<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-KSB
CURRENT REPORT
Pursuant to Sections 13 of 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 22, 1996
ENVIRONMENTAL PLUS, INCORPORATED
--------------------------------
(Exact name of registrant as specified in its charter)
Texas 0-13041 75-1939021
- -----------------------------------------------------------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation Number)
2995 LBJ Freeway, Suite 200, Dallas, Texas 75234
------------------------------------------------
(Address of Principal Executive offices)
Registrant's telephone number, including area code (214) 481-1211.
<PAGE>
ITEM 2. Acquisition or Disposition of Assets.
As previously reported in the Company's Quarterly Report
on Form 10-QSB, filed on August 13, 1996, the Company acquired
substantially all the assets of Gulf Coast Cooling Tower
Services, Inc. from the Company's director and Secretary,
George Davis. Mr. Davis abstained from voting as a director
of the Company in the transaction. The value of the assets
according to the agreement between the parties is
approximately $574,000. The acquisition resulted in the
continuation of the business underlying the assets (through
the Company's subsidiary, Gulf Coast Towers, Inc.), which is
the construction and repair of industrial cooling towers
primarily in Texas, Louisiana and Arkansas for electric
utility companies, and related consulting services.
The purchase price for the assets was 574,000 shares of
the Company's subsidiary's preferred stock, par value $1.00
per share, convertible on a one-for-one basis into the
Company's common stock.
The Company hereby files this Current Report on Form
8-KSB to submit the most recent audited financial statements
of Gulf Coast Cooling Tower Service, Inc., for the year ended
December 31, 1995 and proforma financial statements of the
Company for the nine (9) months ended May 31, 1996.
ITEM 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Audited Balance Sheet of Gulf Coast Cooling Tower
Service, Inc. as of December 31, 1995, and related
statements of income, retained earning and cash flows for
each of the two (2) years then ended.
(b) Unaudited Proforma Condensed Balance Sheet of
Environmental Plus, Inc. p/k/a Kinlaw Energy Partners
Corporation as of May 31, 1996 and the related pro forma
statement of operations for the nine (9) months ended May
31, 1996.
(c) Exhibits
Exhibit No. Document Description
----------- --------------------
2.1 Asset Purchase Agreement, dated as of
June 15, 1996, between Environmental
Plus, Incorporated (formerly known as
Kinlaw Energy Partners Corporation) and
Gulf Coast Cooling Tower Service, Inc.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
ENVIRONMENTAL PLUS, INCORPORATED
By: /s/ J.D. Davenport
------------------------------
J.D. Davenport, President
Date: September 22, 1996
EXHIBIT INDEX
-------------
Exhibit No. Document Description
- ----------- --------------------
2.1 Asset Purchase Agreement, dated as of June 15,
1996, between Environmental Plus, Incorporated
(formerly known as Kinlaw Energy Partners
Corporation) and Gulf Coast Cooling Tower
Service, Inc.
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND
UNAUDITED PRO FORMA FINANCIAL INFORMATION
-----------------------------------------
Financial Statements: Page
Gulf Coast Cooling Tower Service, Inc.
Independent Auditor's Report F-2
Balance Sheet as of December 31, 1995 F-3
Statement of Income and Retained Earnings
for the Years Ended December 31, 1995 and 1994 F-4
Statement of Cash Flows for the years
ended December 31, 1995 and 1994 F-5
Notes to Financial Statements F-6
Unaudited Pro Forma Financial Statements:
Environmental Plus, Inc. (p/ka/ Kinlaw
Energy Partners Corporation
Letter from Gregory Wayne Guinn,
Certified Public Accountant F-10
Pro Forma Condensed Balance Sheet
as of May 31, 1996 F-11
Pro Forma Condensed Statement of Operations
for Nine Months Ended May 31, 1996 F-12
Notes to Pro Forma Financial Statements F-13
<PAGE>
GULF COAST COOLING TOWER SERVICE, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1995
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Gulf Coast Cooling Tower Service, Inc.
We have audited the accompanying balance sheet of Gulf Coast
Cooling Tower Service, Inc. (a Texas corporation) as of December
31, 1995, and the related statements of income, retained earnings,
and cash flows for each of the two years then ended. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Gulf
Coast Cooling Tower Service, Inc. as of December 31, 1995, and the
results of its operations and its cash flows for the two years then
ended in conformity with generally accepted accounting principles.
/s/ Little, Walker & Company
Little, Walker & Company
Certified Public Accountants
Longview, Texas
May 9, 1996
F-2
<PAGE>
GULF COAST COOLING TOWER SERVICE, INC.
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets
Cash $ 19,950
Accounts receivable - trade 17,487
Accounts receivable - shareholder 134,076
Notes receivable - current maturities 55,924
Deferred income tax benefit 12,929
---------
Total Current Assets 240,366
---------
Property and Equipment
Land and buildings 164,708
Machinery and equipment 581,616
Vehicles 43,724
Office equipment 11,069
---------
Total Property and Equipment 801,117
Less accumulated depreciation 615,074
---------
Net Property and Equipment 186,043
---------
Other Assets
Notes receivable 198,514
---------
Total Assets $ 624,923
$=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 2,232
Accrued expenses 2,740
Notes payable 120,000
---------
Total Current Liabilities 124,972
Long-Term Liabilities -0-
---------
Total Liabilities 124,972
---------
Stockholders' Equity - Common stock
($10 par value, 10,000 shares authorized;
1,000 shares issued and outstanding) 10,000
Additional paid-in capital 97,188
Retained earnings 392,763
---------
Total Stockholders' Equity 499,951
---------
Total Liabilities and Stockholders' Equity $ 624,923
=========
</TABLE>
The accompanying notes are an integral part of these
statements.
F-3
<PAGE>
GULF COAST COOLING TOWER SERVICE, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Sales $ 261,267 $ 240,835
Cost of Sales
Materials 68,163 71,364
Labor 51,697 39,031
Consulting and contract services 60,528 25,897
Other costs 28,182 33,484
----------- -----------
Total Cost of Sales 208,570 169,776
----------- -----------
Gross Profit 52,697 71,059
Operating Expenses
Advertising 77 978
Auto and truck 6,986 8,747
Aviation 3,205 5,282
Bad debts 1,612 1,024
Depreciation 5,973 6,550
Equipment rental 4,046 3,229
Insurance 7,727 5,583
Interest 3,277 2,340
Office expense 3,373 1,259
Professional fees 2,587 1,128
Repair and maintenance 12,363 16,365
Safety 600 -0-
Small tools and supplies 2,161 8,202
Taxes and licenses 7,632 8,228
Travel and entertainment 3,783 8,138
Utilities and telephone 8,823 9,159
Other operating expense 208 330
----------- -----------
Total Operating Expenses 74,433 86,542
----------- -----------
Net Income (Loss) From Operations (21,736) (15,483)
----------- -----------
Other Income and (Expense)
Interest income 18,868 14,690
Rent - real estate 4,550 6,500
Gain (loss) on sale of assets (6,613) 760
Litigation settlement (30,000) -0-
Sales tax audit assessment (12,030) -0-
Prior year insurance refund 9,988 8,912
----------- -----------
Total Other Income and (Expense) (15,237) 30,862
----------- -----------
Net Income (Loss) Before Income Taxes (36,973) 15,379
Provision for Income Tax
Expense (Benefit) (5,452) 2,361
----------- -----------
Net Income (Loss) (31,521) 13,018
Retained earnings, beginning 424,284 411,266
Retained earnings, ending $ 392,763 $ 424,284
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
GULF COAST COOLING TOWER SERVICE, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash Flows From
Operating Activities:
Net income (loss) (31,521) 13,018
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 19,249 24,123
Deferred income taxes (5,452) 2,361
(Gain) loss on sale of assets 6,613 (760)
(Increase) decrease in:
Accounts receivable - trade (7,840) (1,732)
Inventory 10,828 (666)
Increase (decrease) in:
Accounts payable 181 (1,393)
Accrued expenses 2,552 (1,392)
----------- -----------
Net Cash Flow Provided By (Used In)
Operating Activities (5,390) 33,559
----------- -----------
Cash Flows From Investing Activities:
Proceeds from sale of assets -0- 96,500
Advances on notes receivable (50,000) -0-
Collection on notes receivable 35,552 23,618
Loans to shareholder -0- (127,500)
Collection of shareholder loans 31,659 -0-
Cash from surrender of life insurance -0- 28,342
Purchase of property and equipment (107,106) (18,500)
----------- -----------
Net Cash Flow Provided By (Used In)
Investing Activities (89,895) 2,460
----------- -----------
Cash Flows From Financing Activities:
Increase (decrease) in operating
line of credit 120,000 -0-
Retirement of debt (14,202) (26,582)
----------- -----------
Net Cash Flows Provided By (Used In)
Financing Activities 105,798 (26,582)
----------- -----------
Increase (Decrease) in Cash
and Cash Equivalents 10,513 9,437
Cash and cash equivalents - beginning 9,437 -0-
----------- -----------
Cash and cash equivalents - ending $ 19,950 $ 9,437
=========== ===========
Other Cash Flow Information
Interest Paid $ 2,186 $ 2,340
Income Taxes Paid $ -0- $ -0-
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
GULF COAST COOLING TOWER SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 1 - Operations and Significant Accounting Policies
This summary of significant accounting policies of Gulf Coast
Cooling Tower Service, Inc.(the Company) is presented to assist in
understanding the Company's financial statements. The financial
statements and notes are representations of the Company's
management, who is responsible for their integrity and objectivity.
These accounting policies, with the exception of property and
equipment, conform to generally accepted accounting principles and
have been consistently applied in the preparation of the financial
statements.
Business Activities - The Company, located in Overton, Texas, is
engaged in the business of constructing and repairing industrial
cooling towers primarily in Texas and Arkansas. The Company extends
credit to customers primarily in utility, petro-chemical and oil
refining industries.
Effective September 1, 1993, the Company entered into a consulting
agreement with Utility Engineering Corporation (UEC) of Amarillo,
Texas. The agreement provides for a monthly base fee of $1,500 for
a period of forty-eight months. In addition, the contract with UEC
contains a non-competition agreement, restricting the ability of
the Company and its majority shareholder to compete with UEC within
a 250 mile radius of Amarillo, Texas during the term of the
contract. The agreement may be terminated by UEC under a buy out
provision or by the Company upon proper notice.
Company management elected, for 1995 and 1994, not to pursue major
cooling tower construction and repair contracts. Sales for the
respective years included the following components:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Material sales $ 75,168 $ 92,728
Labor sales 119,216 99,618
Consulting 22,361 19,605
Equipment rental 41,270 28,884
Other operating income 3,252 -0-
----------- -----------
Total $ 261,267 $ 240,835
=========== ===========
</TABLE>
Accounts Receivable/Revenue Recognition - Trade accounts receivable
and revenue are recognized as jobs are completed for contracts of
short duration, and the " percentage of completion " method is used
for long term contracts.
Accounts which, in the opinion of management, are doubtful of
collection, are charged against current operations. Trade accounts
written off for 1995 and 1994 totalled $1,612 and $1,024,
respectively.
Inventories - Inventories consist of jobsite materials and supplies
and are valued at cost.
F-6
<PAGE>
GULF COAST COOLING TOWER SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 1 - Operations and Significant Accounting Policies (Continued)
Property,Plant and Equipment - Property, plant and equipment are
stated at cost. Management has elected to calculate depreciation
using the accelerated cost recovery system (ACRS) and the modified
accelerated cost recovery system (MACRS). These are not acceptable
methods for financial statements under generally accepted
accounting principles.
Generally accepted accounting principles require depreciating cost
over an asset's estimated useful life using an acceptable method.
Due to the age of significant assets, the effect of this departure
from generally accepted accounting principles on financial
position, results of operations, and cash flows is not material.
Expenditures for maintenance and repairs and minor renewals are
charged to operations, whereas, betterments which significantly
extend the useful lives of individual assets are capitalized.
Depreciation expense for the years ended December 31, 1995 and
1994, was $19,249 and $24,123, respectively.
Federal Income Tax - Deferred income tax assets and liabilities are
computed annually for differences between the financial statement
and tax bases of assets and liabilities that will result in taxable
or deductible amounts in the future based on enacted tax laws and
rates applicable to the periods in which the differences are
expected to effect taxable income. Income tax expense is the tax
payable or refundable for the period plus or minus the change in
deferred tax assets and liabilities.
Cash and Cash Equivalents - Cash and cash equivalents include cash
on hand and on deposit and highly liquid debt investments with
maturities generally of three months or less.
Note 2 - Related Party Transactions
George R. Davis is the majority shareholder of the Company. Loans
are made from the Company to Davis and from Davis to the Company as
needs arise.
During 1995 the Company purchased, from Davis, a building and land
located in Borger, Texas for $82,500 and equipment at a cost of
$19,500.
The following net transactions and balances are included in the
accompanying financial statements:
1995 1994
----------- -----------
Loans to shareholder $ -0- $ 127,500
Retirement of shareholder debt 31,659 -0-
Accounts receivable - shareholder 134,076 N/A
F-7
<PAGE>
GULF COAST COOLING TOWER SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 3 - Notes Receivable
Notes receivable at December 31, 1995 consisted of the following:
<TABLE>
<CAPTION>
Balance Due in One
12-31-95 Year
---------- ----------
<S> <C> <C>
Tri State Construction,
Unsecured, interest at prime
plus 1%, due on demand.
The Company does not
expect to make demand in 1996. $ 76,010 $ -0-
Brett and Dana Newton,
Secured by real estate,
due in monthly installments of
$587.37 including interest
at 9% through December 15, 2019. 69,258 861
Clyde Davis,
Real estate contract for deed,
due in monthly installments of
$430.04 including interest at 8%
through September 1, 2008. 41,168 1,937
Environmental Plus, Inc.,
Unsecured, interest at 10.5%,
due December 28, 1996. 50,000 50,000
Paul W. Lucas,
Secured by real estate, final
installment due January 2, 1996. 27 27
James R. Black,
Secured by real estate, due in
monthly installments of $409.18
including interest at 11% through
July 15, 2000. 17,975 3,099
---------- ----------
Total $ 254,438 $ 55,924
========== ==========
</TABLE>
In the opinion of management, no impaired notes receivable existed
at December 31, 1995.
Note 4 - Notes Payable
The Company is obligated on notes payable as of December 31, 1995,
in the amounts and under terms as follows;
Balance Current
Creditor/Description 12-31-95 Maturity
- -------------------- -------- --------
First State Bank, Overton, Texas
Secured by deed of trust, interest
due quarterly at TCB prime plus 3/4%,
due August 16, 1996. $ 120,000 $ 120,000
--------- ---------
F-8
<PAGE>
GULF COAST COOLING TOWER SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 5 - Provision for Income Taxes
The provision for income tax expense (benefit) for the years ended
December 31, 1995 and 1994 consists of the following components:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Current $ (4,809) $ -0-
Deferred income tax (benefit) (643) 2,361
------------ ------------
Provision for Income Taxes $ (5,452) $ 2,361
============ ============
Income Tax Reconciliation:
Federal income tax on current
operations at current rates $ (5,546) $ 2,307
Effect of temporary differences 643 (2,250)
Effect of permanent differences 94 54
General business credits utilized -0- (111)
------------ ------------
Current income tax (benefit) $ (4,809) $ -0-
============ ============
The net deferred tax assets (liabilities) in the accompanying
balance sheet include the following components:
1995 1994
------------ ------------
Deferred tax assets arising from:
Net operating loss $ 4,809 $ -0-
General business tax credits 9,727 9,727
Deferred tax liabilities arising from:
Depreciation (IRC Section 179) (1,607) (2,250)
------------ ------------
Net deferred tax asset $ 12,929 $ 7,477
=========== ============
The Company has a tax net operating loss of $32,058 available for
carryforward to offset future taxable income through 2010. In
addition, the Company has unused general business tax credits
available for carryforward to offset future tax liabilities which
will expire as follows: 1996 - $222, 1998 - $568, 1999 - $3,515,
2000 - $72, 2001 - $5,350.
Note 6 - Litigation
During 1995, the Company settled litigation relating to a dispute
over prior year worker's compensation insurance premiums. The claim
was settled upon the Company's payment of $30,000. This amount is
presented in the income statement under other income and expense.
Note 7 - Leasing Activities
The Company is currently under contract to lease equipment to a
customer for monthly rentals of $3,000 for a period of thirty-six
months beginning October 1, 1994. Due to terms of cancellation and
purchase provisions, this lease is accounted for as an operating
type lease and income is recognized as monthly rentals are billed.
The equipment is fully depreciated and has an original cost of
$105,000.
F-9
<PAGE>
Environmental Plus, Inc.
p/k/a Kinlaw Energy Partners Corporation
Pro Forma Financial Statements
May 31, 1996
Gregory Wayne Ginn, P.C.
Certified Public Accountants
<PAGE>
Environmental Plus, Inc.
p/k/a Kinlaw Energy Partners Corporation
To the Board of Directors:
We have compiled the accompanying pro forma condensed balance sheet
of Environmental Plus, Inc. p/k/a Kinlaw Energy Partners
Corporation as of May 31, 1996 and the related pro forma statement
of operations for the nine months ended May 31, 1996, in accordance
with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management.
We have not audited or reviewed the accompanying financial
statements, and accordingly, do not express an opinion or any other
form of assurance to them.
The pro forma information is presented for informational purposes
only and is not necessarily indicative of the operating results
that would have occurred had the described acquisition been
consummated as of the report dates, nor are they necessarily
indicative of future operating results.
May 31, 1996
F-10
<PAGE>
Environmental Plus, Inc.
p/k/a Kinlaw Energy Partners Corporation
Pro Forma Condensed Balance Sheet
May 31, 1996
</TABLE>
<TABLE>
<CAPTION>
ASSETS
Pro Forma
Historical Adjustment Pro Forma
------------ ------------
May 31, 1996 (Note 1) May 31, 1996
------------ ----------- ------------
<S> <C> <C> <C>
Current assets $ - $ 325,000 $ 325,080
Property and equipment,
net of accumulated
depreciation - 248,670 248,670
Other assets - 250 250
------------ ----------- ------------
$ - $ 574,000 $ 574,000
============ =========== ============
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current Liabilities $ 6,835 $ - $ 6,835
Stockholder's equity
(deficit): (6,835) 574,000 567,165
------------ ----------- ------------
$ - $ 574,000 $ 574,000
============ =========== ============
</TABLE>
F-11
<PAGE>
Environmental Plus, Inc.
p/k/a Kinlaw Energy Partners Corporation
Pro Forma Condensed Statement of Operations
Nine Months Ended May 31, 1996
<TABLE>
<CAPTION>
Historical Pro Forma Pro Forma
------------ ------------
Nine months ended Adjustment Nine months ended
May 31, 1996 (Note 1) May 31, 1996
------------ ----------- ------------
<S> <C> <C> <C>
Sales $ - $ 253,191 $ 253,191
Cost of sales - 194,847 194,847
------------ ----------- ------------
Gross profit - 58,344 58,344
Operating expenses 4,000 98,225 102,225
------------ ----------- ------------
Income (loss)
from continuing
operation (4,000) (39,881) (43,881)
Other income 4,603 14,910 19,513
------------ ----------- ------------
Income (loss)
before federal
income tax 603 (24,971) (24,368)
Provision for federal
income taxes - - -
Net income
(loss) $ 603 $ (24,971) $ (24,368)
============ =========== ============
Income (loss)
per share $ - $ - $ -
============ =========== ============
Weighted average
common shares
outstanding
(Note 2) ########### 574,000 ###########
============ =========== ============
</TABLE>
F-12
<PAGE>
Environmental Plus, Inc.
p/k/a Kinlaw Energy Partners Corporation
Notes to Pro Forma Financial Statements
May 31, 1996
Note 1
- ------
These financial statements are intended to present the pro forma
results of the acquisition of certain operating assets of Gulf
Coast Cooling Tower Service, Inc. by Environmental Plus, Inc. The
pro forma information combines the assets, liabilities, equity and
results of continuing operations of the Corporation and the company
whose assets were acquired as if the acquisition had occurred at
the beginning of the nine month period ended May 31, 1996. This
pro forma summary does not necessarily reflect the results of
operations as they would have been if the Corporation and the named
company constituted a single entity during such period and is not
necessarily indicative of results which may be obtained in the
future.
Note 2
- ------
The preferred stock issue resulting from the asset acquisition
includes a convertible feature which allows the holder, at his
option, to convert each preferred share into one share of common
stock. Therefore these preferred shares have been included in
determining all pro forma per share results.
F-13
<PAGE>
Exhibit 2.1
ENVIRONMENTAL PLUS, INCORPORATED
(Formerly known as Kinlaw Energy Partners Corporation)
PURCHASE OF ASSETS
OF
GULF COAST COOLING TOWER SERVICE, INC.
__________________________________________
JUNE 15, 1996
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), made and
entered into effective the 15th day of June, 1996, by and between
ENVIRONMENTAL PLUS, INCORPORATED (Formerly Known as Kinlaw Energy
Partners Corporation, a public Texas corporation ("Purchaser"), and
GULF COAST COOLING TOWER SERVICE, INC., a Texas corporation ("
Seller"');
WITNESSETH:
WHEREAS, subject to the terms and conditions contained in this
Agreement, Seller desires to sell, and Purchaser desires to
purchase, certain assets specified herein;
WHEREAS, the parties wish to make certain agreements related
to such purchase and sale and certain other agreements;
NOW THEREFORE, in consideration of the mutual promises and
agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
Section I. Purchase and Sale of Assets
1.1 Purchase and Sale. Subject to the terms and conditions
contained herein, Seller hereby sells, assigns, transfers, conveys,
and delivers to Purchaser, and Purchaser hereby purchases from
Seller, all of Seller's right, title, and interest in and to the
following of Seller's assets (all of such assets being referred to
herein collectively as the "Assets"):
1.2 Assets. Without limiting the generality of Section 1.1
hereof, the Assets include the following:
(a) All of Seller's equipment, furniture, fixtures,
computer software, shop inventory, and leasehold improvements,
including but not limited to those listed on Exhibit "A"
hereto;
(b) All technical data, customer lists and records,
customer credit information, computer printouts,
correspondence, documentation relating to Seller's business;
and copies of all accounting records, inventory records, and
all other files and records of Seller's business;
(c) All of Seller's good-will, including the right to
use the current name and telephone number of "GULF COAST
COOLING TOWER" (Seller agrees to execute any documents
required to transfer said name and telephone number to
Purchaser); and
<PAGE>
(d) All of Seller's rights under the "Assumed Contracts"
(as herein defined).
Section 2. Assumption of Liabilities
2.1 Limit on Assumed Obligations. Except as expressly
provided in Section 2.2, no obligation or liability of Seller or
relating to Seller's business or the Assets, of any nature
whatsoever (whether express or implied, fixed or contingent,
liquidated or unliquidated, known or unknown, accrued, due or to
become due), is being assumed by Purchaser, nor shall Purchaser be
liable to pay, perform or discharge any such obligation or
liability, nor shall the Assets be subject to any such obligation
or liability. Without limiting the generality of the foregoing,
except as expressly provided in Section 2.2, Purchaser has not
assumed or become liable to pay, perform or discharge, and Seller
warrants that no Asset is subject to:
(a) Any mortgage, security interest, lien or encumbrance
of any kind, other than as expressly assumed pursuant to
Section 2.2;
(b) Any obligation or liability arising from the
relationship between Seller and any of its employees or based
upon termination of such employees by Seller, including,
without limitation, any severance or vacation pay obligation
of Seller existing at the "Effective Time" (as herein defined)
or arising by reason of the termination of Seller's employees
by Seller;
(c) Any obligation or liability of Seller for or
relating to taxes of any nature or description, whenever
incurred or accrued, including, without limitation, any tax
liability for any period prior to the Effective Time;
(d) Any obligation, liability or expense arising out of
any claim made or suit brought for personal injury, death,
property damage, tortious injury or damage, breach of
fiduciary duty or trust, or errors or omissions, in any case
attributable to a cause of action arising prior to the
Effective Time;
(e) Any obligation or liability arising from a violation
or alleged violation of law, rule or regulation prior to the
Effective Time, including, without limitation, any claim,
obligation, liability, loss, damage or expense, of whatever
kind or nature, contingent or otherwise, known or unknown,
incurred or imposed or based upon any provision of federal,
state or local law or regulations or common law applicable to
Seller's business, and arising out of any act or omission of
Seller, or Seller's employees, agents or representatives
occurring prior to the Effective Time;
(f) Any obligation or liability to any shareholder of
Seller, however arising;
(g) Any obligation or liability relating to any act or
omission of Seller under, or breach by Seller of, any Assumed
Contract prior to the Effective Time;
<PAGE>
(h) Any liability arising from the assignment to
Purchaser of any Assumed Contract without having obtained any
required consent to such assignment; or
(i) Any liability or obligation arising in connection
with any litigation, claim or proceeding to which Seller is or
becomes a party.
2.2 Assumed Obligations. Purchaser hereby assumes the
following, and only the following, liabilities and obligations of
Seller (the "Assumed Obligations"):
(a) Seller's obligations arising after, and properly
accruable to periods subsequent to, the Effective Time under
the terms of those contracts, agreements and leases listed on
Exhibit "B" hereto (the "Assumed Contracts"), to the extent,
and only to the extent, such obligations and liabilities are
set forth in the copies of the Assumed Contracts delivered to
Purchaser; and
(b) The liabilities, if any, listed on Exhibit "C"
hereto.
Section 3. Purchase Price.
The purchase price (the "Purchase Price") for the Assets shall
be Five Hundred Seventy-Four Thousand (574,000) shares of
Purchaser's Series A Convertible Preferred Stock ($1.00 par value)
("Preferred Stock"), and shall be paid at the time of Closing.
Purchaser shall make an allocation (the "Allocation") of the
Purchase Price among the Assets within a reasonable period alter
the Closing Date and promptly notify Seller in writing thereof
Purchaser and Seller shall use the Allocation in filing Form 8594
with the Internal Revenue Service, as required by Section 1060 of
the Internal Revenue Code of 1986, as amended, and in filing all
relevant federal and state income tax returns. Seller agrees to
cooperate with Purchaser to the extent necessary to comply with any
documentation or other requirements that may arise in conjunction
with filing Form 8594.
Each share of Preferred Stock will, at the option of Seller be
convertible into one share of Purchaser's common stock. Purchaser
may, upon written thirty (30) day notice delivered to Seller prior
to the time of conversion of such Stock into Purchaser's common
stock, repurchase such preferred Stock for cash equal to 200% of
the par value of such preferred stock. Seller may convert the
Preferred Stock into shares of common stock of Purchaser at any
time alter the date of issue. In the event Purchaser delivers
written notice to Seller of it's intent to repurchase the Preferred
Stock, Seller will have twenty (20) days to deliver written notice
of it's desire to convert the Preferred Stock into Purchaser's
common stock.
Section 4. Closing.
The closing (the "Closing") of the transactions contemplated
hereby will occur simultaneously with the completion and delivery
thereof to Joel Held, Esquire, in Dallas, Texas audited financial
statements (in a form acceptable for S.E.C. purposes) of the Assets
<PAGE>
being purchased hereunder. June 15, 1996 is herein sometimes
referred to as the "Effective Time."
Section 5. Representation and Warranties of Seller.
Seller hereby represents, warrants, covenants, and agrees to
and with Purchaser as follows:
5.1 Due Organization. Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Texas. Seller has the corporate power and authority
to own the Assets, to conduct its business as it is now being
conducted, and to enter into and perform its obligations under this
Agreement and all other documents, instruments and agreements
delivered by Seller pursuant hereto (collectively, with this
Agreement, the "Seller Agreements").
5.2 Approval and Effect of Sale. The execution and delivery
of the Seller Agreements by Seller, the sale and delivery of the
Assets, and the performance by Seller of all obligations under the
Seller Agreements have been duly authorized by all necessary
corporate action on the part of Seller. The Seller Agreements have
been duly executed and delivered by Seller, and the Seller
Agreements constitute valid and legally binding obligations of
Seller, enforceable against Seller in accordance with their
respective terms (subject to limitations on enforceability under
normal equity principles and by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting the
rights of creditors generally), and the consummation of the
transactions contemplated herein and therein will not violate or
result in a default under the terms or provisions of Seller's
charter or bylaws. No consent or approval of any governmental
authority is required in connection with the execution and delivery
by Seller of the Seller Agreements or the consummation of the
transactions provided for herein and therein.
5.3 Title to Assets. Seller has, and has conveyed to
Purchaser pursuant hereto, good title to all of the Assets, free
and clear of any pledge, lien, security interest, encumbrance or
restriction whatsoever.
5.4 Contracts. A true, correct, and complete copy of each of
the Assumed Contracts is included in the business records located
at Seller's business. Seller has duly performed in all material
respects all obligations to be performed by it under the Assumed
Contracts at or prior to the Effective Time and has received no
notice from any other party thereto that it is in default in any
material respect under any of its obligations thereunder. To the
best knowledge of Seller, no other party to any Assumed Contract is
in default in any material respect under any of its obligations
thereunder. No condition or state of facts exists that with notice
or the passage of time, or both, would constitute a default by
Seller under any Assumed Contract, and each Assumed Contract is in
full force and effect and enforceable by Seller (and, after
assignment to Purchaser at the Effective Time, by Purchaser)
against all other parties thereto in all material respects.
<PAGE>
5.5 Litigation: Claims. There is no ligation, action, suit,
proceeding or governmental investigation arising out of the
operations of Seller that is pending or, to the best of Seller's
knowledge, threatened, against Seller or affecting Seller or
Seller's business or any of the Assets, at law or in equity, or
before any federal, state, municipal, local, or other governmental
authority, nor does Seller know or have reason to know of any
ground for any such litigation, action, suit, proceeding, or
investigation. Seller is not subject to any order, writ, or decree
of any court or other governmental authority arising out of
Seller's business and Seller is not involved in any material
controversy with any of its employees.
5.6 Compliance with Law. Seller is in compliance in all
material respects, and has complied in every material respect, with
all laws, regulations, rules, and decrees of all governmental
authorities whatsoever that are applicable to the conduct of its
business.
5.7 Finder's Fee. Seller has done nothing to cause Purchaser
to incur any liability to any party for any brokerage or finder's
fee or agent's commission, or the like, in connection with this
Agreement or any transactions provided for herein.
5.8 Taxes. All tax returns of Seller of every kind,
including, without limitation, returns of all income taxes, real
and personal property taxes, intangibles taxes, withholding taxes,
employee compensation taxes and all other applicable taxes, due to
have been filed prior to the Effective Time have been duly filed in
accordance with applicable law. No deficiencies for any taxes have
been asserted or, to the knowledge of Seller, threatened, and no
audit of such returns is currently underway or, to the knowledge of
Seller, threatened. There are no outstanding agreements by Seller
for the extension of time for the assessment of any tax.
5.9 Material Misstatements or Omissions. No representation
or warranty made by Seller in any Seller Agreement, and no written
statement or exhibit that has been furnished to Purchaser pursuant
hereto or thereto, contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.
Section 6. Further Assurances.
Each of the parties shall promptly and duly execute,
acknowledge and deliver such assignments, documents, instruments
and other assurances, and shall take such other actions, as may be
from time to time reasonably necessary or desirable to carry out
more effectively the provisions of this Agreement and to establish
and protect the rights created or intended to be created in favor
of the parties hereunder.
Section 7. Survival of Representations.
All representations, warranties and covenants of Seller
contained in this Agreement shall survive the Closing Date and
shall be fully applicable and effective whether or not Purchaser
relies in fact thereon or has knowledge, acquired either before or
after the date
<PAGE>
hereof and whether from Seller or from its own investigation, of
any fact at variance with, or of any breach of, any such
representation, warranty or covenant.
Section 8. Indemnification.
8.1 Indemnification by Seller. Seller shall defend,
indemnify, and hold Purchaser wholly harmless from and against any
and all liability, loss, cost and expense whatsoever (including
reasonable fees of legal counsel and related disbursements, whether
such fees and disbursements are incurred in connection with trial
or appellate proceedings or otherwise) that may be incurred by
Purchaser as a result of, or arising out of, or attributable to, or
based upon:
(a) Seller's failure to perform any of its agreements
contained in any Seller Agreement or Seller's failure to pay
any of its liabilities or to perform any of its obligations
other than the Assumed Obligations;
(b) Noncompliance with the Bulk Sales Article of the
Uniform Commercial Code of any applicable jurisdiction;
(c) Any breach of any representation, warranty, covenant
or agreement of Seller set forth herein;
(d) Any claim, obligation, liability, loss, damage or
expense, of whatever kind or nature, contingent or otherwise,
known or unknown, incurred or imposed or based upon any
provision of federal, state or local law or regulations or
common law, applicable to Seller's business or any similar
business and arising out of any act or omission of Seller, its
employees, agents or representatives occurring prior to the
Closing Date; or
(e) Any liability arising from the assignment to
Purchaser of any Assumed Contract without having obtained any
required consent to such assignment.
8.2 Manner of Payment of Finally Determined Claims. The
amount of any liability, loss, cost, or expense for which Seller
shall be finally determined, pursuant to the provisions of Section
8.3 hereof, to have an obligation to indemnify Purchaser pursuant
to this Section 8, shall be paid to Purchaser in immediately
available funds no later than ten (10) days after such final
determination.
8.3 Procedure for Obtaining Indemnification.
(a) In the event that Purchaser shall claim that it is
entitled to be indemnified pursuant to the terms of this
Section 8, it shall so notify Seller in writing of such claim.
Such notice shall specify the breach of representation,
warranty or agreement claimed by Purchaser and the liability,
loss, cost or expense incurred by, or imposed upon, Purchaser
on account thereof if such liability, loss, cost or expense
<PAGE>
is liquidated in amount, the notice shall so state and such
amount shall be deemed the amount of the claim of Purchaser.
If the amount is not liquidated, the notice shall so state
and, in such event, a claim shall be deemed asserted against
Seller on behalf of Purchaser, but no payment shall be made on
account thereof until the amount of such claim is liquidated
and the claim is finally determined.
(b) If Seller shall not, within twenty (20) days alter
the receipt of such notice, advise Purchaser, in writing, that
it denies the right of Purchaser to indemnity in respect to a
claim, then the amount of such claim, at once if said claim is
liquidated, or subsequently at such time as any unliquidated
claim has become liquidated, shall be deemed to be finally
determined between the parties hereto.
(c) If Seller shall notify Purchaser that it disputes
any claim made by Purchaser, then the parties hereto shall
endeavor to settle and compromise said claim, or may agree to
submit the same to arbitration, and if unable to agree on any
settlement or compromise or submission to arbitration, such
claim for indemnification shall be settled by appropriate
litigation, and any liability established by reason of such
settlement, compromise, arbitration or litigation shall be
deemed to be finally determined and shall be paid and
satisfied in accordance with this Section 8.
(d) Purchaser shall promptly give written notice to
Seller of any claim of a third party that may reasonably be
expected to result in a claim for indemnification hereunder.
Seller may elect to settle the claim, and such settled claim
shall be deemed to be finally determined and shall be paid and
satisfied in accordance with this Section 8. If Seller does
not settle the claim, Seller shall then defend such claim at
its expense with counsel selected by Seller and reasonably
satisfactory to Purchaser. Counsel for Seller and Purchaser
shall consult and cooperate at all times in defending against
such a claim, but if the proceeding involves claims against
Purchaser in addition to the claim for which indemnification
under this Section 8 is being sought, the defense of those
claims shall be within the sole discretion of Purchaser and
its counsel.
Section 9. Miscellaneous.
9.1 Notices. All notices or other communications required or
permitted to be given hereunder shall be, as elected by the person
giving such notice, personally delivered or transmitted by postage
prepaid certified mail, to the parties as follows:
(i) If to Purchaser:
J. D. Davenport, President
P.O.Box 795517
Dallas, Texas 75379-5517
<PAGE>
with a copy to:
Joel Held
Hill, Held & Metgzer L.L.P.
One Turtle Creek Village
3878 Oak Lawn - Fourth Floor
Dallas, Texas 75219
(ii) If to Seller:
George Davis, President
Gulf Coast Cooling Tower Service, Inc.
Rt. I, Box 41
Overton, Texas 75284
Except as otherwise specified herein, all notices and other
communications shall be deemed to have been duly given on (i) the
date of receipt if delivered personally, or (ii) five (5) days
after posting if transmitted by mail. Any party hereto may change
its address for purposes hereof by notice to all other parties
hereto.
9.2 Publicity. Except as required by law, Seller will not
make any announcement of the transactions provided for herein
except in a manner acceptable to Purchaser.
9.3 Expenses. Each party shall pay all fees for legal and
accounting services incurred by such party in connection with the
transactions provided for in this Agreement.
9.4 Binding Effect. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the successors,
legal representatives, and assigns of the parties hereto.
9.5 No Third Party Beneficiaries. Nothing in this Agreement,
whether expressed or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other
than the parties to it and their respective successors and assigns.
Nothing herein is intended to relieve or discharge the obligation
or liability of any third person to any party to this Agreement,
nor shall any provision give any third persons any right of
subrogation or action over or against any party to this Agreement.
9.6 Construction. This Agreement shall be deemed to be made
in Texas and shall in all respects be interpreted, construed, and
governed by and in accordance with the laws of the State of Texas.
No provision of any Seller Agreement shall be construed against or
interpreted to the disadvantage of any party hereto or thereto by
any court or other governmental or judicial authority by reason of
such party's or its counsel's having or being deemed to have
structured or drafted such provision.
<PAGE>
9.7 Headings. The headings and subheadings hereof are
inserted for convenience of reference only and shall not affect the
interpretation of this Agreement.
9.8 Amendment. This Agreement may be amended only in a
writing signed by all of the parties hereto.
9.9 Entire Agreement. This Agreement (together with the
Disclosure Schedule and the Seller Agreements, all of which are
hereby incorporated herein by reference) merge all prior
negotiations between the parties and collectively embody the entire
agreement of the parties with respect to the subject matter hereof
9.10 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute and
be the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement under seal on this 15th day of June, 1996.
ENVIRONMENTAL PLUS, INCORPORATED
By:
J. D. Davenport, President
GULF COAST COOLING TOWER SERVICE,
INC.
By:
George Davis, President
<PAGE>
EXHIBIT "A"
TRANSFERRED
ASSET VALUE
----- -----------
N/R - TRI STATE CONST. $ 76,000
N/R - LEWIS INDUSTRIES 201,369
INVENTORY 47,711
BLDG & LAND-BORGER 75,000
BLDG & LAND-LA MARQUE 30,000
22'GOOSENECK JOB TRAILER 7,425
TRI TAN 4,200
CFM AIR COMPRESSOR 1,500
125 CFM AIR COMPRESSOR 1,800
15 TON LORAIN CRANE 1,200
SIMON MANLIFT 15,000
SKY WITCH SCISSOR LIFT 7,500
CLARK LIFT TRUCK 6000# 6,000
CLARK LIFT TRUCK 6000# 6,000
TOYOTA FORK TRUCK 9000# 4,200
CHEVROLET 3/4 TON-DIESEL 18,000
KUBOTA TRACTOR 2,100
HYDRO BLASTER 10-20 NLB 9,000
CAT MOTOR GRADER 3,000
INDUMA MILLING MACHINE 1,740
BAND SAW 14" 450
BAND RESAW 36" 6,000
I8' UTILITY TRLR 10,000# 1,080
MACK DUMP TRUCK 7,000
MACK WINCH TRUCK 8,000
CASE 580D BACKHOE 12,000
TRAILER 20,000# 1,800
JOHN DEER 450 DOZER 6,000
FIAT ALLIS 21B DOZER 6,000
1991 BUICK LeSABRE 7,200
1993 FORD F-150 7,200
1993 FORD RANGER 2,700
CESSNA 182 15,000
------
TOTAL $599,185
<PAGE>
EXHIBIT "B"
All uncompleted work and/or service contracts, if any, between
Seller and customers of Seller (work in process). All information
and records regarding same, if any, will be delivered to Purchaser
on the effective date.
End of Exhibit "B"
<PAGE>
EXHIBIT "C"
NONE.
