regulation, order, or other law or
requirement affecting or relating to any activities performed at any time
on any real property owned, leased, or used by Dwight Trucking.
9.7.5 Personal Property. Except for property leased by Dwight Trucking,
as shown on Schedule 6, Dwight Trucking owns the full right and interest
and has good and marketable title in and to all material personal and
intangible property used by Dwight Trucking in the conduct of its business
and none of such material personal and intangible property is subject (i)
to contracts of sale, or (ii) to encumbrances, liens, claims, security
interest or charges of any kind or character, except as otherwise described
in Schedule 6.
9.7.6 Inventories. All inventories on hand constituting assets of Dwight
Trucking are in good condition, are, to Shareholders' knowledge, in
compliance as to content, labeling and packaging with applicable laws and
regulations and are usable by Dwight Trucking in the normal operations of
its business as presently conducted.
9.7.7 Notice from Insurance Carrier. Within the previous twelve (12)
months, Dwight Trucking has not received any notice of, or writing referring
to, any requirements or recommendations by any insurance company which has
issued a policy covering any part of the real property owned, leased or
<PAGE>
used by Dwight Trucking requiring or recommending any repairs or work or
other action being taken on any part of the real property owned, leased or
used by Dwight Trucking, except as otherwise disclosed in Schedule 6
9.8 Agreements, Contracts and Commitments.
9.8.1 Contracts. Except as set forth on Schedule 7, Dwight Trucking does
not have:
9.8.1.1 any collective bargaining agreements or any agreements that
contain any severance pay liabilities or obligations;
9.8.1.2 any bonus, deferred compensation, pension, profit-sharing or
retirement plans, programs or other similar employee benefit arrangements;
9.8.1.3 any employment agreement, contract or commitment with an employee
having more than one year to run from June 30, 1995.
9.8.1.4 any agreement of guarantee or indemnification running from Dwight
Trucking to any person or entity;
9.8.1.5 any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other distribution
in respect of Dwight Trucking Common Stock or any other outstanding
securities of Dwight Trucking;
9.8.1.6 any agreement, contract or commitment containing any covenant
limiting the freedom of Dwight Trucking to engage in any line of business
or compete with any person;
9.8.1.7 any agreement, contract or commitment relating to capital
expenditures in excess of Fifteen Thousand Dollars ($15,000.00) and
involving future payments;
9.8.1.8 any agreement, contract or commitment relating to the acquisition
of assets or capital stock of any business enterprise;
<PAGE>
9.8.1.9 any agreement, contract or commitment not made in the ordinary
course of business which involves Ten Thousand Dollars ($10,000.00) or more
or has a remaining term of one year or more from June 30, 1995, or is not
cancelable on thirty (30) days or less notice without penalty. To the best
of Shareholders' knowledge, Dwight Trucking has not breached, and there is
not any claim that Dwight Trucking has breached any of the terms or
conditions of any agreement, contract or commitment set forth in any
position of damages or the loss of benefits in an amount or of a kind which
would have a material adverse effect or the business of Dwight Trucking, or
9.8.1.10 any agreement, contract or commitment with the Shareholders,
any of the officers or directors of Dwight Trucking or any of the affiliates
or members of the immediate family of the Shareholders or any such officers
or directors.
9.8.2 Written List. Attached hereto as Schedule 7 is a written list of
all contracts, leases, agreements and instruments of the following types,
to which Dwight Trucking is a party, or by which it is bound, together with
true and correct copies of each document requested by Buyer and a written
description of each oral arrangement so listed:
9.8.2.1 leases of, and contracts for, the purchase or sale of real estate,
except such leases or contracts whose obligations do not exceed Five
Thousand Dollars ($5,000.00) or in the aggregate Twenty-Five Thousand
Dollars ($25,000.00);
9.8.2.2 labor union contracts together with a list of all labor unions
representing or, to Dwight Trucking's best knowledge, attempting to
represent employees of Dwight Trucking;
9.8.2.3 pension, retirement, profit-sharing, bonus, stock purchase,
stock option, hospitalization or insurance plans (and certificates or other
documents issued thereunder) or vacation pay, severance pay and other
similar benefit arrangements for officers, employees or agents;
<PAGE>
9.8.2.4 employment contracts or agreements, contracts with other persons
engaged in sales or distributing activities, and advertising contracts, which
are not terminable by Dwight Trucking without liability upon termination
notice of thirty (30) days or less;
9.8.2.5 written or oral agreements, understandings and arrangements with
officers, directors, employees, shareholders, agents or Affiliates relating
to present or future compensation of, or other benefits available to, such
persons;
9.8.2.6 contracts, and other arrangements of any kind, whether oral or
written, with any director, officer, or Affiliate of Dwight Trucking;
9.8.2.7 contracts, purchase orders and other arrangements of any nature
involving an expenditure of Five Thousand Dollars ($5,000.00) or more not
made in the ordinary course of business or which involve an unperformed
commitment, under contracts not otherwise disclosed hereunder, in excess of
Twenty-Five Thousand Dollars ($25,000.00); and
9.8.2.8 indentures, loan agreements, notes, mortgages, conditional sales
contracts, and other agreements for financing which involve an obligation
in excess of Five Thousand Dollars ($5,000.00).
9.9 No Breach of Statute or Contract; Governmental Authorizations.
9.9.1 No Violation. Neither the execution and delivery of this Agreement
by the Shareholders nor the compliance by the Shareholders with the terms
and provisions of this Agreement violates any law, statute, rule or
regulation of any governmental agency or authority, domestic or foreign, or
conflicts with or result in a breach of any of the terms, conditions or
provisions of any judgment, order, injunction, decree or ruling of any
court or governmental agency or authority, domestic or foreign, to which
either of the Shareholders or Dwight Trucking is subject to or of any
material agreement or instrument to which Dwight Trucking or the Shareholders
or either of them is a party or by which any of them is bound, or constitute
a default thereunder, or result in the creation of any lien, charge or
<PAGE>
encumbrance upon the Common Stock or any property or assets of Dwight
Trucking or cause any acceleration of maturity of any obligation or loan,
or give to others any interest or rights, including rights of termination
or cancellation, in or with respect to any of the properties, assets,
agreements, contracts, or business the properties, assets, agreements,
contracts or business of Dwight Trucking.
9.9.2 Permits and Licenses. Schedule 8 attached hereto is a true and
complete list of all permits, licenses and franchises presently held by
Dwight Trucking and all applications for any of the foregoing filed by
Dwight Trucking with any Governmental Authority (as hereafter defined).
All permits, licenses and franchises used by Dwight Trucking to conduct
its business are in the name of Dwight Trucking and none are in the name
of any other party.
9.9.3 Reports. There are no reports made by or with respect to Dwight
Trucking since December 1, 1993, (i) to or from (a) the Federal Trade
Commission ("FTC"), (b) the Environmental Protection Agency ("EPA"), (c)
the Equal Employment Opportunity Commission ("EEOC"), (d) the Department of
Labor, or (e) any state or federal government agencies or departments or
any tax audit reports from the IRS, or (ii) under the Occupational Safety
and Health Act ("OSHA").
9.9.4 Violation of Law. Except as shown on Schedule 8, to the best of
the Shareholders' knowledge, Dwight Trucking is not in violation of any law,
statute, rule, governmental regulation or order, or court decree or judgment,
which violation might have a material adverse effect on Dwight Trucking or
the business of Dwight Trucking or the financial condition of Dwight
Trucking.
9.9.5 Environmental Laws and Transportation Laws. To the best of
Shareholders' knowledge, Dwight Trucking has obtained, presently holds and
has adhered to all permits, licenses, and other authorizations required
under federal, state, and local laws (i) which are necessary for or
material to the conduct of Dwight Trucking's business as it is currently
being operated, including, but not limited to, any and all permits and
licenses required under the Environmental Laws and Transportation Laws for
Dwight Trucking to conduct its business as currently conducted. Except as
set forth on Schedule 8, there is no civil, criminal, or administrative
action, suit, demand, claim, hearing, notice, investigation or proceeding
now pending or, to the best of the Shareholders' knowledge threatened,
<PAGE>
against Dwight Trucking relating in any way to the Environmental Laws or
Transportation Laws, or to any regulation, code, plan, order, decree,
judgment, injunction, notice, or demand issued, entered or approved
thereunder.
9.9.6 Other Permits. Dwight Trucking has not received official notice
that it is in violation of any law, regulation, ordinance or rule applicable
to it or its operations.
9.10 No Litigation or Adverse Effects. Except as set forth in Schedule 9,
there is no suit, action or legal, administrative, arbitration, or other
proceeding, or, to the best knowledge of the Shareholders', any governmental
investigation, or any change in the zoning, use, occupancy or building
ordinances affecting the real property or any leasehold interests of Dwight
Trucking pending or, to the knowledge of the Shareholders, threatened,
which could materially and adversely affect the financial condition, results
of operations or business or properties of Dwight Trucking or the conduct of
business of Dwight Trucking. Further, there is no suit, action or legal,
administrative, arbitration, or other proceeding pending against Dwight
Trucking or, to the best of the Shareholders' knowledge, governmental
investigation pending, or to the best knowledge of the Shareholders
threatened, involving any claims based upon negligence, product warranties,
product liability or any other type of claim exceeding potential liability
(including costs of defense and attorneys' fees), whether or not covered
by insurance, in an amount in excess of Ten Thousand Dollars ($10,000.00)
with respect to the individual suit, action, proceeding or investigation,
or potential liability (including costs of defense and attorneys' fees) of
Twenty Thousand Dollars ($20,000.00) in the aggregate of all such suits,
actions, proceedings or investigations, except as set forth in Schedule 9
hereto.
9.11 Patents, Trademarks, etc. Schedule 10 attached hereto is a true and
complete list of all patents and applications, trade names, trademark
registrations and applications, common law trademarks, copyrights and
copyright registrations and applications, which Dwight Trucking owns, uses
or has the right to use or are necessary to the conduct of its business.
None of such patents and applications, trade names, trademark registrations
and applications, common law trademarks, copyrights or copyright
registrations and applications, as the case may be, is subject to any
outstanding order, judgment, decree, stipulation, or agreement restricting
the use of such patents, trade names, trademarks or copyrights, and to the
best of the Shareholders' knowledge none infringes on, or is being infringed
by, other patents, trade names, trademarks or copyrights. Dwight Trucking
has not given and is not bound by an agreement or indemnification for
<PAGE>
patent, trade name, trademark or copyright infringement as to any property
produced, used or sold by it.
9.12 Ability to Conduct the Business. Dwight Trucking is not subject to
or bound by any judgment, order, writ, injunction or decree of any court or
of any governmental body or of any arbitrator which could prevent the use
by Dwight Trucking of assets material to Dwight Trucking, or the conduct
of business material to Dwight Trucking, in each case in accordance with
present practices, after the date of this Agreement. Dwight Trucking is
not a party to, bound by, or a beneficiary of, any agreement which could
prevent the use of assets material to Dwight Trucking, or the conduct of
business as currently conducted by Dwight Trucking, in each case after
the date of this Agreement.
9.13 Insurance. Attached as Schedule 14 is a complete list of all
insurance policies, policy types, policy amounts, annual premium
requirements and premium years, wherein Dwight Trucking or its officers
and directors, in their capacities as officers and directors, are insured.
Dwight Trucking will keep such policies in effect up to and until the
Closing. To Shareholders' knowledge, the amounts and types of such
insurance policies and the insurance carriers issuing such policies fully
meet Dwight Trucking's contractual, legal or regulatory commitments.
9.14 Completeness of Documents Furnished by Dwight Trucking. The copies
of the Articles of Incorporation and Bylaws of Dwight Trucking, and of all
leases, instruments, agreements or other documents (including all Schedules
and documents delivered pursuant to this Agreement) which have been or will
be delivered to Buyer pursuant to the terms of this Agreement or in
connection with the transactions contemplated hereby, are, or if not now
delivered, will when delivered, be true, complete and correct.
9.15 Disposition of Assets. Since June 30, 1995, Dwight Trucking has not
made any sale or other disposition of any of its material properties or
assets or surrendered any of its material rights with respect thereto, or
made any additions to its properties or assets, or entered into any
agreements, or entered into any other transaction, except in each instance
in the ordinary course of business.
9.16 Obligations to Employees. No employee welfare benefit plans and no
employee pension plans are maintained by Dwight Trucking.
9.17 Condition of Plant, Machinery and Equipment. Except as set forth on
Schedule 11, all of the items of the property, plant and equipment owned,
operated or leased by Dwight Trucking and used by Dwight Trucking in its
operations is, in all material respects, in good operating condition,
ordinary wear and tear excepted, and Dwight Trucking has agreed to maintain
<PAGE>
such items in good operating condition until the Closing Date. Casualty
losses to such property, plant and equipment are covered by existing
insurance.
9.18 Stock Redemptions. Except as set forth on Schedule 3, there are no
shares of Common Stock which are subject to redemption or purchase in lieu
of redemption by Dwight Trucking.
9.19 Indebtedness of Shareholders, etc. Except as set forth on Schedule
11, neither of the Shareholders, any of the officers or directors of Dwight
Trucking nor any affiliates or members of the immediate family of the
Shareholders or such officers or directors are indebted to Dwight Trucking,
and Dwight Trucking is not indebted or obligated to either of the
Shareholders or any of the officers or directors of Dwight Trucking or
affiliates or members of the immediate family of the Shareholders or any
of the officers or directors of Dwight Trucking.
9.20 Sensitive Payments. Dwight Trucking has not made or received, and
to the best of Shareholder's knowledge after reasonable due inquiry, none
of the officers, directors, employees, agents, shareholders or other
representative of Dwight Trucking or any person acting on behalf of Dwight
Trucking, has made or received, directly or indirectly, any bribes,
kickbacks, illegal political contributions with corporate funds, improper
payments from corporate funds that are falsely recorded on the books and
records of Dwight Trucking, payments from corporate funds to obtain or
retain business.
9.21 Books of Account. Dwight Trucking has maintained its books of account
in accordance with GAAP, applied on a consistent basis with prior periods.
9.22 Bank Accounts; Powers of Attorney. Schedule 12 attached hereto sets
forth each bank account or borrowing resolution authorizing officers or
agents of Dwight Trucking to borrow money and lists the persons authorized
to transact business on behalf of Dwight Trucking with respect to each such
account or borrowing resolution. Schedule 12 also lists all powers of
attorney granted by Dwight Trucking to any other person.
10. Representations and Warranties of Buyer. The Buyer represents and
warrants to the Shareholders as follows:
10.1 Organization, etc. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oklahoma. The
Buyer has the corporate power and authority to execute and deliver this
Agreement and consummate the transactions contemplated hereby.
<PAGE>
10.2 Authorization, Execution and Delivery of Agreement. The execution,
delivery and performance of this Agreement have been duly and validly
authorized and approved by the Board of Directors and shareholders of the
Buyer. This Agreement constitutes the valid and binding agreement of Buyer,
enforceable in accordance with its terms, subject to bankruptcy, insolvency
and other laws of similar import.
10.3 No Breach of Statute or Contract, Governmental Authorizations. Neither
the execution and delivery of this Agreement by the Buyer, nor compliance
with the terms and provisions of this Agreement by Buyer violates any law,
statute, rule or regulation of any governmental authority, domestic or
foreign, or conflict with or result in a breach of any of the terms,
conditions or provisions of any judgment, order, injunction, decree or
ruling of any court or governmental agency or authority to which the Buyer
is subject.
10.4 Broker's or Finder's Fees. No agent, broker, person or firm acting on
behalf of Buyer or under its authority has been retained by Buyer in
connection with any of the transactions contemplated herein.
10.5 Purchase for Investment, etc. The Buyer is acquiring the shares of the
Common Stock to be issued to the Buyer pursuant to this Agreement (the
"Shares") for the Buyer's own account, to hold for investment, with no
present intention of dividing the buyer's participation with others or
reselling or otherwise participating, directly or indirectly, in a
distribution thereof, and not with a view to or for sale in connection with
any distribution thereof, except pursuant to a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), and any
applicable state securities laws, or a transaction exempt from registration
thereunder, and shall not make any sale, transfer or other disposition of
such shares in violation of any applicable state securities laws, including
in each instance any applicable rules and regulations promulgated thereunder,
or in violation of the Securities Act or the rules and regulations
promulgated thereunder by the Securities and Exchange Commission (the "SEC").
The Buyer understands and agrees that there will be placed on the certificate
or certificates representing the Shares, any substitutions therefor and any
certificates for additional shares which might be distributed with respect to
the Shares, a legend stating in substance:
The shares of stock evidenced by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933,
as amended (the "Securities Act") in reliance on an exemption contained in
Sections 3(b) and/or 4(2) of the Securities Act. These shares may not be
sold or transferred except pursuant to an effective registration statement
<PAGE>
under the Securities Act and any applicable state securities laws unless
there is furnished to the issuer an opinion of counsel or other evidence,
reasonably satisfactory to the issuer's counsel, to the effect that such
registration is not required.
The Buyer understands that under the Securities Act, the Shares must be
held indefinitely unless they are subsequently registered under the
Securities Act or unless an exemption from such registration is available
with respect to any proposed transfer or disposition of the Stockholder's
Shares. The Buyer has received no public solicitation or advertisement
concerning an offer to sell the Shares.
10.6 Best Efforts. To the best of Buyer's knowledge, Buyer has made all
applications and has obtained or will have obtained by the Closing Date,
all permits, licenses and consents from appropriate Governmental Authorities
which may be necessary under any and all Environmental Laws or Transportation
Laws in order to consummate the transactions contemplated herein and to
allow for the conduct of the business of Dwight Trucking to continue
unimpaired immediately following the Closing Date.
11. Additional Covenants of Shareholders. Shareholders agree at any time
and from time to time after the Closing Date, upon the request of Buyer, to
do, acknowledge, and deliver, or cause to be done, executed, or delivered,
all such further acts, assignments, transfers, powers of attorney and
assurances as may be required to carry out the terms and conditions of this
Agreement.
12. Conditions and Transactions Contemplated by Agreement; Abandonment of
Agreement.
12.1 Closing Conditions of Buyer. The obligations of Buyer to consummate
this Agreement or to effect the transactions contemplated by this Agreement
shall be subject to the following conditions:
12.1.1 Standby Letter of Credit. Buyer shall have received from
Shareholders the Letter of Credit pursuant to the terms of Section 4 of this
Agreement.
12.1.2 Post-Effective Date Revenues. Shareholders shall have delivered
the Post-Effective Date Revenues pursuant to Section 5 of this Agreement.
<PAGE>
12.1.3 Representations and Warranties of Shareholders to be True and
Compliance With Covenants. Except to the extent waived in writing by Buyer
hereunder, (i) the representations and warranties of Shareholders herein
contained shall be true in all material respects on the Closing Date with
the same effect as though made at such time; and (ii) Shareholders shall
have performed all obligations and complied with all covenants, obligations,
and agreements required by this Agreement to be performed or complied with
by Shareholders on or prior to the Closing Date.
12.1.4 Third Party Consents. Dwight Trucking or Shareholders shall have
obtained consents to the transactions contemplated by this Agreement from
the parties to all contracts, permits, agreements, debt instruments and
other documents referred to in the Schedules delivered by Shareholders to
Buyer in accordance with this Agreement, which require such consents and
consents from, or notification to, all Governmental Authorities which
require such consents or notifications.
12.1.5 No Material Adverse Change. Since June 30, 1995, there shall not
have occurred (i) any material adverse change in the business, properties,
assets, results of operations or financial condition of Dwight Trucking, or
(ii) any loss or damage to any of the properties or assets (whether or not
covered by insurance) of Dwight Trucking which will materially affect or
impair the ability of Dwight Trucking to conduct, after consummation of the
transactions contemplated hereby, the business of Dwight Trucking as now
being conducted by Dwight Trucking.
12.1.6 No Change from Effective Date. From the Effective Date through
the Closing Date, there shall not have occurred (i) any material adverse
change in the business, properties, assets, results of operations or
financial condition of Dwight Trucking, or (ii) any loss or damage to any
of the properties or assets (whether or not covered by insurance) of Dwight
Trucking which will materially affect or impair the ability of Dwight
Trucking to conduct, after consummation of the transactions contemplated
hereby, the business of Dwight Trucking as now being conducted by Dwight
Trucking, including, but not limited to, any violation under the
Environmental Laws or any expenditure not in the ordinary course of Dwight
Trucking's business.
12.1.7 Statutory Requirements; Litigation. All statutory requirements
for the valid consummation by Shareholders of the transactions contemplated
by this Agreement shall have been fulfilled; all authorizations, consents
<PAGE>
and approvals of all Governmental Authorities required to be obtained in
order to permit consummation by Shareholders of the transactions
contemplated by this Agreement and to permit the business presently
conducted by Dwight Trucking to continue unimpaired immediately following
the Closing shall have been obtained, and all applications for permits
shall have been approved by the appropriate Governmental Authorities and
all authorizations and approvals relating to all permits and licenses held
by Dwight Trucking shall have been obtained from the appropriate Governmental
Authorities under any and all of the Environmental Laws or Transportation
Laws as a result of the change in ownership of Dwight Trucking, pursuant to
the terms of this Agreement, with such permits, approvals and authorizations
to be in form and substance satisfactory to Buyer, so that Dwight Trucking
is permitted to continue unimpaired immediately following the Closing Date
the same business operations that Dwight Trucking carried on as of the date
of this Agreement and the Closing Date. No Governmental Authority, whether
federal, state or local, shall have instituted (or threatened to institute
either orally or in a writing directed to Shareholders or Dwight Trucking
or any of its subsidiaries) an investigation which is pending on the Closing
relating to this Agreement and the transactions contemplated hereby, and
between the date of this Agreement and the Closing no action or proceeding
shall have been instituted or, to the knowledge of Buyer, shall have been
threatened before a court or other governmental body or any public authority
to restrain or prohibit the transactions contemplated by this Agreement or
to obtain damages in respect thereof.
12.1.8 Opinion of Counsel of Shareholders. Buyer shall have received
from counsel to Shareholders, or such other counsel acceptable to Buyer and
its counsel, an opinion or opinions, dated the Closing Date, substantially
as follows:
12.1.8.1 Dwight Trucking is a California corporation duly organized,
validly existing and in good standing under the laws of the State of
California. Dwight Trucking is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the nature of the
business conducted by it or the character of the property owned, leased or
used by it makes such qualification necessary.
12.1.8.2 Dwight Trucking has all necessary and requisite corporate power
and authority to own, operate and lease its properties and carry on its
business as the same is now being conducted.
<PAGE>
12.1.8.3 The Agreement has been duly and validly executed and delivered
by Shareholders and constitutes the legal, valid and binding obligations of
Shareholders, enforceable against the Shareholders in accordance with its
terms, except as such enforceability is limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws of general
application affecting the rights of creditors now or hereafter in effect.
12.1.8.4 The execution, delivery and performance of the Agreement by
the Shareholders does not conflict with or violate the Certificate of
Incorporation or Bylaws of Dwight Trucking, or, the knowledge of Counsel,
any Laws applicable to the Shareholders or Dwight Trucking or by which any
of Dwight Trucking's material assets are bound.
12.1.8.5 To such counsel's knowledge, the execution, delivery and
performance of the Agreement by Shareholders does not (i) conflict with or
violate any order, writ, judgment, injunction, decree, determination or
award to which Shareholders or Dwight Trucking is a party or bound by; or
(ii) result in a breach of any of the terms or provisions of, or constitute
a default under, give rise to a right of termination or acceleration under,
or imposition of a Lien on any of Dwight Trucking's assets as a result of,
any mortgage, loan, agreement, note, lease, license, permit, franchise or
other agreement to which Shareholders or Dwight Trucking is a party or
bound by.
12.1.8.6 To such counsel's knowledge, there are no claims, actions,
proceedings or investigations, pending or threatened, against Shareholders
or Dwight Trucking that could adversely and materially affect the
consummation of the transactions contemplated by the Agreement before any
court (in law or in equity), arbitrator or administrative, governmental
or regulatory authority or body.
<PAGE>
12.1.8.7 All consents and approvals required by the California
Corporation Commissioner to transfer the Shares to the Buyer have been
obtained.
12.1.8.8 The authorized capital stock of Dwight Trucking is as set forth
in Section 9.2 of the Agreement. Shareholders are the sole owners,
beneficially and of record, free and clear of all Liens, claims and
encumbrances of any nature whatsoever, of all of the issued and outstanding
shares of capital stock of Dwight Trucking. The issued and outstanding
shares of capital stock of Dwight Trucking are validly issued and
outstanding, fully paid and nonassessable, and have not been issued in
violation of the preemptive rights of any past or present stockholder of
Dwight Trucking. There are no outstanding options, warrants or other rights
to subscribe for or purchase from Dwight Trucking or Shareholders any
capital stock of Dwight Trucking or securities convertible into or
exchangeable for capital stock of Dwight Trucking. There are no outstanding
contractual obligations of Dwight Trucking to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock of Dwight Trucking.
12.1.8.9 Shareholders have duly and validly transferred, assigned and
conveyed to Buyer all of the issued and outstanding shares of capital
stock of Dwight Trucking, free and clear of any Liens.
Such opinion must be satisfactory to Buyer and its counsel. In giving
the foregoing opinion, such counsel may rely on opinions of local counsel
in jurisdictions other than that in which such counsel is licensed to
practice with respect to matters involving the laws of such jurisdictions
and on certifications from the Shareholders.
12.1.9 Due Diligence. Buyer shall have completed its due diligence
of Dwight Trucking, with the results thereof satisfactory to Buyer.
12.1.10 Stock Certificates. On or prior to the Closing, Shareholders shall
execute, endorse and deliver to Buyer, with signatures guaranteed by a
bank or investment banking firm and in form acceptable to Buyer, all of the
stock certificates representing the Shares, duly and validly endorsed for
transfer to Buyer, free and clear of any and all Liens.
<PAGE>
12.1.11 No Liens on Assets. All assets of Dwight Trucking (real and
personal) shall be free and clear of any and all Liens except for Permitted
Encumbrances on Real Property owned by Dwight Trucking.
12.1.12 Minute Books and Stock Ledgers. Shareholders shall have delivered
to Buyer the minute books and stock ledgers for Dwight Trucking.
12.1.13 Good Standing Certificates. Certifications of good standing (or
analogous documents), dated as close as practicable to the Closing, from
the appropriate authorities in California and in each jurisdiction in which
Dwight Trucking is qualified to do business, showing Dwight Trucking to be
in good standing and to have paid all taxes due in the applicable
jurisdiction.
12.1.14 Resignation of Directors. All of the directors of Dwight Trucking
shall have resigned as members of the Board of Directors of Dwight Trucking,
effective as of the Closing Date, except for any existing director of Dwight
Trucking who Buyer advises Shareholders in writing prior to Closing is to
remain a director of Dwight Trucking, whichever is applicable, prior to
Closing.
12.1.15 Termination of Stock Purchase Agreement. Dwight Trucking and the
Shareholders shall have terminated the Dwight Trucking, Inc. Stock Purchase
Agreement dated April 30, 1984.
12.1.16 Lease Agreement. Dwight Trucking shall have entered into a Lease
Agreement with The Dwight Living Trust, relating to the property located at
3413 Petrol Road, Bakersfield, California 93308.
12.2 Conditions to Obligations of Shareholders. The obligation of
Shareholders to consummate this Agreement or to effect the transactions
contemplated by this Agreement shall be subject to the following conditions:
12.2.1 Resolutions of Board of Directors. Buyer shall have furnished
Shareholders with:
12.2.1.1 certified copies of resolutions duly adopted by the Board of
Directors of Buyer approving and authorizing execution, delivery and
performance of the transactions contemplated by this Agreement;
12.2.1.2 Incumbency Certificate for the officers of Buyer.
<PAGE>
12.2.2 Representations and Warranties of Buyer to be True. Except to the
extent waived hereunder, (i) the representations and warranties of Buyer
herein contained shall be true in all material respects at the Closing with
the same effect as though made at such time, except for such which do not
have a material adverse effect on Buyer and its subsidiaries, taken as a
whole; and (ii) Buyer shall have performed all material obligations and
complied with all material covenants required by this Agreement to be
a certificate of Buyer, dated the Closing and signed by its President or a
Vice President to both of the aforementioned effects.
12.2.3 Opinion of Counsel of Buyer. Shareholders shall have received from
Conner & Winters, a Professional Corporation, counsel to Buyer, or such
other counsel reasonably acceptable to Shareholders and its counsel, an
opinion, dated the Closing Date, substantially as follows:
12.2.3.1 Buyer is a corporation duly organized and in good standing under
the laws of the State of Oklahoma.
12.2.3.2 Buyer has all necessary corporate power and authority to execute
and deliver the Agreement.
12.2.3.3 The Agreement has been duly executed and delivered by Buyer
and constitutes a legal, valid and binding obligation of Buyer enforceable
against Buyer in accordance with its terms, except (i) insofar as
enforceability or effectiveness is limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfers or similar
laws of general application affecting the rights of creditors now or
hereafter in effect.
12.2.3.4 The execution, delivery and performance of the Agreement by
Buyer does not conflict with or violate the Certificate of Incorporation
or Bylaws of Buyer.
12.2.3.5 To such counsel's knowledge, there are no claims, actions,
proceedings or investigations pending or threatened against Buyer that
could adversely and materially affect the consummation of the transactions
contemplated by the Agreement before any court (in law or in equity),
<PAGE>
arbitrator or administrative, governmental or regulatory authority
or body.
12.2.3.6 To such counsel's knowledge, the execution, delivery and
performance of the Agreement by Buyer does not (i) conflict with or violate
any order, writ, judgment, injunction, decree, determination or award to
which Buyer or its parent is a party or bound by; or (ii) result in a
breach of any of the terms or provisions of, or constitute a default under,
give rise to a right of termination or acceleration under, or imposition
of a Lien on any of Buyer's assets as a result of, any mortgage, loan,
agreement, note, lease, license permit, franchise or other agreement or
instrument to which Buyer or its parent is a party or bound by.
Such opinion is to be satisfactory to Shareholders and its counsel. In
giving the foregoing opinion, such counsel may rely on opinions of local
counsel in jurisdictions other than that in which such counsel is licensed
to practice with respect to matters involving the laws of such jurisdictions
and certificates of officers of the Buyer.
12.2.4 Lease Agreement. Dwight Trucking shall have entered into a Lease
Agreement with The Dwight Living Trust, relating to the property located
at 3413 Petrol Road, Bakersfield, California 93308.
13. Indemnification.
13.1 By the Shareholders. The Shareholders, jointly and severally, shall
indemnify, defend and hold harmless the Buyer, Dwight Trucking and each of
their officers, directors, agents, employees and Affiliates harmless from
and against any and all claims, demands, judgments, penalties, fines,
liabilities, losses, costs, damages, expenses (including, without limitation,
related reasonable attorney's and accountants' fees and expenses), incurred
or suffered or which may be incurred or suffered by any of them
reach of a warranty or misrepresentation, or failure to comply with any
covenant or agreement, given or made by either of the Shareholders in
this Agreement, or (ii) any and all liabilities, claims, judgments, demands,
damages, penalties, fines, losses, orders (judicial or administrative),
decrees, liabilities, obligations, debts, costs and expenses (including,
without limitation, reasonable attorneys' and accountants' fees), and
obligations of Dwight Trucking of any kind or character whatsoever, whether
<PAGE>
liquidated, unliquidated or disputed, asserted or assertable, known or
unknown, in contract or in tort, at law or in equity, which have arisen on
or in connection with or are incurred or relate to any matter, issue or
occurrences that arose or occurred on or before the Effective Date,
including, but not limited to, Balance Sheet Liabilities, liabilities or
obligations arising under or in connection with any Environmental Laws or
Transportation Laws as a result of a violation of, or failure to comply
with, any Environmental Laws or Transportation Laws on or prior to the
Effective Date or due to a release or threatened release of any hazardous
substance (as defined in Subtitle I of RCRA or any analogous state or local
laws) or petroleum (as defined in Subtitle I of RCRA or any analogous state
or local laws) into the environment on or prior to the Effective Date or
Taxes (federal, state or local) due or which may become due by Dwight
Trucking as a result of its activities or operations on or prior to the
Effective Date (all the foregoing liabilities, debts and obligations are
referred to herein as the "Liabilities") .
13.2 Expiration of Indemnification. Except as otherwise provided in
Section 13.4, below, the obligations of the Shareholders to indemnify under
Section 13.1 of this Agreement shall expire at the end of twelve months
after the Closing Date; provided, however, that such expiration shall not
include or extend or apply to any Liability as to which written notice
shall have been given to the Shareholders on or before the end of twelve
months after the Closing Date (the "Indemnification Expiration").
13.3 Limitation on Indemnification. Except as otherwise provided in
Section 13.4, below, the obligations of the Shareholders to indemnify under
Section 13.1 of this Agreement shall be limited to the aggregate amount of
One Hundred Twenty-Five Thousand and 00/100 Dollars ($125,000.00) (the
"Indemnification Limitation").
13.4 Exceptions to Sections 13.2 and 13.3. The Indemnification Expiration
under Section 13.2 of this Agreement and the Indemnification Limitation
under Section 13.3 of this Agreement do not include or extend or apply
to (i) any Liability for, or in connection with, or related to Taxes or
(ii) the Balance Sheet Liabilities.
13.5 Notices and Defense of Claims. The party seeking indemnification
under this Article 13 (the "Indemnitee") shall give the indemnifying party
under this Article 13 (the "Indemnitor") prompt notice of any claims of
third parties as to which the Indemnitee shall seek indemnification
hereunder, and the Indemnitee shall forward to the Indemnitor any letter
of claim, demand, summons, notice or complaint regarding claims of third
parties. Indemnitee shall afford Indemnitor an opportunity to defend, at
Indemnitor's expense, and Indemnitee shall have the right to participate,
at its expense, and with counsel of its own choosing, in such defense.
If Indemnitor shall not defend against any such claim on a timely basis,
<PAGE>
Indemnitee may defend against such claim using counsel selected by
Indemnitee, but at Indemnitor's expense. Indemnitee will not make any
settlement or payment with respect to any such claim without first
obtaining written approval of Indemnitor, which approval shall not be
unreasonably withheld, and if Indemnitor shall fail to respond to such
request for approval within thirty (30) days after each written request
therefore, it shall conclusively be presumed that such approval is
given. Indemnitee and Indemnitor agree mutually to cooperate with one
another in the defense against such claims.
14. General.
14.1 Expenses. Each party shall bear its own out-of-pocket expenses
incurred in connection with the transactions contemplated by this Agreement,
including, without limitation, all legal, accounting, consulting, brokers,
advisory, travel, communications and other similar fees and expenses;
provided, however, that any and all such expenses incurred by Dwight
Trucking on or prior to the Closing Date in connection with this Agreement
and consummation of the transactions contemplated by this Agreement shall
be considered as incurred by Shareholders and shall be paid by Shareholders.
14.2 Amendment. This Agreement may not be amended except in writing
executed by all of the parties hereto.
14.3 Survival. Each representation, warranty, covenant and agreement
contained herein shall survive the consummation of the transactions
contemplated hereby.
14.4 Governing Law and Jurisdiction.
14.4.1 Governing Law. This Agreement and the legal relations between
the parties shall be governed by and construed in accordance with the laws
of the State of Oklahoma.
14.4.2 Jurisdiction. The parties agree that, in the event a suit is
deemed necessary by either party in order to enforce the terms of this
Agreement, such suit shall be brought in the federal court located in
Fresno, California, or state court located in Kern County, California,
of competent jurisdiction. Both parties agree to the jurisdiction of the
above-referenced courts in connection with disputes arising under this
Agreement, and neither party will attempt to file a suit other than in
the above-referenced courts or attempt to seek the removal of a suit to
another jurisdiction in connection with disputes arising under this
Agreement.
<PAGE>
14.5 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if sent by registered or certified
mail, postage prepaid, addressed as follows:
To the Shareholders: Dale Dwight
201 Star Court
Bakersfield, CA 93308
Sam Dwight
649 Twin Leaf Drive
Bakersfield, CA 93308
To the Buyer: Environmental Transportation
Services, Inc.
1813 Southeast 25th Street
Post Office Box 36118
Oklahoma City, Oklahoma 73136
Attn: Mr. Mark Helm
or such other address as shall be furnished in writing by either party.
14.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties.
14.7 Invalidity and Severability. If any one or more of the provisions
contained in the Agreement shall for any reason be held to be invalid or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the remaining provisions of this Agreement
and this Agreement shall be construed as if such invalid, illegal or
unenforceable provisions had never been contained herein.
14.8 Headings. The descriptive headings of the several paragraphs of
this Agreement are inserted for convenience only and do not constitute
a part of this Agreement.
14.9 Entire Agreement. This Agreement, the Schedules and the Exhibit
hereto contain the entire understanding among the parties and supersedes
any prior written or oral agreement between them respecting the subject
matter of this Agreement. There are no representations, agreements,
arrangements or understandings, oral or written, between the parties
hereto relating to the subject mater of this Agreement which are not
fully expressed herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the 17th day of August, 1995; however, this Agreement shall be effective
as of the close of business on the 30th day of June, 1995.
ENVIRONMENTAL TRANSPORTATION
SERVICES, INC., an Oklahoma corporation
By /s/ Mark Helm
__________________________________________
Mark Helm, President
("Buyer")
/s/ Dale Dwight
_____________________________________________
DALE DWIGHT, an individual
/s/ Sam Dwight
_____________________________________________
SAM DWIGHT, an individual
("Shareholders")
ISTE:\A-C\AMETECH\10Q\10Q-EX2.2PA
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> $ 1,000
<SECURITIES> 0
<RECEIVABLES> 3,543,000
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0
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