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
June 26, 1996
Date of Report
(Date of earliest event reported)
Exsorbet Industries, Inc
(Exact name of Registrant as specified in its charter)
Idaho
(State or other jurisdiction of incorporation)
0-25970 82-0464589
(Commission file number) (IRS employer identification no.)
4294 Lakeland, Suite 200
Jackson, Mississippi 39208
(Address of principal executive offices) (Zip code)
(601) 936-4440
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
(a) On June 26, 1996, Exsorbet Industries, Inc. (the "Company") entered
into an Agreement and Plan of Merger (the "Agreement") between the Company,
Larco Acquisition, Inc., an Arkansas corporation and wholly owned subsidiary of
the Company ("Acquisition"), Larco Environmental Services, Inc., and Larry
Woodcock and Marilyn Woodcock. Pursuant to the Agreement, the Company
beneficially acquired all of the outstanding common stock of Larco Environmental
Services, Inc., a Louisiana corporation, which is an environmental emergency
response and industrial services company ("Larco"). The stock was actually
acquired by Acquisition. Acquisition and Larco are filing articles of merger in
which Larco will be the surviving corporation. The stock of Larco was acquired
from its sole shareholders, Larry Woodcock and Marilyn Woodcock. In return, the
Woodcocks received 1,152,021 shares of common stock of the Company, par value
$.001 per share (the "Common Stock"). The Board of Directors of the Company
determined this consideration to be fair and reasonable by determining the fair
market value of Larco to be, at a minimum, $4,500,000. The value of the Common
Stock at closing, based on a five day closing price prior to closing, was
approximately $3.89. The amount of Common Stock provided, the Board believed,
was representative of the fair market value of Larco. At the same time that the
Agreement was entered into, employment agreements were entered into with each of
Larry Woodcock and Marilyn Woodcock. Larry Woodcock will receive cash
compensation of $125,000 per year. Marilyn Woodcock will receive cash
compensation of $60,000 per year. Stock options were granted to each of Larry
Woodcock and Marilyn Woodcock and a signing bonus was provided to Larry
Woodcock. The Company also purchased real estate used by Larco from Larry
Woodcock and Marilyn Woodcock. Such real estate is located at 1890 Swisco Road,
Sulphur, Louisiana. The Woodcocks were paid $1,388,000 for the real estate.
Since the acquisition, Larry Woodcock has been appointed to the Board of
Directors of the Company until the next annual meeting of shareholders of the
Company. He has also been appointed to be an officer of the Company as an
executive vice-president. Marilyn Woodcock has been appointed as the business
manager for the emergency response and industrial services division of the
Company. Necessary funding for the transaction was supplied by a bank loan from
a bank making a request for confidentiality pursuant to Section 13(d)(1)(B) of
the Securities Exchange Act of 1934, as amended.
(b) The assets acquired in the acquisition and real property purchase have
been used as an operating facility for Larco. The assets include both real
property (acquired directly from Larry Woodcock and Marilyn Woodcock) and
personal property, including vehicles, emergency equipment, and other equipment
used in the business. The Company will continue to make the same use of both the
real and personal property as existed prior to the acquisition.
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Item 7. Financial Statements.
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. It is impracticable to provide
the required financial statements with this report on Form 8-K. As permitted by
Form 8-K, such financial statements will be filed under cover of an amendment to
this Form 8-K as soon as practicable, but in no case later than 60 days after
this Report on Form 8-K must be filed.
PRO FORMA FINANCIAL INFORMATION. It is impracticable to provide the
required pro forma financial information with this report on Form 8-K. As
permitted by Form 8-K, such pro forma financial information will be filed under
cover of an amendment to this Form 8-K as soon as practicable, but in no case
later than 60 days after this Report on Form 8-K must be filed.
REAL ESTATE. It is impracticable to provide the required financial
information concerning the acquisition of real estate with this report on Form
8-K. As permitted by Form 8- K, such financial information will be filed under
cover of an amendment to this Form 8-K as soon as practicable, but in no case
later than 60 days after this Report on Form 8-K must be filed.
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EXHIBITS.
2.1 Agreement and Plan of Merger dated June 26, 1996 by and between
Exsorbet Industries, Inc., Exsorbet Acquisition, Inc., Larco Environmental
Services, Inc., and Larry and Marilyn Woodcock
99.1 Press Release of Exsorbet Industries, Inc. dated June 26, 1996
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXSORBET INDUSTRIES, INC.
/s/ Charles E. Chunn, Jr.
Charles E. Chunn, Jr.
Vice-President
Date: July 11, 1996
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EXHIBITS.
Exhibit
Number
------
2.1 Agreement and Plan of Merger dated June 26, 1996 by and between
Exsorbet Industries, Inc., Exsorbet Acquisition, Inc., Larco
Environmental Services, Inc., and Larry and Marilyn Woodcock
99.1 Press Release of Exsorbet Industries, Inc. dated June 26, 1996
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
EXSORBET INDUSTRIES, INC.
(Parent)
LARCO ACQUISITION, INC.
(Merger Subsidiary)
AND
LARCO ENVIRONMENTAL SERVICES, INC.
(Target)
ARTICLE I......................................................................5
THE MERGER.....................................................................5
1.1 The Merger.......................................................5
1.2 Certificate of Incorporation and By-Laws.........................6
1.3 Consideration....................................................6
1.4 Effective Time of the Merger.....................................6
1.5 Closing..........................................................6
ARTICLE II.....................................................................6
FURTHER AGREEMENTS.............................................................6
2.1 Director Appointment.............................................6
2.2 Debt Obligations.................................................6
ARTICLE III....................................................................6
REPRESENTATIONS AND WARRANTIES.................................................6
3.1 General Statement................................................7
3.2 Representations of the Merger Subsidiary.....................7
(a) Organization of the Merger Subsidiary...................7
(b) Authorization of Transaction............................7
(c) Noncontravention........................................7
(d) Brokers' Fees...........................................7
(e) Investment..............................................7
3.3 Representations of the Controlling Shareholders..................8
(a) Organization of Target..................................8
(b) Capitalization..........................................8
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(c) Authorization of Transaction............................8
(d) Noncontravention........................................9
(e) Brokers' Fees...........................................9
(f) Investment..............................................9
(g) Assets of the Target....................................9
(h) ...................................................10
(i) Financial Statements...................................10
(j) Subsequent Events......................................10
(k) Undisclosed Liabilities................................13
(l) Legal Compliance.......................................13
(m) Tax Matters............................................13
(n) Intellectual Property..................................15
(o) Contracts..............................................16
(p) Notes and Accounts Receivable..........................16
(q) Powers of Attorney.....................................16
(r) Insurance..............................................16
(s) Litigation.............................................17
(t) Employees..............................................17
(u) Employee Benefits......................................17
(v) Guaranties.............................................17
(w) Environment, Health, and Safety........................17
ARTICLE IV....................................................................18
COVENANTS.....................................................................18
4.1 Covenants.......................................................18
(a) General................................................18
(b) Litigation Support.....................................19
(c) Transition.............................................19
(d) Confidentiality........................................19
ARTICLE V.....................................................................19
INDEMNIFICATION...............................................................19
5.1 Specific Indemnification Provisions for Benefit
of the Parent...................................................19
5.2 General Indemnification Provisions for the
Benefit of the Parent...........................................20
5.3 Indemnification Provisions for Benefit of
the Controlling Shareholders....................................20
5.4 Matters Concerning Indemnity....................................21
ARTICLE VI....................................................................21
TERMINATION, AMENDMENT AND WAIVER.............................................21
6.1 Amendment.......................................................21
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6.2 Waiver..........................................................21
ARTICLE VII...................................................................22
MISCELLANEOUS.................................................................22
7.1 No Third Party Beneficiaries....................................22
7.2 Entire Agreement................................................22
7.3 Succession and Assignment.......................................22
7.4 Counterparts....................................................22
7.5 Headings........................................................22
7.6 Notices.........................................................22
7.7 Severability....................................................23
7.8 Expenses........................................................23
7.9 Construction....................................................23
7.10 Incorporation of Exhibits.......................................23
7.11 Governing Law...................................................23
7.12 Knowledge.......................................................23
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AGREEMENT AND PLAN OF REORGANIZATION
AMONG
EXSORBET INDUSTRIES, INC.
(Parent)
LARCO ACQUISITION, INC.
(Merger Subsidiary)
AND
LARCO ENVIRONMENTAL SERVICES, INC.
(Target)
This Agreement and Plan of Reorganization (the "Agreement"), is made this
26th day of June, 1996, by and among EXSORBET INDUSTRIES, INC., an Idaho
corporation (the "Parent"), LARCO ACQUISITION, INC., an Arkansas corporation and
a wholly-owned subsidiary of Parent (the "Merger Subsidiary"), LARCO
ENVIRONMENTAL SERVICES, INC., a Louisiana corporation (the "Target") and Larry
Woodcock and Marilyn Woodcock (the "Controlling Shareholders"), and provides for
the Target to become a wholly-owned subsidiary of the Parent by the merger of
the Merger Subsidiary with and into the Target and for the shareholders of the
Target by such merger, to become shareholders instead of the Parent. The Parent,
the Merger Subsidiary, the Target and the Controlling Shareholders are referred
to collectively herein as the "Parties."
RECITALS
WHEREAS, the Parent desires to acquire, on the terms and subject to the
conditions reflected below, the stock of the Target; and
WHEREAS, the Target believes that it is desirable to become a wholly-owned
subsidiary of the Parent as provided below:
WHEREAS, the requisite Boards of Directors have approved the acquisition of
Target by Parent.
WHEREAS, the requisite Boards of Directors have approved the merger of
Merger Subsidiary into Target (the "Merger"), pursuant to the Agreement of
Merger set forth in Exhibit 1.1 hereto ("Merger Agreement") and the transactions
contemplated hereby, in accordance with the applicable provisions of the
statutes of the States of Arkansas and Louisiana, which permit such Merger.
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization with the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
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WHEREAS, each of the Parties to this Agreement desires to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions thereto.
NOW, THEREFORE, THE PARTIES TO THIS PLAN OF REORGANIZATION AND AGREEMENT do
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.4) and
subject to the terms and conditions of this Agreement and the Merger Agreement,
Merger Subsidiary will merge with and into the Target by the filing with the
Secretary of State of the State of Louisiana and, the Secretary of State of the
State of Arkansas, of the fully executed Merger Agreement, in a form identical
in all material respects to that attached hereto as Exhibit 1.1, or, if
permitted, a certificate of merger in lieu thereof ("Certificate of Merger") and
such other documents as may be required by applicable law to effectuate the
Merger, (1) each share of common stock of the Target outstanding prior to the
Merger will, by said occurrence and with no further action on the part of the
holder thereof be, transformed and converted into the right to receive, upon
surrender of the certificate for such share of the common stock of the Target,
the Consideration (as defined in Section 1.3 below), without interest or any
similar payment thereon or with respect thereto; (2) each share of common stock
of the Merger Subsidiary outstanding prior to the Merger will, by said
occurrence and with no further action on the part of the holder thereof be
transformed and converted into 3.333 shares of the Common Stock of the Target,
so that thereafter the Parent will be the sole and exclusive owner of equity
securities of the Target; (3) the officers of the Target immediately prior to
the effectiveness of the Merger will continue to hold such offices after the
effectiveness of the Merger, and thereafter subject at all times to the
discretion of the board of directors of the Target; (4) the board of directors
of the Target immediately prior to the effectiveness of the Merger will continue
to hold such positions after the effectiveness of the Merger; (5) the Target, as
the surviving corporation of the Merger (the "Surviving Corporation") shall be
the owner of all the business, assets, rights and other attributes theretofore
held by either the Merger Subsidiary or the Target; and (6) the name of the
Target shall thereafter be the same as that of the Target prior to the Merger.
1.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Articles of Incorporation
and ByLaws of the Target as in effect immediately prior to the effective time
shall be the Articles of Incorporation and By-Laws of the Incorporation after
the Effective Time.
1.3 CONSIDERATION. Pursuant to the Merger, each holder of shares of common
stock of the Target immediately prior to the Merger shall be entitled to
receive, from and after the effectiveness of the Merger, in respect of each
share of common stock of the Target outstanding immediately prior
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to the Merger owned by such holder (and upon surrender of the certificate(s)
therefor, duly endorsed and in all respects and in proper form for transfer),
his or her pro rata share of the Consideration. The term "Consideration" for
purposes of this Agreement shall mean the 1,152,021 shares of common stock of
the Parent, into which each share of common stock of the Target outstanding
immediately prior to the consummation of the Merger will be converted by reason
of the Merger. All stock issued by the Parent shall be subject to Rule 144 of
the United States Securities and Exchange Commission.
1.4 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, a duly certified and acknowledged copy of the Merger Agreement, or a
certificate of merger (the "Certificate of Merger") duly prepared, executed and
acknowledged by Merger Subsidiary and the Target, shall be delivered to the
Secretary of State of the State of Louisiana and Arkansas for filing, as
provided under the applicable law of such states, on the Closing Date (as
defined in Section 1.5). The Merger shall become effective upon the filing of
the Merger Agreement or the Certificate of Merger with the Secretaries of State
of the States of Louisiana and Arkansas or at such time thereafter as is
provided in the Merger Agreement or the Certificate of Merger pursuant to the
mutual agreement of Parent and Target (the "Effective Time").
1.5 CLOSING. The closing of the Merger (the "Closing") will take place on
June 26, 1996 and the Certificate of Merger will be filed as soon as practicable
after the Closing.
ARTICLE II
FURTHER AGREEMENTS
2.1 DIRECTOR APPOINTMENT. Parent, through its current board of directors,
will appoint Larry Woodcock to a position as a director on the board of
directors of the Parent to take effect no later than June 30, 1996. Prior to
such appointment, Parent will obtain directors and officers liability insurance.
2.2 DEBT OBLIGATIONS. Parent shall be responsible for the liabilities of
the Target, unless otherwise specified, and shall take all steps necessary to
cause the Controlling Shareholders to be removed as guarantors of all Target
debt and to cause any lenders to release the Controlling Shareholders from any
personal obligations on Target debt. Parent shall not be responsible for any
liability of Target in connection with the case of Rymel v. Larco described in
Exhibit "G" hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 GENERAL STATEMENT. The Parties make the representations and warranties
to each other which are set forth in this Article III.
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3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY. Parent
and Merger Subsidiary jointly and severally represent and warrant to Target and
Controlling Shareholders, as of the date hereof and at the Effective Time, as
follows:
(a) ORGANIZATION OF THE MERGER SUBSIDIARY. Exsorbet Industries, Inc. is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Idaho. Larco Acquisition, Inc. is a
wholly owned subsidiary of Exsorbet Industries, Inc. and is duly
organized, validly existing, and in good standing under the laws of
the State of Arkansas.
(b) AUTHORIZATION OF TRANSACTION. Each of the Parent and the Merger
Subsidiary has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of the Parent and the Merger
Subsidiary, enforceable in accordance with its terms and conditions.
Neither the Parent nor the Merger Subsidiary need give any notice to,
make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Parent or the Merger Subsidiary are subject or any provision of
their respective charter or bylaws.
(d) BROKERS' FEES. Neither the Parent nor the Merger Subsidiary has any
liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which any Seller could become liable or obligated.
(e) INVESTMENT. The Parent (A) understands that the restricted common
stock of the Target, which it will receive pursuant to the Merger, has
not been, and will not be, registered under the Securities Act of
1933, or under any state securities laws, and are being offered and
sold in reliance upon federal and state exemptions for transactions
not involving any public offering; (B) is acquiring such restricted
common stock solely for its own account for investment purposes, and
not with a view to the distribution thereof; (C) is a sophisticated
investor with knowledge and experience in business and financial
matters; (D) has received certain information concerning the Target
and has had the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks inherent in
holding the restricted common stock; and (E) is able to bear the
economic risk and lack of liquidity inherent in holding the restricted
common stock.
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3.3 REPRESENTATIONS OF TARGET. Target and Controlling Shareholders jointly
and severally represent and warrant to each of Parent and Merger Subsidiary as
of the date hereof and at the Effective time, as follows:
(a) ORGANIZATION OF TARGET. To the knowledge of Target and the Controlling
Shareholders, Target is duly organized, validly existing, and in good
standing under the laws of the State of Louisiana. To the knowledge of
Target and the Controlling Shareholders, Target is duly authorized to
conduct business in the states of Louisiana and Texas and has ICC
licenses in Louisiana, Florida, Mississippi, Georgia, Arkansas,
Tennessee and Oklahoma. To the knowledge of Target and the Controlling
Shareholders, Target has full corporate power and authority to carry
on the businesses in which it is engaged and to use the properties
used by it. A list of the officers and directors of Target is attached
hereto as Exhibit "A."
(b) CAPITALIZATION. The entire authorized capital stock of Larco
Environmental Services, Inc. consists of 1,000 shares, with 1,000
shares issued in the names of the Controlling Shareholders. All of the
issued and outstanding shares of stock of all classes of the Target
has been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the Controlling Shareholders.
There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Target to issue,
sell, or otherwise cause to become outstanding any of its stock of any
class. Besides the stock appreciation rights in Larco Environmental
Services of Baton Rouge, Inc. previously disclosed herein, there are
no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Target. There are
no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of the Target. The
Controlling Shareholders directly own all of the issued and
outstanding stock of all classes of the Target, free and clear of any
restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), taxes, security interests,
options, warrants, purchase rights, contracts, commitments, equities,
claims, and demands. The Controlling Shareholders are not a party to
any option, warrant, purchase right, or other contract or commitment
that could require the Controlling Shareholders to sell, transfer, or
otherwise dispose of any stock of the Target (other than this
Agreement). The Controlling Shareholders are not a party to any voting
trust, proxy, or other agreement or understanding with respect to the
voting of any stock of the Target.
(c) AUTHORIZATION OF TRANSACTION. The Target and Controlling Shareholders
have full power and authority to execute and deliver this Agreement
and to perform their obligations hereunder. This Agreement constitutes
valid and legally binding obligations of the Target and Controlling
Shareholders, enforceable in accordance with its terms and conditions.
The Target and Controlling Shareholders need not
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give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order
to consummate the transactions contemplated by this Agreement.
(d) NONCONTRAVENTION. To the knowledge of the Target and Controlling
Shareholders, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Controlling Shareholders or the Target is subject; or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement
to which either the Controlling Shareholders or the Target is a party
or by which either the Controlling Shareholders or the Target is bound
or to which any of the assets of either the Controlling Shareholders
or the Target is subject. The parties acknowledge disclosure of the
agreement existing between Ron Barron and Larco Environmental Services
of Baton Rouge, Inc.
(e) BROKERS' FEES. The Target and Controlling Shareholders have no
liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which the Merger Subsidiary could become liable or
obligated.
(f) INVESTMENT. The Target and Controlling Shareholders are acquiring the
restricted common stock solely for their own account for investment
purposes, and not with a view to the distribution thereof and have
received certain information concerning Exsorbet Industries, Inc. and
have had the opportunity to obtain additional information as desired
in order to evaluate the merits and the risks inherent in holding the
stock.
(g) ASSETS OF THE TARGET. To the knowledge of the Target and Controlling
Shareholders, the Target has good and marketable title to, or a valid
leasehold interest in, the properties and assets used by them, located
on their premises, or shown on the most recent balance sheet or
acquired after the date thereof, free and clear of all security
interests, except for properties and assets disposed of in the
ordinary course of business since the date of the most recent balance
sheet and as heretofore disclosed to the Parent. The Controlling
Shareholders have disclosed that the real property utilized by the
Target is owned individually by the Controlling Shareholders. The
Controlling Shareholders warrant that no other person or entity is
entitled to claim a mortgage interest, security interest, or otherwise
claim a right to possession of the real property utilized by the
Target, except as is disclosed in Exhibit "B," attached hereto. To the
knowledge of the Target and Controlling
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Shareholders, the buildings, machinery, equipment, and other tangible
assets that the Target owns and leases are free from material defects
(patent and latent), have been maintained in accordance with normal
industry practice, and are in good operating condition and repair
(subject to normal wear and tear). It is specifically noted that the
Merger Subsidiary and Parent have inspected the buildings and
equipment utilized by the Target. Such buildings, equipment,
machinery, and other tangible assets are acceptable, and the Merger
Subsidiary and Parent will not be asserting any claim against the
Target and Controlling Shareholders for updating, painting, repairing,
or modifying the buildings or equipment.
(h) There are no pending or, to the knowledge of the Target and
Controlling Shareholders and the directors and officers of the Target,
threatened condemnation proceedings, lawsuits, or administrative
actions relating to the real property utilized by either Target. All
real property improvements utilized by the Target have received all
required approvals of governmental authorities (including material
licenses and permits) required in connection with the ownership or
operation thereof, and have been operated and maintained in accordance
with applicable laws, rules, and regulations in all material respects.
(i) FINANCIAL STATEMENTS. Attached hereto as Exhibit "C" are the following
hinancial statements (collectively the "Financial Statements"): (i)
unaudited consolidated balance sheets and statements of income for the
fiscal years ended July 31, 1993, 1994, and 1995 for the Target; and
(ii) unaudited consolidated balance sheets and statements of income
through May 31, 1996 for the Target. The Financial Statements
(including the notes thereto) have been prepared in accordance with
generally accepted accounting principles in effect in the United
States applied on a consistent basis throughout the periods covered
thereby and present fairly the financial condition of the Target as of
such dates and the results of operations of the Target for such
periods; provided, however, that the most recent financial statements
(being all documents identified in this subparagraph for the period
ended December 31, 1995) are subject to normal year-end adjustments
(which will not be material individually or in the aggregate) and lack
footnotes and other presentation items.
(j) SUBSEQUENT EVENTS. To the knowledge of the Target and Controlling
Shareholders, since May 31, 1996, there has not been any material
adverse change in the business, financial condition, operations,
results of operations, or future prospects of the Target taken as a
whole. Without limiting the generality of the foregoing, since that
date:
(a) the Target has not sold, leased, transferred, or assigned any
material assets, tangible or intangible, outside the ordinary
course of business;
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(b) the Target has not entered into any material agreement, contract,
lease, or license outside the ordinary course of business;
(c) no person or entity has accelerated, terminated, made material
modifications to, or canceled any material agreement, contract,
lease, or license to which the Target is a party or by which it
is bound, outside of the ordinary course of business;
(d) the Target has not imposed any security interest upon any of its
assets, tangible or intangible, outside of the ordinary course of
business;
(e) the Target has not made any material capital expenditures outside
the ordinaryhcourse of business;
(f) the Target has not made any material capital investment in, or
any material loan to, any other person outside the ordinary
course of business;
(g) the Target has not created, incurred, assumed, or guaranteed any
indebtedness for borrowed money and capitalized lease obligations
outside of the ordinary course of business;
(h) the Target has not granted any license or sublicense of any
material rights under or with respect to any "intellectual
property." The term "intellectual property" as used herein refers
to: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in
connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost
information, and
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business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible
embodiments thereof (in whatever form or medium);
(i) there has been no material change made or authorized in the
articles of incorporation or by-laws of the Target;
(j) the Target has not issued, sold, or otherwise disposed of any of
its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
(k) the Target has not declared, set aside, or paid any dividend or
made any distribution with respect to its capital stock (whether
in cash or in kind) or redeemed, purchased, or otherwise acquired
any of its capital stock;
(l) the Target has not experienced any material damage, destruction,
or loss (whether or not covered by insurance) to its property.
(The provisions of this paragraph do not imply that the Target
has not experienced depreciation with respect to certain assets
since May 31, 1996, as it has in previous years);
(m) the Target has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees
outside the ordinary course of business;
(n) the Target has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(o) the Target has not granted any increase in the base compensation
of any of its directors, officers, and employees outside the
ordinary course of business. However, the Target has agreed to
provide a raise to its Chief Financial Officer, David Wilburn, in
the amount of $5,000.00 annually effective August 1, 1996;
(p) the Target has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to
any other Employee Benefit Plan). However, a profit sharing plan
is in existence and such action will be taken to assure that no
vesting or interest is lost or diminished; and
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(q) the Target has not made any other material change in employment
terms for any of its directors, officers, and employees outside
the ordinary course of business. (It is understood that placing
emergency response personnel on a salary is within the ordinary
course of business).
(k) Undisclosed Liabilities. To the knowledge of the Target and
Controlling Shareholders, the Target has not incurred any material
liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due,
including any liability for taxes), except for (i) liabilities set
forth on the face of the most recent balance sheet (rather than in any
notes thereto) and (ii) liabilities which have arisen after the most
recent fiscal month end in the ordinary course of business.
Notwithstanding any other provision herein, the Target may have a
nominal income tax liability in the total amount of approximately
$30,000, plus penalties and interest, for the fiscal years ending July
31, 1992 and/or July 31, 1993. Such contingent debt has arisen by
virtue of a tax audit. Accountants' fees have been incurred and are
currently owed by the Target in connection with the tax audit. No
other material income tax liability not incurred in the ordinary
course of business is known to exist.
(l) Legal Compliance. To the knowledge of the Target and Controlling
Shareholders, the Target has materially complied with all applicable
laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or
commenced against it alleging any failure so to comply, except where
the failure to comply would not have a material adverse effect on the
business, financial condition, operations, results of operations, or
future prospects of the Target.
(m) Tax Matters.
(a) To the knowledge of the Target and Controlling Shareholders, the
Target has filed all income tax returns that it was required to
file. All such income tax returns were correct and complete in
all material respects. All income taxes owed by the Target
(whether or not shown on any income tax return) have been paid,
except for a total income tax liability of approximately
$30,000.00 owed for the 1992 and/or 1993 tax years of the Target.
The Target is not the beneficiary of any
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extension of time within which to file any Income Tax Return.
(b) Except as previously disclosed or stated elsewhere, to the
knowledge of the Target and Controlling Shareholders, there is no
known material dispute or claim concerning any income tax
liability of the Target either (A) claimed or raised by any
authority in writing or (B) as to which the Controlling
Shareholders and the directors and officers of the Target has
knowledge based upon personal contact with any agent of such
authority. Provided however, it has been disclosed that there is
a dispute concerning income tax liability of the Target for the
1992 and/or 1993 income tax year of approximately $30,000, plus
penalties and interest.
(c) Attached hereto as Exhibit "D" is a disclosure listing all
federal, state, local, and foreign income tax returns filed with
respect to the Target for which an audit has been conducted or
the Target has been notified that an audit will be conducted. The
Target and Controlling Shareholders have delivered to the Merger
Subsidiary, or allowed the Merger Subsidiary to inspect, correct
and complete copies of all federal and state income tax returns,
examination reports, and statements of deficiencies assessed
against, or agreed to by the Target for the time periods through
and including May 31, 1996. The Target has not waived any statute
of limitations in respect to income taxes or agreed to any
extension of time with respect to an income tax assessment or
deficiency, with the exception of the return for 1992.
(d) The Target has not filed a consent under Internal Revenue Code
ss.341(f) concerning collapsible corporations. The Target has not
made any material payments, is not obligated to make any material
payments, and is not a party to any agreement that under certain
circumstances could obligate it to make any material payments
that will not be deductible under Internal Revenue Code ss.280G.
The Target has not been a United States real property holding
corporation within the meaning of Internal Revenue Code
ss.897(c)(2) during the applicable period specified in Internal
Revenue Code ss.897(c)(1)(A)(ii). The Target is not a party to
any tax allocation or sharing agreement. The Target (A) has not
been a member of an Affiliated Group filing a consolidated
federal Income Tax Return (other than a group the common parent
of which was the Target) or (B) has no liability for the taxes of
any Person (other than the Target) under Treas. Reg. ss.1.1502-6
(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
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(e) Except with respect to the amount of approximately $30,000 in
income tax liability that may exist for the 1992 and/or 1993
income tax year, the unpaid Income Taxes of the Target (A) did
not, as of the most recent fiscal month end, exceed by any
material amount the reserve for income tax liability (rather than
any reserve for deferred taxes established to reflect timing
differences between book and tax income) set forth on the face of
the most recent balance sheet (rather than in any notes thereto)
and (B) will not exceed by any material amount that reserve as
adjusted for operations and transactions through date of this
Agreement in accordance with the past custom and practice of the
Target in filing its income tax returns.
(n) Intellectual Property.
(a) To the knowledge of the Controlling Shareholders and officers and
directors of the Target, except for issues alleged against the
Target in pending patent infringement litigation identified in
Exhibit "G", the Target has not interfered with, infringed upon,
misappropriated, or violated any material "intellectual property"
rights of third parties in any material respect, and neither of
the Controlling Shareholders and the directors and officers of
the Target has ever received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the
Target must license or refrain from using any "intellectual
property" rights of any third party). To the knowledge of the
Controlling Shareholders and the directors and officers of the
Target, no third party has interfered with, infringed upon,
misappropriated, or violated any material "intellectual property"
rights of the Target in any material respect.
(b) No patent or registration has been issued to the Target with
respect to any of its "intellectual property," and no application
for a patent has been made for any such "intellectual property,"
except that a patent was applied for a Pneumatic Excavation
System on July 20, 1995. The patent application is being
processed by Alan J. Atkinson, 2700 Post Oak Boulevard, Suite
1530, Houston, TX 77056 (telephone 713-626-7800). No third party
has been granted any right, license, or agreement to use any of
the "intellectual property" of the Target. The Target possesses
all right, title, and interest to all "intellectual property"
used by it, without restriction by any contract, court order, or
governmental authority.
(o) Contracts. Attached hereto as Exhibit "E" is a list of all contracts
and
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agreements, excluding emergency response contracts and agreements, to
which the Target is a party. Such list may exclude any non-material
contract. Such list shall specifically include: all partnership and
joint venture agreements; contracts of indemnity; confidentiality
agreements; any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan
or arrangement for the benefit of its current or former directors,
officers, and employees; any collective bargaining agreement; any
agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in
excess of $1,000.00 or providing material severance benefits; any
agreement under which either Target has advanced or loaned any amount
to any of its directors, officers, and employees outside the ordinary
course of business; or any agreement under which the consequences of a
default or termination could have a material adverse effect on the
business, financial condition, operations, results of operations, or
future prospects of the Target.
(p) Notes and Accounts Receivable. To the knowledge of the Controlling
Shareholders, with the exception of those obligations listed on
Exhibit "I" attached hereto and the Global Spill Response, National
Bank, and American Marine accounts, which are considered
uncollectible, a relatively small percentage of accounts receivable
are marginal or not collectible and the notes and accounts receivable
of the Target are reflected properly on its books and records, are
valid receivables subject to no setoffs or counterclaims, are current
and collectible, and will be collected in accordance with their terms
at their recorded amounts. Target has no reserve for bad debts.
(q) Powers of Attorney. To the knowledge of either of the Controlling
Shareholders and the directors and officers of the Target, there are
no material outstanding powers of attorney executed on behalf of the
Target except that George Gragson, C.P.A., has an active power of
attorney to represent the Target in connection with the federal tax
matter previously described.
(r) Insurance. Exhibit "F" attached hereto is a list of each material
insurance policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety
arrangements) with respect to which the Target is a party, a named
insured, or otherwise the beneficiary of coverage. It is also
understood that a life insurance policy on Larry Woodcock with the
Target and The Calcasieu Marine National Bank of Lake Charles ("Bank")
as beneficiaries will remain the property of the Controlling
Shareholders and the beneficiary status will be changed as desired by
the Controlling Shareholders.
(s) Litigation. Exhibit "G," attached hereto is a list of each instance in
which any of the Target (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to
the knowledge of any of the Controlling
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Shareholders and the directors and officers of the Target, is
threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator.
(t) Employees. To the knowledge of either of the Controlling Shareholders
and the directors and officers of the Target, no executive, key
employee, or significant group of employees plans to terminate
employment with the Target during the next 12 months. The Target is
not a party to or bound by any collective bargaining agreement, nor
has any of them experienced any strike or material grievance, claim of
unfair labor practices, or other collective bargaining dispute within
the past three years. To the knowledge of the Controlling
Shareholders, the Target has not committed any material unfair labor
practice. Neither of the Controlling Shareholders and the directors
and officers of the Target has any knowledge of any organizational
effort presently being made or threatened by or on behalf of any labor
union with respect to employees of the Target.
(u) Employee Benefits. To the knowledge of the Controlling Shareholders,
every employee benefit plan (and each related trust, insurance
contract, or fund) of the Target complies in form and in operation in
all material respects with the applicable requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA"), the Internal Revenue
Code, and other applicable laws.
(v) Guaranties. The Target is not a guarantor or otherwise responsible for
any liability or obligation (including indebtedness) of any other
person or entity.
(w) Environment, Health, and Safety.
(a) As used herein, the term "Environmental, Health, and Safety Laws"
means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery Act
of 1976, and the Occupational Safety and Health Act of 1970, each
as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof)
concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws
relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface
water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
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(b) To the knowledge of the Controlling Shareholders, the Target (I)
has complied with the Environmental, Health, and Safety Laws in
all material respects (and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has
been filed or commenced against any of them alleging any such
failure to comply), (ii) has obtained and been in substantial
compliance with all of the terms and conditions of all material
permits, licenses, and other authorizations which are required
under the Environmental, Health, and Safety Laws, and (iii) has
complied in all material respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in the
Environmental, Health, and Safety Laws.
(c) To the knowledge of the Controlling Shareholders, all properties
and equipment used in the business of the Target and its
respective predecessors and subsidiaries have been free of
asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-transdichloroethylene, dioxins, dibenzofurans, and extremely
hazardous substances, except for exposure to such substances
limited to periods of emergency response activity by the Target.
ARTICLE IV
COVENANTS
4.1 COVENANTS. The parties agree as follows with respect to the period
after execution of this Agreement.
(a) GENERAL. In case at any time after the execution of this Agreement,
any further action is necessary to carry out the purposes of this
Agreement, each of the parties will take such further action
(including the execution and delivery of such further instruments and
documents) as any other Party reasonably may request, all at the sole
cost and expense of the requesting party unless such action was
specifically required under the terms of this Agreement. The Parent
and the Controlling Shareholders acknowledge and agree that from and
after the Closing Date the Parent will be entitled to possession of
all documents, books, records (including tax records), agreements, and
financial data of any sort relating to the Target.
(b) LITIGATION SUPPORT. In the event and for so long as any signatory to
this Agreement is actively contesting or defending against any action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the execution of
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<PAGE>
this Agreement involving the Target, each of the other parties will
cooperate with him or it and his or its counsel in the contest or
defense, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and
expense of the contesting or defending person or entity.
(c) TRANSITION. Neither the Target nor the Controlling Shareholders will
take any action that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier, or other
business associate of the Target from maintaining the same business
relationships with the Target after the date of this Agreement as it
maintained with the Target prior to execution.
(d) CONFIDENTIALITY. As used herein, the term "confidential information"
means any information concerning the businesses and affairs of the
Target, the Parent, and the Merger Subsidiary that is not already
generally available to the public. Each of the Controlling
Shareholders will treat and hold as such all of the confidential
information, refrain from using any of the confidential information
except in connection with this Agreement, and deliver promptly to the
Parent or destroy, at the request and option of the Parent, all
tangible embodiments (and all copies) of the confidential information
which are in his or its possession. In the event that any of the
Controlling Shareholders is requested or required (by oral question or
request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any confidential information, that Controlling
Shareholders will notify the Parent promptly of the request or
requirement so that the Parent may seek an appropriate protective
order or waive compliance with the provisions of this section. If, in
the absence of a protective order or the receipt of a waiver
hereunder, any of the Controlling Shareholders is, on the advice of
counsel, compelled to disclose any confidential information to any
tribunal or else stand liable for contempt, that Controlling
Shareholders may disclose the confidential information to the
tribunal; provided, however, that the disclosing Controlling
Shareholders shall use his or its reasonable best efforts to obtain,
at the reasonable request of the Parent, an order or other assurance
that confidential treatment will be accorded to such portion of the
confidential information required to be disclosed as the Parent shall
designate.
ARTICLE V
INDEMNIFICATION
5.1 SPECIFIC INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE PARENT.
Controlling Shareholders shall indemnify and hold harmless the Parent and Merger
Subsidiary for any debts and obligations known to the Target or the Controlling
Shareholders, or which should be known by the Target or the Controlling
Shareholders through the use of reasonable accounting procedures, and which were
not disclosed prior to Closing. The Controlling Shareholders agreement to
indemnify Parent for contingent liabilities shall be limited to contingent
liabilities actually known by the Controlling Shareholders and not disclosed.
5.2 GENERAL INDEMNIFICATION PROVISIONS FOR THE BENEFIT OF THE PARENT. In
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the event any of the Controlling Shareholders has misrepresented any matter
contained herein, in accordance with the applicable state law definition of
misrepresentation, then each of the Controlling Shareholders agrees to indemnify
the Parent, its successors, the Target, and the Merger Subsidiary from and
against the entirety of any monetary loss resulting from such misrepresentation
or misrepresentations. However, Controlling Shareholders shall not have any
obligation to indemnify the Parent from and against any monetary loss arising
out of, relating to, in the nature of, or caused by the breach of any
representation or warranty of the Controlling Shareholders contained herein
until such breach, or an aggregate of breaches, exceeds the sum of Twenty-Five
Thousand Dollars ($25,000.00). Notwithstanding any other provision contained
herein, Controlling Shareholders shall have no liability for any debts or
obligations of Target which are disclosed herein or in an exhibit attached
hereto. Exhibit "H," attached hereto is a list of all debts and obligations
(absolute, contingent, or otherwise) of the Target which, to the knowledge of
either of the Controlling Shareholders, now exists or may exist in the future as
a result of any act or omission occurring at any time prior to the execution of
this Agreement. Exhibit "H," need not contain a list of litigation, as such
disclosure has otherwise occurred.
5.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE CONTROLLING SHAREHOLDERS.
(a) In the event the Parent breaches any of its representations
contained herein, in accordance with the applicable state law
definition of misrepresentation, then the Parent agrees to indemnify
the Controlling Shareholders from and against any monetary loss the
Controlling Shareholders, or either of them, may suffer as a result of
such misrepresentation or misrepresentations.
(b) The Parent shall indemnify the Controlling Shareholders from any
monetary loss that the Controlling Shareholders, or either of them,
may suffer as a result of any claim arising from their participation
as an employee, agent, officer, or director of the Target for acts or
omissions occurring prior to the execution of this Agreement. Provided
however, the Parent shall have no obligation to indemnify the
Controlling Shareholders, or either of them, for any monetary loss
suffered as a result of a claim or threatened claim known to the
Controlling Shareholders, or either of them, at the date of execution
of this Agreement but which was not disclosed on, or in an exhibit to,
this Agreement.
5.4 MATTERS CONCERNING INDEMNITY. In the event that either party becomes
aware of any claim or threatened claim being made against such party for which
any other party could ultimately be held liable, either directly or by virtue of
the indemnity requirements of this Agreement, the party becoming aware of such
claim or threatened claim shall immediately cause written notice of the claim or
threatened claim to be given to all other parties. Any party which could
ultimately be held liable, by virtue of the indemnity provisions of this
Agreement, shall have the right to participate in the legal defense of the party
against whom a claim or threatened claim has been made. No claim for indemnity
shall be made which results from a settlement or consent judgment without the
consent of the indemnifying party, which consent shall not be unreasonably
withheld. The foregoing indemnification provisions are in addition to, and not
in derogation of, any statutory, equitable, or common law remedy any party may
have for misrepresentation, breach of contract, or any other cause of action
which may exist.
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ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 AMENDMENT. This Agreement may be amended by the mutual consent of all
the parties.
6.2 WAIVER. At any time prior to the Effective Time, the parties hereto
may, in their respective sole discretion and to the extent legally allowed, (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto; (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements, covenants or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed by or on behalf of such party.
ARTICLE VII
MISCELLANEOUS
7.1 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted assigns.
7.2 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
7.3 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the Parent and the Controlling Shareholder.
7.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
7.5 HEADINGS. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.6 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified
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mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Controlling Shareholders: Larry Woodcock and Marilyn Woodcock, 650
- ----------------------------------- Esplanade, Lake Charles, LA 70607 or
such other address at the Parent is
hereafter directed in writing.
If to the Parent: Charles E. Chunn, Jr., 1401 South Waldron Road, Suite 201,
- ---------------- Fort Smith, AR 72903 or such other address as the Controlling
Shareholders are hereafter directed in writing.
If to the Target: 1890 Swisco Road, Sulphur, LA 70663.
- -----------------
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth. If necessary, Controlling Shareholders
may provide up to two addresses where notices must be delivered.
7.7 SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
7.8 EXPENSES. Each of the Parties and the Target will bear their own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby. The Controlling
Shareholders agree that the Target has not borne and will not bear any of the
Controlling Shareholders costs and expenses (including any of their legal fees
and expenses) in connection with this Agreement or any of the transactions
contemplated hereby.
7.9 CONSTRUCTION. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
7.10 INCORPORATION OF EXHIBITS. The Exhibits identified in this Agreement
are incorporated herein by reference and made a part hereof.
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7.11 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Louisiana, without regard to any
applicable principles of conflicts of law.
7.12 KNOWLEDGE. Any statement herein made "to the knowledge" of a party
hereto, or similar language, shall mean the actual knowledge of the persons to
which such statement relates, without any requirement of independent
verification or inquiry. Any reference to company' knowledge shall mean the
knowledge of the executive officers of the company.
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of
Reorganization on the date first above written.
EXSORBET INDUSTRIES, INC.,
an Idaho corporation
"Parent"
By: /s/Ed Penick, Jr
Officer
LARCO ACQUISITION, INC.,
an Arkansas corporation
"Merger Subsidiary"
By: /s/Ed Penick, Jr.
Officer
LARCO ENVIRONMENTAL SERVICES, INC.,
a Louisiana corporation
"Target"
By: /s/Larry Woodcock
Officer
CONTROLLING SHAREHOLDERS:
/s/ Larry Woodcock
Larry Woodcock
/s/ Marilyn Woodcock
Marilyn Woodcock
20
Contact: Exsorbet Industries, Inc.
Dr. Edward Schrader
President
601/974-1342
Charles E. Chunn, Jr.
Executive Vice President, CFO
501/452-1987
Ed Penick, Jr.
Vice President
501/664-7745
EXSORBET INDUSTRIES ANNOUNCES ACQUISITION OF
LARCO ENVIRONMENTAL SERVICES INC.
Jackson, MS -- Wednesday, June 26, 1996 -- Exsorbet Industries Inc.
(NASDAQ: Small Cap: EXSO) today announced the acquisition of LARCO Environmental
Services Inc. The company was acquired through a pooling transaction in which
Exsorbet obtained all outstanding shares of LARCO common stock in return for
1,152,000 shares of Exsorbet Industries Inc. common stock.
LARCO expects to report an after tax profit for the second quarter of 1996,
as well as 1996 year-to-date. Financial results for the company will be
consolidated with first and second quarter results of Exsorbet Industries Inc.,
boosting both revenue and profitability for Exsorbet Industries Inc.
For the fiscal year ending July 31, 1995, LARCO reported approximately
$6,300,000 in gross sales and approximately $500,000 after tax profit. Through
the first eight months of current fiscal year July 31, 1996, revenues of
approximately $4,000,000 position the company on target to match last year's
revenues. Total assets for the company as of May 31, 1996, were $5,609,000.
LARCO Environmental Services Inc. was established in 1979, to serve the oil
spill recovery and emergency response needs of the Gulf Coast area. Through the
years, the company has evolved alongside the ever-changing industrial community.
That change has included adding equipment rental, environmental supplies, and
emergency response training to their growing list of capabilities. LARCO has
industrial service and full emergency response capabilities at offices in Bridge
City, Texas; Baton Rouge, Louisiana, and Lake Charles (Sulfur), Louisiana.
<PAGE>
LARCO's most recent move to meet the needs of the industrial community is
its merger with Exsorbet Industries Inc. "Exsorbet is very excited about this
merger, "said Dr. Edward Schrader, President and Chief Executive Officer of
Exsorbet Industries Inc. "The synergies between our companies is great. This
will be a good mesh for our companies."
LARCO has established itself as a leading spill cleanup responder in the
Gulf South. Its reputation has carried it well beyond the Gulf waters to include
jobs in Puerto Rico, Florida, and the Atlantic Coast. The company has expanded
its preventative maintenance services to customers as the industry needs
evolved. For the past year and a half, it has applied its industrial expertise
to the creation and development of an industrial services division. It has
applied for a patent on its proprietary "pneumatic excavation system" utilized
in both industrial service and emergency response operations.
"We feel that the market is wide open for a premier service company such as
LARCO, because we can reduce the clients' liability and offer a very dependable
and economical service," said Larry Woodcock, Chief Executive Officer of LARCO
Environmental Services. In addition to these enhanced services, the company
offers emergency response, spill response, safety training and industrial
cleaning. To provide well-rounded service, certified divers are available for
emergency response and industrial-type work. LARCO services a variety of
industries that include the pulp and paper, petrochemical and mining industries.
In 1988, LARCO realized the need for a credible and cost-effective training
facility to meet the stringent needs of federal training requirements. They
established the LARCO Training Academy, providing the industrial community with
an opportunity to train using "real world" emergency response personnel with
training regulatory backgrounds.
Dr. Schrader said, "The addition of LARCO thrusts us into the leadership
role in spill response and industrial service in the central Gulf of Mexico."
Soon to be consolidated with the new "LARCO Division" of Exsorbet, are the
industrial services and spill response activities of SpilTech, an existing
Exsorbet Industries subsidiary with existing operational bases in Euless, Texas;
Little Rock, Arkansas; and Mobile, Alabama.
Schrader further stated that, "With LARCO we will step up our aggressive
expansion activities along the Gulf of Mexico, inland barge and bulk vessel
transportation routes, as well as major industrial focus throughout the eastern
United States. LARCO professionals have established an excellent relationship
with their chemical, petroleum and manufacturing clients that will present an
opportunity for internal growth for Exsorbet Industries' subsidiaries
Eco-Systems, Cierra Engineering, Consolidated Environmental Services, and
SpilTech Services."
Exsorbet Industries, Inc. is a diversified environmental product and
service company specializing in state of the art technical solutions for
problems in site remediation, dewatering and pond solidification, hazardous
waste cleanup material and service, bioremediation, environmental engineering
and project management, and twenty-four hour emergency response.
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Subsidiaries of Exsorbet Industries, Inc. include Eco-Systems, Exsorbet
Technical/SpilTech Services, Inc., Consolidated Environmental Services, Inc.,
and Cierra, Inc. Offices are located in Dallas, Euless, and Houston, Texas: Fort
Smith and Little Rock, Arkansas; Tulsa, Oklahoma; Kansas City, Missouri;
Jackson, Mississippi; Daphne, Alabama; and Atlanta, Georgia.
