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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 13, 1997
ITEQ, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-10668 41-1667001
(STATE OF INCORPORATION) (COMMISSION FILE NUMBER) (IRS EMPLOYER
IDENTIFICATION NO.)
2727 ALLEN PARKWAY, SUITE 760
HOUSTON, TEXAS 77019
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
713/285-2700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 13, 1997, ITEQ, Inc. (the "Company") purchased all of the
capital stock of Exell, Inc. ("Exell") for total cash consideration of
approximately $7,900,000. In addition, the Company guaranteed the obligations
of Exell under a real estate lease covering Exell's operating facility in
Beaumont, Texas and agreed to purchase the property subject to certain
contingencies. The Company funded the acquisition from available borrowings
under its existing revolving credit facility.
Exell specializes in the design, manufacturer and repair of shell and
tube heat exchangers and is a competitor of the Company's Ohmstede, Inc.
operation. For its fiscal year ended September 30, 1996, Exell reported
revenues of approximately $24,300,000. The transaction will be accounted for
using the purchase method of accounting.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired. As of the date
of this Form 8-K, it is impracticable for the Company to file
the required financial statements of the acquired business.
The Company intends to file such required information as soon
as the financial statements become available but in any event
not later than October 27, 1997.
(b) Pro Forma Financial Information. As of the date of this Form
8-K, it is impracticable for the Company to file the pro
forma information with respect to the acquired business. The
information required hereunder will be filed concurrently
with the filing of the financial statements discussed above.
(c) Exhibits.
EXHIBIT NO. EXHIBIT
10.1 Stock Purchase Agreement, dated April 24, 1997, among the
owners of Exell and the Company. (Incorporated by
reference to Exhibit 10.16 of Amendment No. 2 to the
Company's Registration Statement on Form S-2 (No.
333-23245)).
10.2 First and Second Amendment to Exell Stock Purchase
Agreement among the owners of Exell and the Company.
(Incorporated by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the Quarter
ended June 30, 1997).
10.3 Lease, dated August 13, 1997, among Beaumont Franklin
Street Properties, L.L.C. ("BFSP"), Neches Street
Properties, L.L.C. ("NSP") and Exell (Filed herewith).
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EXHIBIT NO. EXHIBIT
10.4 Purchase and Sale Agreement, dated as of the Effective
Date (as defined therein), between Babel, Miller &
Blackwell Partnership (the "Partnership") and the
Company (Filed herewith).
10.5 First Amendment to Purchase and Sale Agreement,
effective August 13, 1997, among the Partnership, BFSP,
NSP and the Company (Filed herewith).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ITEQ, INC.
By: /s/ Lawrance W. McAfee
-----------------------------------------
Lawrance W. McAfee
Executive Vice President,
Chief Financial Officer and Secretary
By: /s/ KATHRYN S. HENDERSON
----------------------------------------
Kathryn S. Henderson
Corporate Controller
and Assistant Secretary
Date: August 28, 1997
3
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
<S> <C>
10.1 Stock Purchase Agreement, dated April 24, 1997, among the
owners of Exell and the Company. (Incorporated by
reference to Exhibit 10.16 of Amendment No. 2 to the
Company's Registration Statement on Form S-2 (No.
333-23245)).
10.2 First and Second Amendment to Exell Stock Purchase
Agreement among the owners of Exell and the Company.
(Incorporated by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the Quarter
ended June 30, 1997).
10.3 Lease, dated August 13, 1997, among Beaumont Franklin
Street Properties, L.L.C. ("BFSP"), Neches Street
Properties, L.L.C. ("NSP") and Exell (Filed herewith).
10.4 Purchase and Sale Agreement, dated as of the Effective
Date (as defined therein), between Babel, Miller &
Blackwell Partnership (the "Partnership") and the
Company (Filed herewith).
10.5 First Amendment to Purchase and Sale Agreement,
effective August 13, 1997, among the Partnership, BFSP,
NSP and the Company (Filed herewith).
</TABLE>
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EXHIBIT 10.3
L E A S E
THE STATE OF TEXAS )
) KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF JEFFERSON )
THIS LEASE is made and entered into this 13th day of August, 1997, by
and among BEAUMONT FRANKLIN STREET PROPERTIES, L.L.C., a Texas limited
liability company, NECHES STREET PROPERTIES, L.L.C., a Texas limited liability
company (hereinafter collectively referred to as "LANDLORD"), and EXELL, INC.,
a Texas corporation (hereinafter referred to as "TENANT").
1. Demised Premises. Upon the conditions, limitations, covenants
and agreements set forth below, Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord, those certain improvements situated on real
property located within the City of Beaumont, Jefferson County, Texas (the
"LEASED PROPERTY"), such real property being more particularly described on
Exhibit A attached hereto and made a part hereof.
2. Term. The term of this Lease shall be for a period (the
"LEASE TERM"), commencing on the 13 day of August, 1997, and terminating at
midnight on the day of the sale of the Leased Property by Landlord pursuant to
the terms of that certain Purchase and Sale Agreement dated effective May 14,
1997 (the "PURCHASE AGREEMENT"), by and between Babel, Miller & Blackwell
Partnership, as Seller, and ITEQ, Inc., as Purchaser, as assigned and amended
by that First Amendment to Purchase and Sale Agreement dated of even date
herewith by and among Babel, Miller & Blackwell Partnership, Landlord and ITEQ,
Inc., or in any event, no later than ninety-nine (99) years from the date
hereof.
3. Rent.
a. Tenant shall pay to Landlord, as the rent (the
"RENT") during the (i) first three (3) years of the Lease Term, the
sum of ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00) per
annum, payable in twelve monthly installments of TWELVE THOUSAND FIVE
HUNDRED AND NO/100 DOLLARS ($12,500.00); (ii) next seven (years) of
the Lease Term, the sum of TWO HUNDRED FORTY THOUSAND AND NO/100
($240,000.00) per annum, payable in twelve monthly installments of
TWENTY THOUSAND AND NO/100 DOLLARS ($20,000.00); and (iii) remainder
of the Lease Term, at the beginning of each successive year of the
Lease Term, Landlord may increase the rent by the amount necessary to
maintain the monthly Rent at an amount which would have had the same
purchasing power as $20,000.00 at the beginning of year ten (10) of
the Lease Term according to the U.S. Consumer Price Index for all
Urban Consumers applicable to Beaumont, Texas. Such Rent shall be
payable on or before the first day of each month of the Lease Term;
provided, however, that if the term of this Lease commences or ends on
a
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day other than the first day of the calendar month, then Tenant shall
pay a pro rata portion of the monthly Rent for such partial month.
b. Landlord acknowledges and agrees that it is a party
to the Purchase Agreement, as amended, Landlord has agreed to sell and
ITEQ, Inc. has agreed to buy the Leased Property subject to certain
conditions contained in the Purchase Agreement. Pursuant to the
Purchase Agreement, the Landlord has agreed to cure certain title
matters as disclosed in Schedule C of the title commitments issued by
Stewart Title Company under File No. 97076934, dated effective April
21, 1997 (the "TITLE MATTERS"). Pursuant to title commitments issued
by Commonwealth Land Title Insurance Company through Beaumont Title
Company under File Nos. 9B21679A and 9B21679B, issued August 11, 1997
with an effective date of July 27, 1997 (the "NEW TITLE COMMITMENTS"),
Commonwealth Land Title Insurance Company is willing to insure that
Landlord owns the Leased Property in fee simple without taking
exception to the Title Matters. Provided that Commonwealth Land Title
Insurance Company is willing to issue an owner's title policy which
does not take exception to the Title Matters at the time of the
closing of the Purchase Agreement, such Title Matters will be deemed
cured.
c. Certain environmental matters (the "ENVIRONMENTAL
MATTERS") are disclosed in reports prepared by Dames & Moore entitled
"Final Report, Phase I Environmental Site Assessment, Limited
Environmental Compliance Review, Excell Manufacturing Facility, 1110
Neches Street, Beaumont, Texas for ITEQ, Inc." dated April 30, 1997,
and "Dames & Moore Group Limited Phase II Investigation, Excell, Inc.
Facilities, Beaumont, Texas" dated July 14, 1997 (collectively, "DAMES
& MOORE REPORTS"). As part of the consideration for the Lease, Tenant
has agreed to remediate, at its sole cost and expense, the
Environmental Matters under the Voluntary Cleanup Program provided for
in Texas Health and Safety Code, Sections 361.601 et. seq., as same
may be amended from time to time and the regulations promulgated
thereunder ("VCP"), pursuant to the following terms and conditions:
i. Tenant shall submit to the Texas Natural
Resource Conservation Commission (the "TNRCC") an application
to participate in the VCP to remediate the Environmental
Matters of concern on the Leased Property, and upon approval
by TNRCC shall execute and submit a VCP Agreement to TNRCC
regarding remediation related to the Leased Property.
ii. Unless other requirements are imposed by the
TNRCC or another governmental agency, clean up shall be in
accord with TNRCC's Risk Reduction Standard No. 3 for
industrial use of the Leased Property.
iii. At the sole cost and expense of Tenant,
Landlord agrees to cooperate fully in all matters necessary to
enable Tenant (A) to perform fully under the VCP Agreement,
(B) to meet obligations imposed by the TNRCC or any other
governmental agency relating to remediation of the Leased
Property, and (C) to obtain a TNRCC VCP Certificate of
Completion for the Leased Property.
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iv. Tenant shall complete the remediation in a
timely manner in accordance with the VCP Agreement or other
applicable government requirements (herein, the "WORK").
Tenant shall select qualified consultants and contractors as
necessary to perform the Work.
v. Tenant shall provide to Landlord a copy of
all work plans and reports related to the Work submitted to
the TNRCC or any other governmental agency and a copy of
material correspondence from the TNRCC or any other
governmental agency relating to the Work.
vi. Upon receipt, Tenant shall promptly file a
TNRCC VCP Certificate of Completion in the Official Public
Records of Jefferson County, Texas, and the remediation shall
be deemed complete at the time of filing.
vii. LANDLORD, ITS AFFILIATES, DIRECTORS,
OFFICERS, PARTNERS, LEGAL REPRESENTATIVES, INSURERS, AGENTS,
SUCCESSORS AND ASSIGNS HEREBY RELEASE AND DISCHARGE AND
COVENANT NOT TO SUE TENANT, ITS PARENT, AFFILIATES, PARTNERS,
INSURERS, LEGAL REPRESENTATIVES, EMPLOYEES, OFFICERS,
DIRECTORS, AGENTS, SUCCESSORS OR ASSIGNS FROM OR FOR ANY AND
ALL CLAIMS, ACTIONS, DEMANDS, CROSS-ACTIONS, CAUSES OF ACTION,
LOSSES, FEES, COSTS AND EXPENSES, INCLUDING LEGAL FEES AND
EXPENSES, OF WHATSOEVER NATURE, AS WELL AS ANY OTHER KIND OR
CHARACTER OF ACTION, WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR
UNLIQUIDATED, CONTINGENT, PAST, PRESENT OR FUTURE, ARISING OR
RELATING DIRECTLY OR INDIRECTLY TO OR OUT OF OR IN CONNECTION
WITH TENANT'S PERFORMANCE OF ITS OBLIGATIONS UNDER THIS
PARAGRAPH 3(c), WHETHER BASED UPON TORT, USURY, VIOLATION OF
LAW, BREACH OF ANY FAIR DEALING OR GOOD FAITH, BREACH OF
CONFIDENCE, BREACH OF FIDUCIARY DUTY, BREACH OF ANY OTHER
DUTY, BREACH OF ANY STATUTORY RIGHT, UNDUE INFLUENCE, DURESS,
ECONOMIC COERCION, CONFLICT OF INTEREST, NEGLIGENCE, BAD
FAITH, MALPRACTICE, INTENTIONAL OR NEGLIGENT INFLICTION OF
MENTAL DURESS, DECEPTIVE TRADE PRACTICES, CONSPIRACY OR ANY
OTHER CAUSE OF ACTION OR BASED UPON ANY OTHER THEORY; PROVIDED
THAT LANDLORD'S RELEASE OF TENANT SHALL NOT APPLY TO ANY
CLAIM, LIABILITY OR CAUSE OF ACTION ARISING OUT OF TENANT'S
FAILURE TO REMEDIATE THE LEASED PROPERTY AS HEREIN SET FORTH,
AND PROVIDED FURTHER THAT TENANT SHALL INDEMNIFY, DEFEND AND
HOLD HARMLESS LANDLORD, ITS AFFILIATES, MANAGERS, OFFICERS,
LEGAL REPRESENTATIVES, SUCCESSORS, ASSIGNS AND PREDECESSORS IN
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TITLE NAMED AS ORIGINAL SELLERS IN THE PURCHASE AGREEMENT,
AGAINST AND IN RESPECT OF ANY AND ALL CLAIMS, LIABILITY OR
CAUSES OF ACTION WHICH ARISE, RESULT FROM OR RELATE TO
TENANT'S REMEDIATION OF THE PROPERTY. THIS PARAGRAPH
3(c)(vii) SHALL SURVIVE THE TERMINATION OR EXPIRATION OF THIS
LEASE.
viii. With the exception of liability insurance
coverage for third party claims against Landlord, Landlord
hereby assigns and grants to Tenant any and all right, title
and interest Landlord may have in any claim for (A) insurance
coverage, or (B) damages, cost recovery or contribution from
or against any other person or entity that may be responsible
under any statute or common law for contamination of the
Leased Property or costs relating to investigation or
remediation thereof. Landlord shall cooperate fully with
Tenant in any effort by Tenant to pursue any such assigned
claims. This Paragraph 3(c)(viii) shall survive the
termination or expiration of this Lease.
4. Use of Leased Property. The Leased Property is to be used and
occupied by Tenant for general office, warehouse and manufacturing purposes.
5. Governmental Compliance. Tenant shall at all times during the
term of the Lease comply with all governmental rules, regulations, ordinances,
statutes and laws, and shall obtain and maintain all required licenses, permits
and approvals.
6. Utilities. Tenant shall be responsible for all usage charges
for utilities, including water, gas, heat, electricity, power, garbage service,
air conditioning, telephone service, water, sewer service charges and sewer
rentals charged or attributable to the Leased Property, and all other services
or utilities used in, upon or about the Leased Property by Tenant. The Tenant
shall also be liable for any such charge which is incurred during the Lease
Term, but which does not become due and payable until after the expiration or
earlier termination of this Lease. Tenant shall not permit any liens to be
filed against the Leased Property by any governmental entity for nonpayment of
utilities.
7. Taxes. Tenant shall be liable for and shall pay before
delinquency all ad valorem taxes, fees, impositions, and assessments of
whatsoever kind or nature, and penalties and interest thereon, if any, levied
against the Leased Property. Tenant also agrees to pay all taxes, fees,
impositions and assessments levied or assessed against the equipment and
personal property belonging to Tenant and located on the Leased Property.
8. Maintenance. Tenant, at its sole cost, shall maintain and
repair the entirety of the Leased Property. Upon the expiration or earlier
termination of the Lease Term, Tenant shall peaceably quit and surrender the
Leased Property in its current condition, excepting ordinary wear and tear and
casualty or condemnation damage.
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9. Alterations and Improvements. Tenant may make alterations and
improvements to the Leased Property; provided, however, Tenant may not remove
or demolish existing improvements and fences without Landlord's prior written
consent, which consent shall not be unreasonably withheld or delayed. No
mechanic's, materialmen's or similar liens shall be allowed on the Leased
Property and same shall be immediately removed by Tenant.
10. Insurance.
a. Landlord shall, at its sole expense, procure and
maintain throughout the Lease Term, for the protection of Landlord,
policies of insurance written by insurance companies rated "A" or
better, and a financial rating of not less than Class "X" by A.M. Best
Company Inc. and otherwise acceptable to Landlord, which afford the
following coverages:
i. Commercial general liability insurance in
amounts of not less than $2,000,000.00 each occurrence
limited, $2,000,000.00 general aggregate limit, and
$2,000,000.00 personal injury and aggregate injury limit or
such other amounts as prudent business judgment may from time
to time require, covering bodily injury and property damage
liability, and including owned and non-owned vehicle coverage
and contractual liability coverage, insuring Landlord, against
any and all liability to the extent obtainable for injury to
or death of a person or persons or damage to property
occasioned by or arising out of or in connection with the
ownership and maintenance of the Leased Premises, during the
policy period, regardless of when the claim is made; and
ii. Such other insurance as Landlord may, in its
sole discretion, deem advisable, including, without
limitation, rental loss insurance.
b. Tenant shall, at its sole expense, procure and
maintain throughout the Lease Term for the protection of Tenant and
Landlord, as their interests may appear, policies of insurance written
by insurance companies rated "A" or better, and a financial rating of
not less than Class "X" by A.M. Best Company Inc. and otherwise
acceptable to Landlord, which afford the following coverages:
i. A policy of standard fire and standard
extended coverage insurance covering the improvements on the
Leased Property, in such amount as Tenant shall deem
advisable, but not less than $1,500,000.00 and naming Landlord
and Tenant as loss payee;
ii. Worker's compensation - statutory limits;
iii. Employer's liability in amounts not less than
$250,000.00 each accident for bodily injury by accident;
$250,000.00 policy limit each employee for bodily injury by
disease;
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iv. Property insurance insuring Tenant's
fixtures, equipment, tenant improvements and personalty
against direct risk of loss, broad form coverage;
v. Commercial general liability insurance in
amounts of not less than $2,000,000.00 each occurrence
limited, $2,000,000.00 general aggregate limit, $2,000,000.00
products/completed operations aggregate limit, and
$2,000,000.00 personal injury and advertising injury limit,
covering bodily injury and property damage liability, and
including owned and non-owned vehicle coverage and contractual
liability coverage, insuring Tenant against any and all
liability to the extent obtainable for injury to or death of a
person or persons or damage to property occasioned by or
arising out of or in connection with the use, operation and
occupancy of the Leased Premises, during the policy period,
regardless of when the claim is made.
c. Tenant shall furnish to Landlord, concurrent with the
execution of this Lease, certificates of insurance and such other
evidence satisfactory to Landlord of the maintenance of all insurance
coverages required hereunder. Tenant shall obtain and deliver to
Landlord a written obligation on the part of each insurance company to
notify Landlord at least thirty (30) days prior to cancellation or
material change of any such insurance. Tenant shall deliver renewal
certificates at least thirty (30) days prior to the expiration of each
policy. Tenant agrees that if it does not keep this insurance in full
force and effect, Landlord may notify Tenant of this failure, and if
Tenant does not deliver to Landlord certificates showing all such
insurance to be in full force and effect within thirty (30) days after
such notice, Landlord may, at its option, but with no obligation to do
so, take out and/or pay the premiums on the insurance needed to
fulfill Tenant's obligations under the provisions of this article.
Upon demand from Landlord, Tenant shall reimburse Landlord the full
amount of any insurance premiums paid by Landlord, with interest at
the rate of ten percent (10%) per annum from the date of Landlord's
demand until reimbursement by Tenant. Landlord makes no
representation that the minimum limits of liability specified to be
carried by Tenant are adequate to protect Tenant. Tenant shall
provide any such additional coverage as Tenant deems adequate.
d. The parties desire to avoid liability to each other's
insurers. Thus, Landlord and Tenant each for itself and for any
person or entity claiming through it (including any insurance company
claiming by way of subrogation), hereby waives any and every claim
which arises or may arise in its favor against the other party hereto
and the other party's officers, directors and employees for any and
all loss of or damage to property, to the extent (but only to the
extent) that the waiving party who suffers such loss or damage is
actually compensated by insurance or would be compensated by the
insurance policies contemplated herein if such policies were
maintained as required hereby. Each party agrees to have such
insurance policies properly endorsed so as to make them valid
notwithstanding this waiver, if such endorsement is required to
prevent a loss of insurance.
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11. Casualty Damage.
a. If the Leased Property shall be damaged by fire or
other casualty, Landlord shall repair the same with reasonable
dispatch, due allowance being made for any delay resulting from a
cause beyond Landlord's reasonable control; provided, however, that
Landlord shall not be required to repair or replace any of Tenant's
leasehold improvements, trade fixtures, equipment or personalty, and
provided further that Landlord's obligations to repair the Leased
Property shall be limited to the aggregate amount of insurance
proceeds which are received by it pursuant to Paragraph 10(b)(i)
hereof.
b. Landlord shall use its best efforts to effect such
repairs and reconstruction in such a manner as to not unreasonably
interfere with Tenant's occupancy. No damages, compensation or claims
shall be payable by Landlord for any inconvenience, loss of business
or annoyance arising from any such repair and reconstruction. After
the occurrence of such fire or other casualty damage and during the
period of repair and reconstruction, Tenant shall be entitled to an
abatement or reduction of Rent based on the percentage of the Leased
Property that is unusable by Tenant.
12. Condemnation. If the Leased Property or any portion thereof
is taken under the power of eminent domain, or sold under the threat of the
exercise of said power (all of which are herein called "CONDEMNATION"), this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever occurs first and the Rent shall
be reduced proportionately. Tenant shall have the right to claim directly from
the condemnor, but not from Landlord, such compensation as may be recoverable
by Tenant in its own right for damage to Tenant's business, fixtures, and
leasehold improvements, to the extent such improvements were made by Tenant, if
such claim can be made separate and apart from any award to Landlord. Landlord
shall repair any damage to the structure of the Leased Property caused by such
Condemnation except to the extent Tenant has been reimbursed therefor by the
condemning authority.
13. Default by Tenant. Each of the following shall constitute a
"DEFAULT" by Tenant:
a. The failure of Tenant to pay the Rent, any part
thereof or other sum or charge when due, which failure continues for
five (5) days after written notice thereof from Landlord to Tenant; or
b. Tenant shall default in the performance of any other
term, covenant or condition of this Lease on the part of Tenant to be
kept and performed and such default continues for twenty (20) days
after written notice thereof from Landlord to Tenant; or
c. If Tenant shall be adjudicated a bankrupt, or shall
file a petition for reorganization, arrangement or other relief under
any present or future provisions of the Bankruptcy Code, or if such a
petition be filed by creditors of Tenant or if Tenant shall seek
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a judicial readjustment of the rights of its creditors under any
present or future federal or state law.
14. Landlord's Remedies. In the event of default as designated in
this Lease, Landlord, as its exclusive remedy, may exercise its rights of
forcible entry and detainer as allowed by Texas law, and sue only for unpaid
Rent and other amounts or charges due Landlord hereunder through the date of
default if the Leased Property is tenantable. Landlord may sue for unpaid Rent
and other amounts or charges due Landlord through the date of the default and
for any damage to the Leased Property if the Leased Property is untenantable.
Provided, however, Tenant shall not be liable to Landlord for consequential or
punitive damages, and Landlord's damages shall be limited to actual damages and
reasonable attorneys' fees directly attributable to Tenant's default under this
Lease. Notwithstanding the foregoing, to the extent allowed by law, Landlord
shall have the right to compel specific performance of Tenant's obligations
under Paragraph 3(c)(vii) and of Guarantor's obligations under Paragraph 35
hereof.
15. Quiet Possession. Tenant, upon paying the amounts provided
for herein required from Tenant, and upon Tenant's performance of all of the
terms, covenants and conditions of this Lease on its part to be kept and
performed, may quietly have, hold and enjoy the Leased Property during the
Lease Term without any disturbance from Landlord or from any other person.
16. Default by Landlord. If Landlord shall fail or refuse to
perform any of the provisions, covenants or conditions of this Lease on
Landlord's part to be kept or performed, Tenant shall provide Landlord written
notice of such default and a twenty (20) day period to cure such default, prior
to Tenant exercising any of Tenant's remedies under Texas law. In addition to
all other remedies available to Tenant at law or in equity, if Landlord fails
to cure its default, Tenant may, at its sole option, terminate its obligations
under Paragraph 3(c)(vii) of this Lease.
17. Assignment and Subletting. Tenant may assign, transfer,
mortgage, sublet or otherwise transfer or encumber all or any part of Tenant's
interest in this Lease or in the Leased Property, only with the prior written
consent of Landlord, but is otherwise not assignable or delegable by any party,
and no such assignment shall release Tenant or Guarantor from their respective
obligations under Paragraph 3(a) and Paragraph 35 of this Lease; provided,
however, Tenant may assign or sublet the Leased Premises to its subsidiaries or
affiliates without the prior consent of Landlord. Any attempted assignment of
this Lease or delegation of duties hereunder, except as expressly allowed
herein, is void.
18. Entry by Landlord. Landlord and/or Landlord's agents shall
have the right to enter the Leased Property upon reasonable notice to Tenant
(such notice may be oral, but no notice shall be required in the case of any
emergency) for any purpose which Landlord may reasonably deem necessary for the
operation, maintenance and/or repair (without implying any obligation of
Landlord to repair unless expressly provided herein) of the Leased Property.
19. Holdover. If Tenant shall remain in possession of the Leased
Property after the expiration or earlier termination of this Lease, then Tenant
shall be deemed a tenant-at-will,
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terminable at any time, and shall pay Rent at one hundred and fifty percent
(150%) the rate of the Rent prevailing on the date of such termination or
expiration, but otherwise shall be subject to all of the terms and obligations
of Tenant under this Lease. Additionally, Tenant shall pay to Landlord all
damages sustained by Landlord on account of such holding over by Tenant.
20. Attorneys' Fees and Other Expenses. In the event either party
hereto defaults in the faithful performance or observance of any of the terms,
covenants, provisions, agreements or conditions contained in this Lease, the
party in default shall be liable for and shall pay to the non-defaulting party
all reasonable expenses incurred by such party in enforcing any of its
remedies for such default, and if the non-defaulting party places the
enforcement of all or any part of this Lease in the hands of an attorney, the
party in default agrees to pay the non-defaulting party's reasonable attorneys'
fees in connection therewith.
21. No Partnership. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent or of partnership or of joint venture or of
any association between Landlord and Tenant. Neither the method of computation
of rent nor any other provisions contained in this Lease nor any acts of the
parties hereto shall be deemed to create any relationship between Landlord and
Tenant other than the relationship of Landlord and Tenant.
22. Authority. Each individual executing this Lease on behalf of
Tenant represents and warrants that he or she is duly authorized to execute and
deliver this Lease on behalf of Tenant. Tenant shall deliver, within thirty
(30) days after execution and delivery of this Lease, satisfactory evidence of
such authority to Landlord. Each individual executing this Lease on behalf of
Landlord represents and warrants that he is duly authorized to execute and
deliver this Lease on behalf of Landlord. Landlord represents and warrants
that it is the owner, in fee simple, of the Leased Property and has the right
to enter into this Lease and no other party has any claim to or lien on the
Leased Property.
23. Notice. Any and all notices and demands by or from Landlord
to Tenant, or by or from Tenant to Landlord, required or desired to be given
hereunder shall be in writing and shall be validly given or made if served
either personally or if deposited in the United States mail, certified or
registered, postage prepaid, return receipt requested. If such notice or demand
be served by registered or certified mail in the manner provided, service shall
be conclusively deemed given five (5) days after mailing or upon receipt,
whichever is sooner. Any party hereto may change its address for the purpose
of receiving notices or demands as herein provided by a written notice given in
the manner aforesaid to the other party hereto, which notice of change of
address shall not become effective, however, until the actual receipt thereof
by the other party.
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<PAGE> 10
If to Landlord to: Beaumont Franklin Street Properties, L.L.C.
Neches Street Properties, L.L.C.
P.O. Box 3726
Beaumont, Texas 77704
Attn: Mr. William R. Miller
(409) 838-3400
FAX: (409) 833-4731
with a copy to: Orgain, Bell & Tucker, L.L.P.
470 Orleans Street
Beaumont, Texas 77701
Attn: John Creighton, III, Esquire
(409)838-6412
FAX: (409)838-6959
If to Tenant: Exell, Inc.
c/o ITEQ, Inc.
2727 Allen Parkway, Suite 760
Houston, Texas 77019
Attn: Mr. Lawrance W. McAfee
(713) 285-2700
FAX: (713) 520-8228
with a copy to: Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Attn: Richard L. Wynne, Esquire
(713)226-0647
FAX: (713)228-1331
The parties shall have the right from time to time to change their
respective addresses by giving written notice to the other party in the manner
set forth in this paragraph.
24. Brokers. Tenant warrants that it has had no dealings with any
broker or agent in connection with this Lease, and covenants to pay, hold
harmless and indemnify Landlord from and against any and all cost, expense or
liability for any compensation, commissions and charges claimed by any broker
or agent with respect to this Lease or the negotiation thereof. Landlord
warrants that it has had no dealings with any broker or agent in connection
with this Lease, and covenants to pay, hold harmless and indemnify Tenant from
and against any and all cost, expense or liability for any compensation,
commissions and charges claimed by any broker or agent with respect to this
Lease or the negotiation thereof.
25. Rights of Parties. Nothing in this Lease, whether express or
implied, with the exception of the release in Paragraph 3(c)(vii), is intended
to confer any rights or remedies under
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<PAGE> 11
or by reason of this Lease on any persons other than the parties hereto and
their respective successors and permitted assigns, nor shall any provision give
any third persons any right of subrogation or action over against any party to
this Lease. Without limiting the generality of the foregoing, it is expressly
understood that this Lease does not create any third-party beneficiary rights.
26. Captions. The captions appearing at the commencement of the
sections hereof are descriptive only and for convenience in reference to this
Lease and in no way whatsoever define, limit or describe the scope or intent
of this Lease, nor in any way affect this Lease.
27. Governing Law. The laws of the State of Texas shall govern
the validity, construction, performance and effect of this Lease.
28. Binding Effect. The terms, provisions, covenants and
conditions contained in this Lease shall apply to, bind and inure to the
benefit of the legal representatives, successors and assigns of Landlord and
Tenant, respectively.
29. Severability. If any term, covenant or condition of this
Lease, or any application thereof, should be held by a court of competent
jurisdiction to be invalid, void or unenforceable, all terms, covenants and
conditions of this Lease, and all applications thereof, not held invalid, void
or unenforceable, shall continue in full force and effect and shall in no way
be affected, impaired or invalidated thereby.
30. No Waiver. No waiver of any breach of the covenants,
warranties, agreements, provisions or conditions contained in this Lease shall
be construed as a waiver of said covenant, warranty, provision, agreement or
condition of any subsequent breach thereof.
31. Time of the Essence. Time is of the essence of this Lease and
all of the terms, covenants and conditions hereof.
32. Recording. A memorandum of this Lease may be recorded or
filed for record in any public records or governmental office by Tenant.
33. Entire Agreement. This Lease, together with the Purchase
Agreement, contains the entire agreement between the parties and cannot be
changed or terminated orally. This Lease supersedes and cancels any and all
previous statements, negotiations, arrangements, agreements and understandings,
if any, between Landlord and Tenant with respect to the subject matter of this
Lease.
34. Counterparts. This Lease may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original, but such counterparts shall together constitute one and the same
instrument; provided, however, this Lease shall not be effective until a
counterpart has been signed by each party to be bound hereby.
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<PAGE> 12
35. Guarantee. By its joinder in execution hereof, ITEQ, Inc.
("GUARANTOR") hereby guarantees Tenant's payment and performance obligations
under Paragraphs 3(a) and 3(c) of this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the
day and year first above written.
LANDLORD:
BEAUMONT FRANKLIN STREET PROPERTIES, L.L.C.
By: /s/ DEE ARNOLD BLACKWELL
------------------------------------------
Name: Dee Arnold Blackwell
----------------------------------------
Title: Managing Member
---------------------------------------
NECHES STREET PROPERTIES, L.L.C.
By: /s/ DEE ARNOLD BLACKWELL
------------------------------------------
Name: Dee Arnold Blackwell
----------------------------------------
Title: Managing Member
---------------------------------------
TENANT:
EXELL, INC.
By: /s/ LAWRANCE W. McAFEE
------------------------------------------
Name: Lawrance W. McAfee
----------------------------------------
Title: Vice President
---------------------------------------
GUARANTOR:
ITEQ, INC.
By: /s/ LAWRANCE W. McAFEE
-------------------------------
Lawrance W. McAfee
Executive Vice President and
Chief Financial Officer
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<PAGE> 1
EXHIBIT 10.4
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("AGREEMENT") is entered into as of
the Effective Date (as hereinafter defined) between BABEL, MILLER & BLACKWELL
PARTNERSHIP, a Texas general partnership ("SELLER") and ITEQ, INC., a Delaware
corporation ("PURCHASER").
W I T N E S S E T H:
In consideration of the mutual covenants set forth herein and in
consideration of the earnest money deposit herein called for, the receipt and
sufficiency of which are hereby acknowledged by Seller, the parties hereto
hereby agree as follows:
Section 1. Sale and Purchase. Seller shall sell, convey, and
assign to Purchaser, and Purchaser shall purchase and accept from Seller, for
the Purchase Price (hereinafter defined) and on and subject to the terms and
conditions herein set forth, the following:
a. the tracts or parcels of land situated in Jefferson
County, Texas described in EXHIBIT A hereto together with all rights
and interests appurtenant thereto, including all of Seller's right,
title, and interest in and to adjacent streets, alleys, rights-of-way,
and any adjacent strips or gores of real estate (the "LAND"); all
fixtures and improvements located on the Land (the "IMPROVEMENTS");
and all rights, titles, and interests appurtenant to the Land and
Improvements;
b. all (i) contracts or agreements, such as maintenance,
service, or utility contracts (the, "PROPERTY AGREEMENTS"), to the
extent Purchaser elects to take assignment thereof, (ii) warranties,
guaranties, indemnities and claims, (iii) licenses, permits or similar
documents, (iv) telephone exchanges, trade names, marks and other
identifying material, (v) plans, drawings, specifications, surveys,
engineering reports and other technical information, (vi) insurance
contracts or policies, to the extent Purchaser elects to take
assignment thereof, and (vii) other property (real, personal, or
mixed), owned or held by Seller that relates, in any way, to the
design, construction, ownership, use, leasing, maintenance, service or
operation of the Land or Improvements.
The above listed items are herein collectively called the "PROPERTY". All of
the Property shall be conveyed, assigned, and transferred to Purchaser at
Closing (hereinafter defined) free and clear of all liens, claims, easements,
and encumbrances whatsoever except for the Permitted Encumbrances (hereinafter
defined).
Section 2. Purchase Price. The price for which Seller shall
sell and convey the Property to Purchaser, and which Purchaser shall pay to
Seller, is [$10,364,958, less amount allocated to purchase price under stock
purchase agreement] Dollars ($1,500,000) ("PURCHASE PRICE"). The Purchase
Price shall be payable in cash or cash equivalent at the Closing (hereinafter
defined).
<PAGE> 2
Section 3. Earnest Money. Within five (5) business days after
the execution hereof, Purchaser shall deliver to Stewart Title Company, 2390
North Dowlen Road, Beaumont, Texas 77706 Attn: ____________________ ("TITLE
COMPANY") a check in the amount of $100.00 which the Title Company shall
immediately deposit for collection. As used in this Agreement, the term
"EARNEST MONEY" shall mean the amount so deposited by Purchaser, together with
all interest earned thereon while in the custody of Title Company. The
"EFFECTIVE DATE" of this Agreement shall be the date the Earnest Money and a
fully executed copy of this Agreement is delivered to the Title Company and
such delivery is acknowledged by the Title Company.
Section 4. Independent Consideration. Contemporaneously with
the delivery of the Earnest Money, Purchaser shall deliver to Seller and Seller
hereby acknowledges the receipt of, a check in the amount of FIFTY AND NO/100
DOLLARS ($50.00) ("INDEPENDENT CONSIDERATION"), which amount the parties
bargained for and agreed to as consideration for the Seller's grant to
Purchaser of Purchaser's exclusive right to purchase the Property pursuant to
the terms hereof and for Seller's execution, delivery and performance of this
Agreement. This Independent Consideration is in addition to and independent of
any other consideration or payment provided in this Agreement, is nonrefundable
under any circumstances, and shall be retained by Seller notwithstanding any
other provisions of this Agreement.
Section 5. Delivery of Information by Seller.
a. Within THIRTY (30) DAYS after the Effective Date,
Seller, at its sole cost and expense, shall deliver or cause to be
delivered to Purchaser the following:
i. commitment for Title Insurance ("TITLE
COMMITMENT") from the Title Company setting forth the status
of the title of the Land and Improvements and showing all
liens, claims, encumbrances, easements, rights-of-way,
encroachments, reservations, restrictions, and all other
matters of record affecting the Land or Improvements; and
ii. a true, complete, and legible copy of all
documents referred to in the Title Commitment ("TITLE
COMMITMENT DOCUMENTS").
b. Within thirty (30) days after the Effective Date of
this Agreement, Seller, at the equally shared cost and expense of
Seller and Purchaser, shall deliver to Purchaser a survey ("SURVEY")
consisting of a plat and field notes prepared by a licensed surveyor
acceptable to Purchaser and Title Company, which Survey shall (i)
reflect the actual dimensions of, and area within, the Land, the
location of any easements, setback lines, encroachments, or overlaps
thereon or thereover, and the outside boundary lines of all
Improvements, (ii) identify by recording reference all easements, set
back lines, and other matters referred to in the Title Commitment,
(iii) include the surveyor's registered number and seal, the date of
the Survey, and a certificate satisfactory to Purchaser, (iv) reflect
that there is access to and from the Land from a publicly dedicated
street or road, (v) be sufficient to cause the Title Company to delete
(except for "shortages in area") the printed exception
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<PAGE> 3
for "discrepancies, conflicts or shortages in area or boundary lines,
or encroachments, or any overlapping of improvements" in the Owner's
Title Policy to be delivered pursuant to Section 9 hereof, (vi)
reflect any area within the Land that has been designated by the
Federal Insurance Administration, the Army Corps of Engineers, or
any other governmental agency or body as being subject to special or
increased flooding hazards, and (vii) in general, comply with the
requirements of the Texas Surveyor's Association for a Category 1A
Condition II. For purposes of the property description to be included
in the general warranty deed to be delivered pursuant to Section 9
hereof, the field notes prepared by the surveyor shall control any
conflicts or inconsistencies with EXHIBIT A hereto, and such field
notes shall be incorporated herein by this reference upon their
completion and approval by Purchaser.
c. Within thirty (30) days after the Effective Date of
this Agreement, Seller, at its sole cost and expense, shall deliver to
Purchaser current searches of all Uniform Commercial Code financing
statements filed with the Office of the Secretary of State of Texas
and the County Clerk of Jefferson County, Texas against Seller and
Seller's predecessors in title reflecting all effective financing
statements then of record relating to the Property or any part
thereof.
d. Within thirty (30) days after the Effective Date of
this Agreement, Seller, at its sole cost and expense, shall deliver to
Purchaser (i) legible copies of all Property Agreements; (ii) copies
of all engineering and technical reports in the possession of Seller
or its representatives that concern the Land or Improvements,
including oils testing reports and reports of environmental or
hazardous waste inspections or surveys; (iii) copies of all plans and
specifications that describe or relate to the Improvements; and (iv)
profit and loss statements reflecting the results of operation of the
Property for the preceding year. The documents described in this
Section 5(d) are herein collectively called the "DOCUMENTS", and the
information contained in the Documents is herein collectively called
the "INFORMATION".
Section 6. Right of Inspection; Contingency Period.
a. From the Effective Date to the Closing Date, Seller
shall afford Purchaser and its representatives a continuing right to
inspect, at reasonable hours, the Property, and all books, records,
contracts, and other documents or data pertaining to the ownership,
operation, or maintenance of the Property; provided, however, that in
conducting its inspection Purchaser shall not unreasonably interfere
with the business and operations of the Seller.
b. If for any reason Purchaser, in its sole and absolute
discretion, is not satisfied with the physical condition of the
Improvements, or any matter in the Documents, or any part of the
Information, or is otherwise not satisfied with the Property, then
Purchaser shall have the right to terminate this Agreement in
accordance with Section 12(b) hereof by delivering to Seller a notice
of termination at any time within 30 days after receipt by Purchaser
of the Title Commitment, Title Commitment Documents and Survey. If
Purchaser does not so
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<PAGE> 4
terminate this Agreement prior to the expiration of the Contingency
Period, Purchaser shall have waived its right to terminate this
Agreement under this Section 6.
Section 7. Title. Purchaser shall have the right, at any time
during the Contingency Period, to object in writing to any liens and
encumbrances reflected by the Title Commitment or Survey. All liens and
encumbrances to which Purchaser so objects are hereinafter referred to as the
"NON-PERMITTED ENCUMBRANCES"; if no such notice of objection is given during
the Contingency Period, then it shall be deemed that all matters reflected by
the Survey and Title Commitment are "PERMITTED ENCUMBRANCES". Seller shall use
reasonable efforts, at its sole cost, to cure or remove all Non-Permitted
Encumbrances and give Purchaser written notice thereof before the end of the
Contingency Period; provided, however, that Seller, at its sole cost, shall be
obligated to cure or remove at or before Closing all mortgages, deeds of trust,
judgment liens, mechanics and materialmen's liens, and other liens against the
Property, whether or not Purchaser objects thereto during the Contingency
Period. Further, Seller shall cause any leases relating to the Land and
Improvements to be terminated on or before Closing. If Seller does not timely
cause all of the Non-Permitted Encumbrances to be removed or cured, and timely
written notice thereof to be given to Purchaser, then Purchaser shall have the
right to either (i) terminate this Agreement in accordance with Section 12(b)
hereof by delivering notice to Seller, or (ii) attempt to remove or cure the
Non-Permitted Encumbrances and deduct the cost of such removal or cure from the
Purchase Price, or (iii) elect to purchase the Property subject to the
Non-Permitted Encumbrances, other than liens that Seller is obligated to cure
or remove, and the Non-Permitted Encumbrances (other than liens that Seller is
obligated to cure or remove) subject to which Purchaser elects to purchase the
Property shall thereafter be Permitted Encumbrances.
Section 8. Seller's Representations, Warranties, and Covenants.
Seller hereby represents and warrants to, and covenants with, Purchaser that:
a. Seller has full right, power, and authority to
execute and deliver this Agreement and to consummate the purchase and
sale transactions provided for herein without obtaining any further
consents or approvals from, or the taking of any other actions with
respect to, any third parties. This Agreement, when executed and
delivered by Seller and Purchaser, will constitute the valid and
binding agreement of Seller, enforceable against Seller in accordance
with its terms.
b. Seller has good, marketable and indefeasible title in
fee simple to the Land and Improvements, free and clear of all liens
(except those liens that will be released at or before Closing), and
no party, except as herein set forth, has or shall have on the Closing
Date any rights in, or to acquire, the Property.
c. The Land is not located within an area that has been
designated by the Federal Insurance Administration, the Army Corps of
Engineers, or any other governmental agency or body as being subject
to special flooding hazards.
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<PAGE> 5
d. The Improvements (i) have been constructed in a good
and workmanlike manner, free from defects in workmanship and material
and, to the best of Seller's knowledge, do not require any repair or
replacement other than minor, routine maintenance not aggregating in
excess of $100,000; and (ii) have been constructed and are being
occupied, maintained, and operated in compliance with all applicable
laws, regulations, insurance requirements, contracts, leases, permits,
licenses, ordinances, restrictions, building setback lines, covenants,
reservations, and easements, and Seller has received no notice,
written or oral, claiming any violation of any of the same or
requesting or requiring the performance of any repairs, alterations,
or other work in order to so comply.
e. The copies of all Documents, Title Commitment
Documents, and other documents delivered by or on behalf of Seller to
Purchaser pursuant to this Agreement shall be true and complete in all
material respects and, to the best of Seller's knowledge and belief,
the information shall be true and complete in all material respects.
f. There are no actions, suits, claims, assessments, or
proceedings pending or, to the knowledge of Seller, threatened that
could materially adversely affect the ownership, operation, or
maintenance of the Property or Seller's ability to perform hereunder.
g. All bills and other payments due with respect to the
ownership, operation, and maintenance of the Property have been paid
or to be paid prior to Closing in the ordinary course of business.
h. From the Effective Date until the Closing Date,
Seller shall: (i) maintain and operate the Property in a good and
businesslike manner in accordance with good and prudent business
practices; (ii) continue all Property Agreements, and insurance
policies or contracts relative to the Property in full force and
effect and neither cancel, amend, nor renew any of the same without
Purchaser's prior written consent; (iii) not commit or permit to be
committed any waste to the Property; and (iv) not, without the prior
written consent of Purchaser, enter into any agreement or instrument
or take any action that would encumber the Property after Closing,
that would bind Purchaser or the Property after Closing, or that would
be outside the normal scope of maintaining and operating the Property.
i. There are no labor disputes, organizational
campaigns, or union contracts existing or under negotiation with
respect to the Property or the operation thereof. There are no
employees engaged in the operation or maintenance of the Property for
whom Purchaser will be responsible after Closing.
j. Attached hereto as EXHIBIT B is a complete and
correct list of all Property Agreements setting forth the identity of
the parties thereto, the date of such agreement, the consideration
payable thereunder, the services to be rendered thereunder, and the
expiration date thereof. Except as otherwise expressly indicated on
EXHIBIT B, all of the Property Agreements are cancelable on thirty
(30) or fewer days notice, without payment of any cancellation
consideration.
5
<PAGE> 6
k. All financial statements, reports and other data,
including but not limited to information concerning gross rental
income, operating expenses, debt service, and cash flow statements
heretofore furnished by Seller to Purchaser relative to the Property
are true and correct in all material respects and fully and
accurately present the financial condition, the financial results, or
other subject matter thereof as of the dates thereof. All such
statements, reports, information, and other data hereafter furnished
by Seller to Purchaser shall be true and correct in all material
respects and shall fully and accurately present the financial
condition, the financial results, or other subject matter thereof as
of the dates thereof.
l. During the period that Seller has owned the Property,
the Property has not been the site of any activity that would violate
any past or present environmental law or regulation of any
governmental body or agency having jurisdiction over the Property.
Specifically, but without limitation, (i) solid waste, petroleum, or
petroleum products have not been handled on the Property such that
they may have leaked or spilled onto the Property or contaminated the
Property, (ii) there is no on-site contamination resulting from
activities on the Property or adjacent tracts, and (iii) the Property
contains no "hazardous materials" which shall mean any flammables,
explosives, radioactive materials, asbestos, or other hazardous waste
including without limitation substances defined as "hazardous
substances", "hazardous materials", or "toxic substances" in the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980; the Hazardous Materials Transportation Act; and the Resources
Conversation and Recovery Act, all as amended.
m. The current zoning classification of the Property is
LI (Light Industrial); the Improvements have been constructed and are
being occupied and maintained in compliance therewith; and there are
no proceedings pending or contemplated to alter such zoning
classification.
If (i) any of Seller's representations and warranties set forth in this Section
8 are untrue in any material respect, or (ii) at any time at or before Closing
there is any material change with respect to the matters represented and
warranted by Seller pursuant to this Section 8, then Seller shall give
Purchaser prompt written notice thereof, and Purchaser shall have the right to
terminate this Agreement in accordance with Section 12(b) hereof by delivering
notice to Seller at any time at or before the Closing. All of Seller's
representations and warranties shall survive the Closing.
Section 9. Closing. The closing ("CLOSING") of the sale of the
Property by Seller to Purchaser shall occur on or before June 30, 1997
("CLOSING DATE"). Time is of the essence with regard to the Closing Date. The
Closing shall occur in the offices of Porter & Hedges, L.L.P., 700 Louisiana,
35th Floor, Houston, Texas 77002 commencing at 10:00 AM on the Closing Date.
At the Closing the following, which are mutually concurrent conditions, shall
occur:
a. Purchaser, at its sole cost and expense, shall
deliver or cause to be delivered to Seller the following:
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<PAGE> 7
i. Cashier's check, or the check of the Title
Company, made payable to the order of Seller, or immediately
available cash funds, in the amount of the Purchase Price as
specified in Section 2 hereof, adjusted in accordance with
Section 9(c) hereof; and
ii. Evidence satisfactory to Seller and Title
Company that the person executing the Closing documents on
behalf of Purchaser has full right, power, and authority to do
so.
b. Seller, at its sole cost and expense, shall deliver
or cause to be delivered to Purchaser the following:
i. Special Warranty Deed in the form of EXHIBIT
C hereto, fully executed and acknowledged by Seller, conveying
to Purchaser the Land and Improvements, subject only to the
Permitted Encumbrances;
ii. Owner's Policy of Title Insurance in the
amount of the Purchase Price issued by Title Company (with
such reinsurance as Purchaser may require), insuring that
Purchaser is the owner of the Land and Improvements subject
only to the Permitted Encumbrances and the standard printed
exceptions included in a Texas standard form owner's policy of
title insurance; provided, however, that (A) the standard
exception for discrepancies, conflicts, or shortages in area
shall be deleted except for "shortages in area"; (B) such
policy shall have "None of Record" endorsed regarding
restrictions except for restrictions that are Permitted
Encumbrances; (C) the rights of parties in possession shall be
limited only to those holding under written leases; and (D)
the standard exception for taxes shall be limited to the year
in which the Closing occurs, marked "not yet due and payable",
and subsequent years and subsequent assessments for prior
years due to change in land usage or ownership;
iii. Current certificate issued by company
acceptable to Purchaser reflecting that since the date of the
searches furnished pursuant to Section 5(c) hereof no Uniform
Commercial Code filings, chattel mortgages, assignments,
pledges, or other encumbrances have been filed in the offices
of the Secretary of State of the State of Texas or the County
Clerk of Jefferson County with reference to the Property;
iv. Certificates issued by the applicable taxing
authorities, pursuant to Section 31.08 of the Texas Tax Code,
stating that no delinquent taxes, penalties and interest are
due and payable on the Property;
v. Evidence satisfactory to Purchaser and the
Title Company that the persons executing and delivering the
Closing documents on behalf of Seller have full right, power
and authority to do so;
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<PAGE> 8
vi. Certificate executed by Seller stating that,
as of the Closing Date, each of Seller's representations and
warranties set forth in Section 8 hereof is true and correct;
vii. Certificate meeting the requirements of
Section 1445 of the Internal Revenue Code of 1986, as amended,
executed and sworn to by Seller; and
viii. Such other instruments as are customarily
executed in Texas to effectuate the conveyance of property
similar to the Property, with the effect that, after the
Closing, Purchaser will have succeeded to all of the rights,
titles, and interests of Seller related to the Property and
Seller will no longer have any rights, titles, or interests in
and to the Property.
c. All normal and customarily proratable items,
including without limitation real estate and personal property taxes,
utility bills, rents, interest, and Property Agreement payments shall
be prorated as of the Closing Date, Seller being charged and credited
for all of same up to such date and Purchaser being charged and
credited for all of same on and after such date. If the actual amounts
to be prorated are not known as of the Closing Date, the prorations
shall be made on the basis of the best evidence then available, and
thereafter, when actual figures are received, a cash settlement will
be made between Seller and Purchaser. The provisions of this Section
9(c) shall survive the Closing.
d. Seller shall pay all costs and liabilities relating
to the Property that arise out of or are attributable to the period
prior to the Closing Date, and shall indemnify and hold harmless
Purchaser from such costs and liabilities and from all reasonable
attorneys' fees expended by Purchaser in connection therewith. Seller
shall have the right to receive all proceeds relating to the Property
that are properly allocable to the period before the Closing Date, and
Purchaser shall have the right to receive all proceeds relating to the
Property that are properly allocable to the period from and after the
Closing Date. Purchaser shall pay all costs and liabilities relating
to the Property that arise out of or are attributable to the period
from and after the Closing Date, except such costs and liabilities
that arise out of or result from a breach by Seller of its
representations and warranties set forth in Section 8 hereof, and
Purchaser shall indemnify and hold harmless Seller from such costs and
liabilities and from all reasonable attorneys' fees expended by Seller
in connection therewith. This Section 9(d) shall survive the Closing.
e. Upon completion of the Closing, Seller shall deliver
to Purchaser possession of the Property free and clear of all
tenancies of every kind and parties in possession, with all parts of
the Property (including without limitation the Improvements) in the
same condition as on the date hereof, normal wear only excepted.
Section 10. Commissions. Seller shall defend, indemnify, and
hold harmless Purchaser, and Purchaser shall defend, indemnify, and hold
harmless Seller, from and against all claims by third parties for brokerage,
commission, finders, or other fees relative to this Agreement or the sale of
the
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<PAGE> 9
Property, and all court costs, attorneys' fees, and other costs or expenses
arising therefrom, and alleged to be due by authorization of the indemnifying
party.
Section 11. Destruction, Damage or Taking Before Closing. If,
before Closing, all or any part of the Land or Improvements are destroyed or
damaged, or become subject to condemnation or eminent domain proceedings, then
Seller shall promptly notify Purchaser thereof. Purchaser shall have the right
to elect to proceed with the Closing (subject to the other provisions of this
Agreement) by delivering notice thereof to Seller within five (5) business days
of receipt of Seller's notice respecting the damage, destruction, or taking,
but Purchaser shall be entitled to all insurance proceeds or condemnation
awards payable as a result of such damage or taking and, to the extent the same
may be necessary or appropriate, Seller shall assign to Purchaser at Closing
Seller's rights to such proceeds or awards. If, within five (5) business days
of receipt of Seller's notice respecting the damage, destruction, or taking,
Purchaser notifies Seller of its intent to terminate this Agreement, or if
Purchaser gives no notice within such period, then Purchaser shall be deemed to
have terminated this Agreement pursuant to Section 12(b) hereof.
Section 12. Termination and Remedies.
a. If Purchaser fails to consummate the purchase of the
Property pursuant to this Agreement for any reason other than
termination hereof pursuant to a right granted to Purchaser in
Sections 6, 7, 8, 11 and 13 hereof, then Seller, shall have the right
to terminate this Agreement by notifying Purchaser thereof, in which
event Title Company shall deliver the Earnest Money to Seller, and
Seller shall have all rights and remedies available under applicable
law.
b. If Purchaser terminates this Agreement pursuant to
Section 6, 7, 8, 11 or 13 hereof, then Title Company shall return the
Earnest Money to Purchaser, whereupon neither party hereto shall have
any further rights or obligations hereunder.
c. If Seller fails to consummate the sale of the
Property pursuant to this Agreement for any reason other than
termination hereof pursuant to Section 13, Purchaser's failure to
perform its obligations hereunder or termination hereof by Purchaser
in accordance with Section 12(b), then Purchaser shall have all rights
and remedies available under applicable law, and Title Company shall
return the Earnest Money to Purchaser.
Section 13. Conditions to Closing. This Agreement is expressly
conditioned upon the consummation of a Stock Purchase Agreement dated April 24,
1997 between the stockholders of Exell, Inc., a Texas corporation and Purchaser
(the "EXELL AGREEMENT"). In the event the Exell Agreement is not consummated
for any reason, Seller shall have no further obligation to sell and Purchaser
shall have no further obligation to purchase the Property and this Agreement
shall be automatically terminated and of no further force and effect.
Section 14. Notices. All notices provided or permitted to be
given under this Agreement must be in writing and may be served by depositing
same in the United States mail, addressed to the
9
<PAGE> 10
party to be notified, postage prepaid and registered or certified with return
receipt requested; by delivering the same in person to such party; transmitted
by Federal Express or a similar generally recognized overnight carrier
generally providing proof of delivery; by prepaid telegram or telex; or by
facsimile copy transmission. Notice given in accordance herewith shall be
effective upon receipt at the address of the addressee. For purposes of notice,
the addresses of the parties shall be as follows:
If to Seller, to: Babel, Miller & Blackwell
P.O. Box 3726
Beaumont, Texas 77704
Attn: William R. Miller
(409) 838-3400
FAX: (409) 833-4731
If to Purchaser, to: ITEQ, Inc.
2727 Allen Parkway, Suite 760
Houston, Texas 77019
Attn: Mr. Lawrence W. McAfee
(713) 285-2700
FAX: (713) 520-8228
Either party hereto may change its address for notice by giving three (3) days
prior written notice thereof to the other party.
Section 15. Assigns; Beneficiaries. This Agreement shall inure
to the benefit of and be binding on the parties hereto and their respective
heirs, legal representatives and successors; provided, this Agreement is not
assignable by either party, except Purchaser may assign this Agreement to any
of its subsidiaries or affiliates. This Agreement is for the sole benefit of
Seller and Purchaser, and no third party is intended to be a beneficiary of
this Agreement.
Section 16. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Texas.
Section 17. Entire Agreement. This Agreement is the entire
agreement between Seller and Purchaser concerning the sale of the Property, and
no modification hereof or subsequent agreement relative to the subject matter
hereof shall be binding on either party unless reduced to writing and signed by
the party to be bound. Exhibits A through C, inclusive, attached hereto, are
incorporated herein by this reference for all purposes.
10
<PAGE> 11
IN WITNESS WHEREOF, Purchaser and Seller have executed this Agreement
as of the date first set forth above.
SELLER:
BABEL, MILLER & BLACKWELL PARTNERSHIP
By: /s/ LEO G. BABEL
--------------------------------
Name: Leo G. Babel
-------------------------------
Title: General Partner
------------------------------
PURCHASER:
ITEQ, INC.
By: /s/ LAWRANCE W. McAFEE
---------------------------------
Name: Lawrance W. McAfee
-------------------------------
Title: EVP & CFO
------------------------------
11
<PAGE> 12
Schedule of Exhibits
<TABLE>
<S> <C> <C>
A - Description of Land
B - List of Property Agreements
C - Form of Special Warranty Deed
</TABLE>
JOINDER BY TITLE COMPANY
The undersigned, STEWART TITLE COMPANY, referred to in this Agreement
as the "TITLE COMPANY," hereby acknowledges that it received this Agreement
executed by Seller and Purchaser on the 13th day of May, 1997, and accepts the
obligations of the Title Company as set forth herein. The undersigned further
acknowledges that it received the Earnest Money on the 14th day of May, 1997.
The Title Company hereby agrees to hold the Earnest Money as directed in this
Agreement, and to distribute the Earnest Money in accordance with the terms and
provisions of this Agreement.
STEWART TITLE COMPANY
By: /s/ SANDRA POTTS
---------------------------------------
Name: Sandra Potts
-------------------------------------
Title: Escrow Officer
------------------------------------
Address: 2390 North Dowlen Road.
Beaumont, Texas 77006
(409) 866-8880
Fax (409) 866-9137
<PAGE> 1
EXHIBIT 10.5
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
This First Amendment to Purchase and Sale Agreement (the "AMENDMENT") is
made and entered into by and among BABEL, MILLER & BLACKWELL PARTNERSHIP, a
Texas general partnership, a/k/a Babel, Miller & Blackwell, Ltd., BEAUMONT
FRANKLIN STREET PROPERTIES, L.L.C., a Texas limited liability company, NECHES
STREET PROPERTIES, L.L.C., a Texas limited liability company (hereinafter
Beaumont Franklin Street Properties, L.L.C. and Neches Street Properties,
L.L.C. are collectively referred to as "SELLER"), and ITEQ, INC., a Delaware
corporation (hereinafter referred to as "PURCHASER").
WHEREAS, Babel, Miller & Blackwell Partnership and Purchaser entered
into that certain Purchase and Sale Agreement (the "AGREEMENT") with an
effective date of May 14, 1997, for the sale of certain real property in
Jefferson County, Texas (the "PROPERTY"), more particularly described in the
Agreement; and
WHEREAS, the Property has been conveyed by the owners thereof to
Beaumont Franklin Street Properties, L.L.C. and Neches Street Properties,
L.L.C.; and
WHEREAS, Purchaser and William R. Miller, Leo G. Babel, Robert L.
Blackwell, II, William Russel Miller, Fabian Howard Babel and Robert Blackwell,
III (collectively, the "SHAREHOLDERS") have entered into that certain Stock
Purchase Agreement dated April 24, 1997 (the "STOCK PURCHASE AGREEMENT"), as
amended, whereby the Shareholders have agreed to sell and Purchaser has agreed
to buy 100% of the stock of Exell, Inc., subject to the terms of the Stock
Purchase Agreement; and
WHEREAS, Seller and Exell, Inc., upon the closing of the Stock Purchase
Agreement intend to enter into a Lease Agreement (the "LEASE") whereby Exell,
Inc. shall lease the Property from Seller; and
WHEREAS, upon the satisfaction of the conditions precedent of the
Agreement, Seller and Purchaser intend to consummate the Agreement, as amended;
and
WHEREAS, Purchaser and Seller desire to amend the Agreement as herein
provided.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby amend the Agreement as follows:
1. Assignment and Assumption of Agreement. Babel, Miller & Blackwell
Partnership has ASSIGNED, TRANSFERRED and SET OVER, and by these presents does
ASSIGN, TRANSFER and SET OVER all of its right, title and interest, in and to
the Agreement to Beaumont Franklin Street Properties, L.L.C. and Neches Street
Properties, L.L.C. and Beaumont
<PAGE> 2
Franklin Street Properties, L.L.C. and Neches Street Properties, L.L.C. has
ASSUMED the obligations of Seller as set forth in the Agreement and this
Amendment.
2. Sale and Purchase. Section 1(a) of the Agreement is deleted in
its entirety and replaced with the following:
a. the tracts or parcels of land situated in Jefferson County, Texas
described in EXHIBIT A hereto together with all rights and interests
appurtenant thereto, including all of Seller's right, title, and
interest in and to adjacent streets, alleys, rights-of-way, and any
adjacent strips or gores of real estate (the "LAND"); all fixtures and
improvements located on the Land, including, but not limited to all
overhead cranes presently situated on the Land (the "IMPROVEMENTS"); and
all rights, titles, and interests appurtenant to the Land and
Improvements; and
3. Purchase Price. Section 2 of the Agreement is deleted in its
entirety and replaced with the following:
The price for which Seller shall sell and convey the Property to
Purchaser, and which Purchaser shall pay to Seller, is ONE MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($1,500,000.00) (the "PURCHASE
PRICE"). The Purchase Price shall be payable in cash or cash equivalent
at the Closing (hereinafter defined).
4. Earnest Money. Pursuant to the Agreement, Purchaser deposited
$100.00 as Earnest Money with Stewart Title Company, 2390 North Dowlen Road,
Beaumont, Texas 77706. Seller and Purchaser wish to replace Stewart Title
Company and designate Beaumont Title Company, 2050 North 11th Street, Beaumont,
Texas 77703, Attn: Mr. Dan Phares as the "TITLE COMPANY" under the Agreement.
Seller and Purchaser agree to cooperate in order to have the Earnest Money
transferred from Stewart Title Company to Beaumont Title Company. Seller and
Purchaser agree that Chicago Title Insurance Company is an acceptable
underwriter for the Title Commitment and Title Policy to be issued pursuant to
the terms of the Agreement. The Effective Date of the Agreement shall remain
May 14, 1997.
5. Delivery of Information. Seller has caused the Title Company to
issue an updated Title Commitment on or before the date of this Amendment.
Further, the following shall be added to Section 5 of the Agreement as
subparagraph e:
e. Within fifteen (15) days after certification of the Property
under the VCP (as defined in Section 13 hereof) or equivalent
regulatory determination, Seller shall deliver or cause to be
delivered to Purchaser, in compliance with the requirements set
forth in Section 5, subparagraphs a, b, c and d, the following:
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<PAGE> 3
i. an updated Title Commitment from the Title Company, with
true, complete and legible copies of all documents not
previously provided to Purchaser;
ii. an updated Survey;
iii. an updated search of the UCC records of the Secretary of
State of Texas and the County Clerk of Jefferson County,
Texas; and
iv. copies of all Documents and Information not previously
provided to Purchaser.
6. Right of Inspection; Contingency Period. The last sentence of
Section 6(b) is hereby deleted. The following shall be added to Section 6 of
the Agreement as subparagraph c:
b. Purchaser shall have the right to terminate this Agreement for
thirty (30) days after receipt of the last of the updated Title
Commitment, Title Documents, Survey, UCC search and copies of
Documents and Information required under Section 5(e) (the
"SECOND CONTINGENCY PERIOD"), if Purchaser, in its sole and
absolute discretion, is not satisfied for any reason with the
condition of Seller's title to the Property. If Purchaser does
not so terminate this Agreement prior to the expiration of the
Second Contingency Period, Purchaser shall have waived its right
to terminate this Agreement under this Section 6.
7. Title. Section 7 of the Agreement is deleted in its entirety and
replaced with the following:
Purchaser shall have the right, at any time during the Contingency
Period and the Second Contingency Period, as the case may be, to object
in writing to any liens and encumbrances reflected by the Title
Commitment or Survey. All liens and encumbrances to which Purchaser so
objects are hereinafter referred to as the "NON-PERMITTED ENCUMBRANCES";
if no such notice of objection is given during the Contingency Period or
the Second Contingency Period, as the case may be, then it shall be
deemed that all matters reflected by the Survey and Title Commitment are
"PERMITTED ENCUMBRANCES". Seller shall use reasonable efforts, at its
sole cost, to cure or remove all Non-Permitted Encumbrances and give
Purchaser written notice thereof before the end of the Contingency
Period or the Second Contingency Period, as the case may be; provided,
however, that Seller, at its sole cost, shall be obligated to cure or
remove at or before Closing all mortgages, deeds of trust, judgment
liens, mechanics and materialmen's liens, and other liens against the
Property, whether or not Purchaser objects thereto during the
Contingency Period or the Second Contingency Period, as the case may be.
Further, Seller shall cause any leases
-3-
<PAGE> 4
relating to the Land and Improvements to be terminated on or before
Closing. If Seller does not timely cause all of the Non-Permitted
Encumbrances to be removed or cured, and timely written notice thereof
to be given to Purchaser, then Purchaser shall have the right to either
(i) terminate this Agreement in accordance with Section 12(b) hereof by
delivering notice to Seller, or (ii) attempt to remove or cure the Non-
Permitted Encumbrances and deduct the cost of such removal or cure from
the Purchase Price, or (iii) elect to purchase the Property subject to
the Non-Permitted Encumbrances, other than liens that Seller is
obligated to cure or remove, and the Non-Permitted Encumbrances (other
than liens that Seller is obligated to cure or remove) subject to which
Purchaser elects to purchase the Property shall thereafter be Permitted
Encumbrances.
8. Seller's Representations, Warranties and Covenants. Section 8(l)
of the Agreement is deleted in its entirety and replaced with the following:
l. Except for those matters disclosed by the Dames & Moore
Reports (as defined in Section 13) for which Seller, Babel, Miller &
Blackwell Partnership (a/k/a Babel, Miller & Blackwell, Ltd.), Leo G.
Babel, Bob Miller and Robert L. Blackwell deny responsibility, during
the period that such parties have owned the Property, the Property has
not been the site of any activity that would violate any past or present
environmental law or regulation of any governmental body or agency
having jurisdiction over the Property. Further, except as disclosed by
the Dames & Moore Reports, (i) solid waste, petroleum, or petroleum
products have not been handled on the Property such that they may have
leaked or spilled onto the Property or contaminated the Property, (ii)
there is no on-site contamination resulting from activities on the
Property or adjacent tracts, and (iii) the Property contains no
"hazardous materials" which shall mean any flammables, explosives,
radioactive materials, asbestos, or other hazardous waste including
without limitation substances defined as "hazardous substances",
"hazardous materials", or "toxic substances" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980; the
Hazardous Materials Transportation Act; and the Resources Conversation
and Recovery Act, all as amended.
9. Closing. The first sentence of Section 9 of the Agreement is
hereby deleted in its entirety and replaced with the following:
The closing ("CLOSING") of the sale of the Property by Seller to
Purchaser shall occur on the later to occur of the following: (i) sixty
(60) days after certification of the Property under the VCP (as defined
in Section 13); or (ii) ten (10) days after the Non-Permitted
Encumbrances have been cured or waived as set forth in Section 7, but in
any event no later than ninety-nine (99) years from the commencement
date of the
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<PAGE> 5
Lease; provided, however, Purchaser, in its sole discretion, may waive
one or more of the conditions to Closing and proceed to Closing at any
time.
10. Conditions to Closing. The Section 13 of the Agreement is hereby
deleted in its entirety and replaced with the following:
a. This Agreement is expressly conditioned upon the
consummation of a Stock Purchase Agreement dated April 24, 1997 between
the stockholders of Exell, Inc., a Texas corporation and Purchaser (the
"EXELL AGREEMENT"). In the event the Exell Agreement is not consummated
for any reason, Seller shall have no further obligation to sell and
Purchaser shall have no further obligation to purchase the Property and
this Agreement shall be automatically terminated and of no further force
and effect.
b. This Agreement is expressly conditioned upon the Seller
entering into the Lease with Exell, Inc. contemporaneously with the
closing of the Exell Agreement, upon terms reasonably acceptable to
Purchaser and Seller.
c. Purchaser has learned of certain environmental matters
affecting the Property (the "ENVIRONMENTAL MATTERS") as set forth in
reports prepared by Dames & Moore entitled "Final Report, Phase I
Environmental Site Assessment, Limited Environmental Compliance Review,
Excell Manufacturing Facility, 1110 Neches Street, Beaumont, Texas for
ITEQ, Inc." dated April 30, 1997, and "Dames & Moore Group Limited Phase
II Investigation, Excell, Inc. Facilities, Beaumont, Texas" dated July
14, 1997 (collectively, "DAMES & MOORE REPORTS"). As part of the
consideration for the Lease, Exell, Inc. (with the guaranty of
Purchaser) has agreed to remediate the Environmental Matters under the
Voluntary Cleanup Program provided for in Texas Health and Safety Code,
Sections 361.601 et. seq., as same may be amended from time to time and
the regulations promulgated thereunder ("VCP"), pursuant to the terms
and conditions set forth in the Lease. The Closing of this Agreement is
expressly conditioned upon Exell, Inc. obtaining a Certificate of
Completion for the Property under the VCP from the Texas Natural
Resources Conservation Commission, or equivalent regulatory
determination in the event remediation of the Property is not performed
under the VCP.
11. Notices. The following is added to Section 14 in the event a
notice is sent to the Seller or Purchaser:
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<PAGE> 6
If to Seller, to: Beaumont Franklin Street Properties, L.L.C.
Neches Street Properties, L.L.C.
P.O. Box 3726
Beaumont, Texas 77704
Attn: Mr. William R. Miller
(409) 838-3400
FAX: (409) 833-4731
with a copy to: Orgain, Bell & Tucker, L.L.P.
470 Orleans Street
Beaumont, Texas 77701
Attn: John Creighton, III, Esquire
(409)838-6412
FAX: (409)838-6959
If to Purchaser, to: ITEQ, Inc.
2727 Allen Parkway, Suite 760
Houston, Texas 77019
Attn: Mr. Lawrance W. McAfee
(713) 285-2700
FAX: (713) 520-8228
with a copy to: Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Attn: Richard L. Wynne, Esquire
(713)226-0647
FAX: (713)228-1331
12. Memorandum of Agreement. The parties shall execute a Memorandum
of this Purchase and Sale Agreement and record such Memorandum in the Official
Public Records of Jefferson County, Texas.
13. No Other Modifications. Except as expressly amended and modified
hereby, all of the covenants and conditions of the Agreement as amended by this
Amendment are ratified and confirmed by Seller and Purchaser.
14. Defined Terms. All terms, definitions and dates contained in the
Agreement shall have the same meaning and application in this Amendment except
to the extent there is a conflict, in which event, the terms of this Amendment
shall control.
-6-
<PAGE> 7
15. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
EXECUTED effective the 13th day of August, 1997.
SELLER:
BEAUMONT FRANKLIN STREET PROPERTIES, L.L.C.
By: /s/ DEE ARNOLD BLACKWELL
------------------------------------------
Name: Dee Arnold Blackwell
----------------------------------------
Title: Managing Member
---------------------------------------
NECHES STREET PROPERTIES, L.L.C.
By: /s/ DEE ARNOLD BLACKWELL
------------------------------------------
Name: Dee Arnold Blackwell
----------------------------------------
Title: Managing Member
---------------------------------------
BABEL, MILLER & BLACKWELL PARTNERSHIP
By: /s/ LEO G. BABEL
------------------------------------------
Name: Leo G. Babel
----------------------------------------
Title: Partner
---------------------------------------
PURCHASER:
ITEQ, INC.
By: /s/ LAWRANCE W. McAFEE
------------------------------------------
Lawrance W. McAfee, Executive Vice
President and Chief
Financial Officer
-7-
