PURCHASE AND SALE OF ASSETS AGREEMENT
THIS PURCHASE AND SALE OF ASSETS AGREEMENT (the "Agreement") is executed
and delivered as of April 1, 1998, between MESA PROCESSING, INC., a Texas
corporation ("Buyer"); RECLAMATION TECHNOLOGY MANAGEMENT, INC. d/b/a EFFLUENT
TREATMENT SERVICES, INC., a Texas corporation ("Seller") and Xxx X.
Xxxxxx, the sole shareholder of Seller ("Shareholder").
W I T N E S S E T H:
WHEREAS, Seller operates a non-hazardous commercial waste, collection,
transportation, reclamation, treatment, processing and disposal business in the
North and Central Texas (the "Business");
WHEREAS, as part of the Business, Seller leases certain improved real
property located in Tarrant County, Texas consisting of approximately 7,750
square feet of office and warehouse space (the "Facility");
WHEREAS, Buyer desires to purchase and acquire certain assets,
properties and contractual rights of Seller used in connection with the
Business, and Seller desires to sell such assets, properties and contractual
rights to Buyer, all in accordance with the terms and conditions set forth in
this Agreement;
WHEREAS, Shareholder holds all of the outstanding capital stock of
Seller and Buyer is unwilling to enter into this Agreement without the covenants
and promises of Shareholder herein set forth; and
NOW, THEREFORE, in consideration of Ten Dollars ($10.00), the mutual
promises and covenants herein contained and other good and valuable
consideration, receive to the full satisfaction of each of them, the parties
hereby agree as follows:
ARTICLE I
SALE OF ASSETS
SECTION 1.1 DESCRIPTION OF ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement, Seller does hereby grant, convey, sell,
transfer and assign to Buyer the following assets, properties and contractual
rights of Seller, wherever located, subject to the exclusions hereinafter set
forth:
(a) all equipment used or for use in the operations of the
Business, including, without limitation, the equipment listed on
Schedule 1.1(a) attached hereto and made a part hereof (the
"Equipment"), other than equipment specifically relating to MIDOS and
identified on Schedule 1.2(b) attached hereto;
(b) all furniture, appliances, business machinery, office
equipment and supplies used or for use in the Business, including
without limitation, the items listed on Schedule 1.1(b) attached hereto
and made a part hereof (collectively, the "Office Furnishings");
(c) all of the motor vehicles used or for use in the Business,
and all radios, attachments, accessories and materials handling
equipment now located in or on such motor vehicles (the "Rolling
Stock"), as the same are listed and more completely described by
manufacturer, model number and model year on Schedule 1.1(c), attached
hereto and made a part hereof;
(d) all manual and automated routing and billing information and
components thereof, including without limitation all routing and billing
computer hardware, software
and programs containing any customer information;
(e) all contractual rights of Seller with Seller's customers
(whether oral or in writing) relating to the conduct of the Business
(the "Customer Accounts"), and all commitments, lists, leases, permits,
licenses, consents, approvals, franchises and other instruments relating
to the Customer Accounts (the "Related Approvals"); a complete and
accurate list of the Customer Accounts and the Related Approvals is set
forth on Schedule 1.1(e), attached hereto and made a part hereof, and
true and complete copies of all Customer Accounts (or descriptions of
unwritten arrangements) and Related Approvals shall be delivered to
Buyer simultaneously with the execution and delivery of this Agreement;
(f) all of Seller's inventory of parts, tires, supplies and
accessories of every kind, nature and description used or for use in
connection with the Business (the "Inventory");
(g) all right, title and interest of Seller in and to all trade
secrets, proprietary rights, symbols, trademarks, service marks, logos
and trade names used in the Business, excluding any of the foregoing
relating to MIDOS;
(h) all permits, licenses, franchises, consents and other
approvals relating to the Business set forth on Schedule 1.1(h),
attached hereto and made a part hereof (the "Permits"), true and
complete copies of which are attached to Schedule 1.1(h);
(i) all of Seller's right, title, estate and interest in and to
the lease of the buildings and other improvements comprising the
Facility;
(j) all right, title and interest of Seller in and to the
telephone number (000) 000-0000 used by Seller in the conduct of the
Business;
(k) all of Seller's right, title and interest in and to the names
"Reclamation Technology Management, Inc." or "Effluent Treatment
Services, Inc." and the right to use such names (the "Business Names");
(l) all of Seller's existing documents, files and other material
related to all current or past customers of the Business;
(m) all of Seller's shop tools, nuts and bolts relating to the
Business; and
(n) all of the goodwill of the Business.
All of the foregoing assets, properties and contractual rights are hereinafter
sometimes collectively called the "Assets."
SECTION 1.2 EXCLUDED ASSETS. The parties agree that there shall be
excluded from the Assets the following which are not being sold to Buyer
pursuant to this Agreement ( the "Excluded Assets"): (a) all cash on hand and on
deposit of Seller, except as set forth in Section 1.5 hereof; (b) all accounts
receivable of Seller ("Accounts Receivable") as of the close of business on the
date of Closing (hereinafter defined); (c) all real property (whether owned or
leased) other than the Facility; (d) all contracts and contract rights and
obligations of Seller (whether oral or in writing) other than the Customer
Accounts, the leases with respect to the Facility and any other contracts
expressly assigned to Buyer hereunder, (e) all commitments, lists, leases,
permits, licenses, consents, approvals, franchises and other instruments not
relating to the Customer Accounts or the Business; (f) all employment contracts
to which Seller is a party or by which Seller is bound; (g) all motor vehicles
of Seller that are not Rolling Stock and (h) all proprietary information of
Buyer in and to the MIDOS machine and process as more particularly described on
Schedule 1.2(a) attached hereto; (i) any assets or equipment relating to MIDOS
as set forth on Schedule 1.2(b) attached hereto.
SECTION 1.3 NON-ASSIGNMENT OF CERTAIN CUSTOMER ACCOUNTS. Notwithstanding
anything to the contrary in this Agreement, to the extent that the assignment
hereunder of any Customer Account shall require the consent of any third party,
neither this Agreement nor any action taken pursuant to its provisions shall
constitute an assignment or an agreement to assign if such assignment or
attempted assignment would constitute a breach thereof or result in the loss or
diminution thereof; provided, however, that in each such case, Seller shall use
its best efforts to obtain the consent of such other party to such assignment to
Buyer. If such consent is not obtained, Seller shall cooperate with Buyer in any
reasonable arrangement designed to provide for Buyer the benefits under any such
Customer Account. The Buyer shall be entitled to adjust the purchase price set
forth in Section 2.1 hereof and enforce for the account and benefit of Buyer,
any and all rights of Seller against any other person arising out of the breach
or cancellation of any such Customer Account by such other person, or otherwise.
Attached hereto as Schedule 1.3 is a list of all Customer Accounts requiring
consent to their agreement.
SECTION 1.4 SELLER ACCOUNTS RECEIVABLE. Buyer shall have no liability or
obligation whatsoever to Seller in connection with the Accounts Receivable.
However, if Buyer receives any payments which are designated by the customer as
being toward such Accounts Receivable, then Buyer shall forward such payments to
Seller on a regular basis (but at least monthly), together with an itemized list
of the sources thereof. Seller shall not hire an outside agency to collect the
Accounts Receivable, take any legal action on the Accounts Receivable or write
any threatening letters in an attempt to collect Accounts Receivable for a
period of ninety (90) days after the date of Closing. Attached hereto as
Schedule 1.4 is a true and complete list of all Accounts Receivable of Seller as
of April 1, 1998.
SECTION 1.5 PRORATION OF CASH ON HAND. The parties shall prorate, as of
the close of business on the date of Closing, all cash on hand or on deposit
with Seller consisting of sums paid to Seller pursuant to the advance billing
practice of Seller or otherwise representing a prepayment to Seller of services
to be rendered after the Closing. Seller shall be entitled to all such sums
allocable to services performed on or before the close of business on the date
of Closing and Buyer shall be entitled to all such sums allocable to services to
be performed thereafter. Buyer and Seller agree that the amount of such prepaid
services to be credited to Buyer is $0.00.
SECTION 1.6 ADJUSTMENTS. The operation of the Business and the income
and normal operating expenses attributable thereto through March 31, 1998 (the
"Adjustment Date") shall be for the account of Seller and thereafter for the
account of Buyer. The expenses to be prorated shall include but not be limited
to expenses for goods or services received both before and after the Adjustment
Date, power and utilities charges, frequency discounts, commissions, ad valorem
taxes, wages, payroll taxes, vacation pay and other fringe benefits of employees
of Seller who enter the employment of Buyer, and rents and similar prepaid and
deferred items. To the extent that any of the foregoing prorations and
adjustments cannot be determined as of the Closing Date, Buyer and Seller shall
conduct a final accounting and make any further payments, as required on a date
mutually agreed upon, within 90 days after the Closing.
SECTION 1.7 CHANGE OF NAME. On the date of Closing, Seller shall take
all necessary action to change Seller's current Business Names to a name not the
same as or similar to Effluent Treatment Services, Inc. or any other symbol,
trademark, service xxxx, logo or trade name now used by Seller. Seller shall, on
the date of closing, deliver to Buyer, in form suitable for filing, such
certificates, consents and other documents as are necessary to effect the
transfer of the registration of the Business Names conveyed by Buyer pursuant to
this Agreement in Texas and shall grant any consents and take any other and
further action, all at Seller's own expense, requested by Buyer to enable Buyer
to reserve or register any such name for use of Buyer in Texas.
ARTICLE II
PURCHASE PRICE
SECTION 2.1 PURCHASE PRICE.
(a) Subject to Sections 2.3 below, Buyer shall pay to Seller for
the Assets and the restrictive covenants set forth herein up to
$2,100,000 (the "Purchase Price").
(b) The Purchase Price, to the extent payable, shall be payable
as follows:
(i) on the Closing Date, (A) Buyer shall pay Seller
cash in the amount of $750,000, and (B) Buyer shall
deliver to Seller that total number of whole shares
of common stock, par value $.01 per share ("Parent
Stock"), of U S Liquids, Inc., a Delaware
corporation and the parent corporation of Buyer
("Parent"), which shall have an aggregate Agreed
Value (as defined in Section 2.2 below) of $500,000
calculated in accordance with Section 2.2 below;
(ii) on each of the first and the second anniversaries
of the Closing Date, Buyer shall pay Seller a cash
payment in the amount of $50,000;
(iii) on the dates specified and upon satisfaction of the
conditions set forth in Section 2.3 below, Buyer
shall pay Seller the contingent consideration
described therein.
SECTION 2.2 AGREED VALUE OF PARENT STOCK. For purposes of this
Agreement, the "Agreed Value" per share of Parent Stock shall be the average of
the closing prices of a share of the common stock of Parent, $.01 par value per
share, on the American Stock Exchange as reported in THE WALL STREET JOURNAL for
the five trading days immediately preceding the five trading days immediately
prior to the date of issuance, adjusted for any stock splits, stock dividends
and other capital changes between the first date of the valuation period and the
date of issuance. Only whole shares shall be delivered. Any fractional shares
resulting from applying the Agreed Value to the amount of consideration payable
shall be paid in cash.
SECTION 2.3 CONTINGENT ADDITIONAL PURCHASE PRICE.
(a) In addition to the consideration payable pursuant to Section
2.1(b)(i) and 2.1 (b)(ii) above, Buyer would pay to Seller additional
consideration in the form of Parent Stock (subject to clause (b) below)
for the Assets if the operations arising out of the acquired Assets
(collectively, with the assets to be acquired pursuant to Section 2.3(c)
below, the "Facility") generate the specified amount of earnings before
taxes ("Pre-Tax Earnings") (as defined below), as follows:
(i) if the Pre-Tax Earnings from the operation of the
Facility exceeds $335,000 for either the 1998 or the 1999 fiscal
year, but not both, Buyer shall deliver to Seller that number of
shares of Parent Stock, which shall have an aggregate value of
$375,000 (rounded to the nearest whole share with any resulting
fractional shares paid in cash) determined by using the closing
price of the Parent Stock, as reported in THE WALL STREET
JOURNAL, on the last trading day of applicable calendar year,
1998 or 1999, in which the Pre-Tax Earnings required by this
subclause (i) were first achieved; and
(ii) if the Pre-Tax earnings from the operation of the
Assets exceeds $405,000 for the 1999 fiscal year or the 2000
fiscal year, Buyer shall deliver to Seller that number of shares
of Parent Stock, which shall have an aggregate value of $375,000
(rounded to the nearest whole share with any resulting fractional
shares paid in cash) determined by using the closing price of the
Parent Stock, as reported in THE WALL STREET JOURNAL, on the last
trading day of applicable calendar year, 1999 or 2000, in which
the Pre-Tax Earnings required by this subclause (ii) were first
achieved; and
(iii) notwithstanding the above and foregoing, the Seller
shall not be
entitled to more than one payment under either Section 2.3(a)(i)
or (ii). Seller shall be entitled to the maximum compensation
under this Section 2.3(a) (i.e. Parent Stock with an aggregate
market value of $750,000 at the respective times of issuance)
if, and only if, the conditions of both subclause (i) and (ii)
of this Section 2.3(a) are satisfied in two separate years.
(b) Pre-Tax Earnings will be calculated within 60 days after the
end of the 1998, 1999 and 2000 fiscal years, respectively, and any
payments owed to Seller shall be paid on the date that is 90 days after
the end of the 1998, 1999 and 2000 fiscal years, respectively.
(c) Buyer agrees to make capital expenditures of up to the
amounts set forth on Schedule 2.3 attached hereto toward the purchase of
the various assets described on such Schedule 2.3 for use at the
Facility. Each such purchase shall be subject to the submission of
appropriate capital purchase orders in accordance with Buyer's corporate
policies. If Buyer fails to make the required capital expenditures prior
to December 31, 1998, unless such failure is occasioned by events
outside of Buyer's reasonable control or the acts or omissions of Seller
or Shareholder, the condition precedent to Seller's entitlement to the
contingent consideration set forth in Section 2.3(a)(i) above shall be
deemed satisfied. If Buyer has failed to make the required capital
expenditures prior to December 31, 1999, unless such failure is
occasioned by events outside of Buyer's reasonable control or the acts
or omissions of Seller or Shareholder, the condition precedent to
Seller's entitlement to the contingent consideration set forth in
Section 2.3(a)(ii) above shall be deemed satisfied. The parties agree
that there shall exist no other state of facts, other than actual
satisfaction of such conditions, which shall cause the conditions set
forth in Section 2.3(a)(i) or (ii) to be deemed satisfied.
(d) For purposes of this Agreement, "Pre-Tax Earnings" shall mean
the gross revenues derived from the Assets calculated in accordance with
generally accepted accounting principles ("GAAP") minus (i) all costs
incurred in operating the Facility (including, without limitation, all
payroll costs, equipment operating costs, insurance costs, maintenance
costs, legal, accounting and other professional fees, all depreciation,
depletion and amortization expenses, all selling, general and
administrative costs, interest and all other operating expenses); all
taxes on operations of the Facility such as franchise taxes, real and
personal property taxes, use taxes and sales taxes (but specifically
excluding all federal, state (if any) and local income taxes); (iii)
reserves for financial assurance, closure and post closure costs and
doubtful accounts of the Facility; and (iv) 2% of such gross revenues
constituting a charge for corporate overhead. All of the foregoing shall
be determined by Buyer in accordance with Parent's past practices and in
accordance with GAAP. Corporate overhead charges relating to operations
outside the Facility shall not exceed 2% of the gross revenues generated
by the operation of the Facility.
ARTICLE III
CLOSING
SECTION 3.1 TIME AND PLACE OF CLOSING. Unless the parties otherwise
agree, this transaction shall be closed simultaneously with the execution and
delivery of this Agreement and the other documents and instruments referred to
in this Article III (the "Closing"). The Closing shall take place at a location
mutually acceptable to Buyer and Seller.
SECTION 3.2 DELIVERIES BY SELLER AND SHAREHOLDER. At the Closing, Seller
and Shareholder shall deliver to Buyer, all duly executed:
(a) assignment of leasehold interests to the Facility;
(b) a General Conveyance, Assignment and Xxxx of Sale, in form
and substance satisfactory to Buyer and Seller, conveying, selling,
transferring and assigning to Buyer all of the Assets (the "Xxxx of
Sale");
(c) motor vehicle Certificates of Title and/or registrations to
the Rolling Stock, properly endorsed to Buyer;
(d) a receipt acknowledging payment by Buyer of the Purchase
Price;
(e) fully executed consents to the assignment of the Customer
Accounts set forth on Schedule 1.3, if any, in form and substance
satisfactory to Buyer;
(f) the documents evidencing Seller's change of name as required
by Section 1.7;
(g) a certified copy of the resolutions of the shareholders and
directors of Seller authorizing the execution of this Agreement, the
sale of the Assets to Buyer, and the consummation of the transactions
contemplated herein, along with an incumbency certificate of Seller; and
(h) such other separate instruments of sale, assignment or
transfer reasonably required by Buyer.
SECTION 3.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver to
Seller the Purchase Price set forth in Section 2.1(a) and (d) and shall assume
all obligations to make rent and other contractual payments arising after the
Closing Date under the leases of the Facility. Rent for the month in which the
Closing occurs shall be prorated and paid by the respective parties based on the
number of days in the month the Facility was occupied by each party. Taxes,
assessments and other charges required to be paid by the tenant under the
leases, and not paid prior to Closing, shall be prorated between the parties
based upon the number of days in the tax year each of Buyer and Seller occupied
the Facility.
ARTICLE IV
COVENANTS OF SELLER AND SHAREHOLDER
SECTION 4.1 USE OF BUSINESS NAMES. Seller and Shareholder covenant not
to use the Business Names or any similar names from and after the close of
business on the date of Closing.
SECTION 4.2 TRANSITION. Neither Seller nor Shareholder will take any
action that is designed or intended to have the effect or discouraging any
customer or business associate of Seller from maintaining the same business
relationships with Buyer after the Closing that it maintained with Seller before
the Closing. Seller and Shareholder will refer all customer inquiries relating
to the Business to Buyer from and after the Closing. Further, Seller and
Shareholder agree that until December 31, 2000, they will, without additional
consideration, assist Buyer with the orderly transition of the operations of the
Business from Seller to Buyer. Such assistance shall include, without
limitation, Seller and Shareholder assisting Buyer to obtain contacts with
Seller's current customers, routing transition activities and development of
sufficient information to allow Buyer to compile accurate customer xxxxxxxx.
SECTION 4.3 SURVIVAL. Each of the covenants set forth in this Article IV
shall survive the Closing and the transfer of the Assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDER
SECTION 5.1 Seller and Shareholder, jointly and severally, represent and
warrant to Buyer that:
(a) AUTHORITY.
(i) Seller is a corporation duly formed, validly existing
and in good standing under the laws of the State of Texas. The
execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the compliance by Seller and
Shareholder with the terms of this Agreement do not and will not
conflict with or result in a breach of any terms of, or
constitute a default under, the articles of incorporation or
bylaws of Seller, or any instruments or other agreement to which
Seller or Shareholder are a party or by which Seller or
Shareholder are bound. This Agreement constitutes a valid
obligation of Seller and Shareholder enforceable against Seller
and Shareholder in accordance with its terms except as limited by
bankruptcy, insolvency, reorganization or other such laws
concerning the rights of creditors.
(ii) Shareholder is competent, under no duress or legal
restraint, and has all necessary authority to enter into this
Agreement, perform his obligations hereunder and consummate the
transactions contemplated hereby.
(iii) All of the issued and outstanding shares of Seller
are owned of record and beneficially by Shareholder, free and
clear of all liens, security interests and encumbrances
whatsoever.
(b) COMPLIANCE WITH LAW. Neither Seller nor the Shareholder is in
default under any applicable federal, state or local laws, statutes,
ordinances, permits, licenses, orders, approvals, variances, rules or
regulations or judicial or administrative decisions ("Applicable Laws")
which would have an adverse effect upon the Assets or the Business.
Seller has been granted all licenses, permits, consents, authorizations
and approvals from federal, state and local government regulatory bodies
necessary or desirable to carry on the Business, all of which are
currently in full force and effect. Each of the Assets complies in all
respects with all federal, state and local laws, statutes, ordinances,
permits, licenses, approvals, rules and regulations applicable thereto.
(c) EQUIPMENT. Listed on Schedule 1.1(a) hereto is a complete and
accurate list of all equipment used or for use in connection with the
Business. Each piece of Equipment is in good working order and repair.
(d) OFFICE FURNISHINGS. Listed on Schedule 1.1(b) is a complete
and accurate list of all Office Furnishings. All items of Office
Furnishings are in good working order and repair.
(e) ROLLING STOCK. Listed on Schedule 1.1(c) hereto is a complete
and accurate list of all Rolling Stock. Each motor vehicle, attachment,
accessory and piece of materials handling equipment comprising the
Rolling Stock is in good working order and repair.
(f) CUSTOMER ACCOUNTS. Listed on Schedule 1.1(d) hereto is a
complete and accurate list of the Customer Accounts as of the date
hereof. Except as set forth on Schedule 1.3, all Customer Accounts are
(and will be immediately following the Closing) in full force and effect
and are valid, binding and enforceable against the respective parties
thereto in accordance with their respective provisions, and Seller is
not in default in, nor has there occurred an event or condition
(including Seller's execution and delivery of or performance under this
Agreement) which with the passage of time or the giving of notice (or
both) would constitute a default, with regard to the payment or
performance of any obligation under any Customer Account; no claim of
such a default has been asserted and there is no reasonable basis upon
which such a claim could validly be made. Neither Seller nor Shareholder
has received any notice that any person intends or desires to modify,
waive, amend, rescind, release, cancel or terminate any Customer
Account. By virtue of the grant, conveyance, sale, transfer and
assignment of the Customer Accounts by Seller to Buyer hereunder, Buyer
shall own and hold all right, title and interest of Seller in and to the
Customer Accounts, without the consent or approval of any other
person or entity.
(g) TITLE TO THE PERSONAL PROPERTY. Seller has good and
marketable title to all of the Assets constituting personal property,
free and clear of all liens, encumbrances, security interests, equities
or restrictions whatsoever and, by virtue of the grant, conveyance,
sale, transfer, and assignment of the Assets hereunder, Buyer shall
receive good and marketable title to all of the Assets constituting
personal property, free and clear of all liens, lease payments
(including lease-end buy-out payments), encumbrances, security
interests, equities or restrictions whatsoever. The Assets include all
of the permits, licenses, franchises, consents and other approvals
necessary or desirable to conduct the Business.
(h) TITLE TO REAL PROPERTY. Seller has never owned, leased or
otherwise occupied, had an interest in or operated any real property
other than the Facility. Seller has good, leasehold title to the
Facility. Attached hereto as Schedule 5.1(h) are true and complete
copies of the leases of the Facility. Except as set forth on Schedule
5.1(h):
(i) The Facility is, and at all times during operation of
the Business has been, fully licensed, permitted and authorized
for the operation of the Business under all Applicable Laws
relating to the protection of the environment, the Facility and
the conduct of the Business thereon (including, without
limitation, all zoning restrictions and land use requirements).
(ii) The Facility is usable for its current uses and can
be used by Buyer after the Closing for such uses without
violating any applicable law or private restriction, and such
uses are legal conforming uses. There are no proceedings or
amendments pending and brought by or, to the best of Seller's
knowledge, threatened by, any third party which would result in a
change in the allowable uses of the Facility or which could
modify the right of Buyer to use the Facility for its current
uses after the Closing Date.
(iii) Shareholder and Company have made available to Buyer
all engineering, geologic and other similar reports,
documentation and maps relating to the Facility in the possession
or control of Seller.
(iv) Neither Seller, Shareholder nor the Facility now is
or ever has been involved in any litigation or administrative
proceeding seeking to impose fines, penalties or other
liabilities or seeking injunctive relief for violation of any
Applicable Laws relating to the environment.
(i) LITIGATION. Except as set forth on Schedule 5.1(i) hereof,
there is no claim, litigation, action, suit or proceeding,
administrative or judicial, pending or threatened against Seller or
Shareholder, or involving the Assets or the Business, at law or in
equity, before any federal, state or local court or regulatory agency,
or other governmental authority. Neither Seller nor Shareholder has
received any notice of any of the above and no facts or circumstances
exist which would, with the passage of time or giving of notice (or
both), give rise to any of the above.
(j) EMPLOYEES. Attached as Schedule 5.1(j) hereof is a complete
list of all employees of Seller and their respective rates of
compensation (including a breakdown of the portion thereof attributable
to salary, bonus and other compensation, respectively) as of the date of
Closing. Each employee is an employee at will and there are no
collective bargaining agreements affecting any employee of Seller. Buyer
shall not be obligated to hire any of Seller's employees.
(k) EMPLOYEE RELATIONS AND BENEFIT PLANS. Set forth on Schedule
5.1(k) is an accurate and complete list of all agreements of any kind
between Seller and its employees or group of employees, including,
without limitation, employment agreements, collective bargaining
agreements and benefit plans. Buyer shall not, by the execution and
delivery
of this Agreement or otherwise, become obligated to or assume any
liabilities or contractual obligations with respect to any employee of
Seller or otherwise become liable for or obligated in any manner
(contractual or otherwise) to any employee of Seller, including, without
limiting the generality of the foregoing, any liability or obligation
pursuant to any collective bargaining agreement, employment agreement,
or pension, profit sharing or other employee benefit plan (within the
meaning of Section 3(3) of the Employment Retirement Income Security Act
of 1974, as amended) or any other fringe benefit program maintained by
Seller or to which Seller contributes or any liability for the
withdrawal or partial withdrawal from or termination of any such plan or
program by Seller.
(l) FINANCIAL STATEMENTS. Attached hereto as Schedule 5.1(l) are
copies of Seller's balance sheet as of December 31, 1997, and a
statement of income, cash flow and retained earnings for the year ended
December 31, 1997, and Seller's balance sheet as of March 31, 1998 (the
"Balance Sheet Date"), and a statement of income, cash flow and retained
earnings for the three-month period then ended (the "Financial
Statements"). The Financial Statements (including any footnotes thereto)
have been prepared in accordance with GAAP, applied on a consistent
basis throughout the periods indicated. The Financial Statements
(including all footnotes thereto) are true, complete and correct and
present fairly the financial condition and the results of the operations
of Seller for the period indicated thereon. All reserves for contingent
risks have been estimated in accordance with GAAP and are appropriate
and sufficient to cover all costs reasonably expected to be incurred
from such risks. The Financial Statements are consistent with the books
and records of Seller (which books and records are correct and complete.
(m) TAXES. No federal, state, local or other tax returns or
reports filed by Seller (whether filed prior to, on or after the date
hereof) with respect to the Business or the Assets will result in any
taxes, assessments, fees or other governmental charges upon the Assets
or Buyer, whether as a transferee of the Assets or otherwise. All
federal, state and local taxes due and payable with respect to the
Business or the Assets have been paid, including, without limiting the
generality of the foregoing, all federal, state and local income, sales,
use franchise, excise and property taxes.
(n) HAZARDOUS MATERIALS. Neither Seller nor Shareholder has ever
generated, transported, stored, handled recycled, reclaimed, disposed
of, or contracted for the disposal of, hazardous materials, hazardous
wastes, hazardous substances, toxic wastes or substances, infectious or
medical waste, radioactive waste or sewage sludges as those terms are
defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"); the Atomic Energy Act of 1954; the
Toxic Substances Control Act; the Occupational Health and Safety Act;
any comparable or similar Texas statute; or the rules and regulations
promulgated under any of the foregoing, as each of the foregoing may
have been from time to time amended (collectively, "Hazardous
Materials"). Seller has never owned, operated, had an interest in,
engaged in and/or leased a waste transfer, recycling, treatment, storage
or disposal facility, business or activity other than the Business.
Seller has obtained and maintained all necessary trip tickets, signed by
the applicable waste generators, and other records demonstrating the
nature of the waste transported in connection with the Business. No
employee, contractor or agent of Seller has, in the course and scope of
employment with Seller, been harmed by exposure to Hazardous Materials.
Seller has no direct or contingent liability or obligation for or in
connection with any claimed release, discharge or leak of any substance
onto the Facility or into the environment. Further, no portion of
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the Facility is listed on the CERCLA list or the National Priorities
List of Hazardous Waste Sites or any similar list maintained by the
State of Texas. Attached hereto as Schedule 5.1(n) is a complete list of
the names and addresses of all disposal sites at any time now or in the
past utilized by Seller, none of which sites is listed on the CERCLA
list or the National Priorities List of Hazardous Waste Sites or any
comparable Texas list. Neither Seller, Shareholder nor the Facility is
listed as a potentially responsible party under CERCLA or any comparable
or similar state statute; neither Seller nor Shareholder has received
any notice of such a listing; and neither Seller nor Shareholder knows
of any
facts or circumstances which could give rise to such a listing.
(o) GOVERNMENT NOTICES. Seller has delivered to Buyer, a
description and copies, as of the date of this Agreement, of all
notifications, filed or submitted, or required to be filed or submitted,
to governmental agencies and of all material notifications from such
governmental agencies relating to Seller and the Assets or relating to
the discharge or release of materials into the environment or otherwise
relating to the protection of the public health or the environment.
(p) ABSENCE OF PRICE RENEGOTIATION CONTRACTS. Seller is not now
nor has ever been a party to any governmental contracts subject to price
redetermination or renegotiation.
(q) GROSS REVENUES. The gross revenues generated by the Business
for the 12-month period immediately preceding the month in which the
Closing occurs were $483,062.
(r) UNDERGROUND STORAGE TANKS. Except for the Facility, Seller
has never owned, leased or operated any real estate having any
underground storage tanks containing petroleum products or wastes or
other hazardous substances regulated by 40 CFR 280 and/or other
applicable federal, state or local laws, rules and regulations and
requirements. Set forth on Schedule 5.1(r) is a list of all above and
below ground tanks located on the Facility, each of which are being used
and maintained in accordance with Applicable Laws.
(s) COMPLETENESS OF DISCLOSURE. This Agreement and the Schedules
hereto and all other documents and information furnished to Buyer and
its representatives pursuant hereto do not and will not include any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. If Seller or
Shareholder become aware of any fact or circumstance which would change
a representation or warranty of Seller or Shareholder in this Agreement,
the party with such knowledge shall immediately give notice of such fact
or circumstance to Buyer. However, such notification shall not relieve
Seller or Shareholder of their obligations under this Agreement, and at
the sole option of Buyer, the truth and accuracy of any and all
warranties and representations of Seller and Shareholder at the date of
this Agreement shall be a precondition to the consummation of this
transaction.
SECTION 5.2 SURVIVAL. Each of the representations and warranties set
forth in this Article V shall survive the Closing and the transfer of the
Assets.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
SECTION 6.1 Buyer and Parent represent and warrant to Seller and
Shareholder that:
(a) CORPORATE ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) AUTHORIZATION. Buyer and Parent each have all requisite corporate
power and corporate authority to enter into this Agreement, perform its
respective obligations hereunder and consummate the transactions contemplated
hereby. The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the compliance by Buyer and Parent with the
terms of this Agreement do not and will not conflict with or result in a breach
of any terms of, or constitute a default under, Buyer's Articles of
Incorporation or Bylaws or any other agreement or instrument to which Buyer or
Parent is a party or by which Buyer or Parent is bound. All necessary corporate
action has been taken by Buyer and Parent with respect to the execution and
delivery of this Agreement, and this Agreement constitutes a valid
obligation of Buyer and Parent enforceable in accordance with its terms except
as limited by bankruptcy, insolvency, reorganization or other such laws
concerning the rights of creditors.
(c) PARENT STOCK. The Parent Stock to be delivered to Seller in
connection with this Agreement, when delivered in accordance with the terms of
this Agreement, will constitute valid and legally issued shares, fully paid and
nonassessable, and will be registered and free from any restriction on transfer
other than restrictions imposed by the Securities Act of 1993, as amended, or
the regulations promulgated thereunder.
SECTION 6.2 SURVIVAL. Each of the representations and warranties set
forth in this Article VI shall survive the Closing and the transfer of the
Assets.
ARTICLE VII
NONCOMPETITION
SECTION 7.1 NONCOMPETITION COVENANTS. Seller and Shareholder, jointly
and severally, agree that for a period of ten years following the date of
Closing, neither of them shall directly or indirectly, through a subsidiary or
affiliate, without the prior express written consent of Buyer:
(i) engage, whether as a corporation on its own account, or as
an officer, director, shareholder, owner, partner, joint venturer,
investor, agent, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in the business of: siting, developing, constructing,
permitting or operating a facility for the processing, treatment or
disposal of non-hazardous liquid waste (including, without limitation,
waste oil, waste water, grease trap waste, grit trap waste and oil
contaminated water); siting, developing, constructing, permitting or
operating a facility for the processing, treatment and disposal of
non-hazardous oilfield waste (including, without limitation, chlorides,
heavy metals, cuttings, contaminated soils, drilling fluids and pit
sludges); and transportation or collection of any such materials, in
each case within a radius of 200 air miles of Seller's facilities in
Haltom City, Texas (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of Buyer in a managerial capacity for the purpose
or with the intent of enticing such employee away from or out of the
employ of Buyer;
(iii) call upon any person or entity which is, at that time, or
which has been, within two years prior to that time, a customer of
Seller or Buyer, as the case may be, within the Territory for the
purpose of: siting, developing, constructing, permitting or operating a
facility for the processing, treatment or disposal of non-hazardous
liquid waste (including, without limitation, waste oil, waste water,
grease trap waste, grit trap waste and oil contaminated water); siting,
developing, constructing, permitting or operating a facility for the
processing, treatment and disposal of non-hazardous oilfield waste
including, without limitation, chlorides, heavy metals, cuttings,
contaminated soils, drilling fluids and pit sludges); and transportation
or collection of any such materials, in each case within the Territory;
(iv) call upon any prospective acquisition candidate, on their
own behalf or on behalf of any competitor, which candidate was either
called upon by Seller or Shareholder or for which Seller or Shareholder
made an acquisition analysis for Seller or Buyer;
(v) disclose the identity of Buyer's customers, whether in
existence or proposed, to any person, firm, partnership, corporation or
business for any reason or purpose whatsoever; or
(vi) promote or assist, financially or otherwise (including,
without limitation, lending, guaranteeing loans or otherwise providing
financial assurance in any way), any
person, firm, partnership, corporation or other entity whatsoever to do
any of the above.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Seller or Shareholder from (i) marketing or selling MIDOS technology or
consulting with other companies in the use of the MIDOS technology, provided
that no such activities targeted to businesses in the waste treatment industry
will take place within the Territory, nor will any such activities be reasonably
likely to have an adverse effect on the Business or the operations of the
Facility, and (ii) acquiring as an investment not more than one percent of the
capital stock of a competing business, whose stock is traded on a national
securities exchange or over-the-counter.
SECTION 7.2 INJUNCTIVE RELIEF. Because of the difficulty of measuring
economic losses to Buyer as a result of the breach of the foregoing covenant,
and because of the immediate and irreparable damage that would be caused to
Buyer for which it would have no other adequate remedy, Seller and Shareholder
agree that, in the event of breach by any of them of the foregoing covenant, the
covenant may be enforced by Buyer by, without limitation, injunctions and
restraining orders.
SECTION 7.3 REASONABLENESS OF COVENANTS. It is agreed by the parties
that the foregoing covenants in this Article VII impose a reasonable restraint
on Seller and Shareholder in light of the activities and business of the Buyer
on the date of the execution of this Agreement and future plans of the Buyer.
SECTION 7.4 SEVERABILITY OF COVENANTS. The covenants in this Article VII
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenants. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
SECTION 7.5 INDEPENDENT COVENANTS. All of the covenants in this Article
VII shall be construed as an agreement independent of any other provision of
this Agreement, and the existence of any claim or cause of action of Seller or
Shareholder against Buyer, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Buyer of such covenants. It
is specifically agreed that the duration of the noncompetition covenants stated
above shall be computed by excluding from such computation any time during which
Seller or Shareholder is in violation of any provision of this Article VII.
SECTION 7.6 MATERIALITY. Seller and Shareholder hereby agree that the
foregoing noncompetition covenants are a material and substantial part of this
transaction.
ARTICLE VIII
NON-ASSUMPTION OF LIABILITIES; INDEMNIFICATION
SECTION 8 NON-ASSUMPTION OF LIABILITIES. Except as explicitly set forth
in Section 8.2 below, Buyer shall not, by the execution and performance of this
Agreement or otherwise, assume, become responsible for or incur any liability or
obligation of any nature of Seller or Shareholder whether legal or equitable,
matured or contingent, known or unknown, foreseen or unforeseen, ordinary or
extraordinary, patent or latent, whether arising out of occurrences prior to, at
or after the date of this Agreement, including, without limiting the generality
of the foregoing, any liability or obligation arising out of or relating to: (a)
any occurrence or circumstance (whether known or unknown) which occurs or exists
on or prior to the date of this Agreement and which constitutes, or which by the
lapse of time or giving notice (or both) would constitute, a breach or default
under any lease, contract, or other instrument or agreement whether written or
oral); (b) any injury to or death of any person or damage to or destruction of
any property, whether based on negligence, breach of warranty, or any other
theory; (c) a violation of the requirements of any governmental authority or of
the rights of any third person, including, without limitation, any requirements
relating to the reporting and payment of federal, state, local or other income,
sales, use, franchise, excise or property tax liabilities of Seller or
Shareholder; (d) the generation, collection, transportation, storage or disposal
by Seller or Shareholder of any materials, including, without limitation,
hazardous materials; (e) an agreement or arrangement between Seller and the
employees of Seller or Shareholder or any labor or collective bargaining unit
representing any such employees; (f) the severance pay obligation of Seller or
any employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended) or any other fringe benefit
program maintained or sponsored by Seller or Shareholder or to which Seller or
Shareholder contributes or any contributions, benefits or liabilities therefor
or any liability for the withdrawal or partial withdrawal from or termination of
any such plan or program by Seller or Shareholder; (g) the debts of Seller or
Shareholder; (h) any litigation against Seller or Shareholder, whether or not
listed on Schedule 5.1(h); (i) any liability, obligation cost or expense related
to the Facility related to the time prior to the Closing Date, including,
without limitation, the environmental condition thereof; and (k) the liabilities
or obligations or Seller or Shareholder for brokerage or other commissions
relative to this Agreement or the transactions contemplated hereunder. Seller
and Shareholder each agree to indemnify Buyer, its successors and assigns from
and against all of the above liabilities and obligations in accordance with
Section 8.3 below.
SECTION 8.2 ASSUMPTION OF SPECIFIC LIABILITIES. Buyer agrees to perform
all of Seller's contractual obligations related to the Customer Contracts and
the leases of the Facility to the extent, and only to the extent, such
obligations first mature and are required to be performed after the close of
business on the Closing Date.
SECTION 8.3 INDEMNIFICATION BY SELLER AND SHAREHOLDER. Notwithstanding
investigation at any time made by or on behalf of Buyer, Seller and Shareholder,
jointly and severally, agree to defend, indemnify and hold harmless Buyer, its
officers, shareholders, directors, divisions, subdivisions affiliates, parent,
employees, agents, successors, assigns and the Assets from and against all
losses, claims, actions, causes of action, damages, liabilities, expenses and
other costs of any kind or amount whatsoever (including, without limitation,
reasonable attorneys' fees), whether equitable or legal, matured or contingent,
known or unknown, foreseen or unforeseen, ordinary or extraordinary, patent or
latent, which result, either before or after the date of this Agreement, from:
(a) inaccuracy in any representation or warranty made by Seller
or Shareholder in this Agreement;
(b) breach of any representation or warranty under this
Agreement by Seller or Shareholder;
(c) failure of Seller or Shareholder duly to perform and observe
any term, provision, covenant, agreement or condition under this
Agreement;
(d) liability of Seller or Shareholder imposed upon Buyer
(including, without limitation, all liability for the generation,
collection, transportation, storage or disposal of any materials,
including, without limitation, Hazardous Materials, whether or not
disclosed on Schedule 5.1(n) hereof);
(e) misrepresentation in or omission from any Schedule to this
Agreement;
(f) liability of Seller or Shareholder imposed upon Buyer as a
result of Seller's failure to comply with any applicable bulk transfer
law;
(g) liability of Seller or Shareholder resulting from one or
more pending or threatened lawsuits whether or not listed on Schedule
5.1(i);
(h) liability of Seller or Shareholder to creditors of Seller or
Shareholder which is imposed on Buyer whether as a result of bankruptcy
proceedings or otherwise and whether as a result of bankruptcy
proceedings or otherwise and whether as an account payable by Seller or
Shareholder or as a claim of alleged fraudulent conveyance or
preferential payments within the meaning of the United States Bankruptcy
Code or
otherwise; and
(i) the existence of creditors of Sellers which are not
disclosed to Buyer;
(j) any of the matters described in Section 8.1(a) - (k) hereof;
and
(k) any claim by a third party that, if true, would mean that a
condition for indemnification set forth in this Section 8.3 had been
satisfied.
Buyer shall be deemed to have suffered such loss, claim, action, cause of
action, damage, liability, expense or other cost, or to have paid or to have
become obligated to pay any sum on account, of, the matters referred to in
subparagraphs (a) - (l) of this Section 8.3 if the same shall be suffered, paid
or incurred by Buyer or any parent, subsidiary, affiliate, or successor of
Buyer. The amount of the loss, claim, action, cause of action, damage,
liability, expense or other cost deemed to be suffered, paid or incurred by
Buyer shall be an amount equal to the loss, claim, action, cause of action,
damage, liability, expense or other cost suffered, aid or incurred by such
parent, subsidiary, affiliate, or successor.
SECTION 8.4 PROCEDURE FOR INDEMNIFICATION. Promptly after a party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person" or the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall, as a condition precedent to a claim with respect thereto being made
against any party obligated to provide indemnification pursuant to this
Agreement (hereinafter the "Indemnifying Party"), give the Indemnifying Party
written notice of such claim or the commencement of such action or proceeding
(the "Notice"). The Notices shall state the nature and the basis of such claim
and a reasonable estimate of the amount thereof. The Indemnifying Party, after
receipt of the Notice, shall defend and settle, at its own expense and by its
own counsel, each such matter so long as the Indemnifying Party pursues the same
diligently and in good faith and the claim does not involve injunction or
equitable relief or involve criminal penalties. The Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records or
information reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. Notwithstanding the foregoing, the
Indemnified Party shall have the right to participate in any matter through
counsel of its own choosing at its own expense, provided that the Indemnifying
Party's counsel shall always be lead counsel and shall determine all litigation
and settlement steps, strategy and the like. After the Indemnifying Party has
received the Notice, the Indemnifying Party shall not be liable for any
additional legal expenses incurred by the Indemnified Party in connection with
any defense or settlement of such asserted liability, except to the extent such
participation is requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying Party for reasonable
additional legal expenses, out-of-pocket and allocable share of employee
compensation incurred in connection with such participation for any employee
whose participation is so requested. The foregoing notwithstanding, if the
Indemnifying Party fails diligently to defend any such matter to which the
Indemnified Party is entitled to indemnification hereunder or if the claim
involves criminal penalties, the Indemnified Party may undertake such defense
through counsel of its choice and at the Indemnifying Party's expense. In each
case where the Indemnifying Party is obligated to pay the costs and expenses of
the Indemnified Party, the Indemnifying Party shall pay the costs and expenses
of the Indemnified Party as such costs and expenses are incurred. If the
Indemnifying Party desires to accept a final and complete settlement of any such
Third Person claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section with
respect to such Third Person claim shall be limited to the amount so offered in
settlement by said Third Person and the Indemnified Party shall reimburse the
Indemnifying Party for any additional costs of defense which it subsequently
incurs with respect to such claim.
ARTICLE IX
NONDISCLOSURE AND CONFIDENTIALITY
SECTION 9.1 NONDISCLOSURE AND CONFIDENTIALITY AGREEMENT. Buyer agrees
not to disclose to any other person, corporation, or entity any information
relating to the MIDOS machine or process, except for information that is or
becomes generally known or in the public domain or with respect to which, based
on an opinion of its legal counsel, it is compelled to produce by court order or
other legal process. Buyer shall take all reasonable action necessary to prevent
any of its employees, representatives and agents (other than Shareholder or his
affiliates) from disclosing any confidential information related to the MIDOS
machine and process. Buyer shall not use the MIDOS technology in any way without
the express permission of Shareholder. Buyer acknowledges that the MIDOS
technology is a trade secret of Shareholder.
SECTION 9.2 DAMAGES. Buyer agrees that it shall be responsible for any
damages to Seller and Shareholder that result from any disclosure of the MIDOS
technology by Buyer.
SECTION 9.3 INJUNCTIVE RELIEF. Because of the difficulty of measuring
economic losses to Seller and Shareholder as a result of the breach of the
foregoing covenant, and because of the immediate and irreparable damage that
would be caused to Seller and Shareholder for which it would have no other
adequate remedy, Buyer agrees that, in the event of breach by any of them of the
foregoing covenant, the covenant may be enforced by Seller and Shareholder by,
without limitation, injunctions and restraining orders.
SECTION 9.4 SURVIVAL. The representations and warranties set forth in
this Article IX shall survive the Closing.
SECTION 9.5 OBLIGATIONS OF SELLER AND SHAREHOLDER. Seller and
Shareholder jointly and severally agree that they shall take all reasonable
actions and precautions to protect their proprietary information relating to the
MIDOS technology, including without limitation, maintaining all records,
prototypes and other materials of a confidential nature in a secure location
away from the Facility, disclosing confidential information only to persons with
a need to know such information and only if such persons are obligated to retain
such information in confidence. Seller shall not disclose any confidential
information regarding the MIDOS technology to any employee, representative or
agent of Buyer without providing Buyer with written notice of such disclosure to
enable Buyer to fulfill its obligations under this Article IX.
SECTION 9.6 INDEPENDENT COVENANTS. All of the covenants in this Article
IX shall be construed as an agreement independent of any other provisions of
this Agreement and the existence of any claim or cause of action of Buyer
against Seller or Shareholder, whether predicated on this Agreement or otherwise
(except for any claims of Seller's or Shareholder's breach of Section 9.5
above), shall not constitute a defense to the enforcement by Shareholder or
Seller of this Article IX.
ARTICLE X
MIDOS TECHNOLOGY
SECTION 10.01 RIGHT OF FIRST REFUSAL. Seller and Shareholder shall grant
to Buyer a right of first refusal for the period beginning on the date hereof
and ending at 11:59 p.m. on December 31, 2000. In the event Seller and/or
Shareholder receives an offer to purchase the MIDOS machine and/or technology,
the Seller and/or Shareholder must promptly submit to Buyer a written
notification of such offer setting forth all of the terms of the proposed sale.
The Buyer shall have the irrevocable right and option to purchase the MIDOS
machine and technology, including without limitation all records, prototypes,
drawings and other information pertaining thereto, on the same terms as are
applicable to the offer. Buyer may exercise this right and option by notifying
Seller and/or Shareholder in writing of its election within 45 days after Buyer
receives the written offer. If Buyer does not notify Seller and/or Shareholder
within such 45 day period, the sale to the offering third party may be
consummated, provided that such sale must take place within a 60 day period
after lapse of the option period, and must be consummated pursuant to the same
terms as were set forth in the offer notice.
SECTION 10.02 NO MARKETING TO WASTE TREATMENT COMPANIES. Seller and/or
Shareholder
shall not market the MIDOS machine and/or technology to other waste treatment
companies until after December 31, 2000.
SECTION 10.03 RIGHT TO SELL TO UNRELATED INDUSTRIES. Seller and/or
Shareholder will retain the right to sell the MIDOS machine and/or technology to
persons in industries unrelated to waste treatment. In the event Seller and/or
Shareholder sells the MIDOS machine and/or technology to a purchaser in an
unrelated industry, Seller and/or Shareholder shall obtain an agreement from the
purchaser that they will not market or sell the MIDOS machine and/or technology
to a waste treatment company until after December 31, 2000.
ARTICLE XI
FEDERAL SECURITIES ACT RESTRICTIONS ON STOCK
SECTION 11.1 REGISTERED STOCK. Parent represents and warrants to Seller
and Seller acknowledges that all of the shares of Parent Stock to be delivered
to Seller pursuant to this Agreement will be registered under the Securities Act
of 1933, as amended (the "Act") prior to delivery to Seller.
SECTION 11.2 GENERAL LEGEND. All Parent Stock shall bear the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 145(D) PROMULGATED UNDER THE SECURITIES ACT OF
1933, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE HOLDER
WITHOUT COMPLIANCE WITH SAID RULE.
SECTION 11.3 COMPLIANCE WITH LAW. Seller covenants, warrants and
represents that none of the shares of Parent Stock will be offered, sold,
assigned, pledged, hypothecated, transferred or otherwise disposed of except in
full compliance with the Act and the rules and regulations promulgated
thereunder.
ARTICLE XII
GENERAL
SECTION 12.1 FURTHER ASSURANCE. From time to time after the Closing,
Seller and Shareholder will, without further consideration, execute and deliver
such other instruments of conveyance and transfer, and take such other action as
Buyer reasonably may request to more effectively convey and transfer to and vest
in Buyer and to put Buyer in possession of the Assets to be transferred
hereunder, and in the case of contracts and rights, if any, which cannot be
transferred effectively without the consents of third parties, to endeavor to
obtain such consents promptly, and if any be unobtainable, to use their best
efforts to provide Buyer with the benefits thereof in some other manner. Seller
and Shareholder will cooperate and use their best efforts to have the present
officers, directors and employees of Seller cooperate with Buyer on and after
the Closing in furnishing information, evidence, testimony and other assistance
in connection with any actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to Closing.
SECTION 12.2 JOINT AND SEVERAL OBLIGATIONS. All representations,
warranties and agreements of Seller or Shareholder under this Agreement, the
Schedules and the transactions contemplated hereby shall be joint and several.
SECTION 12.3 WAIVER. Except as otherwise provided herein, no delay of or
omission in the exercise of any right, power or remedy accruing to any party as
a result of any breach or default by any other party under this Agreement shall
impair any such right, power or remedy, nor shall it be construed as a waiver of
or acquiescence in any such breach or default, or of or in any similar breach or
default occurring later; nor shall any waiver of any single breach or default
be deemed a waiver of any other breach or default occurring before or after that
waiver.
SECTION 12.4 TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
SECTION 12.5 NOTICE. All notices or communications required or permitted
under this Agreement shall be given in writing and served either by personal
delivery, overnight courier or by deposit in the United States mail and sent by
first class registered or certified mail, return receipt requested, postage
prepaid:
If the Seller and Shareholder:
Xxx X. Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
with a copy to:
Xxxxx Xxxxxx
Hilton & Xxxxxxx, L.L.P.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
If to Buyer:
Mesa Processing, Inc.
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: W. Xxxxxxx Xxx
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx, L.L.P.
000 Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier, subject to signature verification, and
three days after deposit in the U.S. mail as provided above, or when actually
received, if earlier. Either party may change the address for notices or
communications to be given to it by written notice to the other party given as
provided in this Section.
SECTION 12.6 ENTIRE AGREEMENT. This Agreement, the Schedules hereto and
the other agreements referred to herein constitute the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
supersede all prior and contemporaneous agreements and understandings, oral or
written, relative to said subject matter.
SECTION 12.7 BINDING EFFECT; ASSIGNMENT. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon the parties hereto and their respective executors, administrators,
heirs, legal representatives, successors and permitted assigns. Seller shall
have no right to assign this Agreement or any of their respective rights
hereunder. Buyer may assign this Agreement without consent by Seller; provided,
however, that the assignee under such assignment shall agree to assume the
obligations of the assignor under this Agreement. It is further understood and
agreed that Buyer may be merged or consolidated with another entity and that any
such entity shall automatically succeed to the rights, powers and duties of
Buyer hereunder.
SECTION 12.8 EXPENSES OF TRANSACTION. Seller shall pay all costs and
expenses incurred by Seller or Shareholder in connection with this Agreement and
the transactions contemplated
hereby and thereby, including, without limitation, the fees and expenses of
Seller's attorneys and accountants and will make all necessary arrangements so
that the Assets will not be charged with or diminished by any such cost or
expense. Buyer shall pay all costs and expenses incurred by it in connection
with this Agreement and the transactions contemplated hereby and thereby,
including without limitation, the fees and expenses of its attorneys and
accountants.
SECTION 12.9 BROKER'S COMMISSION. Seller and Shareholder represent and
warrant to Buyer and Buyer represents and warrants to Seller and Shareholder
that the warranting party has had no dealing with any dealer, broker or agent so
as to entitle such dealer, broker or agent to a commission or fee in connection
with the sale of the Assets to Buyer. If for any reason any commission or fee
shall become due, the party dealing with such dealer, broker or agent shall pay
such commission or fee and agrees to indemnify and save the other party harmless
from all claims for such commission or fee and from all attorneys' fees,
litigation costs and other expense relating to such claim.
SECTION 12.10 MODIFICATION; REMEDIES CUMULATIVE. This Agreement may not
be changed, amended, terminated, augmented, rescinded or otherwise altered, in
whole or in part, except by a writing executed by all of the parties hereto. No
right, remedy or election given by any term of this Agreement shall be deemed
exclusive but each shall be cumulative with all other rights, remedies and
elections available at law or in equity.
SECTION 12.11 SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties. If such modification is not possible,
such provision shall be severed from this Agreement. In either case the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
SECTION 12.12 GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the internal laws of the State of
Texas, without giving effect to any choice or conflict of law provision or rule
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BUYER:
MESA PROCESSING, INC.
By:/s/ C. XXXX XXXXXX
Name: C. Xxxx Xxxxxx
Title: Attorney-in-fact
SELLER:
RECLAMATION TECHNOLOGY
MANAGEMENT, INC. d/b/a EFFLUENT
TREATMENT SERVICES,
INC.
By:/s/ XXX X. XXXXXX
Name: XXX X. XXXXXX
Title: President
EIN______________________________
SHAREHOLDER:
/s/ XXX X. XXXXXX
XXX X. XXXXXX
SSN_____________________________
