Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
U.S. LIQUIDS/RECLAIM ACQUISITION CORPORATION
U S LIQUIDS INC.
AND
RE-CLAIM ENVIRONMENTAL, INC.
AND
XXXX X. XXXX, XXXXX X. XXXXXX, A. XXXXXX XXXXXXXX,
XXXXXXX XXXXXXXX, XXXXXXX X. XXXXXX, XX.,
X.X. XXXXXXXX, AND RAINBOW INVESTMENTS COMPANY
TABLE OF CONTENTS
SECTION PAGE
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1. THE MERGER; DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK . . . . . . 2
1.1 ARTICLES OF MERGER. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 ARTICLES OF INCORPORATION AND BYLAWS. . . . . . . . . . . . . . . . 2
1.3 CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 EFFECT OF MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 DELIVERY OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 ENDORSEMENT OF COMPANY STOCK. . . . . . . . . . . . . . . . . . . . 4
2. CONVERSION AND EXCHANGE OF STOCK . . . . . . . . . . . . . . . . . . . . 4
2.1 CONVERSION OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 AGREED VALUE OF PARENT STOCK. . . . . . . . . . . . . . . . . . . . 5
2.3 ASSUMPTION OF DEBT. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 ADJUSTMENT TO PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . 6
3. TITLE ASSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 OWNERS TITLE POLICY . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 PERMITTED ENCUMBRANCES. . . . . . . . . . . . . . . . . . . . . . . 8
3.3 SURVEY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND COMPANY.. . . . . . . 9
5.1 ORGANIZATION; AUTHORITY . . . . . . . . . . . . . . . . . . . . . . 10
5.2 STOCK OWNERSHIP; ABSENCE OF ADVERSE CLAIMS. . . . . . . . . . . . . 10
5.3 CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 PREDECESSOR ENTITIES; TRADE NAMES . . . . . . . . . . . . . . . . . 11
5.5 NO SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.6 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 NON-BALANCE SHEET LIABILITIES . . . . . . . . . . . . . . . . . . . 13
5.8 ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . . . . . . . . 14
5.9 PROPRIETARY RIGHTS; ENVIRONMENTAL DOCUMENTS . . . . . . . . . . . . 14
5.10 REAL PROPERTY; REPORTING. . . . . . . . . . . . . . . . . . . . . . 15
5.11 PERSONAL PROPERTY; NEW PROJECTS . . . . . . . . . . . . . . . . . . 17
5.12 CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 INSURANCE POLICIES. . . . . . . . . . . . . . . . . . . . . . . . . 19
5.14 DIRECTORS, OFFICERS AND EMPLOYEES; COMPENSATION . . . . . . . . . . 19
5.15 EMPLOYEE PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16 COMPLIANCE WITH ERISA . . . . . . . . . . . . . . . . . . . . . . . 20
5.17 COMPLIANCE WITH LAW; NO CONFLICTS . . . . . . . . . . . . . . . . . 21
5.18 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.19 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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5.20 ABSENCE OF PRICE RENEGOTIATION CONTRACTS. . . . . . . . . . . . . . 23
5.21 CONDUCT OF BUSINESS SINCE BALANCE SHEET DATE. . . . . . . . . . . . 23
5.22 BANK ACCOUNTS; DEPOSITORIES . . . . . . . . . . . . . . . . . . . . 24
5.23 HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . . . . . . 25
5.24 STORAGE TANKS . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.25 ABSENCE OF CERTAIN BUSINESS PRACTICES . . . . . . . . . . . . . . . 26
5.26 COMPLETE DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . 26
6. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT.. . . . . . . . . . . 27
6.1 CORPORATE ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . 27
6.2 CORPORATE AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 NO CONFLICTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.4 BINDING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.5 SEC FILINGS AND FINANCIAL INFORMATION . . . . . . . . . . . . . . . 28
6.6 FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 28
6.7 TAXATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.8 PARENT STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.9 FINANCIAL AND BUSINESS. . . . . . . . . . . . . . . . . . . . . . . 29
7. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1 ACCESS TO LAND AND RECORDS. . . . . . . . . . . . . . . . . . . . . 29
7.2 COMPANY ACTIVITIES PRIOR TO CLOSING . . . . . . . . . . . . . . . . 30
7.3 PROHIBITED ACTIVITIES PRIOR TO CLOSING. . . . . . . . . . . . . . . 31
7.4 POOLING OF INTERESTS; REORGANIZATION. . . . . . . . . . . . . . . . 32
7.5 CONTACT WITH GOVERNMENT OFFICIALS . . . . . . . . . . . . . . . . . 32
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND STOCKHOLDERS. . . . . 33
8.1 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 33
8.2 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 NO ADVERSE PROCEEDING . . . . . . . . . . . . . . . . . . . . . . . 33
8.4 NONCOMPETITION AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 33
8.5 TEXLINE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.6 PARENT STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.7 ANCILLARY DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . 34
8.8 CERTAIN PERSONALTY. . . . . . . . . . . . . . . . . . . . . . . . . 34
8.9 RULE 144. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PARENT. . . . . . . . . 35
9.1 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 35
9.2 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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9.3 NO ADVERSE PROCEEDING . . . . . . . . . . . . . . . . . . . . . . . 35
9.4 GENERAL RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.5 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.6 RESIGNATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.7 GOOD STANDING CERTIFICATES. . . . . . . . . . . . . . . . . . . . . 36
9.8 UPDATED AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 36
9.9 NONCOMPETITION AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 36
9.10 DELIVERY OF COMPANY STOCK . . . . . . . . . . . . . . . . . . . . . 36
9.11 ENVIRONMENTAL REVIEW. . . . . . . . . . . . . . . . . . . . . . . . 37
9.12 TRANSFERABILITY OF PERMITS. . . . . . . . . . . . . . . . . . . . . 37
9.13 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10. POST CLOSING COVENANTS.. . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.2 POST CLOSING BALANCE SHEET . . . . . . . . . . . . . . . . . . . . 38
10.3 CLOSING DATE ACTIONS . . . . . . . . . . . . . . . . . . . . . . . 39
10.4 REGISTRATION OF PARENT STOCK . . . . . . . . . . . . . . . . . . . 39
10.5 TRADE PAYABLES . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.6 RELEASE OF PERSONAL GUARANTIES . . . . . . . . . . . . . . . . . . 40
10.7 FURTHER ASSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . 40
10.8 ANNOUNCEMENT OF EARNINGS . . . . . . . . . . . . . . . . . . . . . 41
10.9 TRANSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.10 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.11 ENVIRONMENTAL REPORTS. . . . . . . . . . . . . . . . . . . . . . . 42
11. POOLING ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.1 RESTRICTIONS ON RESALE; LEGENDS. . . . . . . . . . . . . . . . . . 42
11.2 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . 43
12. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . . . . 43
12.2 GENERAL INDEMNIFICATION BY STOCKHOLDERS. . . . . . . . . . . . . . 44
12.3 SPECIFIC INDEMNIFICATION BY STOCKHOLDERS . . . . . . . . . . . . . 45
12.4 INDEMNIFICATION BY PARENT AND THE SURVIVING CORPORATION. . . . . . 45
12.5 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD PARTY CLAIMS . 46
13. TERMINATION OF AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . . . 48
13.1 TERMINATION BY BUYER . . . . . . . . . . . . . . . . . . . . . . . 48
13.2 TERMINATION BY STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . 49
13.3 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . . 49
14.1 NONDISCLOSURE BY STOCKHOLDERS. . . . . . . . . . . . . . . . . . . 49
14.2 NONDISCLOSURE BY PARENT AND BUYER. . . . . . . . . . . . . . . . . 49
15. GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
15.1 ASSIGNMENT; BINDING EFFECT; AMENDMENT. . . . . . . . . . . . . . . 50
15.2 ENTIRE AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . . . . 50
15.3 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.4 NO BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.5 EXPENSES OF TRANSACTION. . . . . . . . . . . . . . . . . . . . . . 51
15.6 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
15.7 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
15.8 APPOINTMENT OF AGENT . . . . . . . . . . . . . . . . . . . . . . . 53
15.9 NO WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
15.10 TIME OF THE ESSENCE. . . . . . . . . . . . . . . . . . . . . . . . 54
15.11 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.12 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.13 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15.14 STANDSTILL AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 55
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
executed and delivered as of September 30, 1997, among U. S. LIQUIDS/RECLAIM
ACQUISITION CORPORATION, a Texas corporation ("Buyer"); U S LIQUIDS INC., a
Delaware corporation ("Parent"); RE-CLAIM ENVIRONMENTAL, INC., a Texas
corporation ("Company"); and XXXX X. XXXX, XXXXX X. XXXXXX, A. XXXXXX
XXXXXXXX, XXXXXXX XXXXXXXX, XXXXXXX X. XXXXXX, XX., X.X. XXXXXXXX, and
RAINBOW INVESTMENTS COMPANY, the sole shareholders of Company
("Stockholders");
W I T N E S S E T H:
WHEREAS, Company operates a non-hazardous commercial liquid waste
processing and treatment facility in the Houston, Texas area (the "Business");
WHEREAS, as part of the Business, Company owns certain real property
located in Houston, Texas and more fully described on Exhibit A, attached
hereto and made a part hereof (the "Land"), and operates thereon a fully
permitted facility for the treatment and processing of non-hazardous
commercial liquid waste (the "Facility");
WHEREAS, Buyer is a wholly owned subsidiary of Parent;
WHEREAS, Stockholders own all of the issued and outstanding shares
of the capital stock of Company;
WHEREAS, the respective Boards of Directors of Buyer, Parent and
Company deem it advisable and in the best interests of each corporation and
their respective stockholders that Buyer merge with and into Company (the
"Merger") pursuant to this Agreement and the applicable provisions of the
laws of the State of Texas;
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a "pooling-of-interests"; and
WHEREAS, the Boards of Directors of each of the corporate parties
hereto have approved and adopted this Agreement as a plan of reorganization
within the provisions of Section 368(a)(1)(A) and 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of Ten Dollars ($10) in hand paid,
the premises and of the mutual agreements, representations, warranties and
obligations herein contained, the parties hereby agree as follows:
1. THE MERGER; DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK.
1.1 ARTICLES OF MERGER. Buyer and Company will cause a Certificate of
Merger in substantially the form of Annex I attached hereto (the "Certificate of
Merger") to be signed, verified and delivered to the Texas Secretary of State on
the "Closing Date" as defined in Article 4. Such date shall be deemed the
"Effective Date of the Merger." At the Effective Date of the Merger, Buyer
shall be merged with and into Company, whereupon the separate existence of Buyer
shall cease and the corporate name of Company shall remain unchanged. Company,
the party surviving the Merger, is hereinafter sometimes referred to as the
"Surviving Corporation". The Merger will be effected in a single transaction.
1.2 ARTICLES OF INCORPORATION AND BYLAWS. At the Effective Date of the
Merger:
(i) the Articles of Incorporation of Buyer shall become the Articles
of Incorporation of the Surviving Corporation; and, subsequent to the
Effective Date of the Merger, such Articles of Incorporation shall be the
Articles of Incorporation of the Surviving Corporation until changed as
provided by law;
(ii) the Bylaws of Buyer shall become the Bylaws of the Surviving
Corporation; and, subsequent to the Effective Date of the Merger, such
Bylaws shall be the Bylaws of the Surviving Corporation until they shall
thereafter be duly amended;
(iii) the officers of Buyer immediately prior to the Effective Date of
the Merger shall become the officers of the Surviving Corporation, and shall
hold such offices subject to the provisions of the laws of the State of
Texas and the Articles of Incorporation and the Bylaws of the Surviving
Corporation; and
(iv) the name and address of the person who shall serve as the sole
member of the Board of Directors of the Surviving Corporation is as follows:
W. Xxxxxxx Xxx
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
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The Director of the Surviving Corporation shall hold office subject to
the provisions of the laws of the State of Delaware and the Articles of
Incorporation and the Bylaws of the Surviving Corporation.
1.3 CAPITALIZATION. The respective designations and numbers of
outstanding shares and voting rights of each class of outstanding capital
stock of Buyer and Company as of the date of this Agreement are as follows:
(i) the authorized capital stock of Buyer consists of 1,000 shares of
common stock, $1.00 par value ("Buyer Stock"), of which 1,000 shares are
issued and outstanding; and
(ii) the authorized capital stock of Company consists of 1,000 shares
of common stock, $1.00 par value per share, of which 1,000 shares are
issued and outstanding (the "Company Stock").
1.4 EFFECT OF MERGER. Except as herein specifically set forth, the
identity, existence, purposes, powers, objects, franchises, privileges,
permits, licenses, approvals, rights and immunities of Company shall continue
unaffected and unimpaired by the Merger and the corporate franchises,
existence and rights of Buyer shall be merged into Company, and Company, as
the Surviving Corporation, shall be fully vested therewith. At the Effective
Date of the Merger, the separate existence of Buyer shall cease and, in
accordance with the terms of this Agreement, the Surviving Corporation shall
possess all the rights, privileges, permits, licenses, approvals, immunities
and franchises, of a public as well as of a private nature; and all property,
real, personal and mixed, and (except as otherwise expressly set forth
herein) debts on whatever account, including subscriptions to shares, and all
other choses in action, and all and every other interest of or belonging to
or due to each of Buyer and Company shall be taken and deemed to be
transferred to, and vested in, the Surviving Corporation without further act
or deed; and all property, rights and privileges, powers and franchises and
all and every other interest shall be thereafter as effectively the property
of the Surviving Corporation as they were of Buyer and Company; and the title
to any real estate, or interest therein, whether by deed or otherwise, vested
in Buyer and Company shall be deemed to be in the Surviving Corporation and
shall not revert or be in any way impaired by reason of the Merger.
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The Surviving Corporation shall thenceforth be responsible and liable for all
the liabilities and obligations of Buyer and Company and any claim existing,
or action or proceeding pending, by or against Buyer or Company may be
prosecuted as if the Merger had not taken place, or the Surviving Corporation
may be substituted in its place. Neither the rights of creditors nor any
liens upon the property of Buyer or Company shall be impaired by the Merger,
and all debts, liabilities and duties of each of Buyer and Company shall
attach to the Surviving Corporation, and may be enforced against it to the
same extent as if said debts, liabilities and duties had been incurred or
contracted by it.
1.5 DELIVERY OF SHARES. At the Closing, Stockholders, as the holders of
certificates representing all outstanding shares of Company Stock shall, upon
surrender of such certificates, receive the consideration set forth in
Article 2 below.
1.6 ENDORSEMENT OF COMPANY STOCK. Stockholders shall deliver at Closing
the certificates representing the Company Stock, duly endorsed in blank by
Stockholders and their respective spouses, if any, or accompanied by stock
powers duly endorsed in blank and with all necessary transfer tax and other
revenue stamps, acquired at the Stockholders' expense, affixed and cancelled.
Stockholders, at their sole expense, agree to cure (both before and after
Closing) any deficiencies with respect to the endorsement of the certificates
or other documents of conveyance with respect to the Company Stock or with
respect to the stock powers accompanying the Company Stock.
2. CONVERSION AND EXCHANGE OF STOCK.
2.1 CONVERSION OF STOCK. The manner of converting the shares of Company
Stock issued and outstanding immediately prior to the Effective Date of the
Merger into shares of stock of Parent shall be as follows:
At the Effective Date of the Merger all of the shares of Company
Stock issued and outstanding immediately prior to the Effective Date of the
Merger, by virtue of the Merger and without any action on the part of the
holder thereof, shall automatically be converted into that total number of
shares of Parent Stock ("Parent Stock") which shall have an aggregate
Agreed Value of $4,700,000, subject to adjustment in accordance with
Sections 2.3 and 2.4 below and certificates for such Parent Stock (with all
legends required by this
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Agreement) shall be delivered to Stockholders at the Closing, free of all
liens, claims and encumbrances (except for such legends). The shares of
Parent Stock to be issued and distributed pursuant to this Section shall be
determined pursuant to Section 2.2, 30% of such Parent Stock shall be
registered with the Securities Exchange Commission (the "SEC") on the
Closing Date (the "Registered Stock") and 70% of such shares shall be
unregistered on the Closing Date (the "Unregistered Parent Stock"). The
consideration set forth in this Article 2 shall be allocated among the
Stockholders in accordance with Annex II attached hereto and made a part
hereof.
2.2 AGREED VALUE OF PARENT STOCK. For purposes of this Agreement, the
"Agreed Value" per share of Parent Stock shall be the average of the closing
prices of a share of the common stock of Parent, $.01 par value per share, on
the American Stock Exchange as reported in THE WALL STREET JOURNAL for the
five trading days immediately preceding the five trading days immediately
prior to the Closing Date.
2.3 ASSUMPTION OF DEBT. The consideration payable pursuant to Section
2.1 above shall be reduced by an amount equal to:
(a) the outstanding balance existing on the Closing Date of the
promissory notes from Company to Texline Gas Company dated March 16, 1995
and February 21, 1996, and in the original principal amounts of $250,000
and $150,000, respectively, which Buyer shall pay in full on the Closing
Date; and
(b) the actual debt of Company up to a maximum of $725,000,
consisting of all long-term debt (including the current portion of such
debt, including accrued interest) which Buyer shall (subject to the next
succeeding sentence) either assume or pay in full on the Closing Date, at
Buyer's option (the "Assumed Debt"). Attached hereto as Schedule 2.3 is a
listing of all Assumed Debt and evidence establishing the Assumed Debt.
Buyer and Parent agree to pay all Assumed Debt as promptly after the
Closing Date as possible, but in no event later than 10 days after the
Closing Date and to indemnify, defend and hold harmless Stockholders from
all Assumed Debt in accordance with Article 12 hereof during the time
period prior to payment. Buyer and Parent agree that all lease debt
(including lease end by-
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out payments) are specifically excluded from the Assumed Debt, but will
become the obligation of the Surviving Corporation after Closing and Buyer
and Parent shall indemnify, defend and hold harmless Stockholders in
accordance with Article 12 from same.
2.4 ADJUSTMENT TO PURCHASE PRICE. The parties agree that the purchase
price was determined as if the net working capital of Company was going to be
$1.00 at the close of business on the Closing Date. Accordingly, the parties
agree that the purchase price set forth in this Article 2 shall be adjusted
(up or down) on the Adjustment Date (as defined in Section 10.2) to reflect
the actual net working capital of Company on the Closing Date (the "Actual
Net Working Capital"), as shown on the balance sheet to be prepared in
accordance with Section 10.2 hereof. If the Actual Net Working Capital of
Company so reflected is greater than $1.00 on the Closing Date, then the
purchase price paid pursuant to Section 2.1 shall be increased dollar for
dollar for each dollar the Actual Net Working Capital exceeds $1.00 on the
Closing Date. If the Actual Net Working Capital of Company so reflected is
less than $1.00 on the Closing Date, then the purchase price paid pursuant to
Section 2.1 shall be decreased dollar for dollar for each dollar the Actual
Net Working Capital falls below $1.00 on the Closing Date. For purposes of
this Agreement, Actual Net Working Capital shall mean the aggregate current
assets of Company on the Closing Date minus the aggregate of all current
liabilities (excluding leases but including an entry of $200,000 against the
indemnification obligations set forth in this Agreement) of Company on the
Closing Date (not including the Assumed Debt), calculated in accordance with
generally accepted accounting principles ("GAAP"). In computing the
adjustment amounts provided for in this Section, the party owing payment to
the other pursuant to this Section shall make such payment in shares of
Parent Stock having a value equal to the amount owed calculated in accordance
with Section 2.2.
In order to facilitate the contemplated adjustment to purchase price on
the Adjustment Date, between the date hereof and the Closing Date the parties
will prepare and agree upon an estimated net working capital balance for
Company as of August 31, 1997 (the "Estimated Working Capital") which shall
be an adjustment to the purchase price on the Closing Date to be attached
hereto as Exhibit B and will thereafter calculate the Actual Net Working
Capital consistent therewith.
-6-
In the event of a dispute between the parties as to the Actual Net
Working Capital, the parties will have 30 days to resolve the dispute among
themselves. If the parties have not resolved such dispute within such 30-day
period, then the parties shall select an arbitrator who shall decide the
dispute within 30 days after being selected. If the parties cannot agree on
an arbitrator, then Buyer and Stockholders (as a group) shall each select an
arbitrator and the two arbitrators so selected shall select a third
arbitrator. The parties hereto each agree to be bound by the decision of the
arbitrator(s). In the event that three arbitrators are chosen, a majority
decision will be required. Each arbitrator can be any natural person above
the age of 18 and need not have any specific qualification. All costs of the
arbitration shall be split equally between Buyer and Stockholders (as a
group).
3. TITLE ASSURANCE.
3.1 OWNERS TITLE POLICY. On the Closing Date, Stockholders shall
furnish to Buyer (at Buyer's sole cost) an extended coverage owners policy of
title insurance from Xxxxxxx Title Insurance Company (the "Title Company") in
the amount of $4,700,000 and satisfactory to Buyer, insuring title to the
Land to be in fee simple in the Surviving Corporation subject only to the
exceptions permitted by Section 3.2 hereof (the "Owners Policy"). Prior to
the Closing, Stockholders shall deliver to Buyer a preliminary title
commitment in respect of the Land, together with copies of all exception
instruments referenced therein, and any unrecorded leases, option agreements,
contracts and any other items affecting title which are in the possession of,
or known to, Stockholders.
3.2 PERMITTED ENCUMBRANCES. The Owners Policy shall insure the
Surviving Corporation's interest in the Land to be free and clear of all
encumbrances whatsoever except: (i) zoning ordinances and regulations which
do not, in Buyer's judgment, adversely affect the Surviving Corporation's use
of the Land for its current uses; (ii) real estate taxes and assessments,
both general and special, which are a lien but are not yet due and payable at
the Closing Date; and (iii) easements, encumbrances, covenants, conditions,
reservations and restrictions of record, if any, as have been approved in
writing by Buyer. Buyer shall pay all of the costs associated with the
delivery of the Owners Policy to the Surviving Corporation.
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3.3 SURVEY. Stockholders shall obtain for Buyer's use and for the use
of the Title Company in connection with the issuance of the Owners Policy a
current and complete survey of the Land, made on the ground by a competent
registered surveyor, showing: (a) the exact boundary lines of the Land; (b)
the location thereon of all, if any, buildings, improvements, and easements
now existing; (c) the number of acres in the Land; (d) the location of any
buildings, fences or other improvements which encroach on the Land; (e) the
location of any improvements on the Land which encroach on any neighboring
property or on any property which is subject to any easement or right-of-way;
(f) all building lines established in respect of the Land; and (g) all public
access to the Land, and representing that the boundaries of the Land are
contiguous with the boundaries of all adjoining parcels (the "Survey").
Prior to the Closing, a copy of the Survey complying with the above
requirements shall be delivered to Buyer and the Title Company, together with
certification to each entity by the surveyor, which certification complies
with American Land Title Association guidelines, and also together with such
additional supporting reports and other certificates as the Title Company may
require to enable the Title Company to delete its standard survey exceptions
from the Owners Policy. Company shall pay all of the costs of the Survey,
which cost shall be considered as an additional current liability, subject to
Section 2.4 above.
4. CLOSING. Unless the parties agree otherwise, the closing of the within
contemplated transaction (the "Closing") shall take place on the date that is
within five business days after the completion, satisfaction or waiver of
each of the conditions to Closing set forth in Articles 8 and 9. The Closing
shall take place at a location mutually agreeable to Buyer and Stockholders.
The date on which the Closing occurs shall be referred to as the "Closing
Date."
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS AND COMPANY. Company, as
to the time period before Closing only, and each Stockholder, severally,
represent and warrant to Buyer that the statements contained in this Section
5 except as set forth in the schedules to the subsections of this Section 5
delivered by Stockholders to Buyer on the date hereof (such schedules
hereinafter collectively referred to as the "Disclosure Schedules" and,
individually, as a "Disclosure Schedule"): (i) are correct and complete as
of the date of this Agreement; (ii) will be correct and complete as of the
Closing Date (as though made then and as
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though the Closing Date were substituted for the date of this Agreement
throughout this Section 5); and (iii) shall survive the Closing in accordance
with Article 12 hereof. Nothing in the Disclosure Schedules shall be deemed
adequate to disclose an exception to a representation or warranty made
herein, however, unless the Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable
detail. Wherever a representation or warranty herein is qualified as having
been made "to the best of Stockholders' knowledge", such phrase shall mean
the knowledge of Xxxx X. Xxxx, after reasonable inquiry and the actual
knowledge of the other Stockholders without inquiry.
5.1 ORGANIZATION; AUTHORITY.
(i) Company is a Texas corporation duly organized, validly existing
and in good standing under the laws of the State of Texas and is now and
has been at all times since its creation, duly authorized, qualified and
licensed under all laws, regulations, ordinances and orders of public
authorities to carry on its businesses in the places and in the manner as
conducted at the time such activities were conducted except for where
failure to be so authorized, qualified or licensed would not have a
material adverse affect on the Business. Copies of Company's Articles of
Incorporation (certified by the Secretary of State of Texas and Bylaws
(certified by the Secretary of Company), each as amended, are attached
hereto as Schedule 5.1(i).
(ii) Company has full legal right, power and authority (corporate and
otherwise) to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. All corporate action of Company necessary
to approve the sale of the Company Stock has been taken, including director
and shareholder approvals, if necessary.
(iii) Each Stockholder is competent and under no legal restraint or
duress and has the full legal right and capacity to enter into and perform
his obligations under this Agreement.
5.2 STOCK OWNERSHIP; ABSENCE OF ADVERSE CLAIMS. All of the issued and
outstanding shares of Company Stock are owned of record and beneficially by
Stockholders as set forth on Annex II and are free and clear of all liens,
security interests, encumbrances, adverse claims, pledges, charges, voting
trusts, equities and other restrictions on transfer whatsoever (collectively,
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"Adverse Claims"). This Agreement is the valid and binding obligation of
Company and Stockholders, enforceable against each of them in accordance with
its terms.
5.3 CAPITALIZATION. The authorized capital stock of Company consists
solely of 1,000 shares of voting common stock, $1.00 par value, of which
1,000 shares are issued and outstanding. All of the issued and outstanding
shares of Company Stock have been duly authorized and validly issued, are
fully paid and nonassessable, were offered, issued, sold and delivered by
Company in compliance with all state and federal laws concerning the issuance
of securities and none of such shares were issued pursuant to awards, grants
or bonuses nor in violation of the preemptive rights of any past or present
stockholder. The stock transfer records provided by Stockholders and Company
to Buyer correctly set forth all issuances, acquisitions and retirements of
Company Stock since the inception of Company. Company has never acquired any
treasury stock, except for 175 shares acquired from Xxxxxxx Xxxxxxxx in
September 1996 which were subsequently reissued. No subscriptions, options,
warrants, puts, calls, conversion rights or other commitments of any kind
exist which obligate Company to issue any of its authorized but unissued
capital stock or otherwise relate to the sale or transfer by Company of any
securities of Company (whether debt or equity). In addition, Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interests therein or to pay any dividend
or make any distribution in respect thereof. Company has not agreed to
register any securities under the Securities Act of 1933, as amended (the
"Act"), or under any state securities law. There has been no transaction or
action taken with respect to the equity ownership of Company in contemplation
of the transaction described in this Agreement which would prevent Parent
from accounting for such transaction on a "pooling-of-interest" or on a
reorganization accounting basis. Neither the voting stock structure of
Company nor the ownership of shares of Company has been altered or changed in
contemplation of the Merger. Between June 30, 1995 and the Closing Date,
there has not been any sale or spin-off of significant assets of Company
other than in the ordinary course of business.
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5.4 PREDECESSOR ENTITIES; TRADE NAMES. Except as set forth on Schedule
5.4, Company has never directly or indirectly participated in any manner in
any joint venture, partnership or other noncorporate entity. Company was
formed solely to operate the Business and has never conducted any other
business or activity. Also set forth on Schedule 5.4 is a list of the names
of all predecessors of Company, all prior corporate names of Company, and all
trade names and "doing business as" names of Company, including the names of
all entities substantially all of the assets of which were previously
acquired by Company.
5.5 NO SUBSIDIARIES. Company has never owned or controlled and does not
now own, of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into capital stock or any other equity
interest in any partnership, corporation, association or other business
entity other than those of Company, except Re-Claim Environmental Louisiana,
L.L.C. and as disclosed on Schedule 5.4.
5.6 FINANCIAL STATEMENTS. Attached as Schedule 5.6 are copies of the
following financial statements of Company (together, the "Financial
Statements"):
(a) Company's balance sheet as of December 31, 1996, and a statement
of income, cash flow and retained earnings for the year then ended;
(b) Company's balance sheet as of June 30, 1997, and a statement of
income for the quarter then ended;
(c) Company's monthly interim balance sheets and statements of income
commencing for the month ended July 31, 1997, and continuing for each month
end until the end of the month immediately preceding the month in which the
Closing Date occurs; and
(d) Company's balance sheet and income statement as of August 31,
1997 (the "Balance Sheet Date"), prepared and audited by Xxxxxx Xxxxxxxx.
Except as set forth on Schedule 5.6, each of the Financial Statements
described in (d) above (including all footnotes thereto) has been prepared,
to the best of Stockholders' knowledge in accordance with GAAP, applied on a
consistent basis throughout the periods indicated. Each of the Financial
Statements (including all footnotes thereto) is true, complete and correct in
all material
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respects. Each of the balance sheets presents fairly the financial condition
of Company as of the date indicated thereon and each of such statements of
income presents fairly on an accrual basis the results of the operations of
Company for the period indicated thereon. To the best of Stockholders'
knowledge, the Financial Statement described in (d) above includes all
footnotes required by GAAP, each such footnote is complete and accurate, and
contains all information required by GAAP to be contained therein. To the
best of Stockholders' knowledge, all reserves for contingent risks have been
estimated in accordance with GAAP and are appropriate and sufficient to cover
all costs reasonably expected to be incurred from such risks. Since its
inception Company has not (a) made any material change in its accounting
policies or (b) effected any prior period adjustment to, or other restatement
of, its financial statements for any period. The Financial Statements are
consistent with the books and records of Company (which books and records are
materially correct and complete). If required, the President or Chief
Financial Officer of Company will, on or before the Closing Date, execute any
reasonable documentation required by Parent's independent public accountants
or any stock exchange with respect to issues related to pooling accounting
treatment.
5.7 NON-BALANCE SHEET LIABILITIES. Attached hereto as Schedule 5.7 is a
complete and accurate list as of the date hereof of all liabilities and
obligations of Company, excluding obligations arising under this Agreement,
which are not individually reflected in the Financial Statements dated the
Balance Sheet Date, but which would have been so reflected in a full GAAP
accounting (whether or not incurred in the ordinary course of business) of
any kind, character and description, accrued or unaccrued, absolute or
contingent, secured or unsecured, liquidated or unliquidated, due or to
become due, together with, in the case of those liabilities and other
obligations the amounts of which are not fixed, a reasonable best estimate of
the maximum amount which may be payable. For each liability or obligation
for which the amount is not fixed or is contested, Stockholders shall provide
the following information:
(a) a summary description of the liability or other obligation
together with the following:
(1) copies of all relevant documentation relating thereto;
(2) amounts claimed and any other action or relief sought; and
-12-
(3) name of claimant and all other parties to the claim, suit or
proceeding, if any.
(b) the name of each court or agency before which a claim, suit or
proceeding is pending;
(c) the date such claim, suit or proceeding was instituted;
(d) a reasonable best estimate by Stockholders of the maximum amount,
if any, which is likely to become payable with respect to each such
liability or the cost of performance with respect to each such other
obligation.
5.8 ACCOUNTS RECEIVABLE. Attached as Schedule 5.8 is a complete and
accurate list of all accounts and notes receivable of Company as of the date
hereof, including receivables from and advances to employees and Stockholders
and also including all such accounts and notes receivable which are not
reflected in the Financial Statements, if any. Also attached as Schedule 5.8
is an aging of all accounts and notes receivable showing amounts due in 30
day aging categories. Neither Company nor any Stockholder are guarantying
the collectibility of any account or note receivable and no reduction for
same shall be taken from any sums otherwise owed to Stockholders.
5.9 PROPRIETARY RIGHTS; ENVIRONMENTAL DOCUMENTS. (i) Attached as
Schedule 5.9(i) is a reasonably complete and accurate list and summary
description as of the date hereof of all permits, titles (including
motor vehicle titles and current registrations), fuel permits, licenses,
franchises, certificates, trademarks, trade names, patents, patent
applications and copyrights owned or held by Company, none of which
permits, titles, licenses, franchises and certificates, trademarks,
tradenames, patents, patent applications and copyrights, has been
claimed to or, to the best of Stockholders' knowledge, infringe on the
rights of others and all of which are now valid, in good standing and in
full force and effect. Except as set forth on Schedule 5.9(i), such
permits, titles, licenses, franchises, certificates, trademarks, trade
names, patents, patent applications and copyrights are adequate for the
operation of the Business as presently constituted;
(ii) Stockholders have, as of the date of this Agreement, made
available to Buyer for its
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inspection all presently held records, correspondence, reports,
notifications, permits, pending permit applications, licenses and
pending license applications, environmental impact studies, assessments
and audits and all notifications from governmental agencies and any
other person or entity and any other documents of Company relating to:
(a) each actual and threatened violation of Applicable Laws (hereinafter
defined) by Company or otherwise relating to the Land and all, if any,
claims thereof; (b) the present or past environmental compliance by
Company; (c) the present or past environmental condition of the Land;
(d) the discharge, leakage, spillage, transport, disposal or release of
any material into the environment by Company or otherwise relating to
the Land; and (e) land use and access approvals relative to any portion
of the Land (collectively, the "Environmental Documents").
5.10 REAL PROPERTY; REPORTING.
(i) Company has never owned, leased or otherwise occupied, had an
interest in or operated any real property other than the Land and
approximately two (2) acres in Dallas, Texas, previously leased by Company
that was used solely for a staging area. Company has good, fee simple
title to the Land except as permitted under Article 3 hereof. Except as
set forth on Schedule 5.10(i):
(a) The Land is, and at all times during operation of the
Facility has been, fully licensed, permitted and authorized for the
operation of the Facility under all Applicable Laws relating to the
protection of the environment, the Land and the conduct of the Facility
thereon (including, without limitation, all zoning restrictions and
land use requirements).
(b) The Land is usable for its current uses and can be used by
the Surviving Corporation after the Closing for such uses without
violating any Applicable Law or private restriction, and such uses are
legal conforming uses. There are no proceedings or amendments pending
and brought by or, to the best of Stockholders' knowledge, threatened
by, any third party which would result in a change in the allowable uses
of the Land or which would modify the right of the
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Surviving Corporation to use the Land for its current uses after the
Closing Date (subject to Schedule 5.19).
(c) Stockholders and Company have made available to Buyer all
engineering, geologic and other similar reports, documentation and maps
relating to the Land in the possession or control of Stockholders or
Company.
(d) To the best of Stockholders' knowledge, no third parties have
any rights to drill or explore for, collect, produce, mine, excavate,
deliver or transport oil, gas, coal, or other minerals in, on, beneath,
across, over, through, from or to any portion of the Land, other than as
set forth in the Owner's Policy.
(e) Neither Company, Stockholders nor the Land now is or ever
has been involved in any litigation or administrative proceeding
seeking to impose fines, penalties or other liabilities or seeking
injunctive relief for violation of any Applicable Laws relating to the
environment, other than as set forth on Schedule 5.19.
(f) No third party has a present or future right to possession
of all or any part of the Land, other than Force, Inc., Texline Gas
Company and Industrial Bank which hold deeds of trust to secure
Company's debt (which debt is part of the Assumed Debt).
(g) No portion of the Land contains any areas that could be
characterized as disturbed, undisturbed or man made wetlands or as
"waters of the United States" pursuant to any Applicable Laws or the
procedural manuals of the Environmental Protection Agency, U.S. Army
Corps of Engineers or the Department of Natural Resources of the
applicable state, whether such characterization reflects current
conditions or historic conditions which have been altered without the
necessary permits or approvals.
(h) There are no mechanic's liens affecting the Land and no work
has
-15-
been performed on the Land within 120 days of the date hereof for which
a mechanic's lien could be filed.
(i) To the best of Stockholders' knowledge, there (subject to
Schedule 5.19) are no levied or pending special assessments affecting
all or any part of the Land and none is threatened.
(j) There are no pending or, to the best of Stockholders'
knowledge, threatened condemnation or eminent domain proceedings
affecting all or any part of the Land.
(ii) To the best of Stockholders' knowledge, subject to Schedule 5.19,
Company has provided to the government agencies requiring the same, all
material reports, notices, filings and other disclosures required by
Applicable Laws and all such reports, notices, filings and other documents
were complete and accurate in all material respects at the time provided to
said government agencies.
5.11 PERSONAL PROPERTY; NEW PROJECTS. (i) Attached as Schedule 5.11(i) is
a complete and accurate list and a complete description as of the date hereof
of all personal property of Company including true and correct copies of
leases for equipment and other personal property, if any, used in the
operation of the Business and including an indication as to which assets were
formerly owned by business or personal affiliates of Company. All of the
vehicles, machinery and other equipment of Company are in good working order
and repair;
(ii) Company has good title to, or a valid leasehold interest in, the
properties and assets used by it shown on its balance sheet dated the Balance
Sheet Date or acquired after the date thereof, whether or not located on the
Land, including, without limitation, the items of personal property listed on
Schedules 5.11(i), free and clear of all security interests, liens or other
Adverse Claims, except for the Assumed Debt (including security interests
related thereto) and the rights of owners of any leased assets;
(iii) all leases set forth on Schedule 5.11(i) are in full force and
effect and constitute valid and binding agreements of the parties thereto
(and their successors) in accordance with their respective terms. No default
by Company, or, to the best of Stockholders' knowledge, any other party to
any of such leases, exists or would exist except for the
-16-
passage of time or delivery of a notice or both;
(iv) all fixed assets used by Company in the operation of the
Business are either owned by Company or leased by Company under an
agreement indicated on Schedule 5.11(i). Company's combined fixed
assets (together with the real property assets) constitute all of the
real and personal property necessary for the operation of the Business
both by Company and by the Surviving Corporation immediately following
the Closing and include all of the permits, licenses, franchises,
consents and other approvals necessary to operate the Business both
before and immediately after Closing; and
(v) at the Closing, Company shall have good and marketable title to
all personal property, subject to all listed debts and lease payments
(including lease end buy-out payments) and the Assumed Debt.
5.12 CONTRACTS. Attached as Schedule 5.12 is a complete and accurate
list as of the date hereof of all of the following types of contracts,
commitments and other agreements to which Company is a party or by which
Company or its properties are bound, which list shall include, at a minimum,
the full names of each party to each agreement and the date of execution
thereof: waste treatment and processing contracts, joint venture or
partnership agreements, contracts or collective bargaining arrangements with
any labor organizations, loan agreements, powers of attorney (each of which
shall be cancelled at the Closing), indemnity or guaranty agreements, bonds,
mortgages, options to purchase land, liens, pledges or other security
agreements, agreements for the employment of any individual, agreements under
which Company has advanced or loaned any amount to one another or to
Stockholders or any employee, officer or director of Company, any guaranties
by Company, any agreement concerning confidentiality or noncompetition and
any other agreement under which the consequences of a default or termination
could have an adverse effect on the business, financial condition, operations
or prospects of Company. None of the agreements listed on Schedule 5.12 have
been modified, altered, terminated or otherwise amended and there have been
no waivers, oral agreements, representations or other statements with
relation to any such agreements except as described in Schedule 5.12.
Company has complied with all obligations pertaining to it contained in such
contracts, commitments and other agreements, is not in default thereunder and
no notice of default has been received nor will the consummation of the
transactions contemplated by this Agreement result in such a default. To the
best of Stockholders' knowledge,
-17-
there is no default by any other party to any contract, commitment or other
agreement attached as Schedule 5.12.
5.13 INSURANCE POLICIES. Attached as Schedule 5.13 are complete and
accurate copies as of the date hereof of all insurance policies carried by
Company and an accurate list of all insurance loss runs and workers'
compensation claims received for the past three policy years. All insurance
policies are in full force and effect and shall remain in full force and
effect through the Closing Date. Company's insurance has never been
cancelled and Company has never been denied coverage.
5.14 DIRECTORS, OFFICERS AND EMPLOYEES; COMPENSATION. Attached as
Schedule 5.14 is a complete and accurate list of all officers, directors and
employees of Company and the rate of compensation of each as of the date
hereof (including a breakdown of the portion thereof attributable to salary,
bonus and other compensation, respectively). Except as set forth on
Schedules 5.12 and 5.14 as to Xxxxx Xxxxxxx and Xxxxxx Xxxxxxxx, each
employee of Company is an employee at will and there are no collective
bargaining agreements affecting any employee of Company. There is no pending
or, to the best of Stockholders' knowledge, threatened labor dispute
involving Company and any group of its employees nor has Company experienced
any labor interruptions over the past three years.
5.15 EMPLOYEE PLANS. Except as set forth on Schedule 5.15, Company has
no group health plans, employee benefit plans, employee welfare benefit
plans, employee pension benefit plans, multi-employer plans or
multiple-employer welfare arrangements (as defined in Sections 3(3), (1),
(2), (37) and (40), respectively, of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) (collectively, "Plans"), which are
currently maintained and/or sponsored by Company, or to which Company
currently contributes, or has an obligation to contribute in the future
(including, without limitation, employment agreements and any other
agreements containing "golden parachute" provisions and deferred compensation
agreements). No such Plans have been terminated within the past three years.
5.16 COMPLIANCE WITH ERISA. Neither Company, any Controlled Group
Member (as defined in Code Section 414(n)(6)(B)), nor any business,
subsidiary, division or operation acquired
-18-
by Company or a Controlled Group Member in the last five years, ever have
maintained or sponsored, or contributed to, an employee pension benefit plan
(as defined in ERISA Section 3(2)) which is subject to the provisions of
Title IV of ERISA. Except as set forth on Schedule 5.15, Company does not
maintain or sponsor, nor is a contributing employer to, a pension,
profit-sharing, deferred compensation, stock option, employee stock purchase
or other employee benefit plan, employee welfare benefit plan, or any other
arrangement with its employees. Further:
(i) With respect to Plans which qualify as "group health plans" under
Section 4980B of the Internal Revenue Code and Section 607(1) of ERISA and
related regulations (relating to the benefit continuation rights imposed by
"COBRA"), Company and Stockholders have complied (and on the Closing Date
will have complied), in all respects with all reporting, disclosure,
notice, election and other benefit continuation requirements imposed
thereunder as and when applicable to such plans, and Company has no (and
will incur no) direct or indirect liability and is not (and will not be)
subject to any loss, assessment, excise tax penalty, loss of federal income
tax deduction or other sanction, arising on account of or in respect of any
direct or indirect failure by Company and Stockholders or any of them, any
time prior to the Closing Date to comply with any such federal or state
benefit continuation requirement, which is capable of being assessed or
asserted before or after the Closing Date directly or indirectly against
Company or Stockholders, or any of them with respect to such group health
plans.
(ii) With respect to any Plan which qualifies as a group health plan,
such plan is insured by third parties and all premiums have been paid on a
timely basis and are paid in full as of the Closing Date or, to the extent
such plan is not fully insured, all self insured obligations have been met
as of the Closing Date and are fully reflected in the plan's financial
statements. To the extent that any of the Company's group health plans are
retrospectively rated, there are no liabilities capable of assertion against
the Company in respect of claims already incurred and present.
-19-
5.17 COMPLIANCE WITH LAW; NO CONFLICTS.
(i) Except as disclosed in Schedule 5.19, Company has in the past
complied with, and is now in compliance with, all federal, state and local
statutes, laws, rules, regulations, orders, licenses, permits (including,
without limitation, zoning restrictions and land use requirements) and all
administrative and judicial judgments, rulings, decisions and orders of any
body having jurisdiction over Company, the Business or the Land (the
"Applicable Laws"), except to the extent that non-compliance would not have
a material adverse effect on Company and neither Company nor Stockholders
have received any notice that Company is under investigation or other form
of review with respect to any Applicable Law; and
(ii) the execution, delivery and performance of this Agreement, the
consummation of any transactions herein referred to or contemplated hereby
and the fulfillment of the terms hereof and thereof will not:
(a) conflict with, or result in a breach or violation of the
Articles of Incorporation or Bylaws of Company;
(b) conflict with, or result in a breach under any document,
agreement or other instrument to which Company, or Stockholders is a
party, or result in the creation or imposition of any lien, charge or
encumbrance on any properties of Company or Stockholders pursuant to:
(A) any law or regulation to which Company or Stockholders, or any of
their respective properties are subject, or (B) any judgment, order or
decree to which Company or Stockholders is bound or any of their
respective properties are subject;
(c) result in termination or any impairment of any permit,
license, franchise, contractual right or other authorization of
Company; or
(d) require the consent of, or the filing with any governmental
authority or agency or any other third party in order to remain in full
force and effect.
5.18 TAXES. Company has filed, or will file, in a timely manner all
requisite federal, state, local and other tax returns due for all fiscal
periods ended on or before the date hereof and, as of the
-20-
Closing, shall have filed or will file in a timely manner all such returns
due for all periods ended on or before the Closing Date. There are no
agreements to extend the statutory period for the assessment of any taxes,
examinations in progress or claims against Company for federal, state, local
and other taxes (including penalties and interest) for any period or periods
prior to and including the date hereof and none shall exist as of the Closing
Date. No notice of any claim for taxes, whether pending or threatened, has
been received. Copies of: (i) all tax examinations; (ii) extensions of
statutory limitations; and (iii) the federal, state, local and other income
tax returns and franchise tax returns of Company for its last three fiscal
years are attached hereto as Schedule 5.18. Company is taxed under the
provisions of Subchapter C of the Code. Company has a taxable year ended
December 31. Company currently utilizes the accrual method of accounting for
income tax purposes and has not changed its method of accounting since its
initial creation.
5.19 LITIGATION. Except as set forth on Schedule 5.19, there is no
claim, litigation, action, suit or proceeding, investigation, formal
arbitration, informal arbitration or mediation, administrative, judicial or
other review, pending or, to the best of Stockholders' knowledge, threatened
against Company or Stockholders, or otherwise relating to the business or
affairs of Company, at law or in equity, before any federal, state or local
court or regulatory agency, or other governmental or private authority; no
notice of any of the above has been received by Company or Stockholders; and
no facts or circumstances exist which would give rise to any of the
foregoing. Also listed on Schedule 5.19 are all instances where Company is
the plaintiff, or complaining or moving party, under any of the above types
of proceedings or otherwise.
5.20 ABSENCE OF PRICE RENEGOTIATION CONTRACTS. Company is not now nor
has ever been a party to any governmental contracts subject to price
redetermination or renegotiation.
5.21 CONDUCT OF BUSINESS SINCE BALANCE SHEET DATE. Since the Balance
Sheet Date, there has not been any:
(i) material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income and business or prospects of
Company;
(ii) damage, destruction or loss (whether or not covered by insurance)
which, singly or in the aggregate, materially and adversely affects the
properties (whether owned or leased)
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or business of Company;
(iii) change in the authorized capital of Company or in its securities
outstanding, any change in its equity ownership or any grant by it of any
subscriptions, options, warrants, puts, calls, conversion rights or other
commitments related to its equity interests;
(iv) declaration or payment of any dividend or distribution in respect
of the capital stock of Company or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of Company;
(v) any increase in the compensation, bonus, sales commissions or fee
arrangements payable or to become payable by Company to any of its officers,
directors, employees, consultants or agents above those disclosed on
Schedule 5.14;
(vi) work interruption, labor grievance or claim filed;
(vii) sale or transfer of, or any agreement to sell or transfer, any
material assets, property or rights of Company to any person not in the
ordinary course of the business of Company, including, without limitation,
all agreements with Stockholders or with affiliates of Company;
(viii) cancellation or agreement to cancel any indebtedness or other
obligation owing to Company, including, without limitation, any
indebtedness or other obligation of Stockholders or with any affiliate of
Company;
(ix) plan, agreement or arrangement granting any preferential right to
purchase or acquire any interest in any of the assets, property or rights of
Company or requiring consent of any party to the transfer and assignment of
any such assets, property or rights;
(x) purchase or acquisition by any third party of, or any agreement,
plan or other arrangement by any third party to purchase or acquire, any
property, rights or assets of Company other than in the ordinary course of
business;
(xi) waiver of any rights or claims of Company;
(xii) breach, amendment or termination of any contract, license, permit
or other agreement to which Company is a party other than in the ordinary
course of business;
(xiii) transaction by Company outside the ordinary course of its
business;
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(xiv) amendment to the Articles of Incorporation or Bylaws of Company;
(xv) any other material occurrence, event, incident, action or failure
to act outside the ordinary course of business of Company; or
(xvi) any action by Company, Stockholders, or any employee, officer or
agent of Company or Stockholders committing to do any of the foregoing.
5.22 BANK ACCOUNTS; DEPOSITORIES. Attached as Schedule 5.22 is a
complete and accurate list as of the date of this Agreement, of:
(i) the name of each financial institution in which Company has any
account or safe deposit box;
(ii) the names in which each account or box is held;
(iii) the type of each account; and
(iv) the name of each person authorized to draw on or have access to
each account or box.
5.23 HAZARDOUS MATERIALS. Environmental Laws means any applicable
statute, code, enactment, or ordinance, rule, regulation, permit, consent,
approval, authorization, license, judgment, order, writ, decree, injunction,
or other requirement having the force and effect of law, whether local, state
or national relating to: (i) emissions, discharges, spills, releases or
threatened releases of Hazardous Substances into ambient air, surface water,
groundwater, watercourses, publicly or privately owned treatment works,
drains, sewer systems, wetlands septic systems or onto land; (ii) the use,
treatment, storage, disposal, handling, manufacturing, transportation, or
shipment of Hazardous Materials; (iii) the regulation of storage tanks; and
(iv) otherwise relating to pollution or protection of the environment.
Hazardous Materials means any hazardous or toxic material, substance or waste
designated as such under the Resource Conservation and Recovery Act of 1976;
the Comprehensive Environmental Response Compensation and Liability Act
("CERCLA"); the Clean Water Act; the Toxic Substances Control Act; and any
comparable or similar state statute affecting the Business; any other
applicable law or the rules and regulations promulgated under any of the
foregoing, as each of the foregoing may have been amended. The definition of
a Hazardous Materials as used herein, specifically excludes petroleum, as
that term is
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defined under the Resource Conservation and Recovery Act of 1976 and CERCLA.
Except as set forth on Schedules 5.19, 5.23 or 5.10, Company is not in
material violation of any Environmental Laws and Company has not received any
notice of alleged violation of Environmental Laws from any governmental
agency.
No Hazardous Materials have been used, stored, manufactured or processed
on the Land except as necessary to the conduct of Company's business and in
compliance with all applicable laws.
To the best of Company's knowledge, subject to Schedules 5.19 and 5.10,
there has been no disposal release or threatened release of Hazardous
Materials from or to the Land.
No liens, with respect to environmental liability, have been imposed
against Company or the Land under CERCLA, any comparable state statute
affecting the Business or other Applicable Law.
No portion of the Land is listed on the CERCLIS list or the National
Priorities List of Hazardous Waste Sites or any similar list maintained by
the State of Texas.
Neither Company nor any Stockholder has received a notice of potential
responsibility or letter of inquiry from any private party or government
agency for any off-site facility under CERCLA or state counterpart thereof.
5.24 STORAGE TANKS. Except as set forth on Schedule 5.24, the Land does
not contain any underground or above-ground storage tanks containing
Hazardous Materials, petroleum products or wastes or other hazardous
substances regulated by 40 CFR 280 or other Applicable Laws. All above and
below ground tanks currently in use on the Land are being used and maintained
in accordance with all Applicable Laws.
5.25 ABSENCE OF CERTAIN BUSINESS PRACTICES. To the best knowledge of
each Stockholder, neither Company nor Stockholders have ever made, offered or
agreed to offer anything of value to any employees of any customers of
Company for the purpose of attracting business to Company or any foreign or
domestic governmental official, political party or candidate for government
office or any of their respective employees or representatives, nor have they
otherwise taken any action which would cause it to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended.
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5.26 COMPLETE DISCLOSURE. To the best knowledge of each Stockholder,
this Agreement and the schedules hereto and all other documents and
information furnished to Buyer and its representatives pursuant hereto or
pursuant to the negotiation of this transaction or the investigations of
Buyer or the employees or representatives of either of them, do not and will
not include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading. If
Stockholders, or, prior to Closing, Company, becomes aware of any fact or
circumstance which would change a representation or warranty of Company or
Stockholders in this Agreement or any other statement made or document
provided to Buyer, the party with such knowledge shall promptly give written
notice of such fact or circumstance to Buyer. None of (i) such notification,
(ii) any pre-Closing investigation made by Buyer of Company, its properties,
businesses or assets, or (iii) the Closing contemplated by this Agreement,
shall relieve Stockholders or Company of their obligations under this
Agreement, including their representations and warranties made in this
Section 5.
6. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT. Buyer and Parent,
jointly and severally, represent and warrant to each Stockholder that the
statements contained in this Section 6: (i) are correct and complete as of
the date of this Agreement; (ii) will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 6); and
(iii) shall survive the Closing in accordance with Article 12 hereof.
6.1 CORPORATE ORGANIZATION. Buyer is duly incorporated, validly
existing and in good standing under the laws of the State of Texas. Parent
is duly incorporated, validly existing and in good standing under the laws of
the State of Delaware. Buyer and Parent are each duly authorized, qualified
and licensed under all applicable laws, regulations and ordinances of public
authorities to carry on their businesses in the places and in the manner as
now conducted except for where the failure to be so authorized, qualified or
licensed would not have a material adverse affect on such businesses.
6.2 CORPORATE AUTHORITY. The officers of Buyer and Parent executing
this Agreement have the corporate authority to enter into and bind Buyer and
Parent to the terms of this Agreement and
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Buyer and Parent have taken all necessary corporate action (including,
without limitation, approval by their respective Boards of Directors) to
authorize the execution, delivery and performance of this Agreement. All
corporate action by Buyer and Parent necessary to approve the transaction,
including both director and (if required) shareholder approvals, has been
taken.
6.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the consummation of any transactions herein referred to or
contemplated hereby and the fulfillment of the terms hereof and thereof,
including, without limitation, the provisions of Article 2 and Section 10.4,
will not:
(i) conflict with, or result in a breach or violation of the Articles
of Incorporation or Bylaws of Buyer or Parent;
(ii) conflict with, or result in a breach under any document,
agreement or other instrument to which Buyer or Parent is a party, or
result in the creation or imposition of any lien, charge or encumbrance on
any properties of Buyer or Parent pursuant to: (A) any law or regulation
to which Buyer or Parent, or their respective property is subject, or (B)
any judgment, order or decree to which Buyer or Parent is bound or their
respective property is subject; or
(iii) result in termination or any impairment of any material permit,
license, franchise, contractual right or other authorization of Buyer or
Parent.
6.4 BINDING AGREEMENT. This Agreement is the binding and valid
obligation of Buyer and Parent, enforceable against them in accordance with
its terms.
6.5 SEC FILINGS AND FINANCIAL INFORMATION. Buyer and Parent have timely
made all filings required to be made by them with the SEC. None of such
filings contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements therein not misleading in
light of the circumstances in which they were made.
6.6 FINANCIAL INFORMATION. Parent has delivered to Company true copies
of the following: (i) its filings under the Act; (ii) all reports on Form
8-K's for the past twelve months, if any; (iii) all exhibits filed with such
forms or reports, if any. The foregoing filings and reports, as of their
respective dates, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. Since
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the date of filing of Parent's Form S-1, there has not been any material
adverse change in the business, properties, financial condition or prospects
of Parent. Buyer has conducted no business prior to the Effective Date.
6.7 TAXATION. Parent has prepared and filed with the appropriate
governmental agencies all federal, state and local tax returns required to be
filed by it and has paid all taxes shown thereon to be payable or which have
become due pursuant to any assessment, deficiency notice or similar notice
received by it. Parent is not a party to any pending action or proceeding by
any governmental authority for assessment or collection of taxes and no claim
therefor has been asserted against it.
6.8 PARENT STOCK. The Parent Stock to be issued pursuant to Section 2.1
above, is validly issued and authorized and shall be issued and delivered free
and clear of all liens, claims and encumbrances except for the restrictions set
forth in this Agreement. Buyer and Parent are not a party to any agreement
creating rights in any person or entity with respect to such shares of stock
(other than this Agreement) or relating to the voting thereof. The registration
rights and obligations described in Sections 2.1 and 10.4 hereof are enforceable
according to their terms and are not affected by any other contract, agreement,
or commitment to which Parent, Buyer or any affiliate if either is a party.
6.9 FINANCIAL AND BUSINESS. Buyer has no material assets or liabilities
other than the stock it is acquiring in Company. All of the issued and
outstanding capital stock of Buyer is owned by Parent.
7. COVENANTS.
7.1 ACCESS TO LAND AND RECORDS. Between the date of this Agreement and
the Closing Date, Stockholders will cause Company to afford to or obtain for the
officers and authorized representatives of Buyer access to all of the Land
(including, without limitation, for the purpose of performing all testing,
inspections and other procedures considered desirable by Buyer), sites, books
and records, including, without limitation, the Environmental Documents, at all
reasonable times and upon reasonable notice and will furnish Buyer with such
additional financial and operating data and other information as to the business
and properties, both current and former, of
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Company as Buyer may from time to time reasonably request. Buyer agrees to
repair all damage, if any, caused by Buyer's entry onto the Land prior to
Closing. Stockholders will cooperate, and will cause Company to cooperate,
with Buyer, its representatives, engineers, auditors and counsel in the
preparation of any documents or other material which may be required in
connection with any documents or materials required by any governmental
agency. Buyer will cause all information obtained in connection with the
negotiation and performance of this Agreement to be treated as confidential
in accordance with the provisions of Article 14 hereof.
7.2 COMPANY ACTIVITIES PRIOR TO CLOSING. Between the date of this
Agreement and the Closing Date, Stockholders will cause Company:
(i) to carry on its business in substantially the same manner as it
has heretofore and not to introduce any material new method of management,
operation or accounting;
(ii) to maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present, ordinary
wear and tear excepted;
(iii) to perform its obligations under agreements relating to or
affecting its assets, properties or rights, including payment of debts as
they become due;
(iv) to keep in full force and effect present insurance policies or
other comparable insurance coverage with reputable insurers;
(v) to use reasonable efforts to maintain and preserve its business
organization intact, retain employees and maintain relationships with
suppliers, customers, consultants, independent contractors and others
having business relations with Company;
(vi) to maintain compliance with all Applicable Laws;
(vii) to maintain and perform present debt and lease instruments in
accordance with their terms and not enter into new or amended debt or lease
instruments, without the prior written consent of Buyer;
(viii) to pay and provide salaries and commissions for all officers,
directors, employees and agents at levels no higher than those on Schedule
5.14;
(ix) to provide the interim financial statements required by Section
5.6; and
(x) to provide all reasonable assistance to Buyer to provide for an
orderly
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transfer of operating control of Company to Buyer.
7.3 PROHIBITED ACTIVITIES PRIOR TO CLOSING. Between the date of this
Agreement and the Closing Date, Stockholders will cause Company not, without the
prior written consent of Buyer:
(i) to amend the Articles of Incorporation or Bylaws of Company;
(ii) to change the authorized capital of Company or the equity
ownership of Company or grant any options, warrants, puts, calls, conversion
rights or commitments relating to the equity interests of Company;
(iii) to declare or pay any dividend of Company or directly or
indirectly purchase, redeem or otherwise acquire or retire for value or
issue any shares of stock of Company;
(iv) to enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures in excess of an
aggregate of $5,000;
(v) to increase the compensation payable or to become payable to any
officer, director, stockholder, employee, consultant or agent, or make any
bonus or management fee payment to any such person;
(vi) to create or assume any mortgage, pledge or other lien or
encumbrance upon any assets or properties whether now owned or hereafter
acquired;
(vii) to sell, assign, lease or otherwise transfer or dispose of any
property or equipment;
(viii) to negotiate to acquire any business or begin any new business or
project;
(ix) to merge or consolidate or agree to merge or consolidate with or
into any other corporation;
(x) to waive any of its rights or claims;
(xi) to breach or permit a breach of, amend or terminate, any material
agreement, or any permit, license or other agreement or right to which
Company is a party;
(xii) to enter into any other transaction outside the ordinary course
of its business or otherwise prohibited hereunder;
(xiii) to make any oral or written public announcement concerning this
transaction except as may be required by law, all of which announcements, if
any, shall be forwarded to Buyer for review and comment at least seven days
prior to dissemination; or
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(xiv) to allow any other action or omission, or series of actions or
omissions, by Company or Stockholders that would cause a representation and
warranty of Company and Stockholders made in Section 5.21 of this Agreement
to be untrue on the Closing Date.
7.4 POOLING OF INTERESTS; REORGANIZATION. During the period from the date
of this Agreement through the Effective Date of the Merger, unless the other
parties shall otherwise agree in writing, neither Stockholders nor Company shall
intentionally (a) take or fail to take any action, which action or failure to
act would jeopardize the treatment of Company's combination with Buyer as a
"pooling-of-interest" for accounting purposes, or (b) take or fail to take any
action, which action or failure to act would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code.
7.5 CONTACT WITH GOVERNMENT OFFICIALS. Company and Stockholders shall
each use their best efforts to cooperate with Buyer in making contact with the
appropriate governmental agencies and officials having information about or
jurisdiction over Company, the Stockholders or the Land, including, without
limitation, environmental and land use agencies and officials in order to assist
Buyer in completing its regulatory evaluation of Company and the Land.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY AND STOCKHOLDERS. The
obligations of Stockholders and Company hereunder are subject to the completion,
satisfaction, or at their option, waiver, on or prior to the Closing Date, of
the following conditions.
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Buyer and Parent contained in this Agreement shall be accurate on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date; and each and all of the terms, covenants
and conditions of this Agreement to be complied with and performed by Buyer or
Parent on or before the Closing Date shall have been duly complied with and
performed.
8.2 CONSENTS. All necessary notices to, consents of and filings with any
governmental authority or agency or other third party relating to the
consummation of the Closing or the other transactions contemplated herein to be
made or obtained by Buyer shall have been obtained and
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made.
8.3 NO ADVERSE PROCEEDING. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or, to the best of
Stockholders's knowledge, threatened to restrain or prohibit any of the
transactions contemplated by this Agreement.
8.4 NONCOMPETITION AGREEMENT. The Surviving Corporation shall have
executed and delivered at the Closing the Noncompetition Agreement with
Stockholders (the "Noncompetition Agreement"), in form and substance
satisfactory to Buyer and Stockholders.
8.5 TEXLINE NOTES. Buyer shall have paid the then outstanding principal
balance (and accrued but unpaid interest) of the Texline promissory notes on the
Closing Date.
8.6 PARENT STOCK. On the Closing Date, Buyer shall deliver to
Stockholders certificates for all of the Parent Stock, with all necessary and
appropriate legends thereon, not subject to any preemptive rights, free and
clear of all liens, claims and encumbrances, except for the restrictions set
forth in this Agreement.
8.7 ANCILLARY DOCUMENTS. On the Closing Date, Buyer shall have executed
and delivered that certain Executive Employment Agreement with Xxxx X. Xxxx,
that certain Purchase of Membership Interests Agreement relating to Re-Claim
Environmental Louisiana, L.L.C. and that certain Lease Agreement referenced
therein.
8.8 CERTAIN PERSONALTY.
(a) XXXX EQUIPMENT. Notwithstanding other provisions hereof, the
parties acknowledge that the personalty described in Schedule 8.8 hereto is
owned by Xxxx X. Xxxx, individually and used by the Company (some pursuant
to leases and rental paid by Company to Xxxx X. Xxxx). Buyer and Parent
agree that all such personalty shall either be purchased by Company from
Xxxx at Closing, continue to be leased by Company (with Company assuming
such lease and releasing Xxxx from any liability or guaranty); all in
accordance with Schedule 8.8 hereto.
(b) INTER-COMPANY EQUIPMENT. Notwithstanding other provisions
hereof, three items of equipment are owned by Company and used by Re-Claim
Environmental Louisiana, L.L.C. ("RE-LA"), as described in Schedule 8.8.
Buyer agrees to either (i)
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continue to let RE-LA use such equipment so long as RE-LA pays (or
reimburses) Company for the applicable lease or note payments, or (ii)
transfer the applicable leases and/or purchase notes to RE-LA with RE-LA
assuming ownership (or lessee status).
8.9 RULE 144. Parent shall use its best efforts to cause all filings
required with the SEC to be made of Parent's current public information so that
Stockholders shall have available Rule 144 for the resale of the Parent Stock as
soon as practicable under Rule 144. As soon as resales are possible under Rule
144, at the written request of Stockholders proposing to sell securities in
compliance with Rule 144, Company shall (i) forthwith furnish to Stockholders a
written statement of compliance with the filing requirements of the SEC as set
forth in Rule 144, as such rule may be amended form time to time, and (ii)
timely file and make available to the public and Stockholders all such reports
and other information as will enable Stockholders to make sales, subject to the
express limitations of this Agreement, pursuant to Rule 144 beginning one year
after the date of the acquisition of the Parent Stock.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND PARENT. The obligations
of Buyer and Parent hereunder are subject to the completion, satisfaction or, at
their option, waiver, on or prior to the Closing Date, of the following
conditions.
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Stockholders and Company contained in this Agreement shall be accurate on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, and Buyer shall have received a
certificate from Stockholders to that effect, or setting forth any discrepancies
in such representations and warranties which have arisen since the date of this
Agreement. The foregoing notwithstanding, Company and Stockholders agree that
no limitation of any representation or warranty concerning the knowledge of
Company or Stockholders or any qualification of such representations and
warranties set forth in the certificate contemplated in the first sentence of
this Section 9.1 shall restrict Buyer's right to terminate this Agreement if any
representation or warranty of Stockholders or Company is inaccurate as of the
Closing Date.
9.2 COVENANTS. Each and all of the terms, covenants and conditions of
this Agreement to be complied with and performed by Stockholders and Company on
or before the Closing Date
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shall have been duly complied with and performed.
9.3 NO ADVERSE PROCEEDING. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or, to the best of
Buyer's knowledge, threatened to restrain or prohibit any of the transactions
contemplated by this Agreement, and no governmental agency or body shall have
taken any other action or made any request of Buyer as a result of which the
management of Buyer deems it inadvisable to proceed with the transactions
hereunder.
9.4 GENERAL RELEASE. Stockholders shall have delivered to Buyer an
instrument dated the Closing Date releasing Company, Parent, Buyer and the
Surviving Corporation from any and all claims of Stockholders against Company,
Parent, Buyer and the Surviving Corporation arising out of events which occurred
prior to the Closing (but not including any claims pursuant to this Agreement).
9.5 CONSENTS. All necessary notices to, consents of and filings with any
governmental authority or agency or other third party relating to the
consummation of the Closing or the other transactions contemplated herein to be
made or obtained by Company or Stockholders shall have been obtained and made.
9.6 RESIGNATIONS. Each officer and director of Company shall have
delivered to Buyer their written resignation.
9.7 GOOD STANDING CERTIFICATES. Stockholders shall have delivered to
Buyer certificates, dated as of a date no earlier than 10 days prior to the
Closing Date, duly issued by the appropriate governmental authority or
authorities showing that Company is in good standing in its state of
incorporation.
9.8 UPDATED AGREEMENTS. Stockholders shall have delivered to Buyer a
schedule (Schedule 9.8) dated the Closing Date, listing all material agreements
entered into by Company since the date of Schedule 5.12, which new agreements
must have been determined to be acceptable to Buyer in its sole discretion.
9.9 NONCOMPETITION AGREEMENT. The Noncompetition Agreement shall have
been executed and delivered by all parties thereto at the Closing.
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9.10 DELIVERY OF COMPANY STOCK. Stockholders shall have delivered to
Buyer certificates representing all Company Stock, duly endorsed in blank by
Stockholders or accompanied by stock powers duly executed in blank and with all
necessary transfer tax and other revenue stamps affixed and cancelled at
Stockholders's expense, none of which certificates shall bear any restrictive
legend other than those related to compliance with the Act.
9.11 ENVIRONMENTAL REVIEW. Buyer, through its authorized representatives,
must have completed a review (including, without limitation, all testing,
inspections and other procedures, review of existing files of, and discussions
with, governmental agencies and officials having jurisdiction over Company) of
the Land and the environmental and land use practices, procedures, operations
and activities of Company; the results of which review, without limiting the
generality of the foregoing, reflects compliance with all Applicable Laws
governing the Land and the operations of Company, discloses no actual or
probable violations, compliance problems, required capital expenditures or other
substantive environmental, land use or real estate related concerns and are
otherwise satisfactory in all respects to Buyer in its sole discretion.
9.12 TRANSFERABILITY OF PERMITS. Buyer shall have determined, in its sole
discretion, that prior to, or as a result of, this transaction, all of the
permits required for the operation of the Business and the Facility have been
transferred to the Surviving Corporation (as a matter of law or otherwise) or
can be transferred to the Surviving Corporation without a public hearing before
any governmental body and that all consents or other approvals necessary for the
Surviving Corporation's continued use of such permits after the Merger have been
obtained.
9.13 GENERAL. All actions taken by Stockholders and Company in connection
with the consummation of the transactions contemplated hereby and all
certificates, opinions and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Buyer.
10. POST CLOSING COVENANTS.
10.1 TAXES. (i) Stockholders irrevocably agree to indemnify the
Surviving Corporation against, and to hold the Surviving Corporation harmless
from:
(a) any and all federal, state, local, and other taxes of
Company arising
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from the audit, examination, review or other adjustment (all by
a governmental entity or court) of tax liabilities for periods ending
on or prior to the Closing Date;
(b) any and all taxes, interest, penalties, additions to tax (or
additional amounts imposed with respect to any such interest,
penalties, or additions to tax) imposed with respect to any federal,
state, local, or other taxes of Company for periods ending on or
before the Closing Date; and
(c) any and all federal, state, local, or other taxes of the
Surviving Corporation arising as the result of any payment by the
Stockholders to Buyer in fulfillment of his obligation pursuant to this
Section 10.1(i).
(ii) Parent and Buyer agree that they shall be responsible, at their
sole expense, for the preparation of Company's federal, state, local and
other income and franchise tax returns (and all taxes, penalties and
interest shown to be due thereon) for the tax periods beginning January 1,
1997 and ending on the Closing Date. The Surviving Corporation agrees to
cooperate with Stockholders in the preparation of such returns. Parent and
Buyer further agree that they shall pay all taxes (including all penalties
and interest, if any) due for such tax period; provided, however, that the
amount of such taxes, penalties and interest shall be considered a current
liability in calculating Actual Net Working Capital. Prior to filing the
returns provided for in this paragraph, the Surviving Corporation agrees to
allow Stockholders 20 business days to review such returns.
10.2 POST CLOSING BALANCE SHEET. On the date which is 60 days after the
Closing Date (the "Adjustment Date") the parties shall adjust the Purchase Price
in accordance with Section 2.4 based on a balance sheet of Company for the
period ending on the close of business on the Closing Date, prepared by the
Surviving Corporation's regular independent accountant in accordance with GAAP
and delivered to Parent and Stockholders, together with the supporting
documentation for all current assets and liabilities used to prepare such
balance sheet, at least seven days prior to the Adjustment Date. No accounts
receivable shall be written off in whole or in part in connection with preparing
such balance sheet. Any dispute between the parties as to this Section 10.2
shall be resolved in accordance with the procedure set forth in Section 2.4.
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10.3 CLOSING DATE ACTIONS. Buyer and Stockholders mutually agree that
they shall not, and shall cause Company not to, engage in an transaction outside
the normal course of business on the Closing Date.
10.4 REGISTRATION OF PARENT STOCK.
(a) Stockholder acknowledges that the Unregistered Parent Stock to be
delivered to Stockholders pursuant to this Agreement will not be registered with
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Act"), prior to delivery to
Stockholders and as such will not be readily transferable.
(b) On or prior to a date one-month after the first anniversary of the
Closing Date (the "Registration Date"), Parent agrees to use its best efforts to
file a registration statement with the SEC to register for sale the aggregate
Parent Stock that remains unregistered on the Registration Date (the
"Registration Stock") received by Stockholders (the "Registration Statement").
(c) If the Registration Statement is not effective on or before the
Registration Date, then Parent agrees to employ all reasonable means, using its
best efforts, to make the Registration Statement effective as soon as
practicable thereafter.
(d) Parent agrees to use its best efforts to keep the Registration
Statement continually effective for a period of forty-five (45) days after the
date the Registration Statement is declared effective.
(e) In connection with Parent's obligation to file the Registration
Statement, Parent agrees to, as soon reasonably practicable, file any amendments
to the Registration Statement that may be required and complete all required
state securities or "blue sky" compliance procedures (the "State Securities
Laws").
(f) All expenses incident to Parent's performance of or compliance with
this Agreement, including without limitation, all registration and filing fees,
including fees with respect to filings required to be made with the National
Association of Securities Dealers, Inc., fees and expenses of compliance with
the State Securities Laws (including reasonable fees and disbursements of
Parent's counsel in such jurisdiction as the Stockholders reasonably request),
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printing expenses, reasonable fees and expenses of Parent's independent public
accountants will be borne by Parent. Parent will pay the expenses of any annual
audit, the fees and expenses incurred in connection with the listing of the
Parent Stock registered pursuant to the Registration Statement, and the fees and
expenses of any person, including special experts, retained by the Parent.
(g) In the event that Stockholders may sell an amount of Registration
Stock equal to or greater than the amount to be registered hereunder, pursuant
to Rule 144 under the Act on the Registration Date, then Parent shall be under
no obligation to file the Registration Statement or any other registration
statement and Stockholders' rights under this section shall terminate on the
Registration Date.
10.5 TRADE PAYABLES. The Surviving Corporation agrees to pay all of the
trade payables of Company existing on the Closing Date within 30 days after
Closing.
10.6 RELEASE OF PERSONAL GUARANTIES. The Surviving Corporation agrees to
use its reasonable efforts to have each of the Stockholders released from any
personal guaranties and lease obligations entered into by such Stockholder in
connection with a Company debt or lease that is not being paid off within 60
days after the Closing Date. Parent shall indemnify, defend and hold harmless
Stockholders for any loss or other matter suffered as a result of such personal
guaranties prior to release. If the Surviving Corporation cannot obtain a
release with 60 days, the Surviving Corporation will pay off the underlying
obligation in full.
10.7 FURTHER ASSURANCE. From time to time on and after the Closing and
without further consideration, the parties hereto shall each deliver or cause to
be delivered to any other party at such times and places as shall be reasonably
requested, such additional instruments as any of the others may reasonably
request for the purpose of carrying out this Agreement and the transaction
contemplated hereby. Stockholders, also without further consideration, agree to
cooperate with the Surviving Corporation and to use his reasonable efforts to
have the present officers and employees of Company cooperate on and after the
Closing Date in furnishing to the Surviving Corporation information, evidence,
testimony, and other assistance in connection with obtaining all necessary
permits and approvals and in connection with any actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to all
periods prior to the Closing Date. Stockholders
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acknowledge and agree that, from and after the Closing, the Surviving
Corporation shall be entitled to possession of all documents, books, records
(including tax records), agreements and financial and operating data of any
sort of Company; provided that all such material shall be made available to
Stockholders for their preparation of tax returns, audits and other matters.
10.8 ANNOUNCEMENT OF EARNINGS. Parent agrees to announce and complete
publication and dissemination of consolidated financial results which include
results of the combined operations of Parent and Company for at least 30 days as
promptly as possible, but no later than they would be required to be law
(__________).
10.9 TRANSITION. Stockholders will not take any action that is designed
or intended to have the effect of discouraging any customer or business
associate of Company from maintaining the same business relationships with the
Surviving Corporation after the Closing that it maintained with Company before
the Closing. Stockholders will refer all customer inquiries relating to the
Business to the Surviving Corporation from and after the Closing. Further,
Stockholders agree that for a period of 90 days following the Closing Date,
Stockholders will assist the Surviving Corporation, at the Surviving
Corporation's request and expense, with the orderly transition of the operations
of Company from Stockholders to the Surviving Corporation (including, without
limitation, recommendations, advice and interaction with customers and potential
customers of Company, and governmental agencies).
10.10 SURVIVAL. The covenants in this Article 10 shall survive the
Closing in accordance with Article 12 hereof.
10.11 ENVIRONMENTAL REPORTS. Parent agrees to deliver full copies of the
two environmental studies/reports obtained by Parent during the prior two weeks;
one pertaining to the Land and one pertaining to the facility in Shreveport
owned by Reyncor Industrial Alcohol, Inc.
11. POOLING ACCOUNTING.
11.1 RESTRICTIONS ON RESALE; LEGENDS. Parent has informed Stockholders
that it is a material factor to Parent in entering into this Agreement that the
transactions contemplated by this
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Agreement be treated as a "pooling-of-interests" for accounting purposes.
Therefore, notwithstanding any other provision of this Agreement, prior to
the publication and dissemination by Parent of consolidated financial results
which include results of combined operations of Company and Parent for at
least 30 days on a consolidated basis following the Closing Date,
Stockholders shall not sell or otherwise transfer or dispose of, or in any
other way reduce their risk relative to any shares of the Registered Parent
Stock received by Stockholders (including, by way of example and not
limitation, engaging in put, call, short-sale, straddle or similar market
transactions). The SEC has issued Accounting Series Release Nos. 130 and
135, as amended (collectively, the "ASRs"), setting forth certain
restrictions applicable to the availability of "pooling-of-interest"
accounting treatment in transactions of the type contemplated by this
Agreement. Stockholders, therefore, covenant and agree with Parent to hold
their shares of Registered Parent Stock and to comply with the certificates
evidencing the Registered Parent Stock to be received by Stockholders which
will bear a legend substantially in the form set forth below and containing
such other information as Parent may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED, AND THE ISSUER SHALL NOT BE REQUIRED
TO GIVE EFFECT TO ANY ATTEMPTED SALE, TRANSFER OR ASSIGNMENT
PRIOR TO THE PUBLICATION AND DISSEMINATION OF FINANCIAL
STATEMENTS BY THE ISSUER WHICH INCLUDE THE RESULTS OF AT LEAST
THIRTY (30) DAYS OF COMBINED OPERATIONS OF THE ISSUER AND THE
COMPANY ACQUIRED BY THE ISSUER FOR WHICH THESE SHARES ARE ISSUED.
UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE
ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP
ORDER WITH THE TRANSFER AGENTS) WHEN THE REQUIREMENTS OF
ACCOUNTING SERIES RELEASE NOS. 130 AND 135, AS AMENDED, OF THE
SECURITIES AND EXCHANGE COMMISSION HAVE BEEN MET.
11.2 INDEMNIFICATION. Stockholders covenant and agree that they will
indemnify and hold harmless Parent from and after the Closing Date against any
and all losses, damages, liabilities, claims, deficiencies, costs, expenses or
expenditures (excluding any exemplary consequential and punitive damages)
resulting from a breach by Stockholders of the restrictions set forth in Section
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11.1, the ASRs or Stockholders' representations and warranties set forth in this
Agreement which directly results in Parent not being able to account for the
transactions contemplated herein as a "pooling-of-interest" reorganization or in
the transactions not qualifying as a tax free reorganization.
12. INDEMNIFICATION.
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; LIMITATION OF
LIABILITY.
(a) All of the representations, warranties and covenants of any party
hereto contained in this Agreement and the liabilities and obligations of the
parties with respect thereto shall survive the Closing for a period of one year
from the Closing Date; provided, however, the representations set forth in
Sections 5.6, 5.7 and 5.8 (concerning financial statements) shall survive until
the date of the first report of the independent auditors with respect to the
audited financial statements of Parent containing the combined operations of
Parent and Company; and provided further that the specific representations
contained in Section 5.2 (concerning stock ownership) shall survive until the
expiration of the statute of limitations applicable to persons claiming stock
ownership in Company and the specific representations contained in Section 6.2
shall survive until the expiration of the applicable statute of limitations (in
each case, the "Expiration Date").
(b) Notwithstanding any other provisions hereof, all obligations of
Stockholders hereunder including the indemnification obligations set forth in
this Agreement shall be several (and not joint and several) and shall apply only
after the aggregate amount of all such obligations exceed $25,000, at which time
the indemnification obligations shall be effective as to all amounts, including
the initial $25,000. In addition, notwithstanding any other provision hereof,
the aggregate liability of each Stockholder pursuant to this Agreement shall not
exceed the total aggregate purchase price received by each such Stockholder.
12.2 GENERAL INDEMNIFICATION BY STOCKHOLDERS. Stockholders agree that
they will, severally, indemnify, defend (as to third party claims only), protect
and hold harmless Buyer, the Surviving Corporation, Company and their respective
officers, shareholders, directors, divisions, subdivisions, affiliates,
subsidiaries, parent, agents, employees, successors and assigns at all times
from and after the date of this Agreement until the Expiration Date from and
against all liabilities
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claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, penalties, losses, costs and expenses whatsoever (including
specifically, but without limitation, court costs, reasonable attorneys' fees
and reasonable expenses, and reasonable expenses of investigation) ("Claims")
whether equitable or legal, matured or contingent, known or unknown, foreseen
or unforeseen, ordinary or extraordinary, patent or latent, whether arising
out of occurrences prior to, at or after the date of this Agreement, incurred
as a result of or incident to: (a) any breach of, misrepresentation in,
untruth in or inaccuracy in the representations and warranties by Company or
Stockholders (including, without limitation, those relating to the
environmental condition of the Land and Company's environmental compliance),
set forth herein or in the Schedules, Exhibits or certificates attached
hereto or delivered pursuant hereto; (b) nonfulfillment or nonperformance of
any agreement, covenant or condition on the part of Stockholders made in this
Agreement; (c) nonfulfillment or nonperformance of any agreement, covenant or
condition on the part of Company made in this Agreement and to be performed
on or before the Closing Date; (d) the matters set forth in Section 11.1; (e)
the existence of liabilities of Company in excess of the liabilities
represented by Stockholders and Company consistent with Sections 2.4 and
10.2; and (f) any claim by a third party that, if true, would mean that a
condition for indemnification set forth in subsections (a) through (e) of
this Section 12.2 had been satisfied.
12.3 SPECIFIC INDEMNIFICATION BY STOCKHOLDERS. Notwithstanding the above,
Stockholders agree that they will, severally, indemnify, defend, protect and
hold harmless Buyer, the Surviving Corporation, Company and their respective
officers, shareholders, directors, divisions, subdivisions, affiliates,
subsidiaries, agents, parent, employees, successors and assigns at all times
from and after the date of this Agreement, against all Claims (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) incident to any of the following:
(a) a claim by a person of stock ownership in Company, which shall
survive until the expiration of the status of limitations applicable to
persons claiming stock ownership in such Company; and
(b) The litigation specified on Schedule 5.19.
As to the matters set forth in (b) above, Company shall promptly pay the
first $200,000 of
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any Claims and the Stockholders shall pay any excess. If the matters set
forth in (b) above are finally resolved (either by settlement or judgment)
and the aggregate amount of the Claims (as to the items in [b] above) is less
than $200,000, then Company shall pay to Stockholders an amount equal to the
difference between $200,000 and the aggregate amount of such Claims. All
decisions as to handling of the matters described in (b) above (including
settlement) shall be made by Stockholders having held (on the Closing Date) a
majority of the Company stock.
12.4 INDEMNIFICATION BY PARENT AND THE SURVIVING CORPORATION. Parent and
the Surviving Corporation, jointly and severally, agree that they will
indemnify, defend, protect and hold harmless Stockholders, their respective
heirs, executors, assigns and personal representatives, at all times from and
after the date of this Agreement from and against all liabilities, claims,
damages, actions, suits, proceedings, demands, assessments, adjustments,
penalties, losses costs and expenses whatsoever (including specifically, but
without limitation, court costs, reasonable attorneys' fees and expenses and
reasonable expenses of investigation) whether equitable or legal, matured or
contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary,
patent or latent arising out of occurrences after the date hereof, incurred as a
result of or incident to: (i) any breach of, misrepresentation in, untruth in
or inaccuracy in the representations and warranties set forth herein, or in the
Schedules or certificates attached hereto or delivered pursuant hereto by Parent
or Buyer; (ii) nonfulfillment or nonperformance of any agreement, covenant or
condition on the part of Buyer or Parent made in this Agreement; (iii) the
operation of Company after the Closing Date (other than Stockholder
indemnification matters set forth herein); and (iv) any claim by a third party
that, if true, would mean that a condition for indemnification set forth in
subsections (i) or (ii) of this Section 12.4 had been satisfied.
12.5 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD PARTY CLAIMS.
(a) If any third party shall notify a party to this Agreement (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") that may
give rise to a claim for indemnification against any other party to this
Agreement (the "Indemnifying Party") or if any party who may make a claim for
indemnification under this Agreement otherwise becomes aware of any matter that
may give rise to such a claim or wishes to make such a claim (whether or not
related to a Third Party
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Claim), then the Indemnified Party shall promptly notify each Indemnifying
party thereof in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party is thereby prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against a Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within a
reasonable time after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any adverse consequences (which will
include, without limitation, all losses, claims, liens, and attorneys' fees
and related expenses) the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third Party
Claim, to the extent covered by Sections 12.2, 12.3 or 12.4 hereof, as
applicable, (ii) the Indemnifying Party provides the Indemnified Party with
evidence acceptable to the Indemnified Party that the Indemnifying Party
will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (iii) the Third
Party Claim involves principally non-monetary damages and does not seek as
a primary focus an injunction or temporary or permanent restraining order
or involve the possibility of criminal penalties, (iv) settlement of, or
adverse judgment with respect to the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 12.5(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written
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consent of the Indemnifying Party (which will not be unreasonably withheld)
and (iii) the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (which will not
be unreasonably withheld).
(d) In the event or to the extent that any of the conditions set
forth in Section 12.5(b) above is or becomes unsatisfied, however, (i) the
Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party
Claim and any matter it may deem appropriate in its sole discretion and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith (but will keep the Indemnifying
Party reasonably informed regarding the progress and anticipated cost
thereof), (ii) the Indemnifying Party will reimburse the Indemnified Party
promptly and periodically for the cost of defending against the Third Party
Claim (including reasonable attorneys' fees and reasonable expenses) and
(iii) the Indemnifying Party will remain responsible for any adverse
consequences the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the Third Party Claim to
the fullest extent provided in this Article 12; and (iv) the Indemnifying
Party shall be deemed to have waived any claim that its indemnification
obligation should be reduced because of the manner in which the counsel for
the Indemnified Party handled the Third Party Claim. The Indemnifying
Party may retain separate co-counsel at its sole cost and participate in
the defense of the Third Party Claim, but shall not be entitled to direct
the course of such defense. In such instance, the Indemnified Party shall
not agree to a settlement of the defense without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. If
the Indemnifying Party refuses to consent to a settlement and the resulting
judgment or later settlement exceeds the previously proposed settlement,
then the Indemnifying Party will be responsible for the entire excess
amount of the judgment or settlement without reference to any limitation on
indemnity set forth in this Agreement.
13. TERMINATION OF AGREEMENT.
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13.1 TERMINATION BY BUYER. Buyer, by notice in the manner hereinafter
provided on or before the Closing Date, may terminate this Agreement in the
event of a breach by Stockholders or Company in the observance or in the due and
timely performance of any of the agreements or conditions contained herein on
their part to be performed, and such breach shall not have been cured on or
before the Closing Date.
13.2 TERMINATION BY STOCKHOLDERS. Stockholders may, by notice in the
manner hereinafter provided on or before the Closing Date, terminate this
Agreement in the event of a breach by Buyer in the observance or in the due and
timely performance of any of the covenants, agreements or conditions contained
herein on their part to be performed, and such breach shall not have been cured
on or before the Closing Date.
13.3 TERMINATION. Either party may terminate this Agreement by written
notice to the other if the Closing has not occurred by October 31, 1997.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
14.1 NONDISCLOSURE BY STOCKHOLDERS. Stockholders recognize and
acknowledge that they have in the past, currently has, and in the future may
possibly have, access to certain confidential information of Company, such as
lists of customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of Company and its businesses. Stockholders
agree that, except as may be required by Applicable Laws or other legal process,
they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except to authorized representatives of Parent unless such information becomes
known to the public generally through no fault of Stockholders. In the case of
a disclosure required by Applicable Laws or other legal process, Stockholders
shall make no disclosure without prior written notice to Parent. In the event
of a breach or threatened breach by Stockholders of the provisions of this
Section, Parent shall be entitled to an injunction restraining Stockholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting Parent from pursuing any other available
remedy for such breach or threatened breach, including, without limitation, the
recovery of damages. The provisions of this Section shall apply at all times
prior to the Closing Date and for a period of one year following the
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Closing.
14.2 NONDISCLOSURE BY PARENT AND BUYER. Parent and Buyer recognize and
acknowledge that they have in the past, currently have, and prior to the Closing
Date, will have access to certain confidential information of Company and
Stockholders, such as lists of customers, operational policies, financial
information and pricing and cost policies that are valuable, special and unique
assets of Company and its businesses. Parent and Buyer agree that, except as
may be required by Applicable Laws or other legal process, they will not
disclose such confidential information to any person, firm, corporation,
association, or other entity for any purpose or reason whatsoever (prior to the
Closing Date as to Company information) without Stockholders's prior written
consent. In the case of a disclosure required by Applicable Laws or other legal
process, neither Parent nor Buyer shall make no disclosure without prior written
notice to Stockholders. In the event of a breach or threatened breach by Parent
or Buyer of the provisions of this Section, Stockholders shall be entitled to an
injunction restraining Parent and Buyer from disclosing, in whole or in part,
such confidential information. Nothing contained herein shall be construed as
prohibiting Stockholders from pursuing any other available remedy for such
breach or threatened breach, including, without limitation, the recovery of
damages. The provisions of this Section shall apply at all times prior to the
Closing Date and for a period of one year following the Closing or the
termination of this Agreement without a Closing having occurred.
15. GENERAL.
15.1 ASSIGNMENT; BINDING EFFECT; AMENDMENT. This Agreement and the rights
of the parties hereunder may not be assigned (except by operation of law, by
will, succession or probate) and shall be binding upon and shall inure to the
benefit of the parties hereto, the successors of the corporate parties hereto,
and the respective heirs and legal representatives of Stockholders. This
Agreement, upon execution and delivery, constitutes a valid and binding
agreement of the parties hereto enforceable in accordance with its terms and may
be modified or amended only by a written instrument executed by all parties
hereto. Parent hereby unconditionally guarantees all obligations of Buyer
hereunder.
15.2 ENTIRE AGREEMENT. This Agreement is the final, complete and
exclusive statement and
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expression of the agreement among the parties hereto with relation to the
subject matter of this Agreement, it being understood that there are no oral
representations, understandings or agreements covering the same subject
matter as this Agreement. This Agreement supersedes, and cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous
discussions, correspondence, or oral or written agreements of any kind.
15.3 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
15.4 NO BROKERS. Company and Stockholders represent and warrant to Buyer
and Parent and Buyer and Parent represent to Stockholders and Company that the
warranting party has had no dealings with any broker or agent so as to entitle
such broker or agent to a commission or fee in connection with the within
transaction; provided that Stockholders have agreed to and shall pay a
commission to Xxxxxxx Xxxxxxxx. If for any reason a commission or fee shall
become due, the party dealing with such agent or broker shall pay such
commission or fee and agrees to indemnify and save harmless each of the other
parties from all claims for such commission or fee and from all attorneys' fees,
litigation costs and other expenses relating to such claim.
15.5 EXPENSES OF TRANSACTION. Whether or not the transactions herein
contemplated shall be consummated: (i) Buyer and Parent will pay the fees,
expenses and disbursements of Buyer and Parent and its agents, representatives,
accountants (including, without limitation, any cost of the audit of Company
currently being performed by Xxxxxx Xxxxxxxx above $30,000.00) and counsel
incurred in connection with the subject matter of this Agreement and any
amendments hereto and all other costs and expenses incurred in the performance
and compliance with all conditions to be performed by Buyer and Parent under
this Agreement; and (ii) Company will pay the fees, expenses and disbursements
of Stockholders and Company and their respective agents, representatives,
accountants and counsel incurred in connection with the subject matter of this
Agreement and any amendments hereto and all other costs and expenses incurred in
the performance and compliance with all conditions to be performed by
Stockholders and Company under this Agreement. All such fees, expenses and
disbursements of Stockholders and Company shall be paid
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by Company prior to the Closing so as not to become an obligation of the
Surviving Corporation or shall be included as a current liability for
purposes of the calculation of Actual Net Working Capital set forth in
Section 2.4. Stockholders represents and warrants to Buyer that Stockholders
has relied on his own advisors for all legal, accounting, tax or other advice
whatsoever with respect to this Agreement and the transactions contemplated
hereby.
15.6 NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, by overnight courier or
by delivering the same in person to such party.
(a) If to Buyer, addressed to it at:
U S Liquids Inc.
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
ATTN: W. Xxxxxxx Xxx
with a copy to:
U S Liquids Inc.
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
ATTN: Xxxxx Xxxxxx
and a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 X. 0xx Xxxxxx
Xxxxxxxxx, XX 00000-0000
(b) If to Stockholders, addressed to them at:
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
with a copy to:
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X.X. Xxx 0000
Xxxxxx Xxxxxxx, XX 00000
and a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Dow, Xxxxxxx & Xxxxxxxx, P.C.
0 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier, subject to signature verification, and
three business days after the deposit in the U.S. mail of a writing addressed as
above and sent first class mail, certified, return receipt requested, or when
actually received, if earlier. Any party may change the address for notice by
notifying the other parties of such change in accordance with this Section.
15.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Texas, without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Texas or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Texas.
15.8 APPOINTMENT OF AGENT. Stockholders agree to maintain an agent in the
State of Texas to accept and acknowledge service of process. Each Stockholders
initially hereby appoints Xxxx X. Xxxx, 13511 Lindsay, Xxxxxxx, Xxxxx 00000, and
Xxxxxxx X. Xxxxxx, Xx., X.X. Xxx 0000, Xxxxxx Xxxxxxx, Xxxxx 00000, jointly, as
such agent and agree to notify the Surviving Corporation in the manner set forth
in Section 15.6 of any change in agent. Each party agrees that service of
process or notice in any such action, suit or proceeding shall be effective if
in writing and delivered to the address provided in Section 15.6 for such party
or to any other address provided to the surviving corporation in accordance with
Section 15.6 and as set forth in this Section.
15.9 NO WAIVER. No delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or
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acquiescence in any such breach or default, or of or in any similar breach or
default occurring later; nor shall any waiver of any single breach or default
be deemed a waiver of any other breach of default occurring before or after
that waiver.
15.10 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
15.11 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
15.12 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall, to the extent possible, be modified
in such manner as to be valid, legal and enforceable but so as most nearly to
retain the intent of the parties. If such modification is not possible, such
provision shall be severed from this Agreement. In either case the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
15.13 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means including, without limitation. The parties intend that
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not
breached shall not detract from or mitigate the fact the party is in breach of
the first representation, warranty or covenant.
15.14 STANDSTILL AGREEMENT. Unless and until this Agreement is terminated
pursuant to Article 13 hereof without the Closing having taken place,
Stockholders will not directly or indirectly solicit offers for Company Stock or
the assets of Company or a merger or consolidation
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involving Company from, or respond to inquiries from, share information with,
negotiate with or in any way facilitate inquiries or offers from, third
parties who express or who have heretofore expressed an interest in acquiring
Company by merger, consolidation or other combination or acquiring any of
Company's assets; nor will they permit Company to do any of the foregoing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
U.S. LIQUIDS/RECLAIM ACQUISITION
CORPORATION
By: /s/ W. Xxxxxxx Xxx
-------------------------------
Its: President
------------------------------
U S LIQUIDS INC.
By: /s/ W. Xxxxxxx Xxx
-------------------------------
Its: President
------------------------------
RE-CLAIM ENVIRONMENTAL, INC.
(EIN: _____________)
By:
-------------------------------
Its: President
/s/ Xxxx X. Xxxx
----------------------------------
Xxxx X. Xxxx
(SSN: ###-##-####)
/s/ Xxxxx X. Xxxxxx
----------------------------------
Xxxxx X. Xxxxxx
(SSN: ###-##-####)
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/s/ A. Xxxxxx Xxxxxxxx
----------------------------------
A. Xxxxxx Xxxxxxxx
(SSN: ###-##-####)
/s/ Xxxxxxx Xxxxxxxx
----------------------------------
Xxxxxxx Xxxxxxxx
(SSN: ###-##-####)
/s/ Xxxxxxx X. Xxxxxx, Xx.
----------------------------------
Xxxxxxx X. Xxxxxx, Xx.
(SSN: ###-##-####)
/s/ X.X. Xxxxxxxx
----------------------------------
X.X. Xxxxxxxx
(SSN: ###-##-####)
RAINBOW INVESTMENTS COMPANY
(EIN: 00-0000000)
By:
-------------------------------
Its:
------------------------------
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LIST OF SCHEDULES
Exhibit A -- Legal Description of the Land
Exhibit B -- Estimated Working Capital
Schedule 2.3 -- Assumed Debt
Schedule 5.1(i) -- Articles and Bylaws of Company
Schedule 5.4 -- Predecessor Entities; Trade Names
Schedule 5.6 -- Financial Statements
Schedule 5.7 -- Non-Balance Sheet Liabilities
Schedule 5.8 -- Accounts Receivable
Schedule 5.9(i) -- Proprietary Rights
Schedule 5.10(i) -- Real Property Disclosure
Schedule 5.11(i) -- Personal Property of Company
Schedule 5.12 -- Contracts
Schedule 5.13 -- Insurance Policies
Schedule 5.14 -- Employees
Schedule 5.15 -- Employee Plans
Schedule 5.18 -- Tax Returns of Company
Schedule 5.19 -- Litigation
Schedule 5.22 -- Bank Accounts
Schedule 5.23 -- Hazardous Materials; List of Disposal Sites
Schedule 5.24 -- Storage Tanks
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Schedule 8.8 -- Xxxx Lease Property
Schedule 9.8 -- Updated Agreements
-54-
ANNEX I
CERTIFICATE(S) OF MERGER
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ANNEX II
TO THAT CERTAIN AGREEMENT AND PLAN OF REORGANIZATION
Among
U.S. LIQUIDS/RECLAIM ACQUISITION CORPORATION
U S LIQUIDS INC.
and
RE-CLAIM ENVIRONMENTAL, INC.
and
XXXX X. XXXX, XXXXX X. XXXXXX, A. XXXXXX XXXXXXXX,
XXXXXXX XXXXXXXX, XXXXXXX X. XXXXXX, XX.,
X.X. XXXXXXXX, and RAINBOW INVESTMENTS COMPANY
DATED AS OF ___________, 1997.
ALLOCATION
SHARES OF COMPANY OF
SHAREHOLDERS STOCK OWNED CONSIDERATION
------------ ----------------- -------------
Xxxx X. Xxxx 325 32.5
Xxxxx X. Xxxxxx 15 1.5
A. Xxxxxx Xxxxxxxx 25 2.5
Xxxxxxx Xxxxxxxx 200 20.0
Xxxxxxx X. Xxxxxx, Xx. 210 21.0
X.X. Xxxxxxxx 15 1.5
Rainbow Investments Company 210 21.0
-56-
