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EXHIBIT 2.1
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MERGER AGREEMENT
This Merger Agreement (this "Agreement") is entered into as of August
4, 1997 by and among U.S. ENERGY SYSTEMS, INC., a Delaware corporation ("USE");
and AES MERGER CORP. ("AES"), an Indiana corporation and wholly-owned
subsidiary of USE (sometimes hereinafter referred to as the "USE Merger
Sub,"and together with USE, the "USE Companies"); American Enviro-Services,
Inc. (the "Company"), an Indiana corporation; and Xxxxxx X. Xxxxxx ("Xxxxxx"),
Xxxxxx X. Xxxxxx ("Meijer"), Xxxxx X. Xxxxxxxxx ("Xxxxxxxxx"), Xxxxxxx Xxxxxx
individually and as Trustee of the Xxxxxxx Xxxxxx Revocable Trust U/T/A dated
July 1, 1990 (the "Xxxxxx Trust") and Energy Enterprise, LLC ("Energy
Enterprise"), an Indiana limited liability company each a resident of the State
of Indiana, who together constitute all of the shareholders of the Company
(together, the "Shareholders"). Certain other capitalized terms used herein
are defined in Article XI and throughout this Agreement.
RECITALS
USE and the Company have determined that it is in the best interests
of their respective shareholders for USE to acquire the Company upon the terms
and subject to the conditions set forth in this Agreement. In order to
effectuate the transaction, USE has organized the USE Merger Sub as a
wholly-owned subsidiary, and the parties have agreed, subject to the terms and
conditions set forth in this Agreement, to merge the USE Merger Sub with and
into the Company so that the Company continues as the surviving corporation.
As a result, the Company will become a wholly-owned subsidiary of USE, and each
of the Shareholders will be issued certain shares of common stock of USE.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement and in accordance with the Business Corporation laws of the State of
Indiana (the "Corporations Code"), at the Effective Time (as defined below) USE
Merger Sub shall be merged with and into the Company (the "Merger"). As a
result of the Merger, the separate corporate existence of USE Merger
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Sub shall cease and the Company shall continue as the surviving corporation
(the "Surviving Corporation").
1.2 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Merger (the "Closing") shall take place as
promptly as practicable (and in any event within five (5) business days) after
satisfaction or waiver of the conditions set forth in Articles VI and VII, at
the offices of USE's counsel, Akerman, Senterfitt & Xxxxxx, P.A., Miami,
Florida, or such other time and place as the parties may otherwise agree.
1.3 CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger and without any action on the part of the Company, USE, USE Merger
Sub, or the Shareholders:
(a) All of the shares of common stock, no par value per
share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into the
right to receive (i) an aggregate of Six Hundred Sixty Five Thousand
(665,000) shares, par value $.01 per share, of USE common stock (the
"USE Common Stock"), plus (ii) $150,000 in immediately available funds
(collectively, the "Purchase Price"). The Purchase Price shall be
allocated between the Shareholders in accordance with Schedule 1.3
attached hereto.
(b) Each share of common stock of USE Merger Sub issued
and outstanding at the Effective Time shall be converted into one
share of the common stock of the Surviving Corporation.
1.4 FILING OF ARTICLES OF MERGER. At the time of the Closing, the
parties shall cause the Merger to be consummated by filing duly executed
Articles of Merger with the Secretary of State of the State of Indiana, in such
form as USE determines is required by and is in accordance with the relevant
provisions of the Corporations Code (the date and time of such filing is
referred to herein as the "Effective Date" or "Effective Time").
1.5 ISSUANCE OF USE SHARES; DELIVERY OF CERTIFICATES. At the
Effective Time, each of the Shareholders shall deliver the certificates
representing all issued and outstanding shares of Company Common Stock to USE
for cancellation, and USE shall issue to each Shareholder the shares of USE
Common Stock issuable pursuant to Section 1.3, registered in the name of such
Shareholder and shall deliver such shares in the following manner: (i) USE
shall set aside and hold in accordance with Article IX certificates for shares
of USE Common Stock evidencing ten percent (10%) of the shares issuable to
Xxxxxx and Meijer pursuant to Section 1.3 (the "Held Back Shares"); (ii) USE
shall deliver to Xxxxxx and Meijer one or more certificates evidencing the
balance of such Shareholder's shares of USE Common Stock; and USE shall deliver
to Xxxxxxxxx, the Xxxxxx Trust and Energy Enterprises one or more certificates
evidencing the shares of USE Common Stock issuable to such Shareholders
pursuant to Section 1.3. The shares of USE Common Stock, including the Held
Back Shares, issuable by USE in the Merger are sometimes referred to herein as
the "USE Shares."
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1.6 TAX TREATMENT. The parties hereto acknowledge and agree that
the transactions contemplated hereby are intended to be treated as a tax-free
reorganization under Section 368 of the Code; provided, however, that USE, the
Company and their respective Affiliates shall not be liable to the Shareholders
for any costs, damages, liabilities or other consequences of the failure of
this transaction to be treated as a tax-free reorganization and USE, the
Company and their respective Affiliates make no warranties, representations,
guaranties or other assurances that the transaction contemplated hereunder
shall be treated as a tax-free reorganization.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF USE
As a material inducement to each of the Shareholders to enter into
this Agreement and to consummate the transactions contemplated hereby, USE
makes the following representations and warranties to the Shareholders:
2.1 CORPORATE STATUS. USE is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The USE Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Indiana. The USE Merger Sub is a
wholly-owned subsidiary of USE.
2.2 CORPORATE POWER AND AUTHORITY. Each of the USE Companies has
the corporate power and authority to execute and deliver this Agreement, to
perform its respective obligations hereunder and to consummate the transactions
contemplated hereby. Each of the USE Companies has taken all action necessary
to authorize its execution and delivery of this Agreement, the performance of
its respective obligations hereunder and the consummation of the transactions
contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the USE Companies and constitutes a legal, valid and
binding obligation of each of the USE Companies, enforceable against each of
the USE Companies in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
2.4 USE SHARES. Upon consummation of the Merger and the issuance
and delivery of certificates representing the USE Shares to the Shareholders,
the USE Shares will be validly issued, fully paid and non-assessable shares of
USE Common Stock.
2.5 NO COMMISSIONS. Except with respect to a fee payable to
Financial Research Associates, none of the USE Companies has incurred any
obligation for any finder's or broker's or
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agent's fees or commissions or similar compensation in connection with the
transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS
As a material inducement to each of the USE Companies to enter into
this Agreement and to consummate the transactions contemplated hereby, each of
the Shareholders and the Company makes the following representations and
warranties to USE (except for the Xxxxxx Trust and Energy Enterprises, which
only make the representations and warranties set forth in Section 3.3, 3.4,
3.5, 3.6, 3.26 and 3.27:
3.1 CORPORATE STATUS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and has the requisite power and authority to own or lease its
properties and to carry on its business as now being conducted. The Company is
not legally qualified to transact business as a foreign corporation in any
jurisdiction other than those set forth on Schedule 3.1, and the nature of its
properties and the conduct of its business does not require such qualification
in any other jurisdiction. The Company has fully complied with all of the
requirements of any statute governing the use and registration of fictitious
names, and has the legal right to use the names under which it operates its
business. There is no pending or threatened proceeding for the dissolution,
liquidation, insolvency or rehabilitation of the Company.
3.2 POWER AND AUTHORITY. The Company has the power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The Company has taken all
action necessary to authorize the execution and delivery of this Agreement, the
performance of its obligations hereunder and the consummation of the
transactions contemplated hereby. Each of the Shareholders is an individual
residing in the State of Indiana, and has the requisite competence and
authority to execute and deliver this Agreement, to perform his respective
obligations hereunder and to consummate the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by the Company and the Shareholders, and constitutes the legal, valid
and binding obligation of each of them, enforceable against them in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
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3.4 CAPITALIZATION. As of the date hereof, the Company has (a)
1,000 shares of Company Common Stock authorized and no other shares of any
class of capital stock, (b) 500 shares of Company Common Stock issued and
outstanding, and (c) 500 shares of Company Common Stock held in treasury. All
of the issued and outstanding shares of capital stock of the Company (i) have
been duly authorized and validly issued and are fully paid and non-assessable,
(ii) were issued in compliance with all applicable state and federal securities
laws, and (iii) were not issued in violation of any preemptive rights or rights
of first refusal. No preemptive rights or rights of first refusal exist with
respect to the shares of capital stock of the Company and no such rights arise
by virtue of or in connection with the transactions contemplated hereby. There
are no outstanding or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange rights or other
agreements or commitments of any kind that could require the Company to issue
or sell any shares of its capital stock (or securities convertible into or
exchangeable for shares of its capital stock). There are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights with
respect to the Company. There are no proxies, voting rights or other
agreements or understandings with respect to the voting or transfer of the
capital stock of the Company. The Company is not obligated to redeem or
otherwise acquire any of its outstanding shares of capital stock.
3.5 SHAREHOLDERS OF THE COMPANY. Schedule 3.5 sets forth, with
respect to the Company, the name, address and federal taxpayer identification
number of, and the number of outstanding shares of each class of its capital
stock owned of record and/or beneficially by, each shareholder of the Company
as of the close of business on the date of this Agreement. As of the date
hereof, the Shareholders constitute all of the holders of all issued and
outstanding shares of capital stock of the Company, and each of the
Shareholders owns such shares free and clear of all Liens, restrictions and
claims of any kind.
3.6 NO VIOLATION. The execution and delivery of this Agreement by
the Company and the Shareholders, the performance by them of their respective
obligations hereunder and the consummation by them of the transactions
contemplated by this Agreement will not (i) contravene any provision of the
articles of incorporation or bylaws of the Company, (ii) violate or conflict
with any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against the Company
or any of the Shareholders, (iii) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against the Company or any of the
Shareholders, (iv) result in or require the creation or imposition of any Lien
upon or with respect to any of the property or assets of the Company, or (v)
require the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal or any other
Person, except any applicable filings required under the HSR Act, and any SEC
and other filings required to be made by USE.
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3.7 RECORDS OF THE COMPANY. The copies of the articles of
incorporation and bylaws of the Company which were provided to USE are true,
accurate and complete and reflect all amendments made through the date of this
Agreement. The minute books for the Company made available to USE for review
were correct and complete in all material respects as of the date of such
review, no further entries have been made through the date of this Agreement,
such minute books contain the true signatures of the persons purporting to have
signed them, and such minute books contain an accurate record of all material
corporate actions of the shareholders and directors (and any committees
thereof) of the Company taken by written consent or at a meeting since
incorporation. All material corporate actions taken by the Company have been
duly authorized or ratified. All accounts, books, ledgers and official and
other records of the Company have been fully, properly and accurately kept and
completed in all material respects, and there are no material inaccuracies or
discrepancies of any kind contained therein. The stock ledgers of the Company,
as previously made available to USE, contain accurate and complete records of
all issuances, transfers and cancellations of shares of the capital stock of
the Company.
3.8 SUBSIDIARIES. The Company does not own, directly or
indirectly, any outstanding voting securities of or other interests in, or
controls, any other corporation, partnership, joint venture or other business
entity.
3.9 FINANCIAL STATEMENTS. The Shareholders have delivered to USE
the financial statements of the Company (which, for purposes of this Section
3.9 includes American Enviro-Services, LLC, an Indiana limited liability
company (the "LLC")), including the notes thereto, for the year ended December
31, 1996, compiled by Xxxxx, Xxxxx & Settle LLC and for the six month period
ended June 30, 1997 compiled by Xxxxx, Xxxxx & Settle LLC, copies of which are
attached to Schedule 3.9 hereto (the "Financial Statements"). The balance
sheet of the Company dated as of June 30, 1997, included in the Financial
Statements is referred to herein as the "Current Balance Sheet." The Financial
Statements fairly present the financial position of the Company at each of the
balance sheet dates and the results of operations for the periods covered
thereby, and have been prepared in accordance with GAAP consistently applied
throughout the periods indicated. The books and records of the Company fully
and fairly reflect all of its transactions, properties, assets and liabilities.
There are no extraordinary or material non-recurring items of income or
expense during the periods covered by the Financial Statements and the balance
sheets included in the Financial Statements do not reflect any writeup or
revaluation increasing the book value of any assets, except as specifically
disclosed in the notes thereto. The Financial Statements reflect all
adjustments necessary for a fair presentation of the financial information
contained therein.
3.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as set
forth on Schedule 3.10, since the date of the Current Balance Sheet, the
Company has not (i) issued any capital stock or other securities; (ii) made any
distribution of or with respect to its capital stock or other securities or
purchased or redeemed any of its securities; (iii) paid any bonus to or
increased the rate of compensation of any of its officers or salaried employees
or amended any other terms of employment of such persons; (iv) sold, leased or
transferred any of its properties or assets other than in the ordinary course
of business consistent with past practice; (v) made or obligated itself to make
capital
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expenditures out of the ordinary course of business consistent with past
practice; (vi) made any payment in respect of its liabilities other than in the
ordinary course of business consistent with past practice; (vii) incurred any
obligations or liabilities (including any indebtedness) or entered into any
transaction or series of transactions involving in excess of $10,000 in the
aggregate out of the ordinary course of business, except for this Agreement and
the transactions contemplated hereby; (viii) suffered any theft, damage,
destruction or casualty loss, not covered by insurance and for which a timely
claim was filed, in excess of $10,000 in the aggregate; (ix) suffered any
extraordinary losses (whether or not covered by insurance); (x) waived,
canceled, compromised or released any rights having a value in excess of
$10,000 in the aggregate; (xi) made or adopted any change in its accounting
practice or policies; (xii) made any adjustment to its books and records other
than in respect of the conduct of its business activities in the ordinary
course consistent with past practice; (xiii) entered into any transaction with
any Affiliate other than intercompany transactions in the ordinary course of
business consistent with past practice; (xiv) except in the ordinary course of
business consistent with past practice, entered into any employment agreement;
(xv) terminated, amended or modified any agreement involving an amount in
excess of $10,000; (xvi) imposed any security interest or other Lien on any of
its assets other than in the ordinary course of business consistent with past
practice; (xvii) delayed paying any accounts payable which are due and payable
except to the extent being contested in good faith; (xviii) made or pledged any
charitable contribution in excess of $5,000; (xix) entered into any other
transaction or been subject to any event which has or may have a Material
Adverse Effect on the Company; or (xx) agreed to do or authorized any of the
foregoing.
3.11 LIABILITIES OF THE COMPANY. The Company (and the LLC) does
not have any liabilities or obligations, whether accrued, absolute, contingent
or otherwise, except (a) to the extent reflected or taken into account in the
Current Balance Sheet and not heretofore paid or discharged, (b) liabilities
incurred in the ordinary course of business consistent with past practice since
the date of the Current Balance Sheet (none of which relates to breach of
contract, breach of warranty, tort, infringement or violation of law, or which
arose out of any action, suit, claim, governmental investigation or arbitration
proceeding), (c) normal accruals, reclassifications, and audit adjustments
which would be reflected on an audited financial statement and which would not
be material in the aggregate, and (d) liabilities incurred in the ordinary
course of business prior to the date of the Current Balance Sheet which, in
accordance with GAAP consistently applied, were not recorded thereon. As of the
Effective Time, the aggregate amount of Indebtedness of the Company will not
exceed $625,000, the Working Capital of the Company will be no less than
$120,000, and the Net Worth of the Company will be not less than $350,000. For
purposes of this Agreement, (i) "Indebtedness" shall mean the aggregate amount
of all indebtedness of the Company (including accrued and unpaid interest),
whether owed to a bank or any other Person, and remaining payments on
capitalized equipment leases; (ii) "Working Capital" shall mean the difference,
if any, between Current Assets and Current Liabilities; (iii) "Current Assets"
shall mean all current assets determined in accordance with generally accepted
accounting principles; and (iv) "Current Liabilities" shall mean all current
liabilities (excluding the current portion of long-term indebtedness)
determined in accordance with generally accepted accounting principles.
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3.12 LITIGATION. There is no action, suit, or other legal or
administrative proceeding or governmental investigation pending, threatened,
anticipated or contemplated against, by or affecting the Company or the LLC, or
any of its properties or assets, or the Shareholders, or which questions the
validity or enforceability of this Agreement or the transactions contemplated
hereby, and there is no basis for any of the foregoing. There are no
outstanding orders, decrees or stipulations issued by any Governmental
Authority in any proceeding to which the Company or the LLC is or was a party
which have not been complied with in full or which continue to impose any
material obligations on the Company or the LLC.
3.13 ENVIRONMENTAL MATTERS.
(a) The Company (as defined in clause (h) below)
is and has at all times been in full compliance with all Environmental Laws (as
defined in clause (h) below) governing its business, operations, properties and
assets, including, without limitation: (i) all requirements relating to the
Discharge (as defined in clause (h) below) and Handling (as defined in clause
(h) below) of Hazardous Substances (as defined in clause (h) below) or other
Waste (as defined in clause (h) below); (ii) all requirements relating to
notice, record keeping and reporting; (iii) all requirements relating to
obtaining and maintaining Licenses (as defined in clause (h) below) for the
ownership of its properties and assets and the operation of its business as
presently conducted, including Licenses relating to the Handling and Discharge
of Hazardous Substances and other Waste; and (iv) all applicable writs, orders,
judgements, injunctions, governmental communications, decrees, informational
requests or demands issued pursuant to, or arising under, any Environmental
Laws.
(b) There are no (and there is no basis for any)
non-compliance orders, warning letters, notices of violation (collectively
"Notices"), claims, suits, actions, judgments, penalties, fines, or
administrative or judicial investigations or proceedings (collectively
"Proceedings") pending or threatened against or involving the Company, or its
business, operations, properties, or assets, issued by any Governmental
Authority or third party with respect to any Environmental Laws or Licenses
issued to the Company thereunder in connection with, related to or arising out
of the ownership by the Company of its properties or assets or the operation of
its business, which have not been resolved to the satisfaction of the issuing
Governmental Authority or third party in a manner that would not impose any
obligation, burden or continuing liability on USE or the Surviving Corporation
in the event that the transactions contemplated by this Agreement are
consummated, or which could have a Material Adverse Effect on the Company,
including, without limitation: (i) Notices or Proceedings related to the
Company being a potentially responsible party for a federal or state
environmental cleanup site or for corrective action under any applicable
Environmental Laws; (ii) Notices or Proceedings in connection with any federal
or state environmental cleanup site, or in connection with any real property or
premises where the Company has transported, transferred or disposed of other
Waste; (iii) Notices or Proceedings relating to the Company being responsible
to undertake any response or remedial actions or clean-up actions of any kind;
or (iv) Notices or Proceedings related to the Company being liable under any
Environmental Laws for personal injury, property damage, natural resource
damage, or clean up obligations.
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(c) The Company has not Handled or Discharged,
nor has it allowed or arranged for any third party to Handle or Discharge,
Hazardous Substances or other Waste to, at or upon: (i) any location other than
a site lawfully permitted to receive such Hazardous Substances or other Waste;
(ii) any real property currently or previously owned or leased by the Company;
or (iii) any site which, pursuant to any Environmental Laws, (x) has been
placed on the National Priorities List or its state equivalent, or (y) the
Environmental Protection Agency or the relevant state agency or other
Governmental Authority has notified the Company that such Governmental
Authority has proposed or is proposing to place on the National Priorities List
or its state equivalent. There has not occurred, nor is there presently
occurring, a Discharge, or threatened Discharge, of any Hazardous Substance on,
into or beneath the surface of, or adjacent to, any real property currently or
previously owned or leased by the Company in an amount requiring a notice or
report to be made to a Governmental Authority or in violation of any applicable
Environmental Laws.
(d) Schedule 3.13 identifies the operations and
activities, and locations thereof, which have been conducted or are being
conducted by the Company on any real property currently or previously owned or
leased by the Company which have involved the Handling or Discharge of
Hazardous Substances.
(e) Schedule 3.13 identifies the locations to
which the Company has ever transferred, transported, hauled, moved, or disposed
of Waste and the types and volumes of Waste transferred, transported, hauled,
moved, or disposed of to each such location.
(f) The Company uses only those Aboveground
Storage Tanks (as defined in clause (h) below) identified on Schedule 3.13.
The Company does not use, nor has it used, any Underground Storage Tanks (as
defined in clause (h) below), and there are not now nor have there ever been
any Underground Storage Tanks beneath any real property currently or previously
owned or leased by the Company that are required to be registered under
applicable Environmental Laws.
(g) Schedule 3.13 identifies (i) all
environmental audits, assessments or occupational health studies undertaken by
the Company or its agents or, to the knowledge of the Company and Shareholders,
undertaken by any Governmental Authority, or any third party, relating to or
affecting the Company or any real property currently or previously owned or
leased by the Company; (ii) the results of any ground, water, soil, air or
asbestos monitoring undertaken by the Company or its agents or, to the
knowledge of the Company and Shareholders, undertaken by any Governmental
Authority or any third party, relating to or affecting the Company or any real
property currently or previously owned or leased by the Company which indicate
the presence of Hazardous Substances at levels requiring a notice or report to
be made to a Governmental Authority or in violation of any applicable
Environmental Laws; (iii) all material written communications between the
Company and any Governmental Authority arising under or related to
Environmental Laws; and (iv) all outstanding citations issued under OSHA, or
similar state or local statutes, laws, ordinances, codes, rules, regulations,
orders, rulings, or decrees, relating to or affecting either the Company or any
real property currently or previously owned or leased by the Company.
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(h) For purposes of this Section 3.13, the
following terms shall have the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Aboveground Storage
Tanks.
"Company" means the Company, the LLC and any of their
respective Affiliates.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further
be defined in any Environmental Law, into any medium including,
without limitation, ground water, surface water, soil or air.
"Environmental Laws" means all federal, state, regional or
local statutes, laws, rules, regulations, codes, orders, plans,
injunctions, decrees, rulings, and changes or ordinances or judicial
or administrative interpretations thereof, or similar laws of foreign
jurisdictions where the Company conducts business, whether currently
in existence or hereafter enacted or promulgated, any of which govern
(or purport to govern) or relate to pollution, protection of the
environment, public health and safety, air emissions, water
discharges, hazardous or toxic substances, solid or hazardous waste or
occupational health and safety, as any of these terms are or may be
defined in such statutes, laws, rules, regulations, codes, orders,
plans, injunctions, decrees, rulings and changes or ordinances, or
judicial or administrative interpretations thereof, including, without
limitation: the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendment and
Reauthorization Act of 1986, 42 U.S.C. Section 9601, et seq.
(collectively "CERCLA"); the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and subsequent
Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Section 6901
et seq. (collectively "RCRA"); the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. Section 1801, et seq.; the Clean Water Act,
as amended, 33 U.S.C. Section 1311, et seq.; the Clean Air Act, as
amended (42 U.S.C. Section 7401-7642); the Toxic Substances Control
Act, as amended, 15 U.S.C. Section 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act as amended, 7 U.S.C.
Section 136-136y ("FIFRA"); the Emergency Planning and Community
Right-to-Know Act of 1986 as amended, 42 U.S.C. Section 11001, et seq.
(Title III of XXXX) ("EPCRA"); and the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. Section 651, et seq. ("OSHA").
"Handle" means any manner of generating, accumulating,
storing, treating, disposing of, transporting, transferring, labeling,
handling, manufacturing or using, as any of such terms may further be
defined in any Environmental Law, of any Hazardous Substances or
Waste.
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"Hazardous Substances" shall be construed broadly to include
any toxic or hazardous substance, material, or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi- solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated
biphenyls, the presence of which requires investigation or remediation
under any Environmental Laws or which are or become regulated, listed
or controlled by, under or pursuant to any Environmental Laws,
including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, FIFRA, EPCRA and OSHA, or any similar state
statute, or any future amendments to, or regulations implementing such
statutes, laws, ordinances, codes, rules, regulations, orders,
rulings, or decrees, or which has been or shall be determined or
interpreted at any time by any Governmental Authority to be a
hazardous or toxic substance regulated under any other statute, law,
regulation, order, code, rule, order, or decree.
"Licenses" means all licenses, certificates, permits,
approvals and registrations.
"Underground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Underground Storage
Tanks.
"Waste" shall be construed broadly to include agricultural
wastes, biomedical wastes, biological wastes, bulky wastes,
construction and demolition debris, garbage, household wastes,
industrial solid wastes, liquid wastes, recyclable materials, sludge,
solid wastes, special wastes, used oils, white goods, and yard trash
as those terms are defined under any applicable Environmental Laws.
3.14 REAL ESTATE
(a) Schedule 3.14(a) sets forth a list of each parcel of
real property owned by the Company or the LLC on the date hereof (the "Company
Owned Properties") and owned by any Shareholder or Affiliate of the Company or
the Shareholders as of the date hereof and used in the conduct of the business
of the Company (the "Other Owned Properties, together with the Company Owned
Properties, the "Owned Properties"), which Schedule sets forth with respect to
each such parcel (A) the legal description, including street address, of such
parcel, (B) a brief description (including size and function) of the principal
improvements and buildings on such parcel, (C) the title insurance policy
relating to such parcel, all of which policies have previously been delivered
or made available to USE by the Company, and (D) the material terms of the
mortgage on such property. With respect to each such parcel of Owned Property:
(i) The Company has (or will have as of the
Effective Date) good and marketable title to each parcel of Owned
Property, free and clear of any Lien
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other than (w) the mortgage listed on Schedule 3.14(a), (x) liens for
real estate taxes not yet due and payable; (y) recorded easements,
covenants, and other restrictions which do not impair the current use,
occupancy or value of the property subject thereto, and (z)
encumbrances and restrictions described in the title insurance
policies listed on Schedule 3.14(a);
(ii) There are no pending or threatened
condemnation proceedings, suits or administrative actions relating to
the Owned Properties or other matters affecting adversely the current
use, occupancy or value thereof;
(iii) The legal descriptions for the parcels of
Owned Property contained in the deeds thereof describe such parcels
fully and adequately; the buildings and improvements are located
within the boundary lines of the described parcels of land, are not in
violation of applicable setback requirements, local comprehensive plan
provisions, zoning laws and ordinances (and none of the properties or
buildings or improvements thereon are subject to "permitted
non-conforming use" or "permitted non-conforming structure"
classifications), building code requirements, permits, licenses or
other forms of approval by any Governmental Authority, and do not
encroach on any easement which may burden the land; the land does not
serve any adjoining property for any purpose inconsistent with the use
of the land; and the Owned Properties are not located within any flood
plain (such that a mortgagee would require a mortgagor to obtain flood
insurance) or subject to any similar type restriction for which any
permits or licenses necessary to the use thereof have not been
obtained;
(iv) All facilities have received all approvals of
Governmental Authorities (including licenses and permits) required in
connection with the ownership or operation thereof and have been
operated and maintained in accordance with applicable laws,
ordinances, rules and regulations;
(v) Other than those leases listed in Schedule
3.14(b), there are no Contracts granting to any party or parties the
right of use or occupancy of any portion of the parcels of Owned
Property;
(vi) There are no outstanding options or rights of
first refusal to purchase the parcels of Owned Property, or any
portion thereof or interest therein;
(vii) There are no parties (other than the Company)
in possession of the parcels of Owned Property;
(viii) All facilities located on the parcels of
Owned Property are supplied with utilities and other services
necessary for the operation of such facilities, including gas,
electricity, water, telephone, sanitary sewer and storm sewer, all of
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which services are adequate in accordance with all applicable laws,
ordinances, rules and regulations, and are provided via public roads
or via permanent, irrevocable, appurtenant easements benefitting the
parcels of Owned Property;
(ix) Each parcel of Owned Property abuts on and
has direct vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant easement
benefitting the parcel of Owned Property; access to the property is
provided by paved public right-of-way with adequate curb cuts
available; and there is no pending or threatened termination of the
foregoing access rights;
(x) All improvements and buildings on the Owned
Property are in good repair and are safe for occupancy and use, free
from termites or other wood-destroying organisms; the roofs thereof
are watertight; and the structural components and systems (including
plumbing, electrical, air conditioning/heating, and sprinklers) are in
good working order and adequate for the use of such Owned Property in
the manner in which presently used;
(xi) There are no service contracts, management
agreements or similar agreements which affect the parcels of Owned
Property; and
(xii) The Company has not received notice of (a)
any condemnation proceeding with respect to any portion of any parcel
of Owned Property or any access thereto; and no such proceeding is
contemplated by any Governmental Authority; or (b) any special
assessment which may affect any parcel of Owned Property, and no such
special assessment is contemplated by any Governmental Authority.
(b) Schedule 3.14(b) sets forth a list of all leases,
licenses or similar agreements, oral or written, ("Leases") to which the
Company is a party (copies of which have previously been furnished to USE), in
each case setting forth (A) the lessor and lessee thereof and the date and term
of each of the Leases, (B) the legal description, including street address, of
each property covered thereby, and (C) a brief description (including size and
function) of the principal improvements and buildings thereon (the "Leased
Premises"), all of which are within the property set-back and building lines of
the respective property. The Leases are in full force and effect and have not
been amended, and no party thereto is in default or breach under any such
Lease. No event has occurred which, with the passage of time or the giving of
notice or both, would cause a material breach of or default under any of such
Leases. There is no breach or anticipated breach by any other party to such
Leases. With respect to each such Leased Premises:
(i) The Company has valid leasehold interests in
the Leased Premises, free and clear of any Liens, covenants and
easements or title defects of any nature whatsoever;
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(ii) The portions of the buildings located on the
Leased Premises that are used in the business of the Company are each
in good repair and condition, normal wear and tear excepted, and are
in the aggregate sufficient to satisfy the Company's current and
reasonably anticipated normal business activities as conducted
thereat;
(iii) Each of the Leased Premises (a) has direct
access to public roads or access to public roads by means of a
perpetual access easement, such access being sufficient to satisfy the
current and reasonably anticipated normal transportation requirements
of the Company's business as presently conducted at such parcel; and
(b) is served by all utilities in such quantity and quality as are
sufficient to satisfy the current normal business activities as
conducted at such parcel; and
(iv) The Company has not received notice of (a)
any condemnation proceeding with respect to any portion of the Leased
Premises or any access thereto, and no such proceeding is contemplated
by any Governmental Authority; or (b) any special assessment which may
affect any of the Leased Premises, and no such special assessment is
contemplated by any Governmental Authority.
3.15 GOOD TITLE TO AND CONDITION OF ASSETS
(a) Except as set forth in Schedule 3.15, the Company has
good and marketable title to all of its Assets (as hereinafter defined), free
and clear of any Liens or restrictions on use. For purposes of this Agreement,
the term "Assets" means all of the properties and assets of the Company and the
LLC, other than the Owned Properties and the Leased Premises, whether personal
or mixed, tangible or intangible, wherever located.
(b) The Fixed Assets (as hereinafter defined) currently
in use or necessary for the business and operations of the Company are in good
operating condition, normal wear and tear excepted, and have been maintained
substantially in accordance with all applicable manufacturer's specifications
and warranties. For purposes of this Agreement, the term "Fixed Assets" means
all vehicles, machinery, equipment, tools, supplies, leasehold improvements,
furniture and fixtures used by or located on the premises of the Company or set
forth on the Current Balance Sheet or acquired by the Company since the date of
the Current Balance Sheet. Schedule 3.15 lists the vehicles owned, leased or
used by the Company, setting forth the make, model, vehicle identification
number, and year of manufacture, and for each vehicle, whether it is owned or
leased, and if owned, the name of any lienholder and the amount of the lien,
and if leased, the name of the lessor and the general terms of the lease, and,
whether owned or leased, if it is used to transport, transfer, handle, dispose
or haul Waste materials.
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3.16 COMPLIANCE WITH LAWS.
(a) The Company (which includes the LLC for purposes of
this Section 3.16) is and has been in compliance with all laws, regulations and
orders applicable to it, its business and operations (as conducted by it now
and in the past), the Assets, the Owned Properties and the Leased Premises and
any other properties and assets (in each case owned or used by it now or in the
past). The Company has not been cited, fined or otherwise notified of any
asserted past or present failure to comply with any laws, regulations or orders
and no proceeding with respect to any such violation is pending or threatened.
(b) Neither the Company, nor any of its employees or
agents, has made any payment of funds in connection with the business of the
Company which is prohibited by law, and no funds have been set aside to be used
in connection with the business of the Company for any payment prohibited by
law.
(c) The Company is and at all times has been in full
compliance with the terms and provisions of the Immigration Reform and Control
Act of 1986, as amended (the "Immigration Act"). With respect to each Employee
(as defined in 8 C.F.R. 274a.1(f)) of the Company for whom compliance with the
Immigration Act is required, the Company has on file a true, accurate and
complete copy of (i) each Employee's Form I-9 (Employment Eligibility
Verification Form) and (ii) all other records, documents or other papers
prepared, procured and/or retained by the Company pursuant to the Immigration
Act. The Company has not been cited, fined, served with a Notice of Intent to
Fine or with a Cease and Desist Order, nor has any action or administrative
proceeding been initiated or threatened against the Company, by the Immigration
and Naturalization Service by reason of any actual or alleged failure to comply
with the Immigration Act.
(d) The Company is not subject to any Contract, decree or
injunction in which the Company is a party which restricts the continued
operation of any business of the Company or the expansion thereof to other
geographical areas, customers and suppliers or lines of business.
3.17 LABOR AND EMPLOYMENT MATTERS. Schedule 3.17 sets forth the
name, address, social security number and current rate of compensation of the
employees of the Company. The Company (and the LLC) is not a party to or bound
by any collective bargaining agreement or any other agreement with a labor
union, and there has been no effort by any labor union during the 24 months
prior to the date hereof to organize any employees of the Company (or the LLC)
into one or more collective bargaining units. There is no pending or
threatened labor dispute, strike or work stoppage which affects or which may
affect the business of the Company or which may interfere with its continued
operations. Neither the Company, the LLC nor any agent, representative or
employee thereof has within the last 24 months committed any unfair labor
practice as defined in the National Labor Relations Act, as amended, and there
is no pending or threatened charge or complaint against the Company (or the
LLC) by or with the National Labor Relations Board or any representative
thereof. There has been no strike, walkout or work stoppage involving any of
the employees of the Company (or the LLC) during the 24 months prior to the
date hereof. None of the Shareholders is
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aware that any executive or key employee or group of employees has any plans to
terminate his, her or their employment with the Company as a result of the
Merger or otherwise. The Company (and the LLC) has complied with applicable
laws, rules and regulations relating to employment, civil rights and equal
employment opportunities, including but not limited to, the Civil Rights Act of
1964, the Fair Labor Standards Act, and the Americans with Disabilities Act, as
amended.
3.18 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Schedule 3.18 contains a
list setting forth each employee benefit plan or arrangement of the Company
(which includes the LLC for purposes of this Section 3.18), including but not
limited to employee pension benefit plans, as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
multiemployer plans, as defined in Section 3(37) of ERISA, employee welfare
benefit plans, as defined in Section 3(1) of ERISA, deferred compensation
plans, stock option plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans and
policies, whether or not described in Section 3(3) of ERISA, in which
employees, their spouses or dependents, of the Company participate ("Employee
Benefit Plans") (true and accurate copies of which, together with the most
recent annual reports on Form 5500 and summary plan descriptions with respect
thereto, were furnished to USE).
(b) Compliance with Law. With respect to each Employee
Benefit Plan (i) each has been administered in all material respects in
compliance with its terms and with all applicable laws, including, but not
limited to, ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"); (ii) no actions, suits, claims or disputes are pending, or threatened;
(iii) no audits, inquiries, reviews, proceedings, claims, or demands are
pending with any governmental or regulatory agency; (iv) there are no facts
which could give rise to any liability in the event of any such investigation,
claim, action, suit, audit, review, or other proceeding; (v) all material
reports, returns, and similar documents required to be filed with any
governmental agency or distributed to any plan participant have been duly or
timely filed or distributed; and (vi) no "prohibited transaction" has occurred
within the meaning of the applicable provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each Employee
Benefit Plan intended to qualify under Code Section 401(a) or 403(a) (i) the
Internal Revenue Service has issued a favorable determination letter, true and
correct copies of which have been furnished to USE, that such plans are
qualified and exempt from federal income taxes; (ii) no such determination
letter has been revoked nor has revocation been threatened, nor has any
amendment or other action or omission occurred with respect to any such plan
since the date of its most recent determination letter or application therefor
in any respect which would adversely affect its qualification or materially
increase its costs; (iii) no such plan has been amended in a manner that would
require security to be provided in accordance with Section 401(a)(29) of the
Code; (iv) no reportable event (within the meaning of Section 4043 of ERISA)
has occurred, other than one for which the 30-day notice requirement has been
waived; (v) as of the Effective Date, the present value of all liabilities that
would be "benefit liabilities" under Section 4001(a)(16) of ERISA if benefits
described in Code
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Section 411(d)(6)(B) were included will not exceed the then current fair market
value of the assets of such plan (determined using the actuarial assumptions
used for the most recent actuarial valuation for such plan); (vi) all
contributions to, and payments from and with respect to such plans, which may
have been required to be made in accordance with such plans and, when
applicable, Section 302 of ERISA or Section 412 of the Code, have been timely
made; and (vii) all such contributions to the plans, and all payments under the
plans (except those to be made from a trust qualified under Section 401(a) of
the Code) and all payments with respect to the plans (including, without
limitation, PBGC (as defined below) and insurance premiums) for any period
ending before the Effective Date that are not yet, but will be, required to be
made are properly accrued and reflected on the Current Balance Sheet.
(d) Multiemployer Plans. With respect to any
multiemployer plan, as described in Section 4001(a)(3) of ERISA ("MPPA Plan")
(i) all contributions required to be made with respect to employees of the
Company have been timely paid; (ii) the Company has not incurred or is not
expected to incur, directly or indirectly, any withdrawal liability under ERISA
with respect to any such plan (whether by reason of the transactions
contemplated by the Agreement or otherwise); (iii) Schedule 3.18 sets forth (A)
the withdrawal liability under ERISA to each MPPA Plan, (B) the date as of
which such amount was calculated, and (C) the method for determining the
withdrawal liability; and (iv) no such plan is (or is expected to be) insolvent
or in reorganization and no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
exists or is expected to exist with respect to any such plan.
(e) Welfare Plans. (i) The Company is not obligated
under any employee welfare benefit plan as described in Section 3(1) of ERISA
("Welfare Plan") to provide medical or death benefits with respect to any
employee or former employee of the Company or its predecessors after
termination of employment; (ii) the Company has complied with the notice and
continuation coverage requirements of Section 4980B of the Code and the
regulations thereunder with respect to each Welfare Plan that is, or was during
any taxable year for which the statute of limitations on the assessment of
federal income taxes remains, open, by consent or otherwise, a group health
plan within the meaning of Section 5000(b)(1) of the Code; and (iii) there are
no reserves, assets, surplus or prepaid premiums under any Welfare Plan which
is an Employee Benefit Plan. The consummation of the transactions contemplated
by this Agreement will not entitle any individual to severance pay, and, will
not accelerate the time of payment or vesting, or increase the amount of
compensation, due to any individual.
(f) Controlled Group Liability. Neither the Company, nor
any entity that would be aggregated with it under Code Section 414(b), (c), (m)
or (o): (i) has ever terminated or withdrawn from any employee benefit plan
under circumstances resulting (or expected to result) in liability to the
Pension Benefit Guaranty Corporation ("PBGC"), the fund by which the employee
benefit plan is funded, or any employee or beneficiary for whose benefit the
plan is or was maintained (other than routine claims for benefits); (ii) has
any assets subject to (or expected to be subject to) a lien for unpaid
contributions to any employee benefit plan; (iii) has failed to pay premiums to
the PBGC when due; (iv) is subject to (or expected to be subject to) an excise
tax under
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Code Section 4971; (v) has engaged in any transaction which would give rise to
liability under Section 4069 or Section 4212(c) of ERISA; or (vi) has violated
Code Section 4980B or Section 601 through 608 of ERISA.
(g) Other Liabilities. (i) None of the Employee Benefit
Plans obligates the Company to pay separation, severance, termination or
similar benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change of control" (as such term is
defined in Section 280G of the Code); (ii) all required or discretionary (in
accordance with historical practices) payments, premiums, contributions,
reimbursements, or accruals for all periods ending prior to or as of the
Effective Date shall have been made or properly accrued on the Current Balance
Sheet or will be properly accrued on the books and records of the Company as of
the Effective Date; and (iii) none of the Employee Benefit Plans has any
unfunded liabilities which are not reflected on the Current Balance Sheet or
the books and records of the Company.
3.19 TAX MATTERS. All Tax Returns required to be filed prior to
the date hereof with respect to the Company (which includes the LLC for
purposes of this Section 3.19) or any of its income, properties, franchises or
operations have been timely filed, each such Tax Return has been prepared in
compliance with all applicable laws and regulations, and all such Tax Returns
are true and accurate in all respects. All Taxes due and payable by or with
respect to the Company have been paid and are accrued on the Current Balance
Sheet or will be accrued on its books and records as of the Closing. Except as
set forth in Schedule 3.19 hereto: (i) with respect to each taxable period of
the Company, either such taxable period has been audited by the relevant taxing
authority or the time for assessing or collecting Taxes with respect to each
such taxable period has closed and such taxable period is not subject to review
by any relevant taxing authority; (ii) no deficiency or proposed adjustment
which has not been settled or otherwise resolved for any amount of Taxes has
been asserted or assessed by any taxing authority against the Company; (iii)
the Company has not consented to extend the time in which any Taxes may be
assessed or collected by any taxing authority; (iv) the Company has not
requested or been granted an extension of the time for filing any Tax Return to
a date later than the Effective Time; (v) there is no action, suit, taxing
authority proceeding, or audit or claim for refund now in progress, pending or
threatened against or with respect to the Company regarding Taxes; (vi) the
Company has not made an election or filed a consent under Section 341(f) of the
Code (or any corresponding provision of state, local or foreign law) on or
prior to the Effective Time; (vii) there are no Liens for Taxes (other than for
current Taxes not yet due and payable) upon the assets of the Company; (viii)
the Company will not be required (A) as a result of a change in method of
accounting for a taxable period ending on or prior to the Effective Date, to
include any adjustment under Section 481(c) of the Code (or any corresponding
provision of state, local or foreign law) in taxable income for any taxable
period (or portion thereof) beginning after the Effective Time or (B) as a
result of any "closing agreement,"as described in Section 7121 of the Code (or
any corresponding provision of state, local or foreign law), to include any
item of income or exclude any item of deduction from any taxable period (or
portion thereof) beginning after the Effective Time; (ix) the Company has not
been a member of an affiliated group (as defined in Section 1504 of the Code)
or filed or been included in a combined, consolidated or unitary income Tax
Return; (x) the Company is not a party to or bound by any tax allocation or tax
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sharing agreement or has any current or potential contractual obligation to
indemnify any other Person with respect to Taxes; (xi) no taxing authority will
claim or assess any additional Taxes against the Company for any period for
which Tax Returns have been filed; (xii) the Company has not made any payments,
and will not become obligated (under any contract entered into on or before the
Effective Date) to make any payments, that will be non-deductible under Section
280G of the Code (or any corresponding provision of state, local or foreign
law); (xiii) the Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code (or any
corresponding provision of state, local or foreign law) during the applicable
period specified in Section 897(c)(1)(a)(ii) of the Code (or any corresponding
provision of state, local or foreign law); (xiv) no claim has ever been made by
a taxing authority in a jurisdiction where the Company does not file Tax
Returns that such company is or may be subject to Taxes assessed by such
jurisdiction; (xv) the Company does not have any permanent establishment in any
foreign country, as defined in the relevant tax treaty between the United
States of America and such foreign country; (xvi) true, correct and complete
copies of all income and sales Tax Returns filed by or with respect to the
Company since the Company's formation have been furnished or made available to
USE; (xvii) the Company will not be subject to any Taxes for the period ending
at the Effective Time for any period for which a Tax Return has not been filed
imposed pursuant to Section 1374 or Section 1375 of the Code (or any
corresponding provision of state, local or foreign law); and (xviii) no sales
or use tax, non-recurring intangibles tax, documentary stamp tax or other
excise tax (or comparable tax imposed by any governmental entity) will be
payable by USE by virtue of the transactions contemplated in this Agreement.
3.20 INSURANCE. The Company is covered by valid, outstanding and
enforceable policies of insurance covering its respective properties, assets
and businesses against risks of the nature normally insured against by
corporations in the same or similar lines of business and in coverage amounts
typically and reasonably carried by such corporations (the "Insurance
Policies"). Such Insurance Policies are in full force and effect, and all
premiums due thereon have been paid. As of the Effective Time, each of the
Insurance Policies will be in full force and effect. None of the Insurance
Policies will lapse or terminate as a result of the transactions contemplated
by this Agreement. The Company has complied with the provisions of such
Insurance Policies. Schedule 3.20 contains (i) a complete and correct list of
all Insurance Policies and all amendments and riders thereto (copies of which
have been provided to USE) and (ii) a detailed description of each pending
claim under any of the Insurance Policies for an amount in excess of $10,000
that relates to loss or damage to the properties, assets or businesses of the
Company. The Company has not failed to give, in a timely manner, any notice
required under any of the Insurance Policies to preserve its rights thereunder.
3.21 RECEIVABLES. All of the Receivables (as hereinafter defined)
are valid and legally binding, represent bona fide transactions and arose in
the ordinary course of business of the Company. Xxxxxx agrees to use his best
efforts to cause the Receivables to be collected in full in accordance with the
terms of such receivables. For purposes of this Agreement, the term
"Receivables" means all receivables of the Company, including all trade account
receivables arising from the provision of services, sale of inventory, notes
receivable, and insurance proceeds receivable.
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3.22 LICENSES AND PERMITS. The Company possesses all licenses and
required governmental or official approvals, permits or authorizations
(collectively, the "Permits") for its businesses and operations, including with
respect to the operation of each of the Owned Properties and Leased Premises,
and Schedule 3.22 contains a true and complete list of all such Permits. All
such Permits are valid and in full force and effect, the Company is in full
compliance with the respective requirements thereof, and no proceeding is
pending or threatened to revoke or amend any of them. None of such Permits is
or will be impaired or in any way affected by the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
3.23 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. The Assets, Owned Properties and Leased
Premises constitute, in the aggregate, all of the assets and properties
necessary for the conduct of the business of the Company in the manner in which
and to the extent to which such business is currently being conducted (and as
was conducted by the LLC). No current supplier to the Company of items
essential to the conduct of its business has threatened to terminate its
business relationship with it for any reason. Except as set forth on Schedule
3.23, the Company does not have any direct or indirect interest in any
customer, supplier or competitor of the Company, or in any person from whom or
to whom the Company leases real or personal property. No officer, director or
shareholder of the Company, nor any person related by blood or marriage to any
such person, nor any entity in which any such person owns any beneficial
interest, is a party to any Contract or transaction with the Company or has any
interest in any property used by the Company.
3.24 INTELLECTUAL PROPERTY. The Company has full legal right,
title and interest in and to all trademarks, service marks, trade names,
copyrights, know-how, patents, trade secrets, proprietary computer software,
data bases and compilations, licenses (including licenses for the use of
computer software programs), and other intellectual property used in the
conduct of its business (the "Intellectual Property"). The business of the
Company as presently conducted, and the unrestricted conduct and the
unrestricted use and exploitation of the Intellectual Property, does not
infringe or misappropriate any rights held or asserted by any Person, and no
Person is infringing on the Intellectual Property. No payments are required
for the continued use of the Intellectual Property. None of the Intellectual
Property has ever been declared invalid or unenforceable, or is the subject of
any pending or threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like
claim, action or proceeding.
3.25 CONTRACTS. Schedule 3.25 sets forth a list of each Material
Contract (as defined below), true, correct and complete copies of which have
been provided to USE. Schedule 3.25 identifies (i) which franchise and other
agreements with Governmental Authorities grant the Company full rights and
privileges necessary to operate the Company's business, and (ii) certain
Material Contracts identified therein that require the Consents of third
parties to the transactions contemplated hereby. The copy of each Material
Contract furnished to USE is a true and complete copy of the document it
purports to represent and reflects all amendments thereto made through the date
of this Agreement. The Company (and the LLC) has not violated any of the terms
or conditions of any Material Contract or any term or condition which would
permit termination or material
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modification of any Material Contract, all of the covenants to be performed by
any other party thereto have been fully performed, and there are no claims for
breach or indemnification or notice of default or termination under any
Material Contract. No event has occurred which constitutes, or after notice or
the passage of time, or both, would constitute, a default by the Company under
any Material Contract, and no such event has occurred which constitutes or
would constitute a default by any other party. The Company is not subject to
any liability or payment resulting from renegotiation of amounts paid under any
Material Contract. As used in this Section 3.25 "Material Contracts" shall
mean formal or informal, written or oral, (a) loan agreements, indentures,
mortgages, pledges, hypothecations, deeds of trust, conditional sale or title
retention agreements, security agreements, equipment financing obligations or
guaranties, or other sources of contingent liability in respect of any
indebtedness or obligations to any other Person, or letters of intent or
commitment letters with respect to same (other than those which individually
provide for annual payments of less than $10,000); (b) contracts obligating the
Company to provide or obtain products or services for a period of one year or
more; (c) leases of real property; (d) leases of personal property (other than
those which individually provide for annual payments of less than $10,000); (e)
distribution, sales agency, franchise or similar agreements (including, without
limitation, the Franchise Agreements), or agreements providing for an
independent contractor's services, or letters of intent with respect to same
(other than those which individually provide for annual payments of less than
$10,000); (f) employment agreements, management service agreements, consulting
agreements, confidentiality agreements, non-competition agreements, employee
handbooks, policy statements and any other agreements relating to any employee,
officer or director of the Company; (g) licenses, assignments or transfers of
trademarks, trade names, service marks, patents, copyrights, trade secrets or
know how, or other agreements regarding proprietary rights or intellectual
property; (h) contracts relating to pending capital expenditures by the
Company; (i) contracts obligating the Company to purchase vehicles, parts,
accessories, supplies, equipment, oil, advertising, media and media related
services of any kind (other than those which individually provide for annual
payments of less than $10,000); (j) non-competition agreements restricting the
Company in any manner, (k) any contracts obligating the Company to make
payments in excess of $25,000, in the aggregate, over the remaining term of
such contract; and (l) all other Contracts or understandings which are material
to the Company, or its business, assets or properties, irrespective of subject
matter and whether or not in writing, and not otherwise disclosed on the
Schedules.
3.26 ACCURACY OF INFORMATION FURNISHED BY THE SHAREHOLDERS. No
representation, statement or information made or furnished by the Shareholders
to USE or any of USE's representatives, including those contained in this
Agreement and the various Schedules attached hereto and the other information
and statements referred to herein and previously furnished by the Company and
the Shareholders, contains or shall contain any untrue statement of a material
fact or omits or shall omit any material fact necessary to make the information
contained therein not misleading. The Shareholders have provided USE with
true, accurate and complete copies of all documents listed or described in the
various Schedules attached hereto.
3.27 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Each of the Shareholders is acquiring the USE Shares hereunder for
his own account for investment and not
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with a view to, or for the sale in connection with, any distribution of any of
the USE Shares, except in compliance with applicable state and federal
securities laws. Each of the Shareholders has had the opportunity to discuss
the transactions contemplated hereby with USE and has had the opportunity to
obtain such information pertaining to the USE Companies as has been requested,
including but not limited to filings made by USE with the SEC under the
Exchange Act, including the most recent filing by USE on Form 10-KSB, and any
filings on Forms 10-QSB or 8-K since the end of USE's last fiscal year end.
Each of the Shareholders is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act, and has such knowledge and
experience in business or financial matters that he is capable of evaluating
the merits and risks of an investment in the USE Shares.
3.28 BANK ACCOUNTS; BUSINESS LOCATIONS. Schedule 3.28 sets forth
all accounts of the Company with any bank, broker or other depository
institution, and the names of all persons authorized to withdraw funds from
each such account. As of the date hereof, the Company has no office or place
of business other than as identified on Schedules 3.14(a) and 3.14(b) and the
Company's principal places of business and chief executive offices are
indicated on Schedule 3.14(a) or 3.14(b), and, except for equipment leased to
customers in the ordinary course of business, all locations where the
equipment, inventory, chattel paper and books and records of the Company is
located as of the date hereof are fully identified on Schedules 3.14(a) and
3.14(b).
3.29 NAMES; PRIOR ACQUISITIONS. All names under which the Company
does business as of the date hereof are specified on Schedule 3.29. Except as
set forth on Schedule 3.29, the Company has not changed its name or used any
assumed or fictitious name, or been the surviving entity in a merger, acquired
any business or changed its principal place of business or chief executive
office, within the past three years.
3.30 NO COMMISSIONS. Neither the Company nor the Shareholders has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, the business of the Company shall be conducted only in, and the
Company shall not take any action except in, the ordinary course of business,
consistent with past practice. The Company shall use its best efforts to
preserve intact its business organization, to keep available the services of
its current officers, employees and consultants, and to preserve its present
relationships with customers, suppliers and other persons with which it has
significant business relations. By way of amplification and not limitation,
the Company shall not, between the date of this Agreement and the Effective
Time,
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directly or indirectly, do or propose or agree to do any of the following
without the prior written consent of USE:
(a) amend or otherwise change its articles of
incorporation or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or,
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of (i) any shares of its capital stock of any class, or
any options, warrants, convertible securities or other rights of any
kind to acquire any shares of such capital stock, or any other
ownership interest, of it or (ii) any of its assets, tangible or
intangible, except in the ordinary course of business consistent with
past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock (except for distributions to the
Shareholders in amounts reasonably necessary for the Shareholders to
pay taxes with respect to the taxable income of the LLC for the
taxable period between January 1, 1997 and July 31, 1997);
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) acquire (including, without limitation, for cash
or shares of stock, by merger, consolidation, or acquisition of stock
or assets) any interest in any corporation, partnership or other
business organization or division thereof or any assets, or make any
investment either by purchase of stock or securities, contributions of
capital or property transfer, or, except in the ordinary course of
business, consistent with past practice, purchase any property or
assets of any other Person, (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations
of any Person, or make any loans or advances, or (iii) enter into any
Contract other than in the ordinary course of business, consistent
with past practice;
(f) increase the compensation payable or to become
payable to its officers or employees, or, except as presently bound to
do, grant any severance or termination pay to, or enter into any
employment or severance agreement with, any of its directors, officers
or other employees, or establish, adopt, enter into or amend or take
any action to accelerate any rights or benefits which any collective
bargaining, bonus, profit sharing, trust, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any directors, officers
or employees;
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(g) take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to
accounting policies or procedures;
(h) pay, discharge or satisfy any existing claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with
past practice of due and payable liabilities reflected or reserved
against in its financial statements, as appropriate, or liabilities
incurred after the date hereof in the ordinary course of business and
consistent with past practice;
(i) increase or decrease prices charged to its customers,
except for previously announced price changes, or take any other
action which might reasonably result in any material increase in the
loss of customers through non-renewal or termination of service
contracts or other causes; or
(j) agree, in writing or otherwise, to take or authorize
any of the foregoing actions or any action which would make any
representation or warranty in Article III untrue or incorrect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
5.2 COMPLIANCE WITH COVENANTS. The Shareholders shall cause the
Company to comply with all of the respective covenants of the Company under
this Agreement.
5.3 COOPERATION. Each of the parties agrees to cooperate with the
other in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation or the rules of The NASDAQ Stock Market (or any
exchange on which the USE Common Stock may be listed) in connection with the
transactions contemplated by this Agreement and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.
5.4 RELEASE OF PERSONAL OBLIGATIONS. USE shall cause the
Shareholders to be released from any personal liability under any loan or
obligation of the Company, and, in the event USE is
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unable to obtain such releases, shall indemnify such Shareholders from any
amounts owed by them under any loan, guarantee or other obligation for which
releases from personal liability cannot be obtained. USE shall take whatever
actions are reasonably necessary to obtain said releases, including, but not
limited to, the execution of security agreements or other such documents with
creditors of the Company to whom the Shareholders have personal liability in
order to substitute liability for said Shareholders.
5.5 ACCESS TO INFORMATION. From the date hereof to the Effective
Time, the Company shall (and shall cause its directors, officers, employees,
auditors, counsel and agents) to afford USE and USE's officers, employees,
auditors, counsel and agents reasonable access at all reasonable times to its
properties, offices, and other facilities, to its officers and employees and to
all books and records, and shall furnish such persons with all financial,
operating and other data and information as may be requested. No information
provided to or obtained by USE shall affect any representation or warranty in
this Agreement.
5.6 NOTIFICATION OF CERTAIN MATTERS. The Shareholders shall give
prompt notice to USE of the occurrence or non-occurrence of any event which
would likely cause any representation or warranty contained herein to be untrue
or inaccurate, or any covenant, condition, or agreement contained herein not to
be complied with or satisfied.
5.7 TAX MATTERS. USE, the Company and the Shareholders will use
their respective best efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code and do not
presently intend to take any action after the Merger is effected to cause the
Merger to lose its tax-free status; provided, however, that USE, the Company
and their respective Affiliates shall not be liable to the Shareholders for any
costs, damages, liabilities or other consequences of the failure of this
transaction to be treated as a tax-free reorganization and USE, the Company and
their respective Affiliates make no warranties, representations, guaranties or
other assurances that the transaction contemplated hereunder shall be treated
as a tax-free reorganization. All parties hereto agree to file the Plan of
Merger with its respective federal income tax returns for the year in which the
Merger is effective, and to comply with the reporting requirements of Treasury
Regulation 1.368-3.
5.8 CONFIDENTIALITY; PUBLICITY. Except as may be required by law
or as otherwise permitted or expressly contemplated herein, no party hereto or
their respective Affiliates, employees, agents and representatives shall
disclose to any third party this Agreement or the subject matter or terms
hereof without the prior consent of the other parties hereto. No press release
or other public announcement related to this Agreement or the transactions
contemplated hereby shall be issued by any party hereto without the prior
approval of the other parties, except that USE may make such public disclosure
which it believes in good faith to be required by law or by the terms of any
listing agreement with or requirements of a securities exchange (in which case
USE will consult with an officer of the Company prior to making such
disclosure).
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5.9 NO OTHER DISCUSSIONS. The Company, the Shareholders, and
their respective Affiliates, employees, agents and representatives will not (i)
initiate, encourage the initiation by others of discussions or negotiations
with third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
business or properties of the Company (whether by merger, consolidation, sale
of stock or otherwise) or (ii) enter into any agreement or commitment (whether
or not binding) with respect to any of the foregoing transactions. The
Shareholders will immediately notify USE if any third party attempts to
initiate any solicitation, discussion or negotiation with respect to any of the
foregoing transactions.
5.10 RESTRICTIVE COVENANTS. In order to assure that USE will
realize the benefits of the Merger, each of Xxxxxx, Meijer and Xxxxxxxxx agrees
with USE that he will not:
(a) for a period of five years from the Effective Time,
directly or indirectly, alone or as a partner, joint venturer,
officer, director, employee, consultant, agent, independent contractor
or stockholder of any company or business, engage in the business of
waste oil or water oil or water waste collection, disposal or
recycling environmental remediation or emergency response waste
clean-up (the "Environmental Services Business") in any county in any
state in the United States in which USE or any of its subsidiaries
conducts business at the time such Shareholder commences to engage in
such activity; provided, however, that, the beneficial ownership of
less than five percent (5%) of the shares of stock of any corporation
having a class of equity securities actively traded on a national
securities exchange or over-the-counter market shall not be deemed, in
and of itself, to violate the prohibitions of this Section;
(b) for a period of five years from the Effective Time,
directly or indirectly (i) induce any Person which is a customer of
USE or any of its subsidiaries to patronize any business directly or
indirectly in competition with the Environmental Services Business
conducted by USE or any of its subsidiaries; (ii) canvass, solicit or
accept from any Person which is a customer of USE or any of its
subsidiaries, any such competitive business; or (iii) request or
advise any Person which is a customer or supplier of USE or any of its
subsidiaries to withdraw, curtail or cancel any such customer's or
supplier's business with such entity;
(c) for a period of five years from the Effective Time,
directly or indirectly employ, or knowingly permit any company or
business directly or indirectly controlled by him, to employ, any
person who was employed by USE or any of its subsidiaries at or within
the prior six months, or in any manner seek to induce any such person
to leave his or her employment, however, that Midwest Custom
Chemicals, Inc. ("MCC") shall be permitted to engage such of the
Company or USE's employees who are currently providing services to MCC
so long as the scope of, and the time devoted to, such activities for
MCC are not more than what such employees provided to MCC
historically, and provided further that the
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Company or USE is indemnified in full for any costs associated with
MCC's engagement of such employees; and
(d) at any time following the Effective Time, directly or
indirectly, in any way utilize, disclose, copy, reproduce or retain in
his possession the Company's proprietary rights or records, including,
but not limited to, any of its customer lists.
The Shareholders agree and acknowledge that the restrictions contained in this
Section are reasonable in scope and duration and are necessary to protect USE
after the Effective Time. The parties agree and acknowledge that the breach of
this Section will cause irreparable damage to USE and upon breach of any
provision of this Section, USE shall be entitled to injunctive relief, specific
performance or other equitable relief; provided, however, that, this shall in
no way limit any other remedies which USE may have (including, without
limitation, the right to seek monetary damages).
Notwithstanding the restrictions set forth in this Section 9, in the
event USE's business and assets are liquidated pursuant to Chapter 7 of the
U.S. Bankruptcy Code, then the restrictions contained in this Section 9 shall
be without further force and effect.
5.11 DUE DILIGENCE REVIEW AND ENVIRONMENTAL ASSESSMENT. USE shall
be entitled to have conducted prior to Closing a due diligence review of the
assets, properties, books and records of the Company and an environmental
assessment of the Owned Properties and Leased Premises (hereinafter referred to
as "Environmental Assessment"). The Environmental Assessment may include, but
not be limited to, a physical examination of the Owned Property or Leased
Premises, and any structures, facilities, or equipment located thereon, soil
samples, ground and surface water samples, storage tank testing, review of
pertinent records, documents, and Licenses of the Company. The Shareholders
shall provide USE or its designated agents or consultants with the access to
such property which USE, its agents or consultants require to conduct the
Environmental Assessment. If the Environmental Assessment identifies
environmental conditions which require remediation or further evaluation under
the Environmental Laws or if the results of the Environmental Assessment or due
diligence review are otherwise not satisfactory to USE in its sole discretion,
then USE may elect not to close the transactions contemplated by this Agreement
in which case this Agreement shall be terminated. USE's failure or decision
not to conduct any such Environmental Assessment shall not affect any
representation or warranty of the Shareholders under this Agreement.
5.12 TRADING IN USE COMMON STOCK. Except as otherwise expressly
consented to by USE, (i) from the date of this Agreement until the Effective
Time, neither the Company nor the Shareholders (nor any Affiliates thereof)
will directly or indirectly purchase or sell (including short sales) any shares
of USE Common Stock in any transactions effected on The NASDAQ Stock Market or
otherwise, or sell, transfer, pledge, dispose of or otherwise part with any
interest in or with respect to or in any other manner reduce their investment
risk with respect to any shares of USE Common Stock to be received pursuant to
this Agreement, and (ii) from the Effective Time until two years following the
Effective Time, the Shareholders (and all Affiliates of the Shareholders) will
not directly or indirectly sell or purchase or enter into any agreement,
contract or arrangement to sell or
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purchase any put or call options or other derivative securities (including any
short sales) with respect to shares of USE Common Stock or enter into any other
agreements, contracts or arrangements providing for the alteration of their
investment risk with respect to any shares of USE Common Stock; provided,
however, that the foregoing shall not prohibit the Shareholders and their
Affiliates from making outright, unhedged sales or purchases of USE Common
Stock at any time. Notwithstanding the foregoing, Xxxxxx and Meijer shall have
the right to pledge or use for collateral their shares of USE Common Stock for
security on loans.
5.13 TITLE INSURANCE AND SURVEYS.
(a) Within 10 days following the date hereof, the Company
shall obtain and deliver to USE commitments (the "Commitments") issued by a
title insurance company acceptable to USE (the "Title Company") and dated on or
after the date hereof for the issuance of an ALTA Owners Policy of Title
Insurance (the "Title Policy") for each of the Owned Properties (and such of
the Leased Premises as USE may designate) in an amount acceptable to USE,
together with legible hard copies of all title exceptions reflected in the
commitments. At USE's option, the Company shall deliver copies of previous
owner policies or other title evidence sufficient for USE to obtain the
Commitments directly from the Title Company or its agent. The premium for the
Title Policy shall be paid by the Company. The Title Policy shall be in the
amount designated by USE, showing fee simple title to the Owned Properties
vested in the Company at the Effective Time subject only to current real estate
Taxes not yet due and payable as of the Effective Time, and such other
covenants, conditions, easements, and exceptions to title as USE may approve in
writing (collectively, the "Permitted Exceptions"). The Commitments and the
Title Policy to be issued by the Title Company shall have all Standard and
General Exceptions deleted so as to afford full "extended form coverage" and
shall contain an ALTA Zoning Endorsements 3.1 (if available), contiguity (where
appropriate), survey, and such other endorsements as may be reasonably
requested by USE. At the Effective Time, the Company, the Shareholders and
their Affiliates shall deliver such affidavits or other instruments as the
Title Company may reasonably require to delete Standard and General Exceptions
and to provide the special endorsements required hereunder. The Company shall
cause the Commitments to be dated as of the Effective Time and cause the Title
Company to deliver the Title Policy at the Closing as directed by USE.
(b) Within 20 days following the date hereof, the
Company shall deliver to USE and the Title Company an as-built plat of survey
of each of the Owned Properties and the Leased Premises (the "Surveys")
prepared by a registered land surveyor or engineer, licensed in the respective
states in which such properties are located, dated on or after the date hereof,
certified to USE, the Title Company, and such other entities as USE may
designate in writing to the Company prior to the Closing, and conforming to
current ALTA/ACSM Minimum Detail Requirements for Land Title Surveys,
sufficient to cause the Title Company to delete the standard printed survey
exception. The cost of the Surveys or recertification of a prior Survey shall
be paid by the Company. Each Survey shall show access from the land to
dedicated roads and shall include a flood plain certification. Any survey may
be a recertification of a prior survey, provided that it meets the
above-described criteria.
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(c) If (i) any Commitment discloses a title exception
other than a Permitted Exception (an "Unpermitted Exception") or (ii) any
Survey discloses any encroachment, overlap, boundary dispute, or gap or any
other matter which renders title to any of the Owned Properties unmarketable or
reflects that any utility service to the improvements or access thereto does
not lie wholly within the applicable parcel of real property, or within an
encumbered easement for the benefit of such parcel of real property, or
reflects any other matter adversely affecting the use or improvements of such
parcel of real property (a "Survey Defect"), then the Shareholders, prior to
the Closing, shall have the Unpermitted Exception removed from such Commitment
or the Survey Defect corrected or insured over by an appropriate title
insurance endorsement, all in a manner reasonably satisfactory to USE.
5.14 CERTAIN TAX MATTERS. The Shareholders shall duly prepare, or
cause to be prepared, and file, or cause to be filed, on a timely basis, all
Tax Returns for the Company for any period ending on or before the Effective
time. The Shareholders shall provide such Tax Returns to USE for review at
least 60 days prior to their due date (including extensions where applicable).
The Shareholders shall not file any amended Tax Returns with respect to the
Company without the prior written consent of USE. The Shareholders and USE
shall provide the other party with such information and records and access to
such of its officers, directors, employees and agents as may be reasonably
requested by the other party in connection with the preparation of any tax
return or any audit or other proceeding relating to the Company.
5.15 SHAREHOLDER VOTE. Each of the Shareholders, in executing this
Agreement, consents as a shareholder of the Company to the Merger and the
transactions contemplated hereby, and waives notice of any meeting in
connection therewith, and hereby releases and waives all rights with respect to
the transactions contemplated hereby under any agreements relating to the sale,
purchase or voting of any capital stock of the Company.
5.16 PAYOFF AMOUNTS. Prior to Closing, the Company shall request
and deliver to USE payoff and estoppel letters from such holders of the
Company's outstanding Indebtedness as designated by USE, which letters shall
contain payoff amounts, per diem interest, wire transfer instructions and an
agreement to deliver, upon payment in full, UCC-3 termination statements,
satisfactions of mortgage and any original promissory notes or other evidences
of indebtedness marked canceled.
5.17 EMPLOYMENT AGREEMENTS. At the Closing, USE and Xxxxxx Xxxxxx
shall enter into an employment agreement in the form attached hereto as Exhibit
5.18A. At the Closing, USE and Xxxxx Xxxxxx shall enter into a consulting
agreement in the form attached hereto as Exhibit 5.18B.
5.18 RIGHT OF FIRST REFUSAL. Xxxxxx and Meijer (the "MCC
Stockholders") own 100% of the issued and outstanding common stock of Midwest
Custom Chemicals, Inc., an Indiana corporation ("MCC"). The MCC Stockholders
agree that, if at any time after the date hereof, but before the second
anniversary of the Effective Date, the MCC Stockholders receive a bona fide
offer from a third party to acquire MCC (whether by acquisition of a
controlling stock interest in MCC,
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acquisition of a substantial portion of MCC's assets or otherwise), then the
MCC Stockholders shall give written notice ("Notice of Offer") to USE within
five calendar days following the MCC Stockholders' receipt of such offer. The
Notice of Offer shall set forth the price, the stock or assets that are the
subject of the offer, the name of the third party and the other terms and
conditions of such offer, including a signed copy of such offer, and shall
affirmatively state the MCC Stockholders' desire to sell MCC at such price and
on such other terms and conditions. For a period of 30 calendar days following
the receipt of the Notice of Offer (the "Option Period"), USE shall have the
option to elect to purchase MCC at the price and on the other terms and
conditions set forth in the Notice of Offer. If USE gives written notice to
the MCC Stockholders within the Option Period of its election to purchase MCC,
the parties agree that the closing of the purchase and sale of such property
shall take place no later than the last to occur of (i) the date set forth in
the Notice of Offer, or (ii) 60 calendar days from the date that USE gives
notice to the MCC Stockholders of its intention to exercise its option, or such
other date as the parties may otherwise agree. If USE fails to give written
notice of its election to purchase MCC within the Option Period, then the MCC
Stockholders shall have the right, for a period of 90 calendar days from the
expiration of the Option Period, to close the purchase and sale or other
transfer of MCC with the third party named in the Notice of Offer on the terms
and conditions set forth in the Notice of Offer, free of this restriction. If
such closing has not occurred within such 90-day period, any sale of MCC shall
again be subject to the limitations contained herein. Further, if during such
90-day period the MCC Stockholders desire to change the terms of the
transaction identified in the Notice of Offer, then the MCC Stockholders shall
provide USE with a revised Notice of Offer and the procedure identified above
will apply to USE's consideration of the revised Notice of Offer. If USE
exercises this right of first refusal, it may require MCC Stockholders to
transfer MCC to a nominee of USE.
5.19 TRANSFER OF ASSETS. At or before Closing, all of the LLC's
assets, tangible and intangible, real property and personalty, of whatsoever
kind or nature, including without limitation the Company Owned Properties and
the Assets, shall have been transferred to AES, free and clear of all liens,
mortgages, security interests and encumbrances other than those expressly
permitted by this Agreement.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE USE COMPANIES
The obligations of the USE Companies to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions, any or all of which may be waived in writing in whole or in part by
the USE Companies:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Shareholders contained
in this Agreement shall be true and correct at and as of the Effective Time
with the same force and effect as though made at and as of that time except (i)
for changes specifically permitted by or disclosed on any schedule to this
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Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. The Company and the Shareholders shall have performed and complied with
all of their respective obligations required by this Agreement to be performed
or complied with at or prior to the Effective Time. The Company and the
Shareholders shall have delivered to the USE Companies a certificate, dated as
of the Effective Date, duly signed (in the case of the Company, by its
President), certifying that such representations and warranties are true and
correct and that all such obligations have been complied with and performed.
6.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the date hereof and the Effective Time, (i) there shall have been no
Material Adverse Change to the Company, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the services, products or business of the Company, and (iii)
none of the properties and assets of the Company shall have been damaged by
fire, flood, casualty, act of God or the public enemy or other cause
(regardless of insurance coverage for such damage) which damages may have a
Material Adverse Effect thereon, and there shall have been delivered to the USE
Companies a certificate to that effect, dated the Effective Date and signed by
or on behalf of the Company and the Shareholders.
6.3 CORPORATE CERTIFICATE. The Shareholders shall have delivered
to the USE Companies (i) copies of the articles of incorporation and bylaws of
the Company as in effect immediately prior to the Effective Time, (ii) copies
of resolutions adopted by the Board of Directors and Shareholders of the
Company authorizing the transactions contemplated by this Agreement, and (iii)
a certificate of good standing of the Company issued by the Secretary of State
of the State of Indiana as of a date not more than ten days prior to the
Effective Date, certified in the case of subsections (i) and (ii) of this
Section as of the Effective Date by the Secretary of the Company as being true,
correct and complete.
6.4 OPINION OF COUNSEL. The USE Companies shall have received an
opinion dated as of the Effective Date from counsel for the Company and the
Shareholders, in form and substance set forth as Exhibit 6.4 attached hereto.
6.5 CONSENTS. The Company shall have received consents to the
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of the Company from any Person from whom
such consent or waiver is required under any Contract or instrument as of a
date not more than ten days prior to the Effective Date, or who, as a result of
the transactions contemplated hereby, would have such rights to terminate or
modify such Contracts or instruments, either by the terms thereof or as a
matter of law.
6.6 SECURITIES LAWS. USE shall have received all necessary
consents and otherwise complied with any state or federal securities laws
applicable to the issuance of the USE Shares, in connection with the
transactions contemplated hereby.
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6.7 COMPANY COMMON STOCK. At the Closing, each of the
Shareholders shall have delivered to USE all certificates evidencing the shares
of capital stock of the Company held by them.
6.8 STOCK POWERS. At the Closing, Xxxxxx and Meijer shall have
delivered to USE, for use in connection with the Held Back Shares, ten stock
powers executed in blank, with signatures guaranteed.
6.9 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate or collect
damages arising out of the Merger or any other transaction contemplated hereby,
and which, in the judgment of USE, makes it inadvisable to proceed with the
Merger and other transactions contemplated hereby.
6.10 BOARD APPROVAL. The Board of Directors of USE shall have
authorized and approved this Agreement, the Merger and transactions
contemplated hereby.
6.11 DUE DILIGENCE REVIEW. USE shall be satisfied with the results
of its due diligence review and Environmental Assessment pursuant to Section
5.11.
6.12 RELEASES. Each of the Shareholders shall deliver to USE a
release (collectively, the "Releases") in such form as is reasonably
satisfactory to USE releasing all claims of any nature against USE and the
Company, if any, and any claims arising out of the Merger and the transactions
contemplated by this Agreement, provided that such Release shall not cover any
rights of the Shareholders against USE under this Agreement.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and the Shareholders to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following conditions, any or all of which may be waived in whole or in part
by the Company and the Shareholders:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of USE contained in this
Agreement shall be true and correct at and as of the Effective Time with the
same force and effect as though made at and as of that time except (i) for
changes specifically permitted by or disclosed pursuant to this Agreement, and
(ii) that those representations and warranties which address matters only as of
a particular date shall remain true and correct as of such date. USE shall
have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Effective Time.
USE shall have delivered to the Company and the Shareholders a certificate,
dated as of the Effective
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Date, and signed by an executive officer, certifying that such representations
and warranties are true and correct and that all such obligations have been
complied with and performed.
7.2 USE SHARES. At the Closing, USE shall have issued all of the
USE Shares and shall have delivered to the Shareholders (i) certificates
representing the USE Shares issued to them hereunder, other than the Held Back
Shares, and (ii) copies of stock certificates representing the Held Back Shares
issued to them.
7.3 NO ORDER OR INJUNCTION. No court of competent jurisdiction or
other governmental body shall have issued or entered any order or injunction
restraining or prohibiting the transactions contemplated hereby, which remains
in effect at the time of Closing.
7.4 ELECTION TO BOARD. As soon as practicable following the date
of Closing, USE's Board of Directors shall have been expanded by one member and
Xxxxxx Xxxxxx (or his designee) shall have been elected to fill such seat for a
term ending no earlier than the next annual meeting of the Stockholders of USE.
ARTICLE VIII
REGISTRATION RIGHTS
The Shareholders shall have the following registration rights with
respect to the USE Shares issued to them hereunder:
8.1 REGISTRATION RIGHTS FOR USE SHARES; FILING OF REGISTRATION
STATEMENT. USE will utilize reasonable efforts to cause, as soon as practicable
following the Effective Time, but in any event within 30 calendar days after
the Effective Time, a registration statement to be filed under the Securities
Act or an existing registration statement to be amended for the purpose of
registering the USE Shares for resale by a Holder thereof (the "Registration
Statement"). For purposes of this Article, a person is deemed to be a "Holder"
of USE Shares whenever such person is the record owner of USE Shares. USE will
use reasonable efforts to have the Registration Statement become effective and
cause the USE Shares to be registered under the Securities Act, and registered,
qualified or exempted under the state securities laws of such jurisdictions as
any Holder reasonably requests, as soon as is reasonably practicable.
Notwithstanding the foregoing, USE may delay (for a period not to exceed 30
calendar days) filing a Registration Statement, and may withhold (for a period
not to exceed 30 calendar days) efforts to cause the Registration Statement to
become effective, if USE determines in good faith that such registration is
likely to materially interfere with or materially affect the negotiation or
completion of any transaction that is actively being contemplated by USE at the
time the right to delay is exercised.
8.2 EXPENSES OF REGISTRATION. USE shall pay all expenses incurred
by USE in connection with the registration, qualification and/or exemption of
the USE Shares, including any
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SEC and state securities law registration and filing fees, printing expenses,
fees and disbursements of USE's counsel and accountants, transfer agents' and
registrars' fees, fees and disbursements of experts used by USE in connection
with such registration, qualification and/or exemption, and expenses incidental
to any amendment or supplement to the Registration Statement or prospectuses
contained therein. USE shall not, however, be liable for any sales, broker's
or underwriting commissions or other selling expenses incurred upon sale by any
Holder of any of the USE Shares.
8.3 FURNISHING OF DOCUMENTS. USE shall furnish to the Holders
such reasonable number of copies of the Registration Statement, such
prospectuses as are contained in the Registration Statement and such other
documents as the Holders may reasonably request in order to facilitate the
offering of the USE Shares.
8.4 AMENDMENTS AND SUPPLEMENTS. USE shall prepare and promptly
file with the SEC and promptly notify the Holders of the filing of such
amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions
if, at the time when a prospectus relating to the USE Shares is required to be
delivered under the Securities Act, any event shall have occurred as a result
of which any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. USE shall also
advise the Holders promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of the Registration Statement or the initiation or threatening of
any proceeding for that purpose and promptly use its reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued. If, after a Registration Statement becomes effective,
USE advises the Holders that USE considers it appropriate that the Registration
Statement be amended, the Holders shall suspend any further sales of the USE
Shares until USE advises the Holders that the Registration Statement has been
amended.
8.5 DURATION. USE shall maintain the effectiveness of the
Registration Statement until such time as USE reasonably determines, based on
an opinion of counsel, that the Holders will be eligible to sell all of the
Shares then owned by the Holders without the need for continued registration of
the shares, in the three month period immediately following the termination of
the effectiveness of the Registration Statement. USE's obligations contained
in this Article VIII shall terminate on the first anniversary of the Effective
Date.
8.6 FURTHER INFORMATION. If USE Shares owned by a Holder are
included in any registration, such Holder shall furnish USE such information
regarding itself as USE may reasonably request and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
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ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT BY CERTAIN OF THE SHAREHOLDERS TO INDEMNIFY. Xxxxxx
and Meijer, jointly and severally, agree to indemnify and hold USE harmless
from and against the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including, without limitation, related counsel and
paralegal fees and expenses) incurred or suffered by USE arising out of or
resulting from (i) any breach of a representation or warranty made by the
Shareholders in or pursuant to this Agreement, (ii) any breach of the covenants
or agreements made by the Company or any Shareholder in or pursuant to this
Agreement, (iii) any audit, assessment or taxes arising from the matters set
forth on Schedule 3.19, or (iv) any inaccuracy in any certificate delivered by
the Company or any Shareholder pursuant to this Agreement (collectively,
"Indemnifiable Damages"). Without limiting the generality of the foregoing,
with respect to the measurement of Indemnifiable Damages, USE shall have the
right to be put in the same pre-tax consolidated financial position as it would
have been in had each of the representations and warranties of the Shareholders
hereunder been true and correct and had the covenants and agreements of the
Company and the Shareholders hereunder been performed in full.
9.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Shareholders in this Agreement or
pursuant hereto shall survive the Closing. No claim for the recovery of
Indemnifiable Damages arising out of a breach of any representation or warranty
may be asserted by USE against the Shareholders after such representations and
warranties shall thus expire, provided, however, that claims for Indemnifiable
Damages first asserted within the applicable period shall not thereafter be
barred. Notwithstanding any knowledge of facts determined or determinable by
any party by investigation, each party shall have the right to fully rely on
the representations, warranties, covenants and agreements of the other parties
contained in this Agreement or in any other documents or papers delivered in
connection herewith. Each representation, warranty, covenant and agreement of
the parties contained in this Agreement is independent of each other
representation, warranty, covenant and agreement. Each of the representations
and warranties of USE and the Company shall expire at the Effective Time.
9.3 SECURITY FOR THE SHAREHOLDERS' INDEMNIFICATION OBLIGATION. As
security for the agreement by Xxxxxx and Meijer to indemnify and hold USE
harmless as described in this Article at the Closing, Xxxxxx and Meijer do each
hereby grant a first priority security interest in, and pledge and instruct USE
to set aside and hold, certificates representing the Held Back Shares issued
pursuant to this Agreement. USE may set off against the Held Back Shares any
Indemnifiable Damages for which Xxxxxx and Meijer may be responsible pursuant
to this Agreement, subject, however, to the following terms and conditions:
(a) USE shall give written notice to Xxxxxx and Meijer of
any claim for Indemnifiable Damages or any other damages hereunder,
which notice shall set forth (i) the amount of Indemnifiable Damages
or other loss, damage, cost or expense
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which USE claims to have sustained by reason thereof, and (ii) the
basis of such claim;
(b) Such set off shall be effected on the later to occur
on the expiration of 10 days from the date of such notice (the "Notice
of Contest Period") or, if such claim is timely contested, the date
the dispute is resolved;
(c) After the Held Back Shares are registered and any
restrictions on sale imposed under the Securities Act or otherwise are
terminated, Xxxxxx and Meijer may, not more than once during the nine
(9) month period following the Effective Date, instruct USE in writing
to sell some or all of the Held Back Shares and USE shall utilize
reasonable efforts to promptly sell the Held Back Shares following
such written instruction and the net proceeds thereof shall be
substituted for such Held Back Shares in any set off to be made by USE
pursuant to any claim hereunder; and
(d) For purposes of this Article, the shares of USE
Common Stock not sold as provided in clause (c) of this Section shall
be valued at the Average Closing Price.
9.4 VOTING OF AND DIVIDENDS ON THE HELD BACK SHARES. Except with
respect to shares transferred pursuant to the foregoing right of setoff (and in
the case of such shares, until the same are transferred), all Held Back Shares
shall be deemed to be owned by Xxxxxx and Meijer and Xxxxxx and Meijer shall be
entitled to vote the same; provided, however, that, there shall also be
deposited with USE subject to the terms of this Article, all shares of USE
Common Stock issued to Xxxxxx and Meijer as a result of any stock dividend or
stock split and all cash issuable to Xxxxxx and Meijer as a result of any cash
dividend, with respect to the Held Back Shares. All stock and cash issued or
paid upon Held Back Shares shall be distributed to the person or entity
entitled to receive such Held Back Shares together with such Held Back Shares.
9.5 DELIVERY OF HELD BACK SHARES. USE agrees to deliver to Xxxxxx
and Meijer no later than nine (9) months following the Effective Date any Held
Back Shares then held by it (or proceeds from the Held Back Shares) unless
there then remains unresolved any claim for Indemnifiable Damages or other
damages hereunder as to which notice has been given, in which event any Held
Back Shares remaining on deposit (or proceeds from the sale of Held Back
Shares) after such claim shall have been satisfied shall be returned to Xxxxxx
and Meijer promptly after the time of satisfaction.
9.6 NO BAR; WAIVER. If the Held Back Shares are insufficient to
set off any claim for Indemnifiable Damages made hereunder (or have been
delivered to Xxxxxx and Meijer prior to the making or resolution of such
claim), then USE may take any action or exercise any remedy available to it by
appropriate legal proceedings to collect the Indemnifiable Damages. Xxxxxx and
Meijer hereby waive any rights to contribution or any similar rights they may
have against the Company as of a result of their agreement to indemnify USE
under this Article IX.
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ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the Effective Time of the USE Shares:
10.1 DISPOSITION OF SHARES. The Shareholders represent and warrant
that the shares of USE Common Stock being acquired by them hereunder are being
acquired and will be acquired for their own respective accounts and will not be
sold or otherwise disposed of, except pursuant to (a) an exemption from the
registration requirements under the Securities Act, which does not require the
filing by USE with the SEC of any registration statement, offering circular or
other document, in which case, the Shareholders shall first supply to USE an
opinion of counsel (which counsel and opinions shall be satisfactory to USE)
that such exception is available, or (b) an effective registration statement
filed by USE with the SEC under the Securities Act.
10.2 LEGEND. The certificates representing the USE Shares shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT (A) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND IN COMPLIANCE WITH APPLICABLE
SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO, (B) IN ACCORDANCE
WITH RULE 145(D) UNDER THE ACT OR (C) IN ACCORDANCE WITH AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE, AND ALSO MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT
COMPLIANCE WITH ANY APPLICABLE RULES OF THE SECURITIES AND EXCHANGE
COMMISSION.
USE may, unless a registration statement is in effect covering such shares,
place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws. The Shareholders each
agree that all sales of the USE Common Stock shall be made in compliance with
Rule 145(d) under the Act, and that the Shareholders shall make such sales
through Gaines, Berland, Inc. and/or other parties designated by USE in
brokered transactions, provided that if such designated broker is not making a
good faith effort to sell such shares of USE Common Stock then, upon written
notice to USE, the Shareholders may otherwise sell such shares in accordance
with Rule 145(d).
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ARTICLE XI
DEFINITIONS
11.1 DEFINED TERMS. As used herein, the following terms shall have
the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
"Contract" means any agreement, contract, lease, note,
mortgage, indenture, loan agreement, franchise agreement, covenant,
employment agreement, license, instrument, purchase and sales order,
commitment, undertaking, obligation, whether written or oral, express
or implied.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited
to, any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable
law or any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)"means a change (or
effect), in the condition (financial or otherwise), properties,
assets, liabilities, rights, obligations, operations, business or
prospects which change (or effect) individually or in the aggregate,
is materially adverse to such condition, properties, assets,
liabilities, rights, obligations, operations, business or prospects.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, estate, trust, unincorporated
association, joint venture, Governmental Authority or other entity, of
whatever nature.
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"Register", "registered" and "registration" refer to a
registration of the offering and sale of securities effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of
such registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to
any Taxes; and
"Taxes" means all taxes, fees or other assessments, including,
but not limited to, income, excise, property, sales, franchise,
intangible, withholding, social security and unemployment taxes
imposed by any federal, state, local or foreign governmental agency,
and any interest or penalties related thereto.
11.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificates, reports or other documents made
or delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection
with this Agreement and the transactions contemplated hereby shall be
determined in accordance with GAAP applied on a basis consistent with prior
periods, where applicable.
(d) As used herein, the neuter gender shall also denote
the masculine and feminine, and the masculine gender shall also denote the
neuter and feminine, where the context so permits.
ARTICLE XII
TERMINATION
12.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
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(a) by mutual written consent of all of the parties
hereto at any time prior to the Closing; or
(b) by USE in the event of a material breach by the
Company or any of the Shareholders of any provision of this Agreement;
or
(c) by the Company in the event of a material breach by
USE of any provision of this Agreement; or
(d) by either USE or the Company if the Closing shall not
have occurred by August 31, 1997, unless the only outstanding
unfulfilled condition is the lack of one or more required consents to
the transaction by a third party, in which case such date shall be
extended to September 30, 1997.
12.2 EFFECT OF TERMINATION. Except for the provisions of Article
IX hereof, which shall survive any termination of this Agreement, in the event
of termination of this Agreement pursuant to Section 12.1, this Agreement shall
forthwith become void and of no further force and effect and the parties shall
be released from any and all obligations hereunder; provided, however, that
nothing herein shall relieve any party from liability for the willful breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
(a) IF TO ANY OF THE USE COMPANIES TO:
U.S. Energy Systems, Inc.
000 Xxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
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WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(b) IF TO THE COMPANY AND/OR THE SHAREHOLDERS TO:
American Enviro-Systems, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
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IF SENT BY U.S. MAIL, TO:
American Enviro-Systems, Inc.
X.X. Xxx 000
Xxxxxxxx, XX 00000
WITH A COPY TO:
Statham Xxxxxxx & XxXxxx
000 XX Xxxxxx Xxxxxx Xxxx, Xx. Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Rounder, Esq.
Telecopy: (000) 000-0000
IF SENT BY U.S. MAIL, TO:
Xxxxxxx Xxxxxxx & XxXxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Notice shall be deemed given on the date sent if sent by facsimile
transmission and on the date delivered (or the date of refusal of delivery) if
sent by overnight delivery, or certified or registered mail.
13.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto) and other documents delivered at the Closing
pursuant hereto, contains the entire understanding of the parties in respect of
its subject matter and supersedes all prior agreements and understandings (oral
or written) between or among the parties with respect to such subject matter.
The Exhibits and Schedules constitute a part hereof as though set forth in full
above.
13.3 EXPENSES. Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising,
any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall
any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations
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or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by the Company, or any Shareholders without the
prior written consent of USE.
13.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
13.7 INTERPRETATION. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein and on the schedules are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or the schedules. Whenever the words "include,""includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." Time shall be of the essence in this Agreement.
13.8 GOVERNING LAW; SEVERABILITY. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State. If any word, phrase, sentence, clause, section, subsection
or provision of this Agreement as applied to any party or to any circumstance
is adjudged by a court to be invalid or unenforceable, the same will in no way
affect any other circumstance or the validity or enforceability of any other
word, phrase, sentence, clause, section, subsection or provision of this
Agreement. If any provision of this Agreement, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby or otherwise, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form,
such provision shall then be enforceable and shall be enforced.
13.9 JURISDICTION.
(a) The parties to this Agreement agree that any suit,
action or proceeding arising out of, or with respect to, this Agreement or any
judgment entered by any court in respect thereof shall be brought in the courts
of Palm Beach County, Florida or in the U.S. District Court for the Southern
District of Florida and USE, the Company and the Shareholders hereby
irrevocably accept the exclusive personal jurisdiction of those courts for the
purpose of any suit, action or proceeding.
(b) In addition, USE, the Company and the Shareholders
each hereby irrevocably waive, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or
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any judgment entered by any court in respect thereof brought in Palm Beach
County, Florida or in the U.S. District Court for the Southern District of
Florida, and hereby further irrevocably waives any claim that any suit, action
or proceedings brought in any such court has been brought in an inconvenient
forum.
13.10 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
U.S. ENERGY SYSTEMS, INC., a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
AES MERGER CORP., an Indiana corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
AMERICAN ENVIRO-SERVICES, INC., an Indiana
corporation
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
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/s/ Xxxxxx X. Xxxxxx
-------------------------------------------------------
Xxxxxx X. Xxxxxx, individually
/s/ Xxxxxx X. Xxxxxx
-------------------------------------------------------
Xxxxxx X. Xxxxxx, individually
/s/ Xxxxx X. Xxxxxxxxx
-------------------------------------------------------
Xxxxx X. Xxxxxxxxx, individually
/s/ Xxxxxxx Xxxxxx
-------------------------------------------------------
Xxxxxxx Xxxxxx, individually and as Trustee of the
Xxxxxxx Xxxxxx Revocable Trust U/A/T dated July 1, 1990
ENERGY ENTERPRISE, LLC, an Indiana limited liability
company
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
----------------------------------------------
Title: Manager
---------------------------------------------
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LIST OF EXHIBITS AND SCHEDULES
Schedule 1.3 Allocation of Purchase Price
Schedule 3.1 Foreign Qualification
Schedule 3.5 Shareholders
Schedule 3.6 Required Consents
Schedule 3.9 Financial Statements
Schedule 3.10 Changes Since Current Balance Sheet
Schedule 3.13 Environmental Matters
Schedule 3.14(a) Owned Properties
Schedule 3.14(b) Leased Premises
Schedule 3.15 Liens and Vehicles
Schedule 3.17 Employees
Schedule 3.18 Employee Benefit Plans
Schedule 3.19 Tax Matters
Schedule 3.20 Insurance Matters
Schedule 3.22 Permits
Schedule 3.23 Affiliated Transactions
Schedule 3.25 Designated Contracts
Schedule 3.28 Bank Accounts
Schedule 3.29 Names
Exhibit 5.18A Xxxxxx Employment Agreement
Exhibit 5.18B Meijer Consulting Agreement
Exhibit 6.4 Opinion of Counsel
[Schedules to the Merger Agreement have not been provided herewith, but will be
provided at the request of the Commission.]
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