STOCK PURCHASE AGREEMENT
Among
U S LIQUIDS, INC.
and
ADVANCED MANAGEMENT SYSTEMS, INC.,
and
XXXXXXX X. XXXXX
TABLE OF CONTENTS
SECTION PAGE
1. DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK. 1
1.1 DELIVERY OF SHARES................................................1
1.2 ENDORSEMENT OF COMPANY STOCK......................................1
2. PURCHASE PRICE. 2
2.1 PURCHASE PRICE....................................................2
2.2 AGREED VALUE OF BUYER STOCK......................................2
2.3 ASSUMPTION OF DEBT................................................2
2.4 ADJUSTMENT TO CONSIDERATION.......................................2
3. TITLE ASSURANCE. 3
4. CLOSING. 3
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER AND COMPANY. 3
5.1 ORGANIZATION; AUTHORITY...........................................4
5.2 STOCK OWNERSHIP; ABSENCE OF ADVERSE CLAIMS........................4
5.3 CAPITALIZATION....................................................4
5.4 PREDECESSOR ENTITIES; TRADE NAMES.................................5
5.5 NO SUBSIDIARIES...................................................5
5.6 FINANCIAL STATEMENTS..............................................5
5.7 NON-BALANCE SHEET LIABILITIES.....................................6
5.8 ACCOUNTS RECEIVABLE...............................................6
5.9 PROPRIETARY RIGHTS; ENVIRONMENTAL DOCUMENTS.......................6
5.10 REAL PROPERTY; REPORTING.........................................7
5.11 PERSONAL PROPERTY; NEW PROJECTS..................................8
5.12 CONTRACTS........................................................9
5.13 INSURANCE POLICIES..............................................10
5.14 DIRECTORS, OFFICERS AND EMPLOYEES; COMPENSATION.................10
5.15 EMPLOYEE PLANS..................................................10
5.16 COMPLIANCE WITH ERISA...........................................11
5.17 COMPLIANCE WITH LAW; NO CONFLICTS...............................11
5.18 TAXES...........................................................12
5.19 LITIGATION......................................................13
5.20 ABSENCE OF PRICE RENEGOTIATION CONTRACTS........................13
5.21 CONDUCT OF BUSINESS SINCE BALANCE SHEET DATE....................13
5.22 BANK ACCOUNTS; DEPOSITORIES.....................................14
5.23 HAZARDOUS MATERIALS.............................................14
5.24 STORAGE TANKS...................................................15
5.25 CORRUPT PRACTICES...............................................15
5.26 COMPLETE DISCLOSURE.............................................15
6. REPRESENTATIONS AND WARRANTIES OF BUYER. 16
6.1 CORPORATE ORGANIZATION...........................................16
6.2 CORPORATE AUTHORITY..............................................16
6.3 BUYER STOCK.....................................................16
6.4 NO CONFLICTS.....................................................16
6.5 BINDING AGREEMENT................................................17
Page 1
7. COVENANTS. 17
7.1 ACCESS TO LAND AND RECORDS.......................................17
7.2 COMPANY ACTIVITIES PRIOR TO CLOSING..............................17
7.3 PROHIBITED ACTIVITIES PRIOR TO CLOSING...........................18
7.4 CONTACT WITH GOVERNMENT OFFICIALS................................19
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND STOCKHOLDER. 19
8.1 REPRESENTATIONS AND WARRANTIES...................................19
8.2 CONSENTS.........................................................19
8.3 NO ADVERSE PROCEEDING............................................19
8.4 NONCOMPETITION AGREEMENT.........................................19
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. 19
9.1 REPRESENTATIONS AND WARRANTIES...................................19
9.2 COVENANTS.......................................................20
9.3 NO ADVERSE PROCEEDING............................................20
9.4 GENERAL RELEASE..................................................20
9.5 CONSENTS.........................................................20
9.6 RESIGNATIONS.....................................................20
9.7 GOOD STANDING CERTIFICATES.......................................20
9.8 UPDATED AGREEMENTS...............................................20
9.9 NONCOMPETITION AGREEMENT.........................................20
9.10 DELIVERY OF COMPANY STOCK.......................................20
9.11 ENVIRONMENTAL REVIEW............................................21
9.12 TRANSFERABILITY OF PERMITS......................................21
9.13 TERMINATION OF AMS LEASE AND EXECUTION OF NEW LEASE.............21
9.14 GENERAL.........................................................21
10. POST CLOSING COVENANTS. 21
10.1 TAXES...........................................................21
10.2 POST CLOSING BALANCE SHEET......................................22
10.3 CLOSING DATE ACTIONS............................................22
10.4 FURTHER ASSURANCE...............................................22
10.5 TRANSITION......................................................22
10.6 SURVIVAL........................................................23
11. NON-ASSUMPTION OF LIABILITIES. 23
11.1. NON-ASSUMPTION OF LIABILITIES..................................23
12. INDEMNIFICATION. 23
12.1 INDEMNIFICATION BY STOCKHOLDER..................................23
12.2 INDEMNIFICATION BY BUYER........................................24
12.3 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD PARTY
CLAIMS..........................................................24
13. TERMINATION OF AGREEMENT. 26
13.1 TERMINATION BY BUYER............................................26
13.2 TERMINATION BY STOCKHOLDER......................................26
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. 26
14.1 NONDISCLOSURE BY STOCKHOLDER....................................26
14.2 NONDISCLOSURE BY BUYER..........................................27
15. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON STOCK. 27
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15.1 REGISTERED STOCK................................................27
15.2 CONTRACTUAL RESTRICTION.........................................27
15.3 CONTRACTUAL RESTRICTION LEGEND..................................27
15.4 GENERAL LEGEND..................................................27
15.5 COMPLIANCE WITH LAW.............................................28
16. GENERAL. 28
16.1 ASSIGNMENT; BINDING EFFECT; AMENDMENT...........................28
16.2 ENTIRE AGREEMENT................................................28
16.3 COUNTERPARTS....................................................28
16.4 NO BROKERS......................................................28
16.5 EXPENSES OF TRANSACTION.........................................28
16.6 NOTICES.........................................................29
16.7 APPOINTMENT OF AGENT............................................30
16.8 NO WAIVER.......................................................30
16.9 TIME OF THE ESSENCE.............................................30
16.10 CAPTIONS.......................................................30
16.11 SEVERABILITY...................................................30
16.12 CONSTRUCTION...................................................30
16.13 STANDSTILL AGREEMENT...........................................31
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), executed and delivered as
of June 25, 1998, among U S LIQUIDS, INC., a Delaware corporation ("Buyer");
ADVANCED MANAGEMENT SYSTEMS, INC., a Texas corporation ("Company"); and XXXXXXX
X. XXXXX, the sole stockholder ("Stockholder") of Company;
W I T N E S S E T H :
WHEREAS, Company operates a business which provides industrial field
services, hazardous and non-hazardous waste identification and manifesting and
technical sales support services in the San Xxxx, Texas, area (collectively, the
"Business");
WHEREAS, in connection with the Business AMS leases office space in
Galveston, Texas (the "Leased Land"), from Galveston Environmental Services,
Inc., a separate company owned by Stockholder (the "AMS Lease");
WHEREAS, Stockholder owns all of the issued and outstanding shares of the
capital stock of Company; and
WHEREAS, Buyer desires to acquire all of the issued and outstanding shares
of the capital stock of Company from Stockholder and Stockholder desires to sell
such Company stock to Buyer as set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties and obligations herein contained, the
parties hereby agree as follows:
1. DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK.
1.1 DELIVERY OF SHARES.
Upon the terms and subject to the conditions set forth in this Agreement,
Stockholder shall, at the Closing (hereinafter defined), deliver to Buyer
certificates representing the number of shares of stock of Company owned by
Stockholder, which certificates represent all of the issued and outstanding
capital stock of Company (the "Company Stock"). Stockholder shall deliver the
Company Stock to Buyer free and clear of all liens, security interests,
encumbrances, adverse claims, pledges, charges, voting trusts, equities and
other restrictions on transfer of any nature whatsoever (collectively, "Adverse
Claims").
1.2 ENDORSEMENT OF COMPANY STOCK.
Stockholder shall deliver at Closing the certificates representing the
Company Stock, duly endorsed in blank by Stockholder or accompanied by stock
powers duly endorsed in blank and with all necessary transfer tax and other
revenue stamps, acquired at Stockholder's expense, affixed and cancelled.
Stockholder, at his sole expense, agrees to cure (both before and after Closing)
any deficiencies with respect to the endorsement of the certificates or other
documents of
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conveyance with respect to the Company Stock or with respect to the stock powers
accompanying the Company Stock.
2. PURCHASE PRICE.
2.1 PURCHASE PRICE.
Subject to Sections 2.3 and 2.4 below, in consideration of the sale to
Buyer in accordance with this Agreement of the certificates representing the
Company Stock, Company shall pay to Stockholder on the Closing Date: (a)
$1,100,000 in immediately available funds; (b) that total number of shares of
the common stock of Buyer (the "Buyer Stock"), which shall have an Agreed Value
(hereinafter defined) equal to $50,000, all of which will be contractually
restricted for a period of one year in accordance with Article 15 hereof; and
(c) that total number of shares of Buyer Stock which shall have an Agreed Value
equal to $50,000, all of which will be contractually restricted for a period of
two years in accordance with Article 15 hereof.
2.2 Agreed Value of Buyer Stock.
For purposes of this Agreement, the "Agreed Value" per share of Buyer Stock
shall be the average of the closing prices of a share of the common stock of
Buyer, $.01 par value per share, on the American Stock Exchange as reported in
The Wall Street Journal for a period of five consecutive trading days. The days
used to obtain the average will be the tenth trading day through the sixth
trading day before the date of Closing.
2.3 Assumption of Debt.
Attached hereto as Schedule 2.3 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 buyout payments) (the "Assumed Debt") and evidence
establishing the Assumed Debt. If the Assumed Debt of Company (when combined
with the actual long term debt of MCS Transportation, Inc. ("MCS")) is less than
$435,000 on the Closing Date, the consideration payable in Section 2.1(a) shall
be increased by an amount equal to the difference between $435,000 and the
Assumed Debt of Company and MCS combined. If the Assumed Debt of Company and MCS
combined is more than $435,000 on the Closing Date, the consideration payable in
Section 2.1(a) shall be reduced by an amount equal to the difference between
$435,000 and the Assumed Debt of Company and MCS combined.
2.4 ADJUSTMENT TO CONSIDERATION.
The parties agree that the consideration set forth in Section 2.1 was
determined as if the combined net working capital of Company and MCS was going
to be $1.00 at the close of business on the Closing Date. Accordingly, the
parties agree that the consideration set forth in Section 2.1(a) shall be
adjusted on the Adjustment Date to reflect the actual combined net working
capital of Company and MCS on the Closing Date (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 so reflected is greater
than $1.00 on the Closing Date, then
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the consideration paid pursuant to Section 2.1(a) shall be increased dollar for
dollar for each dollar the Actual Net Working Capital exceeds $1.00 on the
Closing Date. If the Actual Net Working Capital so reflected is less than $1.00
on the Closing Date, then the consideration paid pursuant to Section 2.1(a)
shall be decreased dollar for dollar for each dollar the Actual Net Working
Capital falls below $1.00 on the Closing Date. For purposes of this Agreement,
Actual Net Working Capital shall mean the combined current assets of Company and
MCS on the Closing Date minus all combined current liabilities of Company and
MCS on the Closing Date, calculated in accordance with generally accepted
accounting principles ("GAAP").
In order to facilitate the contemplated adjustment to purchase price on the
Adjustment Date, between the date hereof and the Closing Date the parties will
prepare and agree upon an estimated combined net working capital balance for
Company and MCS as of May 31, 1998 (the "Estimated Working Capital").
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 Stockholder 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
Stockholder.
3. TITLE ASSURANCE. INTENTIONALLY DELETED.
4. CLOSING.
Unless the parties agree otherwise, the closing of the within contemplated
transaction (the "Closing") shall take place on a date mutually agreeable to
Stockholder and Buyer within five business days after the completion,
satisfaction or waiver of each of the conditions to Closing set forth in
Articles 8 and 9. The Closing shall take place at a place mutually agreeable to
Buyer and Stockholder. The date on which the Closing occurs shall be referred to
as the "Closing Date."
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER AND COMPANY.
Company, as to the time period before Closing only, and Stockholder,
jointly and severally, represents and warrants 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 Stockholder 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. 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
particularity
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and describes the relevant facts in detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of a document or other item itself).
5.1 ORGANIZATION; AUTHORITY.
(i) Company is a Texas corporation duly organized, validly existing
and in good standing under the laws of the State of Texas and 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 Company's business. Copies of 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).
(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 this transaction has been taken, including director and
shareholder approvals, if necessary.
(iii) 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 Stockholder and are free and clear of all Adverse
Claims. This Agreement is the valid and binding obligation of Company and
Stockholder, enforceable against each of them in accordance with its terms.
5.3 CAPITALIZATION.
The authorized capital stock of Company consists solely of 1,000 shares of
voting common stock, $1.00 par value, of which 1,000 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 Stockholder and Company to Buyer correctly set forth all issuances,
acquisitions and retirements of Company Stock since the inception of Company. 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
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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 agreed not 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.
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 Company has ever conducted any other business
or activity. 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.
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.
5.6 FINANCIAL STATEMENTS.
Attached as Schedule 5.6 are copies of the following financial statements
of Company (together, the "Financial Statements"):
(i) balance sheet of Company as of December 31, 1997, and a statement
of income, cash flow and retained earnings for the year then ended (the
"Balance Sheet Date");
(ii) balance sheet of Company as of March 31, 1998, and a statement of
income for the quarter then ended; and
(iii) Company's monthly interim balance sheets and statements of
income commencing for the month ended April 30, 1998, and continuing for
each month end until the month immediately preceding the Closing Date.
Except as set forth on Schedule 5.6, each of the Financial Statements
(including all footnotes thereto) has been prepared in accordance with
GAAP, applied on a consistent basis throughout the periods indicated. Each
of the Financial Statements (including all footnotes thereto) is true,
complete and correct. Each of the balance sheets 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. Each
Financial Statement includes all footnotes required by GAAP, each such
footnote is complete and accurate, and contains all information required by
GAAP to be contained therein. All reserves for contingent risks have been
estimated in accordance with GAAP and are appropriate and sufficient to
cover all costs reasonably expected to be incurred from such risks. Company
has not (i) made any material change in its accounting policies or (ii)
effected any prior period adjustment to, or other restatement of, its
financial statements for any period. The Financial
Page 5
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 or is contested,
Stockholder shall provide the following information:
(i) a summary description of the liability or other obligation
together with the following:
(A) copies of all relevant documentation relating thereto;
(B) amounts claimed and any other action or relief sought; and
(C) name of claimant and all other parties to the claim, suit or
proceeding, if any;
(ii) the name of each court or agency before which a claim, suit or
proceeding is pending;
(iii) the date such claim, suit or proceeding was instituted; and
(iv) a reasonable best estimate by Stockholder 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 Stockholder 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, each account and note receivable is
collectible in the full amount shown on Schedule 5.8.
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, none of which
permits, titles, licenses, franchises and certificates, trademarks, trade
names,
Page 6
patents, patent applications and copyrights, has been claimed to 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;
(ii) Stockholder has, 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 notifications from governmental agencies and any other
person or entity and any other documents of Company relating to: (A) each
actual and threatened violation of Applicable Laws (hereinafter defined) by
Company or otherwise relating to any real property owned or operated by
Company and all, if any, claims thereof; (B) the present or past
environmental compliance by Company; (C) the present or past environmental
condition of any real property owned or operated by Company; (D) the
discharge, leakage, spillage, transport, disposal or release of any
material into the environment by Company or otherwise relating to any real
property owned or operated by Company; and (E) land use and access
approvals relative to any portion of any real property owned or operated by
Company (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 Leased Land. A
true and complete copy of the AMS Lease, together with all amendments or
other modifications thereto, is attached hereto as Schedule 5.10(i). Except
as set forth on Schedule 5.10(i):
(A) The Leased Land is fully licensed, permitted and authorized
for the operation of the Business under all Applicable Laws
(hereinafter defined) relating to the protection of the environment,
the Leased Land and the conduct of the Business thereon (including,
without limitation, all zoning restrictions and land use
requirements).
(B) The Leased Land is usable for its current uses and can be
used by Buyer after the Closing for such uses without violating any
Applicable Law or private restriction, and such uses are legal
conforming uses. There are no proceedings or amendments pending and
brought by or threatened by any third party which would result in a
change in the allowable uses of the Leased Land or which would modify
the right of Buyer to use the Leased Land for its current uses.
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(C) Stockholder and Company have made available to Buyer all
engineering, geologic and other similar reports, documentation and
maps relating to the Leased Land in the possession or control of
Stockholder or Company.
(D) 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 Leased Land.
(E) Company, Stockholder nor the Leased Land now is or ever has
been involved in any litigation or administrative proceeding seeking
to impose fines, penalties or other liabilities or seeking injunctive
relief for violation of any Applicable Laws relating to the
environment.
(F) No third party has an unrecorded present or future right to
possession of all or any part of the Leased Land other than the
landlord under the AMS Lease.
(G) No portion of the Leased 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 Texas Department of Natural Resources,
whether such characterization reflects current conditions or historic
conditions which have been altered without the necessary permits or
approvals.
(H) There are no mechanics' liens affecting the Leased Land and
no work has been performed thereon at the request of Company 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 Leased Land and none is threatened.
(J) There are no pending or threatened condemnation or eminent
domain proceedings affecting all or any part of the Leased Land.
(ii) 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 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 trucks, compactors,
containers, materials
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handling equipment, machinery and other equipment of Company are in good
working order and repair;
(ii) Company has good title to, or a valid leasehold interest in, the
properties and assets used by it shown on Company's balance sheet dated
the Balance Sheet Date or acquired after the date thereof, whether or not
located on the Leased 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;
(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 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). The combined fixed assets of Company
(together with the real property assets) constitute all of the real and
personal property necessary for the operation of the Business both by
Company and by Buyer following the Closing and include all of the permits,
licenses, franchises, consents and other approvals necessary to operate
the Business both before and after Closing;
(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-buyout payments) other than the Assumed Debt; and
(vi) attached as Schedule 5.11(vi) is a summary description of all
plans or projects involving recycling, waste hauling, the opening of new
landfills, expansion of any existing landfills or the acquisition of any
real property or existing business, to which management of Company has
devoted any significant effort or expenditure on behalf of Company which,
if pursued by Company, would require the expenditure by Company of
significant additional effort or capital.
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 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 hauling, transfer and
disposal contracts, joint venture or partnership agreements, and all other
operating agreements (if any), 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 (if any), liens, pledges or other security
agreements, agreements for the employment of any individual, agreements under
which Company has advanced or loaned any amount to
Page 9
one another or to Stockholder or any employee, officer or director either 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 an 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
except as set forth on Schedule 5.12 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. Company has complied with all
obligations pertaining to it contained in such contracts, commitments and other
agreements, is not in default thereunder and no notice of default has been
received by Company or by Stockholder nor will the consummation of the
transactions contemplated by this Agreement result in such a default. To the
best of Stockholder's 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. 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 threatened labor dispute
involving Company and any group of its employees nor has Company experienced any
labor interruptions over the past three years. Stockholder will cause Company to
terminate each of its employees as of the close of business on the Closing Date.
Buyer agrees to consider the former employees of Company for positions with
Buyer, provided that each such person seeking employment meets the minimum
acceptable qualifications established by Buyer. It is expressly understood that
Buyer shall not assume or be responsible for any severance or other employee
benefit arising out of an individual's employment by Company prior to the
Closing Date. Nothing herein will be deemed to give any individual a right of
employment.
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"))
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(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 of the Company, any Controlled Group Member (as defined in the
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 it 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 Stockholder have complied (and on the Closing Date
will have complied) in all respects 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 not incur
any) direct or indirect liability and Company 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 and Stockholder 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 Stockholder, 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 Company's group health plans are
retrospectively rated, there are no liabilities capable of assertion
against Company in respect of claims already incurred and present.
5.17 COMPLIANCE WITH LAW; NO CONFLICTS.
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(i) 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 or the Business (the "Applicable Laws"). Neither Company nor
Stockholder has received any notice that Company is under investigation or
other form of review with respect to any Applicable Law; and
(ii) 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 Stockholder is a
party, or result in the creation or imposition of any lien, charge or
encumbrance on any properties of Company or Stockholder pursuant to:
(1) any law or regulation to which Company or Stockholder, or any of
their respective properties are subject, or (2) any judgment, order or
decree to which Company or Stockholder 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 in
accordance with GAAP 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
Page 12
attached hereto as Schedule 5.18. Company is taxed under the
provisions of Subchapter C of the Code. Company has a taxable year ended
December 31. Company currently utilizes the cash 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 or
threatened against Company or Stockholder, 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 Stockholder; and 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 a party to any governmental contracts subject to price
redetermination or renegotiation.
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) increase 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;
(vi) work interruption, labor grievance or 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 Stockholder or with affiliates of Company;
Page 13
(viii) cancellation or agreement to cancel any indebtedness or other
obligation owing to Company, including, without limitation, any
indebtedness or other obligation of Stockholder 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 rights or claims of Company; (xii) breach,
amendment or termination of any 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) other material occurrence, event, incident, action or failure to
act outside the ordinary course of business of Company; or
(xvi) action by Company, Stockholder, or any employee, officer or
agent of Company or Stockholder 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, infectious or medical waste,
radioactive waste or sewage sludges as those terms are defined by the Resource
Conservation and Recovery Act of 1976; the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"); the Atomic Energy Act of 1954; the
Toxic Substances Control Act; the Occupational Health and Safety Act; any
comparable or similar applicable state statute; 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
Page 14
to environmental liability have been imposed against Company or the
Leased Land under CERCLA, any comparable state statute or other Applicable Law,
and no facts or circumstances exist which would give rise to the same. No
portion of the Leased Land is listed on the CERCLIS list or the National
Priorities List of Hazardous Waste Sites or any similar state list. Neither
Company nor Stockholder is listed as a potentially responsible party under
CERCLA, any comparable state statute or other Applicable Law, and neither
Company nor Stockholder has received a notice of such a listing.
Company has never owned, operated, had an interest in, engaged in and/or
leased a waste transfer, recycling, treatment, storage or disposal facility,
business or activity other than the Business. None of Company's employees,
contractors or agents has, in the course and scope of employment with Company,
been harmed by exposure to Hazardous Materials.
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 CERCLIS 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 Leased Land by Company of any Hazardous Materials and
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 Leased 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 aboveground and belowground tanks
currently in or on the Leased Land are being used and maintained in accordance
with all Applicable Laws.
5.25 CORRUPT PRACTICES.
Neither Company nor Stockholder has 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 has it 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.
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 Stockholder or,
prior to Closing, Company, becomes aware of any fact or circumstance which would
change a representation or warranty of Company or Stockholder in this Agreement
or any other statement made or document provided to Buyer, the party
Page 15
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, their properties, businesses or assets, or (iii) the Closing
contemplated by this Agreement, shall relieve Stockholder or Company of their
obligations under this Agreement, including their representations and warranties
made in this Section 5.
6. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants 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 Agreement throughout this
Section 6); and (iii) shall survive the Closing.
6.1 CORPORATE ORGANIZATION.
Buyer is duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Buyer is duly authorized, qualified and licensed
under all applicable laws, regulations and ordinances of public authorities to
carry on its business 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 effect on such businesses.
6.2 CORPORATE AUTHORITY.
The officer of Buyer executing this Agreement has the corporate authority
to enter into and bind Buyer to the terms of this Agreement and Buyer has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement. All corporate action by Buyer necessary to
approve the transaction, including both director and shareholder approvals (if
required), has been taken.
6.3 BUYER STOCK.
The Buyer Stock to be delivered to Stockholder in connection with this
Agreement, when delivered in accordance with the terms of this Agreement, will
constitute valid and legally issued shares, fully paid and nonassessable and
will be registered and free from any restriction on transfer other than
restrictions imposed by the Act or the regulations promulgated thereunder and
the contractual restrictions set forth in this Agreement.
6.4 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;
(ii) conflict with, or result in a material breach under any document,
agreement or other instrument to which Buyer is a party, or result in the
creation or imposition of any lien, charge or encumbrance on any properties
of Buyer pursuant to: (A) any law or regulation to which Buyer
Page 16
or its property is subject, or (B) any judgment, order or decree to which
Buyer is bound or its property is subject; or
(iii) result in termination or any impairment of any material permit,
license, franchise, contractual right or other authorization of Buyer.
6.5 BINDING AGREEMENT.
This Agreement is the binding and valid obligation of Buyer, enforceable
against it in accordance with its terms.
7. COVENANTS.
7.1 ACCESS TO LAND AND RECORDS.
Between the date of this Agreement and the Closing Date, Stockholder will
cause Company to afford to or obtain for the officers and authorized
representatives of Buyer access to all of the Leased 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 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 Leased Land prior to Closing. Stockholder 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, Stockholder 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;
Page 17
(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 employees,
officers and directors 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.
7.3 PROHIBITED ACTIVITIES PRIOR TO CLOSING.
Between the date of this Agreement and the Closing Date, Stockholder will
cause Company not, without the prior written consent of Buyer:
(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 $1,000;
(v) to increase the compensation payable or to become payable to any
employee, consultant, agent, officer, director or stockholder 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;
Page 18
(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
(xiv) to allow any other action or omission, or series of actions or
omissions, by Company or Stockholder that would cause a representation and
warranty of Company and Stockholder made in Section 5.21 of this Agreement
to be untrue on the Closing Date.
7.4 CONTACT WITH GOVERNMENT OFFICIALS.
Company and Stockholder shall use their best efforts to cooperate with
Buyer in making contact with the appropriate governmental agencies and officials
having information about or jurisdiction over Company, Stockholder or the Leased
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 Leased Land.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND STOCKHOLDER.
The obligations of Stockholder 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 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 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 threatened to restrain or prohibit any of the
transactions contemplated by this Agreement.
8.4 NONCOMPETITION AGREEMENT.
Buyer shall have executed and delivered at the Closing a Noncompetition
Agreement with Stockholder (the "Noncompetition Agreement"), in form and
substance satisfactory to Buyer and Stockholder.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.
The obligations of Buyer hereunder are subject to the completion,
satisfaction or, at its option, waiver, on or prior to the Closing Date, of the
following conditions.
9.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Stockholder and Company contained in
this Agreement shall be accurate on and as of the Closing Date with the same
effect as
Page 19
though such representations and warranties had been made on and as of
such date, and Buyer shall have received a certificate from Stockholder 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 Stockholder agree that no limitation of any
representation or warranty concerning the knowledge of Company or Stockholder 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 Stockholder or Company is inaccurate as of the Closing Date. 9.2
Covenants.
Each and all of the terms, covenants and conditions of this Agreement to be
complied with and performed by Stockholder and the 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 threatened to restrain or prohibit any of the
transactions contemplated by this Agreement.
9.4 GENERAL RELEASE.
Stockholder shall have delivered to Buyer an instrument dated the Closing
Date releasing Company and Buyer from any and all claims of Stockholder against
Company and Buyer 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 Stockholder shall have been obtained and made. 9.6 Resignations.
Each officer and director of Company shall have delivered to Buyer their
written resignation.
9.7 GOOD STANDING CERTIFICATES.
Stockholder 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 Texas.
9.8 UPDATED AGREEMENTS.
Stockholder shall have delivered to Buyer a schedule (Schedule 9.8) 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
acceptable to Buyer in its sole discretion.
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.
Stockholder shall have delivered to Buyer certificates representing all
Company Stock, duly endorsed in blank by Stockholder or accompanied by stock
powers duly executed
Page 20
in blank and with all necessary transfer tax and other
revenue stamps affixed and cancelled at Stockholder'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 Leased Land and the
environmental and land use practices, procedures, operations and activities of
the Company; the results of which review, without limiting the generality of the
foregoing, reflect compliance with all Applicable Laws, disclose 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 all consents or
other approvals necessary for Company's continued use of all permits required
for the operation of the Business after Buyer's acquisition of the Company Stock
have been obtained.
9.13 TERMINATION OF AMS LEASE AND EXECUTION OF NEW LEASE.
The AMS Lease shall have been terminated without liability to AMS or Buyer
and Buyer and Galveston Environmental Services, Inc. shall have entered into a
new lease providing for Buyer's continued use of the AMS Leased Land in form and
substance acceptable to Buyer and landlord.
9.14 GENERAL.
All actions taken by Stockholder 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.
10. POST CLOSING COVENANTS.
10.1 TAXES.
(i) Stockholder irrevocably agrees to indemnify Buyer against, and to
hold Buyer 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 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 Buyer
arising as the result of any payment by Stockholder to Buyer in
fulfillment of its obligation pursuant to this Section 10.1(i).
Page 21
(ii) Stockholder agrees that he shall be responsible, at his 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,
1998, and ending on the Closing Date. Buyer agrees to cooperate with
Stockholder in the preparation of such returns. Stockholder further agrees
that he 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, Stockholder agrees to allow Buyer 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 at least 120 days after the Closing Date (the
"Adjustment Date"), the parties shall adjust the Purchase Price in accordance
with Section 2.4 based on a combined balance sheet of Company and MCS for the
period ending on the close of business on the Closing Date, prepared by Buyer in
accordance with GAAP and delivered to Stockholder, together with reasonable
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 Buyer after the
Adjustment Date will be paid to Stockholder 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 2.4.
10.3 CLOSING DATE ACTIONS.
Buyer and Stockholder 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.
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.
Stockholder, also without further consideration, agrees to cooperate with Buyer
and to use his reasonable efforts to have the present officers and employees of
Company cooperate on and after the Closing Date in furnishing to Buyer
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. Stockholder
acknowledges and agrees that, from and after the Closing, Buyer 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.
Stockholder 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 Company after the Closing that
it maintained with Company before the Closing.
Page 22
Stockholder will refer all
customer inquiries relating to the business of Company to Buyer from and after
the Closing. Further, Stockholder agrees that for a period of 90 days following
the Closing Date, Stockholder will assist Buyer, at Buyer's request and expense,
with the orderly transition of the operations of Company from Stockholder to
Buyer (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.
11. NON-ASSUMPTION OF LIABILITIES.
11.1. NON-ASSUMPTION OF LIABILITIES.
Except as explicitly set forth herein, Buyer shall not, by the execution
and performance of this Agreement or otherwise, assume, become responsible for
or incur any liability or obligation of any nature of Company or Stockholder
whether legal or equitable, matured or contingent, known or unknown, foreseen or
unforeseen, ordinary or extraordinary, patent or latent, whether arising out of
occurrences prior to, at or after the date of this Agreement, out of or relating
to: (a) any agreement or arrangement between Company or Stockholder and the
employees of Company or Stockholder or any labor or collective bargaining unit
representing any such employees; (b) any severance pay obligation of Company or
Stockholder or any employee benefit plan (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended) or any other
fringe benefit program maintained or sponsored by Company or to which Company
contributes or any contributions, benefits or liabilities therefor or any
liability for the withdrawal or partial withdrawal from or termination of any
such plan or program by Company; (c) any litigation set forth on Schedule 5.19;
(d) any liabilities related to the operation of the Business prior to Closing;
and (e) any loss related to the existing federal tax lien in the amount of
approximately $1,879. Stockholder hereby agrees to indemnify Buyer, Company and
their respective successors and assigns from and against all of the above
liabilities and obligations in accordance with Section 12.1 below. Company
shall, by the Closing Date, either (i) discharge, or (ii) obtain novations, in
form and substance satisfactory to Buyer, discharging Company and Buyer as
obligors on, or (iii) make other arrangements satisfactory to Buyer, in Buyer's
sole judgment, to hold harmless Buyer from any claim, obligation, duty or
liability on or with respect to all non-assumed liabilities.
12. INDEMNIFICATION.
12.1 INDEMNIFICATION BY STOCKHOLDER.
Stockholder agrees that he will indemnify, defend (as to third party claims
only), protect and hold harmless Buyer, Company and its respective 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
Page 23
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 Stockholder (including, without limitation, those
relating to the environmental condition of the Leased Land and Company's
environmental compliance), set forth herein or in the Schedules, Exhibits or
certificates attached hereto or delivered pursuant hereto; (b) nonfulfillment or
nonperformance of any agreement, covenant or condition on the part of
Stockholder made in this Agreement; (c) nonfulfillment or nonperformance of any
agreement, covenant or condition on the part of Company made in this Agreement
and to be performed on or before the Closing Date; (d) the matters set forth in
Section 11.1; (e) the existence of liabilities of Company in excess of the
liabilities represented by Stockholder and Company; and (f) any claim by a third
party that, if true, would mean that a condition for indemnification set forth
in subsections (a) through (e) of this Section 12.1 had been satisfied.
12.2 INDEMNIFICATION BY BUYER.
Buyer agrees that it will indemnify, defend, protect and hold harmless
Stockholder, his 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 Stockholder 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 made in this Agreement; and (iii) 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 12.2 had been satisfied.
12.3 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.
Page 24
(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 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 12.3(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 12.3(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
xxxx
Xxxx 25
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
Section 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.
13. TERMINATION OF AGREEMENT.
13.1 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
Stockholder 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.
13.2 TERMINATION BY STOCKHOLDER.
Stockholder 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 its part to be performed, and such
breach shall not have been cured on or before the Closing Date.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
14.1 NONDISCLOSURE BY STOCKHOLDER.
Stockholder recognizes and acknowledges that he had in the past, currently
has, and in the future may possibly have, access to certain confidential
information of Company and Buyer, such as lists of customers, operational
policies, and pricing and cost policies that are valuable, special and unique
assets of Company and its businesses. Stockholder agrees that, except as may be
required by Applicable Laws or other legal process, he will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except to authorized
representatives of Buyer, unless such information becomes known to the public
generally through no fault of Stockholder. In the case of a disclosure required
by Applicable Laws or other legal process, Stockholder shall make no disclosure
without prior written notice to Buyer. In the event of a breach or threatened
breach by Stockholder of the provisions of this Section, Buyer shall be entitled
to an injunction restraining Stockholder from disclosing, in whole or in part,
such confidential information. Nothing herein shall be construed as prohibiting
Buyer 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.
Page 26
14.2 NONDISCLOSURE BY BUYER.
Buyer 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. Buyer 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
Stockholder's prior written consent. In the case of a disclosure required by
Applicable Laws or other legal process, Buyer shall make no disclosure without
prior written notice to Stockholder. In the event of a breach or threatened
breach by Buyer of the provisions of this Section, Stockholder shall be entitled
to an injunction restraining Buyer from disclosing, in whole or in part, such
confidential information. Nothing contained herein shall be construed as
prohibiting Stockholder 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.
15. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON STOCK.
15.1 REGISTERED STOCK.
Buyer represents and warrants to Stockholder that all of the shares of
Buyer Stock to be delivered to Stockholder pursuant to this Agreement will be
registered under the Act prior to delivery to Stockholder.
15.2 CONTRACTUAL RESTRICTION.
Notwithstanding the above, Stockholder agrees to not sell or transfer the
Buyer Stock described in Section 2.1 for the applicable time periods set forth
therein (the "Contractually Restricted Stock").
15.3 CONTRACTUAL RESTRICTION LEGEND.
(a) All one year Contractually Restricted Stock shall bear the
following legend:
THE SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED HEREBY HAS BEEN
CONTRACTUALLY RESTRICTED. THE HOLDER AGREES THAT SUCH SHARES MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF U S
LIQUIDS INC., UNTIL THE EXPIRATION OF SUCH RESTRICTION ON JUNE 25, 1999.
(b) All two-year Contractually Restricted Stock shall bear the
following legend:
THE SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED HEREBY HAS BEEN
CONTRACTUALLY RESTRICTED. THE HOLDER AGREES THAT SUCH SHARES MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF U S
LIQUIDS INC., UNTIL THE EXPIRATION OF SUCH RESTRICTION ON JUNE 25, 2000.
15.4 GENERAL LEGEND.
All Buyer Stock shall bear the following legend:
Page 27
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF
RULE 145(D) PROMULGATED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE
TRANSFERRED OR DISPOSED OF BY THE HOLDER WITHOUT COMPLIANCE WITH SAID RULE.
15.5 COMPLIANCE WITH LAW.
Stockholder covenants, warrants and represents that none of the shares of
Buyer Stock will be offered, sold, assigned, pledged, hypothecated, transferred
or otherwise disposed of except in full compliance with the Act and the rules
and regulations promulgated thereunder.
16. GENERAL.
16.1 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 Stockholder. 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.
16.2 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.
16.3 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.
16.4 NO BROKERS.
Company and Stockholder represent and warrant to Buyer and Buyer represents
to Stockholder 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.
16.5 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
Page 28
with all conditions to be
performed by Buyer under this Agreement; and (ii) Stockholder will pay
personally the fees, expenses and disbursements of Stockholder 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 Stockholder and Company under this Agreement.
All such fees, expenses and disbursements of Stockholder and Company shall be
paid by Stockholder prior to the Closing so as not to become an obligation of
Company or shall be included as a current liability for purposes of the
calculation of "net working capital" set forth in Section 2.3. Stockholder
represents and warrants to Buyer that Stockholder 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.
16.6 NOTICES.
All notices or other communications required or permitted hereunder shall
be in writing and may be given by depositing the same in the 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.
(i) If to Buyer, addressed to it at:
U S Liquids
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx Xxxxx 000 Xxxxxxx, XX
00000 ATTN: Xxxxx Xxxxxx
with a copy to:
U S Liquids Inc.
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
ATTN: W. Xxxxxxx Xxx
and a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 X. 0xx Xxxxxx
Xxxxxxxxx, XX 00000-0000
(ii) If to Stockholder, addressed to him at:
0000 Xx Xxxxxx Xxxxxxx Xx.
Xxx. 0000
Xxxxxxx, XX 00000
Page 29
with a copy to:
Xxxxxxxxx X. Xxxxx
0000 Xxxxxxxxx
Xxxxxxx, XX 00000
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier, subject to signature verification, and
three 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. 16.7
Appointment of Agent.
Stockholder agrees to maintain a registered agent in the State of Texas to
accept and acknowledge service of process. Stockholder initially hereby appoints
Xxxxxxxxx X. Xxxxx, 0000 Xxxxxxxxx, Xxxxxxx, Xxxxx 00000, as such registered
agent and agrees to notify Company in the manner set forth in Section 16.6 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 16.6 for such party, in the
manner prescribed in such Section.
16.8 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.
16.9 TIME OF THE ESSENCE.
Time is of the essence for this Agreement.
16.10 CAPTIONS.
The headings of this Agreement are inserted for convenience only and shall
not constitute a part of this Agreement or be used to construe or interpret any
provision hereof.
16.11 SEVERABILITY.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal and enforceable but so as 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.
16.12 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
Page 30
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.
16.13 STANDSTILL AGREEMENT.
Unless and until this Agreement is terminated pursuant to Article 13 hereof
without the Closing having taken place, Stockholder 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 he permit Company to do any of the foregoing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
U S LIQUIDS, INC.
By:
Its:
ADVANCED MANAGEMENT SYSTEMS,
INC.
(EIN: 00-0000000)
By:
Its:
Xxxxxxx X. Xxxxx
(SSN: ###-##-####)
Page 31
LIST OF SCHEDULES
Exhibit A -- Legal
Description of the Leased Land
Schedule 2.2 -- Assumed Debt
Schedule 5.1(i) -- Articles and Bylaws
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) -- MCS Lease; Real Property
Disclosure
Schedule 5.11(i) -- Personal Property
Schedule 5.11(vi) -- Plans or Projects
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 5.18 -- Tax Returns
Schedule 5.19 -- Litigation
Schedule 5.22 -- Bank Accounts
Schedule 5.23 -- Hazardous
Materials; List of Disposal Sites
Schedule 5.24 -- Storage Tanks
Page 32
