EXHIBIT 10.50
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
U S LIQUIDS/EMI ACQUISITION CORPORATION
U S LIQUIDS INC.
AND
ENVIRONMENT MANAGEMENT, INC.
AND
XXXXXXX X. XXXXXXX AND XXXX X. XXXXXX
TABLE OF CONTENTS
SECTION PAGE
1. THE MERGER; DELIVERY OF SHARES; ENDORSEMENT OF COMPANY
STOCK................................................................ 2
1.1 Articles of Merger........................................ 2
1.2 Articles of Incorporation and Bylaws...................... 2
1.3 Capitalization............................................ 3
1.4 Effect of Merger.......................................... 3
1.5 Delivery of Shares........................................ 3
1.6 Endorsement of Company Stock.............................. 4
2. CONVERSION AND EXCHANGE OF STOCK..................................... 4
2.1 Conversion of Stock....................................... 4
2.2 Assumption of Debt........................................ 4
2.3 Adjustment to Purchase Price.............................. 4
3. TITLE ASSURANCE...................................................... 5
3.1 Title Policies............................................ 5
3.2 Permitted Encumbrances.................................... 6
3.3 Survey.................................................... 6
4. CLOSING.............................................................. 7
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND
COMPANY.............................................................. 7
5.1 Organization; Authority................................... 7
5.2 Stock Ownership; Absence of Adverse Claims................ 8
5.3 Capitalization............................................ 8
5.4 Predecessor Entities; Trade Names......................... 8
5.5 No Subsidiaries........................................... 9
5.6 Financial Statements...................................... 9
5.7 Non-Balance Sheet Liabilities............................. 9
5.8 Accounts Receivable....................................... 10
5.9 Proprietary Rights; Environmental Documents............... 10
5.10 Real Property; Reporting................................. 11
5.11 Personal Property; New Projects.......................... 12
5.12 Contracts................................................ 13
5.13 Insurance Policies....................................... 14
5.14 Directors, Officers and Employees; Compensation.......... 14
5.15 Employee Plans........................................... 14
SECTION PAGE
5.16 Compliance with ERISA.................................... 14
5.17 Compliance with Law; No Conflicts........................ 15
5.18 Taxes.................................................... 16
5.19 Litigation............................................... 16
5.20 Absence of Price Renegotiation Contracts................. 16
5.21 Conduct of Business Since Balance Sheet Date............. 17
5.22 Bank Accounts; Depositories.............................. 18
5.23 Hazardous Materials...................................... 18
5.24 Storage Tanks............................................ 19
5.25 Absence of Certain Business Practices.................... 19
5.26 Complete Disclosure...................................... 19
6. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT................... 19
6.1 Corporate Organization.................................... 20
6.2 Corporate Authority....................................... 20
6.3 No Conflicts.............................................. 20
6.4 Binding Agreement......................................... 20
7. COVENANTS............................................................ 20
7.1 Access to Land and Records................................ 20
7.2 Company Activities Prior to Closing....................... 21
7.3 Prohibited Activities Prior to Closing.................... 22
7.4 Contact with Government Officials......................... 23
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND
STOCKHOLDERS......................................................... 23
8.1 Representations and Warranties............................ 23
8.2 Consents.................................................. 23
8.3 No Adverse Proceeding..................................... 23
8.4 Noncompetition Agreement.................................. 23
8.5 Simultaneous Closings..................................... 23
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PARENT.............. 24
9.1 Representations and Warranties............................ 24
9.2 Covenants................................................ 24
9.3 No Adverse Proceeding..................................... 24
9.4 General Release........................................... 24
9.5 Consents.................................................. 24
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SECTION PAGE
9.6 Resignations.............................................. 24
9.7 Good Standing Certificates................................ 25
9.8 Updated Agreements........................................ 25
9.9 Noncompetition Agreement.................................. 25
9.10 Delivery of Company Stock................................ 25
9.11 Environmental Review..................................... 25
9.12 Transferability of Permits............................... 25
9.13 General.................................................. 25
9.14 Simultaneous Closings.................................... 25
10. POST CLOSING COVENANTS............................................... 26
10.1 Taxes.................................................... 26
10.2 Post Closing Balance Sheet............................... 26
10.3 Closing Date Actions..................................... 26
10.4 Further Assurance........................................ 27
10.5 Transition............................................... 27
10.6 Survival................................................. 27
11. INDEMNIFICATION...................................................... 27
11.1. Indemnification by Stockholders and Company.............. 27
11.2 Indemnification by the Surviving Corporation............. 28
11.3 Procedure for Indemnification with Respect to Third
Party Claims............................................. 28
11.4 Limitation on Liability.................................. 29
11.5 Escrow................................................... 30
12.1 Termination by Buyer..................................... 30
12.2 Termination by Stockholders.............................. 30
12.3 Termination by Lapse..................................... 30
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION............................ 30
13.1 Nondisclosure by Stockholders............................ 30
13.2 Nondisclosure by Parent.................................. 30
14. GENERAL.............................................................. 31
14.1 Assignment; Binding Effect; Amendment.................... 31
14.2 Entire Agreement......................................... 31
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14.3 Counterparts............................................. 31
14.4 No Brokers............................................... 31
14.5 Expenses of Transaction.................................. 32
14.6 Notices.................................................. 32
14.7 Governing Law............................................ 33
14.8 Appointment of Agent..................................... 33
14.9 No Waiver................................................ 33
14.10 Time of the Essence..................................... 33
14.11 Captions................................................ 33
14.12 Severability............................................ 34
14.13 Construction............................................ 34
14.14 Standstill Agreement.................................... 34
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
executed and delivered as of January 1, 1998, among U S LIQUIDS/EMI ACQUISITION
CORPORATION, a Texas corporation ("Buyer"); U S LIQUIDS INC., a Delaware
corporation ("Parent"); ENVIRONMENT MANAGEMENT, INC., a Texas corporation
("Company"); and XXXXXXX X. XXXXXXX and XXXX X. XXXXXX, the sole stockholders of
Company ("Stockholders");
W I T N E S S E T H:
WHEREAS, Company owns all the stock of MLB Investments, Inc., a
Texas corporation ("Subsidiary");
WHEREAS, Subsidiary operates a non-hazardous commercial waste
collection, transportation and processing business in the Austin, Texas area
(the "Business");
WHEREAS, as part of the Business, Subsidiary leases certain real
property located at 0000 X. 0xx Xxxxxx in Austin, Texas and more fully described
on Exhibit A, attached hereto and made a part hereof (the "Austin Land"), and
operates thereon a fully permitted facility for the collection transportation
and processing of non-hazardous commercial waste (the "Facility") pursuant to a
written lease dated January 22, 1993, with Xxxxxxx X. Xxxx, Trustee, as amended
by a letter agreement dated June 3, 1996 (the "Austin Lease");
WHEREAS, as part of the Business, Subsidiary leases certain real
property located at 1375 Creekview in San Antonio, Texas and more fully
described on Exhibit B, attached hereto and made a part hereof (the "San Antonio
Land"), pursuant to a written lease dated June 23, 1993, with Xxxxxxx X. Xxxxx
("the San Antonio Lease," together with the Austin Lease, the "Real Estate
Leases");
WHEREAS, as part of the Business, Subsidiary owns certain real
property located in San Antonio, Texas and more fully described on Exhibit C,
attached hereto and made a part hereof (the "Owned Land," together with the
Austin Land and the San Antonio Land, the "Land");
WHEREAS, Buyer is a wholly owned subsidiary of Parent;
WHEREAS, Stockholders own all of the issued and outstanding shares
of the capital stock of Company;
WHEREAS, the respective Boards of Directors of Buyer and Company
deem it advisable and in the best interests of each corporation and their
respective stockholders that Buyer merge with and into Company (the "Merger")
pursuant to this Agreement and the applicable provisions of the laws of the
State of Texas; and
WHEREAS, the Boards of Directors of each of the corporate parties
hereto have approved and adopted this Agreement as a plan of reorganization
within the provisions of Section 368(a)(1)(A) and 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of Ten Dollars ($10) in hand paid,
the premises and of the mutual agreements, representations, warranties and
obligations herein contained, the parties hereby agree as follows:
1. THE MERGER; DELIVERY OF SHARES; ENDORSEMENT OF COMPANY
STOCK.
1.1 ARTICLES OF MERGER. Buyer and Company will cause a Certificate of
Merger in substantially the form of Annex I attached hereto (the "Certificate of
Merger") to be signed, verified and delivered to the Texas Secretary of State on
the "Closing Date" as defined in Article 4. Such date shall be deemed the
"Effective Date of the Merger." At the Effective Date of the Merger, Buyer shall
be merged with and into Company, whereupon the separate existence of Buyer shall
cease and the corporate name of Company shall remain unchanged. Company, the
party surviving the Merger, is hereinafter sometimes referred to as the
"Surviving Corporation".
The Merger will be effected in a single transaction.
1.2 ARTICLES OF INCORPORATION AND BYLAWS. At the Effective Date of the
Merger:
(i) the Articles of Incorporation of the Surviving Corporation shall
be amended to reflect the Articles of Incorporation of Buyer; and,
subsequent to the Effective Date of the Merger, such Articles of
Incorporation shall be the Articles of Incorporation of the Surviving
Corporation until changed as provided by law;
(ii) the Bylaws of Buyer shall become the Bylaws of the Surviving
Corporation; and, subsequent to the Effective Date of the Merger, such
Bylaws shall be the Bylaws of the Surviving Corporation until they shall
thereafter be duly amended;
(iii) the officers of Buyer immediately prior to the Effective Date
of the Merger shall become the officers of the Surviving Corporation, and
shall hold such offices subject to the provisions of the laws of the State
of Texas and the Articles of Incorporation and the Bylaws of the Surviving
Corporation; and
(iv) the name and address of the person who shall serve as the sole
member of the Board of Directors of the Surviving Corporation is as
follows:
W. Xxxxxxx Xxx
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
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The Director of the Surviving Corporation shall hold office subject to the
provisions of the laws of the State of Delaware and the Articles of
Incorporation and the Bylaws of the Surviving Corporation.
1.3 CAPITALIZATION. The respective designations and numbers of outstanding
shares and voting rights of each class of outstanding capital stock of Buyer and
Company as of the date of this Agreement are as follows:
(i) the authorized capital stock of Buyer consists of 1,000 shares
of common stock, without par value ("Buyer Stock"), of which 1,000 shares
are issued and outstanding; and
(ii) the authorized capital stock of Company consists of 100,000
shares of common stock, without par value per share, of which 3,000 shares
are issued and outstanding (the "Company Stock").
1.4 EFFECT OF MERGER. Except as herein specifically set forth, the
identity, existence, purposes, powers, objects, franchises, privileges, permits,
licenses, approvals, rights and immunities of Company shall continue unaffected
and unimpaired by the Merger and the corporate franchises, existence and rights
of Buyer shall be merged into Company, and Company, as the Surviving
Corporation, shall be fully vested therewith. At the Effective Date of the
Merger, the separate existence of Buyer shall cease and, in accordance with the
terms of this Agreement, the Surviving Corporation shall possess all the rights,
privileges, permits, licenses, approvals, immunities and franchises, of a public
as well as of a private nature; and all property, real, personal and mixed, and
(except as otherwise expressly set forth herein) debts on whatever account,
including subscriptions to shares, and all other choses in action, and all and
every other interest of or belonging to or due to each of Buyer and Company
shall be taken and deemed to be transferred to, and vested in, the Surviving
Corporation without further act or deed; and all property, rights and
privileges, powers and franchises and all and every other interest shall be
thereafter as effectively the property of the Surviving Corporation as they were
of Buyer and Company; and the title to any real estate, or interest therein,
whether by deed or otherwise, vested in Buyer and Company shall be deemed to be
in the Surviving Corporation and shall not revert or be in any way impaired by
reason of the Merger. The Surviving Corporation shall thenceforth be responsible
and liable for all the liabilities and obligations of Buyer and Company and any
claim existing, or action or proceeding pending, by or against Buyer or Company
may be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in its place. Neither the rights of creditors nor
any liens upon the property of Buyer or Company shall be impaired by the Merger,
and all debts, liabilities and duties of each of Buyer and Company shall attach
to the Surviving Corporation, and may be enforced against it to the same extent
as if said debts, liabilities and duties had been incurred or contracted by it.
1.5 DELIVERY OF SHARES. At the Closing, Stockholders, as the holders of
certificates representing all outstanding shares of Company Stock shall, upon
surrender of such certificates, be entitled to receive the consideration set
forth in Article 2 below.
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1.6 ENDORSEMENT OF COMPANY STOCK. Stockholders shall deliver at Closing
the certificates representing the Company Stock, duly endorsed in blank by
Stockholders or accompanied by stock powers duly endorsed in blank and with all
necessary transfer tax and other revenue stamps, acquired at the Stockholders'
expense, affixed and cancelled. Stockholders, at their sole expense, agree to
cure (both before and after Closing) any deficiencies with respect to the
endorsement of the certificates or other documents of conveyance with respect to
the Company Stock or with respect to the stock powers accompanying the Company
Stock.
2. CONVERSION AND EXCHANGE OF STOCK.
2.1 CONVERSION OF STOCK. The manner of converting the shares of Company
Stock issued and outstanding immediately prior to the Effective Date of the
Merger shall be as follows:
At the Effective Date of the Merger all of the shares of Company
Stock issued and outstanding immediately prior to the Effective Date of
the Merger, by virtue of the Merger and without any action on the part of
the holder thereof, shall automatically be converted into $1,125,000 in
cash subject to adjustment in accordance with Sections 2.2 and 2.3 below.
The consideration set forth in this Article 2 shall be allocated among the
Stockholders in accordance with Annex II attached hereto and made a part
hereof.
2.2 ASSUMPTION OF DEBT. Attached hereto as Schedule 2.2 is a listing of
all of the actual long-term debt of Company (including the current portion of
such debt) plus all lease debt (including lease end buy out payments) (the
"Assumed Debt") and evidence establishing the Assumed Debt. If the Assumed Debt
is more than $710,000 on the Closing Date, the consideration payable in Section
2.1 shall be reduced by an amount equal to the difference between $710,000 and
the Assumed Debt.
2.3 ADJUSTMENT TO PURCHASE PRICE. The parties agree that the purchase
price was determined as if the net working capital of Company, together with
Enviro-Plumbing, Inc. and Enviro-Waste Type V of Texas, Inc. (collectively, the
"Combined Companies"), was going to be $125,000 at the close of business on
December 31, 1997. Accordingly, the parties agree that the purchase price set
forth in this Article 2 shall be adjusted (up or down) on the Adjustment Date
(as defined in Section 10.2) to reflect the actual net working capital of the
Combined Companies on December 31, 1997 (the "Actual Net Working Capital"), as
shown on the balance sheet to be prepared in accordance with Section 10.2
hereof. If the Actual Net Working Capital of the Combined Companies so reflected
is greater than $125,000 on December 31, 1997, then the purchase price paid
pursuant to Section 2.1 shall be increased dollar for dollar for each dollar the
Actual Net Working Capital exceeds $125,000 on December 31, 1997. If the Actual
Net Working Capital of the Combined Companies so reflected is less than $125,000
on December 31, 1997, then the purchase price paid pursuant to Section 2.1 shall
be decreased dollar for dollar for each dollar the Actual Net Working Capital
falls below $125,000 on December 31, 1997. For purposes of this Agreement,
Actual Net Working Capital shall mean the current assets of the Combined
Companies on December 31, 1997, minus all current liabilities of the Combined
Companies (exclusive of the Assumed Debt) on December 31, 1997, calculated in
accordance with the method and principles of accounting used by the Combined
Companies in the
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preparation of the Combined Companies's financial information delivered pursuant
to Section 5.6 hereof.
In order to facilitate the contemplated adjustment to purchase price on
the Adjustment Date, at least five business days before December 31, 1997, the
parties will prepare and agree upon an estimated net working capital balance for
the Combined Companies as of November 30, 1997 (the "Estimated Working
Capital"). The amount of Estimated Working Capital (positive or negative) will
be an adjustment to the purchase price on December 31, 1997. In computing the
adjustment amounts provided for this Section, the party owing payment to the
other pursuant to this Section shall make such payment in cash.
In the event of a dispute between the parties as to the Actual Net Working
Capital, the parties will have 30 days to resolve the dispute among themselves.
If the parties have not resolved such dispute within such 30-day period, then
the parties shall select an arbitrator who shall decide the dispute within 30
days after being selected. If the parties cannot agree on an arbitrator, then
Buyer and Stockholders (as a group) shall each select an arbitrator and the two
arbitrators so selected shall select a third arbitrator. The parties hereto each
agree to be bound by the decision of the arbitrator(s). In the event that three
arbitrators are chosen, a majority decision will be required. Each arbitrator
can be any natural person above the age of 18 and need not have any specific
qualification. All costs of the arbitration shall be split equally between Buyer
and Stockholders (as a group).
3. TITLE ASSURANCE.
3.1 TITLE POLICIES. On the Closing Date, Stockholders shall furnish to
Buyer:
(a) an extended coverage owners policy of title insurance from
Chicago Title Insurance Company (the "Title Company") in the amount of
$200,000 with each of the Title Company's standard printed exceptions
deleted and including comprehensive, access, contiguity, non-arbitration,
going concern, non-imputation and zoning endorsements (to the extent such
endorsements are available in Texas), insuring title to the Owned Land to
be in fee simple in the Surviving Corporation subject only to the
exceptions permitted by Section 3.2 hereof (the "Owners Policy"). At least
ten business days prior to the Closing, Stockholders shall deliver to
Buyer a preliminary title commitment in respect of the Owned Land,
together with copies of all exception instruments referenced therein, and
any unrecorded leases, option agreements, contracts and any other items
affecting title which are in the possession of, or known to, Stockholders.
(b) an extended coverage leasehold policy of title insurance from
the Title Company in the amount of $500,000 with each of the Title
Company's standard printed exceptions deleted and including comprehensive,
access, contiguity, non-arbitration, going concern, non-imputation and
zoning endorsements (to the extent such endorsements are available in
Texas), insuring valid leasehold title to the Austin Land in the Surviving
Corporation subject only to the exceptions permitted by Section 3.2 hereof
(the "Austin Policy"). At least ten business days prior to the Closing,
Stockholders shall deliver to Buyer a preliminary title commitment in
respect of the Austin Land, together with copies of all exception
instruments referenced therein, and any unrecorded leases, option
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agreements, contracts and any other items affecting title which are in the
possession of, or known to, Stockholders.
(c) an extended coverage leasehold policy of title insurance from
the Title Company in the amount of $100,000 with each of the Title
Company's standard printed exceptions deleted and including comprehensive,
access, contiguity, non-arbitration, going concern, non-imputation and
zoning endorsements (to the extent such endorsements are available in
Texas), insuring valid leasehold title to the San Antonio Land in the
Surviving Corporation subject only to the exceptions permitted by Section
3.2 hereof (the "San Antonio Policy," together with the Owners Policy and
the Austin Policy, the "Title Policies"). At least ten business days prior
to the Closing, Stockholders shall deliver to Buyer a preliminary title
commitment in respect of the San Antonio Land, together with copies of all
exception instruments referenced therein, and any unrecorded leases,
option agreements, contracts and any other items affecting title which are
in the possession of, or known to, Stockholders.
3.2 PERMITTED ENCUMBRANCES. The Title Policies shall insure the Surviving
Corporation's interest in the Land to be free and clear of all encumbrances
whatsoever except: (i) zoning ordinances and regulations which do not, in
Buyer's judgment, adversely affect the Surviving Corporation's use of the Land
for its current uses; (ii) real estate taxes and assessments, both general and
special, which are a lien but are not yet due and payable at the Closing Date;
(iii) easements, encumbrances, covenants, conditions, reservations and
restrictions of record, if any, as have been approved in writing by Buyer; and
(iv) in the case of the San Antonio Policy and the Austin Policy, the Real
Estate Leases. Buyer shall pay all of the costs associated with the delivery of
the Title Policies to the Surviving Corporation.
3.3 SURVEY. Stockholders shall obtain for Buyer's use and for the use of
the Title Company in connection with the issuance of the Title Policies current
and complete surveys of the San Antonio Land, the Austin Land and the Owned
Land, respectively, each made on the ground by a competent registered surveyor,
showing: (a) the exact boundary lines of the San Antonio Land, the Austin Land
and the Owned Land; (b) the location thereon of all, if any, buildings,
improvements, and easements now existing; (c) the number of acres in the San
Antonio Land, the Austin Land and the Owned Land; (d) the location of any
buildings, fences or other improvements which encroach on the San Antonio Land,
the Austin Land and the Owned Land; (e) the location of any improvements on the
San Antonio Land, the Austin Land and the Owned Land which encroach on any
neighboring property or on any property which is subject to any easement or
right-of-way; (f) all building lines established in respect of the San Antonio
Land, the Austin Land and the Owned Land; and (g) all public access to the Land,
and representing that the boundaries of the San Antonio Land, the Austin Land
and the Owned Land are contiguous with the boundaries of all adjoining parcels
(the "Surveys"). At least ten business days prior to the Closing, a copy of the
Surveys complying with the above requirements shall be delivered to Buyer and
the Title Company, together with certification to each entity by the surveyor,
which certification complies with American Land Title Association guidelines,
and also together with such additional supporting reports and other certificates
as the Title Company may require to
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enable the Title Company to delete its standard survey exceptions from the Title
Policies. Buyer shall pay all of the costs of the Surveys.
4. CLOSING. Unless the parties agree otherwise, the closing of the within
contemplated transaction (the "Closing") shall take place on the date that is
within five business days after the completion, satisfaction or waiver of each
of the conditions to Closing set forth in Articles 8 and 9; provided, however,
that in the event that the Closing shall not have occurred by February 28, 1998,
either Company or Buyer may terminate this Agreement by giving written notice to
the other party. The Closing shall take place at a location mutually agreeable
to Buyer and Stockholders. The date on which the Closing occurs shall be
referred to as the "Closing Date." The effective date of this Agreement for all
accounting purposes shall be January 1, 1998.
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND
COMPANY. For purposes of this Section, the term Company shall be deemed to refer
to both Company and Subsidiary. Company, as to the time period before Closing
only, and each Stockholder, severally (and not jointly and severally), represent
and warrant to Buyer that the statements contained in this Section 5 except as
set forth in the schedules to the subsections of this Section 5 delivered by
Stockholders to Buyer on the date hereof (such schedules hereinafter
collectively referred to as the "Disclosure Schedules" and, individually, as a
"Disclosure Schedule"): (i) are correct and complete as of the date of this
Agreement; (ii) will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 5); and (iii) shall survive the Closing in
accordance with Article 11 hereof. Nothing in the Disclosure Schedules shall be
deemed adequate to disclose an exception to a representation or warranty made
herein, however, unless the Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail.
Wherever a representation or warranty herein is qualified as having been
made "to the best of Stockholders' knowledge", such phrase shall mean the
knowledge of any Stockholder, after reasonable inquiry.
5.1 ORGANIZATION; AUTHORITY.
(i) Company and Subsidiary are each a Texas corporation duly
organized, validly existing and in good standing under the laws of the
State of Texas and each is now and has been at all times since its
creation, duly authorized, qualified and licensed under all laws,
regulations, ordinances and orders of public authorities to carry on its
businesses in the places and in the manner as conducted at the time such
activities were conducted except for where failure to be so authorized,
qualified or licensed would not have a material adverse affect on the
Business. Copies of the Company's Articles of Incorporation (certified by
the Secretary of State of Texas) and Bylaws (certified by the Secretary of
Company), each as amended, are attached hereto as Schedule 5.1(i). Copies
of the Subsidiary's Articles of Incorporation (certified by the Secretary
of State of Texas) and Bylaws (certified by the Secretary of Subsidiary),
each as amended, are attached hereto as Schedule 5.1(i).
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(ii) Company has full legal right, power and authority (corporate
and otherwise) to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. All corporate action of
Company necessary to approve the sale of the Company Stock has been taken,
including director and shareholder approvals, if necessary.
(iii) Each Stockholder is competent and under no legal restraint or
duress and has the full legal right and capacity to enter into and perform
his obligations under this Agreement.
5.2 STOCK OWNERSHIP; ABSENCE OF ADVERSE CLAIMS. All of the issued and
outstanding shares of Company Stock are owned of record and beneficially by
Stockholders as set forth on Annex II and are free and clear of all liens,
security interests, encumbrances, adverse claims, pledges, charges, voting
trusts, equities and other restrictions on transfer whatsoever (collectively,
"Adverse Claims"). All of the issued and outstanding shares of Subsidiary are
owned of record and beneficially by Company and are free and clear of Adverse
Claims. This Agreement is the valid and binding obligation of Company and
Stockholders, enforceable against each of them in accordance with its terms.
5.3 CAPITALIZATION. The authorized capital stock of Company consists
solely of 100,000 shares of voting common stock, no par value, of which 3,000
shares are issued and outstanding. All of the issued and outstanding shares of
Company Stock have been duly authorized and validly issued, are fully paid and
nonassessable, were offered, issued, sold and delivered by Company in compliance
with all state and federal laws concerning the issuance of securities and none
of such shares were issued pursuant to awards, grants or bonuses nor in
violation of the preemptive rights of any past or present stockholder. The stock
transfer records provided by Stockholders and Company to Buyer correctly set
forth all issuances, acquisitions and retirements of Company Stock since the
inception of Company. Company has never acquired any treasury stock. No
subscriptions, options, warrants, puts, calls, conversion rights or other
commitments of any kind exist which obligate Company to issue any of its
authorized but unissued capital stock or otherwise relate to the sale or
transfer by Company of any securities of Company (whether debt or equity). In
addition, Company has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its equity securities or any interests
therein or to pay any dividend or make any distribution in respect thereof.
Company has not agreed to register any securities under the Securities Act of
1933, as amended (the "Act"), or under any state securities law.
5.4 PREDECESSOR ENTITIES; TRADE NAMES. Except as set forth on Schedule
5.4, Company has never directly or indirectly participated in any manner in any
joint venture, partnership or other noncorporate entity. Company was formed
solely to operate the Business and has never conducted any other business or
activity. Also set forth on Schedule 5.4 is a list of the names of all
predecessors of Company, all prior corporate names of Company, and all trade
names and "doing business as" names of Company, including the names of all
entities substantially all of the assets of which were previously acquired by
Company.
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5.5 NO SUBSIDIARIES. Company has never owned or controlled and does not
now own, of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into capital stock or any other equity
interest in any partnership, corporation, association or other business entity
other than those of Company and Subsidiary.
5.6 FINANCIAL STATEMENTS. Attached as Schedule 5.6 are copies of the
following financial statements of Company (together, the "Financial
Statements"):
(a) Company's Statement of Assets, Liabilities and Equity--Income
Tax Basis as of December 31, 1996, and a Statement of Revenue and
Expenses--Income Tax Basis for the year then ended (the "Balance Sheet
Date");
(b) Company's Statement of Assets, Liabilities and Equity--Income
Tax Basis as of August 31, 1997, and a Statement of Revenue and
Expenses--Income Tax Basis for the eight months then ended; and
(c) Company's monthly interim Statement of Assets, Liabilities and
Equity--Income Tax Basis and Statements of Revenue and Expenses--Income
Tax Basis commencing for the month ended September 30, 1997, and
continuing for each month end until the end of the month immediately
preceding the month in which the Closing Date occurs.
Except as set forth on Schedule 5.6, each of the Financial Statements
(including all footnotes thereto) has been prepared in accordance with the
income tax basis, applied on a consistent basis throughout the periods
indicated. Each of the Financial Statements is true, complete and correct. Each
of the Statements of Assets, Liabilities and Equity--Income Tax Basis presents
fairly the financial condition of Company as of the date indicated thereon and
each of such statements of income presents fairly on an accrual basis the
results of the operations of Company for the period indicated thereon. All
reserves for contingent risks are appropriate and sufficient to cover all costs
reasonably expected to be incurred from such risks. Since its inception Company
has not (a) made any material change in its accounting policies or (b) effected
any prior period adjustment to, or other restatement of, its financial
statements for any period. The Financial Statements are consistent with the
books and records of Company (which books and records are correct and complete).
5.7 NON-BALANCE SHEET LIABILITIES. Attached hereto as Schedule 5.7 is a
complete and accurate list as of the date hereof of all liabilities and
obligations of Company, excluding obligations arising under this Agreement,
which are not individually reflected in the Financial Statements dated the
Balance Sheet Date, but which would have been so reflected in a full GAAP
accounting (whether or not incurred in the ordinary course of business) of any
kind, character and description, accrued or unaccrued, absolute or contingent,
secured or unsecured, liquidated or unliquidated, due or to become due, together
with, in the case of those liabilities and other obligations the amounts of
which are not fixed, a reasonable best estimate of the maximum amount which may
be payable. For each liability or obligation for which the amount is not fixed
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or is contested, Stockholders shall provide the following information to the
extent such information is in the possession of the Company or Stockholders or
is reasonably available to them:
(a) a summary description of the liability or other obligation
together with the following:
(1) copies of all relevant documentation relating thereto;
(2) amounts claimed and any other action or relief sought; and
(3) name of claimant and all other parties to the claim, suit
or proceeding, if any.
(b) the name of each court or agency before which a claim, suit or
proceeding is pending;
(c) the date such claim, suit or proceeding was instituted;
(d) a reasonable best estimate by Stockholders of the maximum
amount, if any, which is likely to become payable with respect to each
such liability or the cost of performance with respect to each such other
obligation.
5.8 ACCOUNTS RECEIVABLE. Attached as Schedule 5.8 is a complete and
accurate list of all accounts and notes receivable of Company as of the date
hereof, including receivables from and advances to employees and Stockholders
and also including all such accounts and notes receivable which are not
reflected in the Financial Statements, if any. Also attached as Schedule 5.8 is
an aging of all accounts and notes receivable showing amounts due in 30 day
aging categories. Except to the extent reflected on Schedule 5.8, 90% of the
aggregate amount of the accounts and notes receivable shown on Schedule 5.8 are
collectible.
5.9 PROPRIETARY RIGHTS; ENVIRONMENTAL DOCUMENTS.
(i) Attached as Schedule 5.9(i) is a complete and accurate list and
summary description as of the date hereof of all permits, titles
(including motor vehicle titles and current registrations), fuel permits,
licenses, franchises, certificates, trademarks, trade names, patents,
patent applications and copyrights owned or held by Company which are
material to the operation of the principal business of the Company, none
of which permits, titles, licenses, franchises and certificates,
trademarks, tradenames, patents, patent applications and copyrights, has
been claimed to or, to the best of Stockholders' knowledge, infringe on
the rights of others and all of which are now valid, in good standing and
in full force and effect. Except as set forth on Schedule 5.9(i), such
permits, titles, licenses, franchises, certificates, trademarks, trade
names, patents, patent applications and copyrights are adequate for the
operation of the Business as presently constituted;
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(ii) Stockholders have, as of the date of this Agreement, made
available to Buyer for its inspection all presently held records,
correspondence, reports, notifications, permits, pending permit
applications, licenses and pending license applications, environmental
impact studies, assessments and audits and all written notifications from
governmental agencies and any other person or entity and any other
documents of Company of which the Stockholders have knowledge relating to:
(a) each actual and threatened violation of Applicable Laws (hereinafter
defined) by Company or otherwise relating to the Land and all, if any,
claims thereof; (b) the present or past environmental compliance by
Company; (c) the present or past environmental condition of the Land; (d)
the discharge, leakage, spillage, transport, disposal or release of any
material into the environment by Company or otherwise relating to the
Land; and (e) land use and access approvals relative to any portion of the
Land (collectively, the "Environmental Documents").
5.10 REAL PROPERTY; REPORTING.
(i) Company has never owned, leased or otherwise occupied, had an
interest in or operated any real property other than the Land. Company has
good, fee simple title to the Owned Land and a valid leasehold interest in
the Austin Land and San Antonio Land. Attached hereto as Schedule 5.10(i)
are true and correct copies of the Real Estate Leases together with all
amendments or other modifications. Except as set forth on Schedule
5.10(i):
(a) The Austin Land is, and at all times during operation of
the Facility has been, fully licensed, permitted and authorized for
the operation of the Facility under all Applicable Laws relating to
the protection of the environment, the Austin Land and the conduct
of the Facility thereon (including, without limitation, all zoning
restrictions and land use requirements).
(b) The Land is usable for its current uses and, to the best
of Stockholders' knowledge, can be used by the Surviving Corporation
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 Stockholders' knowledge, threatened by, any third party
which would result in a change in the allowable uses of the Land or
which would modify the right of the Surviving Corporation to use the
Land for its current uses after the Closing Date.
(c) Stockholders and Company have made available to Buyer all
engineering, geologic and other similar reports, documentation and
maps relating to the Land in the possession or control of
Stockholders or Company.
(d) To the best of Stockholders' knowledge, no third parties
have any rights to drill or explore for, collect, produce, mine,
excavate, deliver or transport oil, gas, coal, or other minerals in,
on, beneath, across, over, through, from or to any portion of the
Land.
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(e) Neither Company, Stockholders nor the Land now is or, to
the best of Stockholders' knowledge (with respect to the Land), 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.
(f) To the best of Stockholders' knowledge, no third party has
a present or future right to possession of all or any part of the
Land except pursuant to the Real Estate Leases.
(g) To the best of Stockholders' knowledge, no portion of the
Land contains any areas that could be characterized as disturbed,
undisturbed or man made wetlands or as "waters of the United States"
pursuant to any Applicable Laws or the procedural manuals of the
Environmental Protection Agency, U.S. Army Corps of Engineers or the
Department of Natural Resources of the applicable state, whether
such characterization reflects current conditions or historic
conditions which have been altered without the necessary permits or
approvals.
(h) There are no mechanic's liens affecting the Land and no
work has been performed on the Land within 120 days of the date
hereof for which a mechanic's lien could be filed.
(i) There are no levied or pending special assessments
affecting all or any part of the Land and, to the best of
Stockholders' knowledge, none is threatened.
(j) There are no pending or, to the best of Stockholders'
knowledge, threatened condemnation or eminent domain proceedings
affecting all or any part of the Land.
(ii) To the best of Stockholders' knowledge, Company has provided to
the government agencies requiring the same, all material reports, notices,
filings and other disclosures required by Applicable Laws and all such
reports, notices, filings and other documents were complete and accurate
in all material respects at the time provided to said government agencies.
5.11 PERSONAL PROPERTY; NEW PROJECTS. (i) Attached as Schedule 5.11(i) is
a complete and accurate list and a complete description as of the date
hereof of all personal property having a value greater than $2,000 of
Company including true and correct copies of leases for equipment and
other personal property, if any, used in the operation of the Business and
including an indication as to which assets were formerly owned by business
or personal affiliates of Company. All of the vehicles, machinery and
other equipment of Company are in good working order and repair in all
material respects;
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(ii) Company has good title to, or a valid leasehold interest in,
the properties and assets used by it shown on its Statement of Assets,
Liabilities and Equity--Income Tax Basis dated the Balance Sheet Date or
acquired after the date thereof, whether or not located on the Land,
including, without limitation, the items of personal property listed on
Schedules 5.11(i), free and clear of all security interests, liens or
other Adverse Claims, except for the Assumed Debt, as applicable;
(iii) all leases set forth on Schedule 5.11(i) are in full force and
effect and constitute valid and binding agreements of the parties thereto
(and their successors) in accordance with their respective terms. No
default by Company, or, to the best of Stockholders' knowledge, any other
party to any of such leases, exists or would exist except for the passage
of time or delivery of a notice or both;
(iv) all fixed assets used by Company in the operation of the
Business are either owned by Company or leased by Company under an
agreement indicated on Schedule 5.11(i). Company's combined fixed assets
(together with the real property assets) constitute all of the real and
personal property reasonably necessary for and material to the operation
of the Business both by Company and by the Surviving Corporation
immediately following the Closing and, to the best of Stockholders'
knowledge, include all of the permits, licenses, franchises, consents and
other approvals necessary to operate the Business both before and
immediately after Closing; and
(v) at the Closing, Company shall have good and marketable title to
all personal property, free and clear of all debts and lease payments
(including lease end buy-out payments) except for the Assumed Debt.
5.12 CONTRACTS. Attached as Schedule 5.12 is a complete and accurate list
as of the date hereof of all of the following types of contracts, commitments
and other agreements which are material to the operation of the Business and to
which Company is a party or by which Company or its properties are bound, which
list shall include, at a minimum, the full names of each party to each agreement
and the date of execution thereof: waste treatment and processing contracts, the
Real Estate Leases, joint venture or partnership agreements, contracts or
collective bargaining arrangements with any labor organizations, loan
agreements, powers of attorney (each of which shall be cancelled at the
Closing), indemnity or guaranty agreements, bonds, mortgages, options to
purchase land, liens, pledges or other security agreements, agreements for the
employment of any individual, agreements under which Company has advanced or
loaned any amount to one another or to Stockholders or any employee, officer or
director of Company, any guaranties by Company, any agreement concerning
confidentiality or noncompetition and any other agreement under which the
consequences of a default or termination could have a material adverse effect on
the business, financial condition, operations or prospects of Company. None of
the agreements listed on Schedule 5.12 have been modified, altered, terminated
or otherwise amended and there have been no waivers, oral agreements,
representations or other statements with relation to any such agreements except
as described in Schedule 5.12. To the best of Stockholders' and Company's
knowledge, except as noted in Schedule 5.13, Company has complied with all
obligations pertaining to it contained in such contracts, commitments and other
agreements, is not in
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default thereunder and no notice of default has been received nor will the
consummation of the transactions contemplated by this Agreement result in such a
default. To the best of Stockholders' knowledge, there is no default by any
other party to any contract, commitment or other agreement attached as Schedule
5.12.
5.13 INSURANCE POLICIES. Attached as Schedule 5.13 are complete and
accurate copies as of the date hereof of all insurance policies carried by
Company and an accurate list of all insurance loss runs and workers'
compensation claims received for the past three policy years. All insurance
policies are in full force and effect and shall remain in full force and effect
through the Closing Date. Except as set forth on Schedule 5.13, Company's
insurance has never been cancelled and Company has never been denied coverage.
5.14 DIRECTORS, OFFICERS AND EMPLOYEES; COMPENSATION. Attached as Schedule
5.14 is a complete and accurate list of all officers, directors and employees of
Company and the rate of compensation of each as of the date hereof (including a
breakdown of the portion thereof attributable to salary, bonus and other
compensation, respectively). Each employee of Company is an employee at will and
there are no collective bargaining agreements affecting any employee of Company.
There is no pending or, to the best of Stockholders' knowledge, threatened labor
dispute involving Company and any group of its employees nor has Company
experienced any labor interruptions over the past three years.
5.15 EMPLOYEE PLANS. Except as set forth on Schedule 5.15, Company has no
group health plans, employee benefit plans, employee welfare benefit plans,
employee pension benefit plans, multi-employer plans or multiple-employer
welfare arrangements (as defined in Sections 3(3), (1), (2), (37) and (40),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (collectively, "Plans") which are currently maintained and/or
sponsored by Company, or to which Company currently contributes, or has an
obligation to contribute in the future (including, without limitation,
employment agreements and any other agreements containing "golden parachute"
provisions and deferred compensation agreements).
No such Plans have been terminated within the past three years.
5.16 COMPLIANCE WITH ERISA. Neither Company, any Controlled Group Member
(as defined in Internal Revenue Code (the "Code") Section 414(n)(6)(B)), nor any
business, subsidiary, division or operation acquired by Company or a Controlled
Group Member in the last five years, ever have maintained or sponsored, or
contributed to, an employee pension benefit plan (as defined in ERISA Section
3(2)) which is subject to the provisions of Title IV of ERISA. Except for the
Plans, Company does not maintain or sponsor, nor is a contributing employer to,
a pension, profit-sharing, deferred compensation, stock option, employee stock
purchase or other employee benefit plan, employee welfare benefit plan, or any
other arrangement with its employees. Further:
(i) with respect to Plans which qualify as "group health plans"
under Section 4980B of the Internal Revenue Code and Section 607(1) of
ERISA and related regulations (relating to the benefit continuation rights
imposed by "COBRA"), Company and Stockholders have complied (and on the
Closing Date will have complied), in all respects
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with all reporting, disclosure, notice, election and other benefit
continuation requirements imposed thereunder as and when applicable to
such plans, and Company has no (and will incur no) direct or indirect
liability and is not (and will not be) subject to any loss, assessment,
excise tax penalty, loss of federal income tax deduction or other
sanction, arising on account of or in respect of any direct or indirect
failure by Company or Stockholders or any of them, any time prior to the
Closing Date to comply with any such federal or state benefit continuation
requirement, which is capable of being assessed or asserted before or
after the Closing Date directly or indirectly against Company or
Stockholders, or any of them with respect to such group health plans;
(ii) attached hereto as Schedule 5.16(ii) is a copy of the claims
history under Company's group health plan for the past three years; and
(iii) with respect to any Plan which qualifies as a group health
plan, such plan is fully insured and all premiums have been paid on a
timely basis and are paid in full as of the Closing Date or, to the extent
such plan is not fully insured, all self insured obligations have been met
as of the Closing Date and are fully reflected in the plan's financial
statements. To the extent that any of the Company's group health plans are
retrospectively rated, there are no liabilities capable of assertion
against the Company in respect of claims already incurred and present.
5.17 COMPLIANCE WITH LAW; NO CONFLICTS.
(i) To the best of Stockholders' knowledge and except as set forth
on Schedule 5.17, Company has in the past complied with, and is now in
compliance with, all federal, state and local statutes, laws, rules,
regulations, orders, licenses, permits (including, without limitation,
zoning restrictions and land use requirements) and all administrative and
judicial judgments, rulings, decisions and orders of any body having
jurisdiction over Company, the Business or the Land (the "Applicable
Laws") with regard to which the noncompliance by Company would or could
have a material adverse affect on Company or the Business. Neither Company
nor Stockholders have received any written notice (nor, to the best of
Stockholders' knowledge, oral other notice) that Company is under
investigation or other form of review with respect to any Applicable Law;
and
(ii) to the best of Stockholders' knowledge, the execution, delivery
and performance of this Agreement, the consummation of any transactions
herein referred to or contemplated hereby and the fulfillment of the terms
hereof and thereof will not:
(a) conflict with, or result in a breach or violation of the
Articles of Incorporation or Bylaws of Company;
(b) conflict with, or result in a breach under any document,
agreement or other instrument to which Company, or Stockholders is a
party, or result in the creation or imposition of any lien, charge
or encumbrance on any properties of Company or Stockholders pursuant
to: (A) any law or regulation to which
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Company or Stockholders, or any of their respective properties are
subject, or (B) any judgment, order or decree to which Company or
Stockholders is bound or any of their respective properties are
subject;
(c) result in termination or any impairment of any permit,
license, franchise, contractual right or other authorization of
Company; or
(d) require the consent of, or the filing with any
governmental authority or agency or any other third party in order
to remain in full force and effect.
5.18 TAXES. Company has filed, or will file, in a timely manner all
requisite federal, state, local and other tax returns due for all fiscal periods
ended on or before the date hereof and, as of the Closing, shall have filed or
will file in a timely manner all such returns due for all periods ended on or
before the Closing Date. There are no agreements to extend the statutory period
for the assessment of any taxes, examinations in progress or claims against
Company for federal, state, local and other taxes (including penalties and
interest) for any period or periods prior to and including the date hereof and
none shall exist as of the Closing Date. No notice of any claim for taxes,
whether pending or threatened, has been received. The amounts shown as accruals
for taxes on the Financial Statements as of the respective dates thereof are
sufficient as of such respective dates for the payment of all taxes of the kinds
indicated (including penalties and interest) for all fiscal periods ended on or
before such date. Copies of: (i) all tax examinations; (ii) extensions of
statutory limitations; and (iii) the federal, state, local and other income tax
returns and franchise tax returns of Company for its last three fiscal years are
attached hereto as Schedule 5.18. Company is taxed under the provisions of
Subchapter C of the Code. Company has a fiscal year ended May 31; however,
Company will file a return for the period from June 1, 1992 to December 31,
1997. Company currently utilizes the accrual method of accounting for income tax
purposes and has not changed its method of accounting since its initial
creation.
5.19 LITIGATION. Except as set forth on Schedule 5.19, there is no claim,
litigation, action, suit or proceeding, investigation, formal arbitration,
informal arbitration or mediation, administrative, judicial or other review,
pending and of which the Company or any Stockholder has received notice or, to
the best of Stockholders' knowledge, threatened against Company or Stockholders,
or otherwise relating to the business or affairs of Company, at law or in
equity, before any federal, state or local court or regulatory agency, or other
governmental or private authority; no notice of any of the above has been
received by Company or Stockholders; and, to the best of Stockholders'
knowledge, no facts or circumstances exist which would give rise to any of the
foregoing. Also listed on Schedule 5.19 are all instances where Company is the
plaintiff, or complaining or moving party, under any of the above types of
proceedings or otherwise.
5.20 ABSENCE OF PRICE RENEGOTIATION CONTRACTS. Company is not now nor has
ever been a party to any governmental contracts subject to price redetermination
or renegotiation.
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5.21 CONDUCT OF BUSINESS SINCE BALANCE SHEET DATE. Since the Balance Sheet
Date, there has not been any:
(i) material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income and business or prospects of
Company;
(ii) damage, destruction or loss (whether or not covered by
insurance) which, singly or in the aggregate, materially and adversely
affects the properties (whether owned or leased) or business of Company;
(iii) change in the authorized capital of Company or in its
securities outstanding, any change in its equity ownership or any grant by
it of any subscriptions, options, warrants, puts, calls, conversion rights
or other commitments related to its equity interests;
(iv) declaration or payment of any dividend or distribution in
respect of the capital stock of Company or any direct or indirect
redemption, purchase or other acquisition of any of the capital stock of
Company;
(v) any material increase from prior years in the compensation,
bonus, sales commissions or fee arrangements payable or to become payable
by Company to any of its officers, directors, employees, consultants or
agents above the amounts shown on Schedule 5.14;
(vi) work interruption, labor grievance or material claim filed;
(vii) sale or transfer of, or any agreement to sell or transfer, any
material assets, property or rights of Company to any person not in the
ordinary course of the business of Company, including, without limitation,
all agreements with Stockholders or with affiliates of Company;
(viii) except as set forth herein cancellation or agreement to
cancel any indebtedness or other obligation owing to Company, including,
without limitation, any indebtedness or other obligation of Stockholders
or with any affiliate of Company;
(ix) plan, agreement or arrangement granting any preferential right
to purchase or acquire any interest in any of the assets, property or
rights of Company or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(x) purchase or acquisition by any third party of, or any agreement,
plan or other arrangement by any third party to purchase or acquire, any
property, rights or assets of Company other than in the ordinary course of
business;
(xi) waiver of any material rights or claims of Company;
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(xii) breach, amendment or termination of any material contract,
license, permit or other agreement to which Company is a party other than
in the ordinary course of business;
(xiii) transaction by Company outside the ordinary course of its
business;
(xiv) amendment to the Articles of Incorporation or Bylaws of
Company;
(xv) any other material occurrence, event, incident, action or
failure to act outside the ordinary course of business of Company; or
(xvi) any action by Company, Stockholders, or any employee, officer
or agent of Company or Stockholders committing to do any of the foregoing.
5.22 BANK ACCOUNTS; DEPOSITORIES. Attached as Schedule 5.22 is a
complete and accurate list as of the date of this Agreement, of:
(i) the name of each financial institution in which Company has any
account or safe deposit box;
(ii) the names in which each account or box is held;
(iii) the type of each account; and
(iv) the name of each person authorized to draw on or have access to
each account or box.
5.23 HAZARDOUS MATERIALS. Except as set forth on Schedule 5.23, Company
has never owned, leased, had an interest in, generated, transported, handled,
recycled, reclaimed, disposed of, or contracted for the disposal of, hazardous
materials, hazardous wastes, hazardous substances, toxic wastes or substances as
those terms are defined by the Resource Conservation and Recovery Act of 1976;
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"); the Clean Water Act; the Toxic Substances Control Act; the
Occupational Health and Safety Act; any comparable or similar state statute
affecting the Business; any other Applicable Law; or the rules and regulations
promulgated under any of the foregoing, as each of the foregoing may have been
amended (collectively, "Hazardous Materials"). No liens with respect to
environmental liability have been imposed against Company or the Land under
CERCLA, any comparable state statute affecting the Business or other Applicable
Law, and, to the best of Stockholders' knowledge, no facts or circumstances
exist which would give rise to the same. No portion of the Land is listed on the
CERCLIS list or the National Priorities List of Hazardous Waste Sites or any
similar list maintained by the State of Texas. Neither Company nor any
Stockholder is listed as a potentially responsible party under CERCLA, any
comparable state statute or other Applicable Law, and neither Company nor any
Stockholder has received a written notice of such a listing.
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Set forth on Schedule 5.23 is a complete list of the names and addresses
of all disposal sites at any time now or in the past utilized by Company, none
of which sites is listed on the CERCLA list or the National Priorities List of
hazardous waste sites or any comparable state list.
There have been no spills, leaks, deposits or other releases into the
environment or onto the Land by Company of any Hazardous Materials and, to the
best of Stockholders' knowledge, Company has no direct or contingent liability
or obligation for or in connection with any claimed release, discharge or leak
of any substance into the environment.
5.24 STORAGE TANKS. Except as set forth on Schedule 5.24, the Company has
not placed and, to the best of Stockholders' knowledge, the Land does not
contain any underground or above-ground storage tanks or transformers containing
Hazardous Materials, petroleum products or wastes or other hazardous substances
regulated by 40 CFR 280 or other Applicable Laws. All above and below ground
tanks currently in use on the Land are being used and maintained in accordance
with all Applicable Laws.
5.25 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Company nor
Stockholders have ever made, offered or agreed to offer anything of value to any
employees of any customers of Company for the purpose of attracting business to
Company or any foreign or domestic governmental official, political party or
candidate for government office or any of their respective employees or
representatives, nor have they otherwise taken any action which would cause it
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended.
5.26 COMPLETE DISCLOSURE. To the best of Stockholders' knowledge, This
Agreement and the schedules hereto and all other documents and information
furnished to Buyer and its representatives pursuant hereto or pursuant to the
negotiation of this transaction or the investigations of Buyer or the employees
or representatives of either of them, 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 Stockholders, or, prior to Closing,
Company, becomes aware of any material fact or circumstance which would
materially change a representation or warranty of Company or Stockholders in
this Agreement or any other statement made or document provided to Buyer, the
party with such knowledge shall promptly give written notice of such fact or
circumstance to Buyer. None of (i) such notification, (ii) any pre-Closing
investigation made by Buyer of Company, its properties, businesses or assets, or
(iii) the Closing contemplated by this Agreement, shall relieve Stockholders or
Company of their obligations under this Agreement, including their
representations and warranties made in this Section 5, provided that no party
shall be entitled to rely on any representation or warranty provided in this
Agreement to the extent such party has actual knowledge that such representation
or warranty is inaccurate or incorrect.
6. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT. Buyer and
Parent represent and warrant that the statements contained in this Section 6:
(i) are correct and complete as of the date of this Agreement; (ii) will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this
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Agreement throughout this Section 6); and (iii) shall survive the Closing in
accordance with Article 12 hereof.
6.1 CORPORATE ORGANIZATION. Buyer is duly incorporated, validly existing
and in good standing under the laws of the State of Texas. Parent is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Buyer and Parent are each duly authorized, qualified and licensed
under all applicable laws, regulations and ordinances of public authorities to
carry on their businesses in the places and in the manner as now conducted
except for where the failure to be so authorized, qualified or licensed would
not have a material adverse affect on such businesses.
6.2 CORPORATE AUTHORITY. The officers of Buyer and Parent executing this
Agreement have the corporate authority to enter into and bind Buyer and Parent
to the terms of this Agreement and Buyer and Parent have taken all necessary
corporate action to authorize the execution, delivery and, subject to receipt of
required regulatory approvals, performance of this Agreement. All corporate
action by Buyer and Parent necessary to approve the transaction, including both
director and shareholder approvals (if required), has been taken.
6.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the consummation of any transactions herein referred to or
contemplated hereby and the fulfillment of the terms hereof and thereof will
not:
(i) conflict with, or result in a breach or violation of the
Articles of Incorporation or Bylaws of Buyer or Parent;
(ii) conflict with, or result in a material breach under any
document, agreement or other instrument to which Buyer or Parent is a
party, or result in the creation or imposition of any lien, charge or
encumbrance on any properties of Buyer or Parent pursuant to: (A) any law
or regulation to which Buyer or Parent, or their respective property is
subject, or (B) any judgment, order or decree to which Buyer or Parent is
bound or their respective property is subject; or
(iii) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of
Buyer or Parent.
6.4 BINDING AGREEMENT. This Agreement is the binding and valid obligation
of Buyer or Parent, enforceable against them in accordance with its terms.
7. COVENANTS.
7.1 ACCESS TO LAND AND RECORDS. Between the date of this Agreement and the
Closing Date, Stockholders will cause Company to afford to or obtain for the
officers and authorized representatives of Buyer access to all of the Land
(including, without limitation, for the purpose of performing all testing,
inspections and other procedures considered desirable by Buyer), sites, books
and records, including, without limitation, the Environmental Documents, at all
reasonable
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times and upon reasonable notice and will furnish Buyer with such additional
financial and operating data and other information as to the business and
properties, both current and former, of Company as Buyer may from time to time
reasonably request. Buyer agrees to repair all damage, if any, caused by Buyer's
entry onto the Land prior to Closing and to indemnify Company and Stockholders
from any claims, causes of action, liabilities or expenses of any kind arising
from the actions or omissions of Buyer, Parent or either of their agents in
entering onto the Land. Stockholders will cooperate, and will cause Company to
cooperate, with Buyer, its representatives, engineers, auditors and counsel in
the preparation of any documents or other material which may be required in
connection with any documents or materials required by any governmental agency.
Buyer will cause all information obtained in connection with the negotiation and
performance of this Agreement to be treated as confidential in accordance with
the provisions of Article 14 hereof.
7.2 COMPANY ACTIVITIES PRIOR TO CLOSING. Between the date of this
Agreement and the Closing Date, Stockholders will cause Company:
(i) to carry on its business in substantially the same manner as it
has heretofore and not to introduce any material new method of management,
operation or accounting;
(ii) to maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(iii) to perform its obligations under agreements relating to or
affecting its assets, properties or rights, including payment of debts as
they become due;
(iv) to keep in full force and effect present insurance policies or
other comparable insurance coverage with reputable insurers;
(v) to use reasonable efforts to maintain and preserve its business
organization intact, retain employees and maintain relationships with
suppliers, customers, consultants, independent contractors and others
having business relations with Company;
(vi) to maintain compliance with all Applicable Laws in all material
respects;
(vii) to maintain and perform present debt and lease instruments in
accordance with their terms and not enter into new or amended debt or
lease instruments, without the prior written consent of Buyer;
(viii) to pay and provide salaries and commissions for all officers,
directors, employees and agents at levels no higher than those in effect
at the Balance Sheet Date;
(ix) to provide the interim financial statements required by Section
5.6; and
(x) to provide all reasonable assistance to Buyer to provide for an
orderly transfer of operating control of Company to Buyer.
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7.3 PROHIBITED ACTIVITIES PRIOR TO CLOSING. Between the date of this
Agreement and the Closing Date, and except as otherwise permitted by this
Agreement, Stockholders will cause Company not, without the prior written
consent of Buyer (which consent shall not be unreasonably withheld or delayed):
(i) to amend the Articles of Incorporation or Bylaws of Company;
(ii) to change the authorized capital of Company or the equity
ownership of Company or grant any options, warrants, puts, calls,
conversion rights or commitments relating to the equity interests of
Company;
(iii) to declare or pay any dividend of Company or directly or
indirectly purchase, redeem or otherwise acquire or retire for value or
issue any shares of stock of Company;
(iv) to enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures in excess of an
aggregate of $5,000;
(v) to increase the compensation payable or to become payable to any
officer, director, stockholder, employee, consultant or agent, or make any
bonus or management fee payment to any such person;
(vi) to create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now owned
or hereafter acquired;
(vii) to sell, assign, lease or otherwise transfer or dispose of any
property or equipment;
(viii) to negotiate to acquire any business or begin any new
business or project;
(ix) to merge or consolidate or agree to merge or consolidate with
or into any other corporation;
(x) to waive any of its rights or claims;
(xi) to breach or permit a breach of, amend or terminate, any
material agreement, or any permit, license or other agreement or right to
which Company is a party;
(xii) to enter into any other transaction outside the ordinary
course of its business or otherwise prohibited hereunder;
(xiii) to make any oral or written public announcement concerning
this transaction except as may be required by law, all of which
announcements, if any, shall be forwarded to Buyer for review and comment
at least seven days prior to dissemination; or
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(xiv) to allow any other action or omission, or series of actions or
omissions, by Company or Stockholders that would cause a representation
and warranty of Company and Stockholders made in Section 5.21 of this
Agreement to be untrue on the Closing Date.
7.4 CONTACT WITH GOVERNMENT OFFICIALS. Company and Stockholders shall each
use their reasonable best efforts (provided that neither Company nor
Stockholders will be required to expend any funds in connection with such
efforts) to cooperate with Buyer in making contact with the appropriate
governmental agencies and officials having information about or jurisdiction
over Company, the Stockholders or the Land, including, without limitation,
environmental and land use agencies and officials in order to assist Buyer in
completing its regulatory evaluation of Company and the Land.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND STOCKHOLDERS. The
obligations of Stockholders and Company hereunder are subject to the completion,
satisfaction, or at their option, waiver, on or prior to the Closing Date, of
the following conditions.
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Buyer and Parent contained in this Agreement shall be accurate on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date; and each and all of the terms, covenants
and conditions of this Agreement to be complied with and performed by Buyer or
Parent on or before the Closing Date shall have been duly complied with and
performed.
8.2 CONSENTS. All necessary notices to, consents of and filings with any
governmental authority or agency or other third party relating to the
consummation of the Closing or the other transactions contemplated herein to be
made or obtained by Buyer shall have been obtained and made.
8.3 NO ADVERSE PROCEEDING. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or, to the best of
Stockholders's knowledge, threatened to restrain or prohibit any of the
transactions contemplated by this Agreement.
8.4 NONCOMPETITION AGREEMENT. The Surviving Corporation shall have
executed and delivered at the Closing the Noncompetition Agreement with
Stockholders (the "Noncompetition Agreement"), in form and substance
satisfactory to Buyer and Stockholders.
8.5 SIMULTANEOUS CLOSINGS. The closings under that certain Stock Purchase
Agreement among Parent, Company, Stockholders and Enviro-Waste Type V of Texas,
Inc. and that certain Purchase and Sale of Assets Agreement among Parent,
Company, Stockholders and Enviro-Plumbing, Inc. shall occur contemporaneously
with the Closing hereunder.
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9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PARENT. The obligations
of Buyer and Parent hereunder are subject to the completion, satisfaction or, at
their option, waiver, on or prior to the Closing Date, of the following
conditions.
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Stockholders and Company contained in this Agreement shall be accurate on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, and Buyer shall have received a
certificate from Stockholders to that effect, or setting forth any discrepancies
in such representations and warranties which have arisen since the date of this
Agreement. The foregoing notwithstanding, Company and Stockholders agree that no
limitation of any representation or warranty concerning the knowledge of Company
or Stockholders or any qualification of such representations and warranties set
forth in the certificate contemplated in the first sentence of this Section 9.1
shall restrict Buyer's right to terminate this Agreement if any representation
or warranty of Stockholders or Company is inaccurate as of the Closing Date;
provided, however, that if Parent and Buyer close on the transactions
contemplated by this Agreement after receipt of a certificate containing
discrepancies between the representations and warranties provided in this
Agreement and the contents of the certificate, the representations and
warranties in this Agreement shall thereby be modified to conform to the
contents of the certificate.
9.2 COVENANTS. Each and all of the terms, covenants and conditions of this
Agreement to be complied with and performed by Stockholders and Company on or
before the Closing Date shall have been duly complied with and performed.
9.3 NO ADVERSE PROCEEDING. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or, to the best of
Buyer's knowledge, threatened to restrain or prohibit any of the transactions
contemplated by this Agreement, and no governmental agency or body shall have
taken any other action or made any request of Buyer as a result of which the
management of Buyer deems it inadvisable to proceed with the transactions
hereunder.
9.4 GENERAL RELEASE. Stockholders shall have delivered to Buyer an
instrument dated the Closing Date releasing Company, Parent, Buyer and the
Surviving Corporation from any and all claims of Stockholders against Company,
Parent, Buyer and the Surviving Corporation arising out of events which occurred
prior to the Closing (but not including any claims pursuant to this Agreement).
9.5 CONSENTS. All necessary notices to, consents of and filings with any
governmental authority or agency or other third party relating to the
consummation of the Closing or the other transactions contemplated herein to be
made or obtained by Company or Stockholders shall have been obtained and made.
9.6 RESIGNATIONS. Each officer and director of Company shall have
delivered to Buyer their written resignation.
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9.7 GOOD STANDING CERTIFICATES. Stockholders shall have delivered to Buyer
certificates, dated as of a date no earlier than 10 days prior to the Closing
Date, duly issued by the appropriate governmental authority or authorities
showing that Company is in good standing in its state of incorporation.
9.8 UPDATED AGREEMENTS. Stockholders shall have delivered to Buyer a
schedule (Schedule 9.9) dated the Closing Date, listing all agreements entered
into by Company since the date of Schedule 5.12, which new agreements must have
been determined to be in accordance with the provisions of this Agreement.
9.9 NONCOMPETITION AGREEMENT. The Noncompetition Agreement shall have been
executed and delivered by all parties thereto at the Closing.
9.10 DELIVERY OF COMPANY STOCK. Stockholders shall have delivered to Buyer
certificates representing all Company Stock, duly endorsed in blank by
Stockholders or accompanied by stock powers duly executed in blank and with all
necessary transfer tax and other revenue stamps affixed and cancelled at
Stockholders's expense, none of which certificates shall bear any restrictive
legend other than those related to compliance with the Act.
9.11 ENVIRONMENTAL REVIEW. Buyer, through its authorized representatives,
must have completed a review (including, without limitation, all testing,
inspections and other procedures, review of existing files of, and discussions
with, governmental agencies and officials having jurisdiction over Company) of
the Land and the environmental and land use practices, procedures, operations
and activities of Company; the results of which review, without limiting the
generality of the foregoing, reflects compliance with all Applicable Laws
governing the Land and the operations of Company, discloses no actual or
probable violations, compliance problems, required capital expenditures or other
substantive environmental, land use or real estate related concerns and are
otherwise satisfactory in all respects to Buyer in its sole discretion.
9.12 TRANSFERABILITY OF PERMITS. Buyer shall have determined, in its sole
discretion, that prior to, or as a result of, this transaction, all of the
permits required for the operation of the Business and the Facility have been
transferred to the Surviving Corporation or can be transferred to the Surviving
Corporation without a public hearing before any governmental body and that all
consents or other approvals necessary for the Surviving Corporation's continued
use of such permits after the Merger have been obtained.
9.13 GENERAL. All actions taken by Stockholders and Company in connection
with the consummation of the transactions contemplated hereby and all
certificates, opinions and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Buyer.
9.14 SIMULTANEOUS CLOSINGS. The closings under that certain Stock Purchase
Agreement among Parent, Company, Stockholders and Enviro-Waste Type V of Texas,
Inc. and that certain Purchase and Sale of Assets Agreement among Parent,
Company, Stockholders and Enviro-Plumbing, Inc. shall occur contemporaneously
with the Closing hereunder.
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10. POST CLOSING COVENANTS.
10.1 TAXES. (i) Stockholders irrevocably agree to indemnify the Surviving
Corporation against, and to hold the Surviving Corporation harmless from:
(a) any and all federal, state, local, and other taxes of
Company arising from the audit, examination, review or other
adjustment of tax liabilities made pursuant to applicable law by
appropriate governmental agencies for periods ending on or prior to
the Closing Date;
(b) any and all taxes, interest, penalties, additions to tax
(or additional amounts imposed with respect to any such interest,
penalties, or additions to tax) imposed with respect to any federal,
state, local, or other taxes of Company for periods ending on or
before the Closing Date; and
(c) any and all federal, state, local, or other taxes of the
Surviving Corporation arising as the result of any payment by the
Stockholders to Buyer in fulfillment of his obligation pursuant to
this Section 10.1(i).
(ii) Stockholders agree that they shall be responsible, at their sole
expense, for the preparation of Company's federal, state, local and other
income and franchise tax returns for the tax periods beginning January 1,
1997 and ending on the Closing Date. The Surviving Corporation agrees to
cooperate with Stockholders in the preparation of such returns.
Stockholders further agree that they shall pay all taxes (including all
penalties and interest, if any) due for such tax period. Prior to filing
the returns provided for in this paragraph, Stockholders agree to allow
the Surviving Corporation 20 business days to review and approve such
returns, approval of which will not unreasonably be withheld.
10.2 POST CLOSING BALANCE SHEET. On the date which is 60 days after the
Closing Date (the "Adjustment Date") the parties shall adjust the purchase price
in accordance with Section 2.3 based on a balance sheet of the Combined
Companies for the period ending on the close of business on the Closing Date,
prepared by Buyer in accordance with the Combined Companies' past accounting
practices and delivered to Stockholders, together with the supporting
documentation for all current assets and liabilities used to prepare such
balance sheet, at least seven days prior to the Adjustment Date. Any accounts
receivable which are written off in whole or in part in connection with
preparing such balance sheet that are subsequently collected by the Surviving
Corporation after the Adjustment Date will be paid to Stockholders as soon as
possible, but at least on a quarterly basis. Any dispute between the parties as
to this Section 10.2 shall be resolved in accordance with the procedure set
forth in Section 2.3.
10.3 CLOSING DATE ACTIONS. Buyer and Stockholders mutually agree that they
shall not, and shall cause Company not to, engage in an transaction outside the
normal course of business on the Closing Date.
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10.4 FURTHER ASSURANCE. From time to time on and after the Closing and
without further consideration, the parties hereto shall each deliver or cause to
be delivered to any other party at such times and places as shall be reasonably
requested, such additional instruments as any of the others may reasonably
request for the purpose of carrying out this Agreement and the transaction
contemplated hereby. Stockholders, also without further consideration but also
without cost, agree to reasonably cooperate with the Surviving Corporation and
to use their reasonable efforts to have the present officers and employees of
Company cooperate on and after the Closing Date in furnishing to the Surviving
Corporation information, evidence, testimony, and other assistance in connection
with obtaining all necessary permits and approvals and in connection with any
actions, proceedings, arrangements or disputes of any nature with respect to
matters pertaining to all periods prior to the Closing Date. Stockholders
acknowledge and agree that, from and after the Closing, the Surviving
Corporation shall be entitled to possession of all documents, books, records
(including tax records), agreements and financial and operating data of any sort
of Company.
10.5 TRANSITION. Stockholders will not take any action that is designed or
intended to have the effect of discouraging any customer or business associate
of Company from maintaining the same business relationships with the Surviving
Corporation after the Closing that it maintained with Company before the
Closing. Stockholders will refer all customer inquiries relating to the Business
to the Surviving Corporation from and after the Closing. Further, Stockholders
agrees that for a period of 90 days following the Closing Date, Stockholders
will assist the Surviving Corporation, at the Surviving Corporation's request
and expense, with the orderly transition of the operations of Company from
Stockholders to the Surviving Corporation (including, without limitation,
recommendations, advice and interaction with customers and potential customers
of Company, and governmental agencies).
10.6 SURVIVAL. The covenants in this Article 10 shall survive the Closing
in accordance with Article 12 hereof.
11. INDEMNIFICATION.
11.1. INDEMNIFICATION BY STOCKHOLDERS AND COMPANY. Company and each
Stockholder agree that they will each, severally (and not jointly and
severally), indemnify, defend (as to third party claims only), protect and hold
harmless Buyer, its officers, shareholders, directors, divisions, subdivisions,
affiliates, subsidiaries, parent, agents, employees, successors and assigns at
all times from and after the date of this Agreement from and against all
liabilities, claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, penalties, losses, costs and expenses whatsoever (including
specifically, but without limitation, court costs, reasonable attorneys' fees
and expenses and expenses of investigation) whether equitable or legal, 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, incurred as a result of or incident to: (a)
any breach of, misrepresentation in, untruth in or inaccuracy in the
representations and warranties by Company or any Stockholder (including, without
limitation, those relating to Company's environmental compliance), set forth
herein or in the Schedules, Exhibits or certificates attached hereto or
delivered pursuant hereto; (b) nonfulfillment or
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nonperformance of any agreement, covenant or condition on the part of
Stockholders or Company made in this Agreement; (c) the matters set forth in
Section 10.1; (d) the existence of liabilities of Company in excess of the
liabilities represented by Stockholders and Company; (e) the imposition upon
Buyer of any liability or obligation of Company or Stockholders resulting from
one or more pending or threatened lawsuits, legal or regulatory proceedings,
investigations or judgments; (f) the Executory Agreement between Austin Liquids
Disposal Co., Inc., and Enviro Waste Management, Inc., dated July 1, 1996 (the
"Executory Agreement") (including, without limitation, the right of first
refusal set forth therein); (g) any surcharge imposed by the City of Austin for
sewer discharge; or (h) any claim by a third party that, if true, would mean
that a condition for indemnification set forth in subsections (a) through (g) of
this Section 11.1 had been satisfied.
11.2 INDEMNIFICATION BY THE SURVIVING CORPORATION. Parent and the
Surviving Corporation agrees that it will indemnify, defend, protect and hold
harmless Stockholders, their respective heirs, executors and personal
representatives, at all times from and after the date of this Agreement from and
against all liabilities, claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, penalties, losses costs and expenses whatsoever
(including specifically, but without limitation, court costs, reasonable
attorneys' fees and expenses and reasonable expenses of investigation) incurred
by Stockholders as a result of or incident to: (i) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties set forth herein, or in the Schedules or certificates attached hereto
or delivered pursuant hereto by Buyer; (ii) nonfulfillment or nonperformance of
any agreement, covenant or condition on the part of Buyer or Parent made in this
Agreement; incident to operations by Buyer and Parent after the Closing Date;
and (iv) any claim by a third party that, if true, would mean that a condition
for indemnification set forth in subsections (i) or (ii) of this Section 12.4
had been satisfied.
11.3 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD PARTY CLAIMS.
(a) If any third party shall notify a party to this Agreement (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
that may give rise to a claim for indemnification against any other party
to this Agreement (the "Indemnifying Party") or if any party who may make
a claim for indemnification under this Agreement otherwise becomes aware
of any matter that may give rise to such a claim or wishes to make such a
claim (whether or not related to a Third Party Claim), then the
Indemnified Party shall promptly notify each Indemnifying party thereof in
writing; provided, however, that no delay on the part of the Indemnified
Party in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the extent)
the Indemnifying Party is thereby prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against a Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing within a reasonable time
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any adverse consequences (which will include,
without limitation, all
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losses, claims, liens, and attorneys' fees and related expenses) the
Indemnified Party may suffer resulting from, arising out of, relating to,
in the nature of, or caused by the Third Party Claim, (ii) the
Indemnifying Party provides the Indemnified Party with evidence acceptable
to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill
its indemnification obligations hereunder, (iii) the Third Party Claim
involves only monetary damages and does not seek an injunction or
equitable relief or involve the possibility of criminal penalties, (iv)
settlement of, or adverse judgment with respect to the Third Party Claim
is not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice adverse to the continuing
business interests of the Indemnified Party, and (v) the Indemnifying
Party conducts the defense of the Third Party Claim actively and
diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 12.5(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (which will not be
unreasonably withheld) and (iii) the Indemnifying Party will not consent
to the entry of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of the Indemnified
Party (which will not be unreasonably withheld).
(d) In the event or to the extent that any of the conditions set
forth in Section 12.5(b) above is or becomes unsatisfied, however, (i) the
Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party
Claim and any matter it may deem appropriate in its sole discretion and
the Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith (but will keep the
Indemnifying Party reasonably informed regarding the progress and
anticipated cost thereof), (ii) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the cost of defending
against the Third Party Claim (including attorneys' fees and expenses) and
(iii) the Indemnifying Party will remain responsible for any adverse
consequences the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the Third Party Claim to
the fullest extent provided in this Article 12; and (iv) the Indemnifying
Party shall be deemed to have waived any claim that its indemnification
obligation should be reduced because of the manner in which the counsel
for the Indemnified Party handled the Third Party Claim.
11.4 LIMITATION ON LIABILITY. The indemnification obligations set forth in
this Agreement shall apply only after the aggregate amount of such obligations
exceed $50,000 when combined with the Stock Purchase Agreement among Company,
Parent, Enviro-Waste Type V of Texas, Inc. and Stockholders (the "Stock Purchase
Agreement") and the Purchase and Sale of Assets Agreement among Company,
Enviro-Plumbing, Inc. and Stockholders (the "Purchase
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Agreement"), at which time the indemnification obligations shall be effective as
to all amounts, including the initial $50,000 and in shall in no event exceed a
maximum of $4,585,000.
11.5 RIGHT OF SET OFF. Stockholders agree that Parent shall be entitled to
off-set on a dollar for dollar basis any liabilities, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, penalties, losses costs
and expenses whatsoever paid by the Surviving Corporation related to the
Executory Agreement listed in Section 11.1(f) or the surcharge listed in Section
11.1(g) hereof.
11.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Except for the
representations and warranties of Company, which shall each expire as of the
Closing, all of the representations, warranties and covenants of any party
hereto contained in this Agreement and the liabilities and obligations of the
parties with respect thereto shall survive the Closing hereunder for a period of
one year after the Closing Date; provided, however, that the representations and
warranties in Sections 5.1, 5.2, 5.3, 5.17, 6.1, 6.2 and 10.1 shall survive
until the expiration of the applicable statute of limitations; and that the
representations and warranties in Sections 5.9, 5.10 and 5.23 shall survive for
a period of three years after the Closing Date (in each case, the "Expiration
Date").
12. TERMINATION OF AGREEMENT.
12.1 TERMINATION BY BUYER. Buyer, by notice in the manner hereinafter
provided on or before the Closing Date, may terminate this Agreement in the
event of a breach by Stockholders or Company in the observance or in the due and
timely performance of any of the agreements or conditions contained herein on
their part to be performed, and such breach shall not have been cured on or
before the Closing Date.
12.2 TERMINATION BY STOCKHOLDERS. Stockholders may, by notice in the
manner hereinafter provided on or before the Closing Date, terminate this
Agreement in the event of a breach by Buyer in the observance or in the due and
timely performance of any of the covenants, agreements or conditions contained
herein on their part to be performed, and such breach shall not have been cured
on or before the Closing Date.
12.3 TERMINATION BY LAPSE. Either Buyer or Stockholders may, by notice in
the manner hereinafter provided, terminate this Agreement in the event that the
Closing shall not have occurred on or before February 28, 1998.
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
13.1 NONDISCLOSURE BY STOCKHOLDERS. Stockholders recognize and acknowledge
that they have in the past, currently has, and in the future may possibly have,
access to certain confidential information of Company, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of Company and its businesses. Stockholders
agree that, except as may be required by Applicable Laws or other legal process,
they will not
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disclose such confidential information to any person, firm, corporation,
association or other entity for any purpose or reason whatsoever, except to
authorized representatives of Parent unless such information becomes known to
the public generally through no fault of Stockholders. In the case of a
disclosure required by Applicable Laws or other legal process, Stockholders
shall make no disclosure without prior written notice to Parent. In the event of
a breach or threatened breach by Stockholders of the provisions of this Section,
Parent shall be entitled to an injunction restraining Stockholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting Parent from pursuing any other available
remedy for such breach or threatened breach, including, without limitation, the
recovery of damages. The provisions of this Section shall apply at all times
prior to the Closing Date and for a period of one year following the Closing.
13.2 NONDISCLOSURE BY PARENT. Parent recognizes and acknowledges that it
has in the past, currently has, and prior to the Closing Date, will have access
to certain confidential information of Company, such as lists of customers,
operational policies, and pricing and cost policies that are valuable, special
and unique assets of Company and its businesses. Parent agrees that, except as
may be required by Applicable Laws or other legal process, it will not disclose
such confidential information to any person, firm, corporation, association, or
other entity for any purpose or reason whatsoever, prior to the Closing Date
without Stockholders's prior written consent. In the case of a disclosure
required by Applicable Laws or other legal process, Parent shall make no
disclosure without prior written notice to Stockholders. In the event of a
breach or threatened breach by Parent of the provisions of this Section,
Stockholders shall be entitled to an injunction restraining Parent from
disclosing, in whole or in part, such confidential information. Nothing
contained herein shall be construed as prohibiting Stockholders from pursuing
any other available remedy for such breach or threatened breach, including,
without limitation, the recovery of damages. The provisions of this Section
shall apply at all times prior to the Closing Date and for a period of one year
following the termination of this Agreement without a Closing having occurred.
14. GENERAL.
14.1 ASSIGNMENT; BINDING EFFECT; AMENDMENT. This Agreement and the rights
of the parties hereunder may not be assigned (except by operation of law) and
shall be binding upon and shall inure to the benefit of the parties hereto, the
successors of the corporate parties hereto, and the respective heirs and legal
representatives of Stockholders. This Agreement, upon execution and delivery,
constitutes a valid and binding agreement of the parties hereto enforceable in
accordance with its terms and may be modified or amended only by a written
instrument executed by all parties hereto.
14.2 ENTIRE AGREEMENT. This Agreement is the final, complete and exclusive
statement and expression of the agreement among the parties hereto with relation
to the subject matter of this Agreement, it being understood that there are no
oral representations, understandings or agreements covering the same subject
matter as this Agreement. This Agreement supersedes, and cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous
discussions, correspondence, or oral or written agreements of any kind.
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14.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
14.4 NO BROKERS. Company and Stockholders represent and warrant to Buyer
and Buyer represents to Stockholders and Company that the warranting party has
had no dealings with any broker or agent so as to entitle such broker or agent
to a commission or fee in connection with the within transaction. If for any
reason a commission or fee shall become due, the party dealing with such agent
or broker shall pay such commission or fee and agrees to indemnify and save
harmless each of the other parties from all claims for such commission or fee
and from all attorneys' fees, litigation costs and other expenses relating to
such claim.
14.5 EXPENSES OF TRANSACTION. Whether or not the transactions herein
contemplated shall be consummated: (i) Buyer will pay the fees, expenses and
disbursements of Buyer and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments hereto and all other costs and expenses incurred in the performance
and compliance with all conditions to be performed by Buyer under this
Agreement; and (ii) Stockholders will pay personally the fees, expenses and
disbursements of Stockholders and Company and their respective agents,
representatives, accountants and counsel incurred in connection with the subject
matter of this Agreement and any amendments hereto and all other costs and
expenses incurred in the performance and compliance with all conditions to be
performed by Stockholders and Company under this Agreement. All such fees,
expenses and disbursements of Stockholders and Company shall be paid by
Stockholders prior to the Closing so as not to become an obligation of the
Surviving Corporation or shall be included as a current liability for purposes
of the calculation of Actual Net Working Capital set forth in Section 2.3.
Stockholders represents and warrants to Buyer that Stockholders has relied on
his own advisors for all legal, accounting, tax or other advice whatsoever with
respect to this Agreement and the transactions contemplated hereby.
14.6 NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, by overnight courier or
by delivering the same in person to such party.
(a) If to Buyer, addressed to it at:
U S Liquids Inc.
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
ATTN: W. Xxxxxxx Xxx
with a copy to:
U S Liquids Inc.
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
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ATTN: Xxxx Xxxxxx
and a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 X. 0xx Xxxxxx
Xxxxxxxxx, XX 00000-0000
(b) If to Stockholders, addressed to them at:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxxxxx Xxx
Xxxxxx, XX 00000
and
Xxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxx, Esq.
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Notice shall be deemed given and effective the day personally delivered (if
delivered during normal business hours on a business day, or on the next
business day if not so delivered), the day after being sent by overnight
courier, subject to signature verification, and three business days after the
deposit in the U.S. mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received, if
earlier. Any party may change the address for notice by notifying the other
parties of such change in accordance with this Section.
14.7 GOVERNING LAW. This Agreement shall 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.
14.8 APPOINTMENT OF AGENT. Stockholders agrees to maintain a registered
agent in the State of Texas to accept and acknowledge service of process. Each
Stockholders initially hereby appoints Xxxxxxx Xxx, Esq. as such registered
agent and agrees to notify the Surviving
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Corporation in the manner set forth in Section 15.7 of any change in registered
agent. Each party agrees that service of process or notice in any such action,
suit or proceeding shall be effective if in writing and delivered to the address
provided in Section 15.7 for such party, in the manner prescribed in such
Section.
14.9 NO WAIVER. 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 of default occurring before or after that waiver.
14.10 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
14.11 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
14.12 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 most nearly to
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.
14.13 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 shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means including, without limitation. The parties intend that
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not
breached shall not detract from or mitigate the fact the party is in breach of
the first representation, warranty or covenant.
14.14 STANDSTILL AGREEMENT. Unless and until this Agreement is terminated
pursuant to Article 13 hereof without the Closing having taken place,
Stockholders will not directly or indirectly solicit offers for Company Stock or
the assets of Company or a merger or consolidation involving Company from, or
respond to inquiries from, share information with, negotiate with or in any way
facilitate inquiries or offers from, third parties who express or who have
heretofore expressed an interest in acquiring Company by merger, consolidation
or other combination or acquiring any of Company's assets; nor will they permit
Company to do any of the foregoing.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
U S LIQUIDS/EMI ACQUISITION CORPORATION
By:
Its:
U S LIQUIDS INC.
By:
Its:
ENVIRONMENT MANAGEMENT, INC.
(EIN: 00-0000000)
By:
Its:
Xxxxxxx Xxxxxxx
(SSN: ###-##-####)
Xxxx Xxxxxx
(SSN: ###-##-####)
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LIST OF SCHEDULES
Exhibit A -- Legal Description of the Land
Schedule 2.2 -- Assumed Debt
Schedule 5.1(i) -- Articles and Bylaws of Company
Schedule 5.4 -- Predecessor Entities; Trade Names
Schedule 5.6 -- Financial Statements
Schedule 5.7 -- Non-Balance Sheet Liabilities
Schedule 5.8 -- Accounts Receivable
Schedule 5.9(i) -- Proprietary Rights
Schedule 5.10(i) -- Real Property Disclosure
Schedule 5.11(i) -- Personal Property of Company
Schedule 5.12 -- Contracts
Schedule 5.13 -- Insurance Policies
Schedule 5.14 -- Employees
Schedule 5.15 -- Employee Plans
Schedule 5.16(ii) -- Claims History
Schedule 5.17 -- Compliance With Laws
Schedule 5.18 -- Tax Returns of Company
Schedule 5.19 -- Litigation
Schedule 5.22 -- Bank Accounts
Schedule 5.23 -- Hazardous Materials; List of Disposal Sites
Schedule 5.24 -- Storage Tanks
Schedule 9.9 -- Updated Agreements
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ANNEX I
CERTIFICATE OF MERGER
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ANNEX II
TO THAT CERTAIN AGREEMENT AND PLAN OF REORGANIZATION
Among
U S LIQUIDS/EMI ACQUISITION CORPORATION
U S LIQUIDS INC.
and
ENVIRONMENT MANAGEMENT, INC.
and
XXXXXXX XXXXXXX and XXXX XXXXXX
DATED AS OF January 1, 1997.
SHARES OF COMPANY ALLOCATION
SHAREHOLDERS STOCK OWNED OF CONSIDERATION
Xxxxxxx Xxxxxxx 2160 72%
Xxxx Xxxxxx 840 28%
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