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EXHIBIT 10.15
ASSIGNMENT AND SECURITY AGREEMENT
THIS ASSIGNMENT AND SECURITY AGREEMENT (this "Agreement") is made and
entered into as of the 30th day of September, 1996, by and between American
Physicians Service Group, Inc., a Texas corporation ("Secured Party") and
Exsorbet Industries, Inc., an Idaho corporation ("Debtor").
RECITALS:
A. Debtor has sold 1,200,000 shares of common stock of Debtor
(the "EXSO Stock") to Secured Party for the sum of $3,300,000.
B. Such sale is subject to the terms, condition and covenants of
the Stock Put Agreement of even date herewith, executed by Debtor and Secured
Party. Under the terms of the Stock Put Agreement, Debtor may be required to
repurchase the EXSO Stock from Secured Party at the price set forth therein
(the "Repurchase Price"), as more fully set forth in the Stock Put Agreement.
C. Debtor's obligation to pay the Repurchase Price may be
satisfied by Debtor's execution of a promissory note in the maximum principal
amount of $3,300,000, and payable to the order of Secured Party (the "Note");
D. Debtor intends to use the proceeds received by Debtor from
Secured Party's purchase of the EXSO stock to acquire 707, Inc., an Ohio
corporation ("Ohio 7-7"). Such acquisition shall be accomplished by the merger
of Ohio 7- 7 with 7-7 Merger, Inc., an Arkansas corporation ("7-7 Merger"),
after which 7-7 Merger shall be the surviving corporation. Such acquisition
and merger is being closed simultaneously herewith pursuant to the Plan of
Agreement and Merger (the "Merger Agreement") dated August 5, 1996, executed by
and among Debtor, Ohio 7-7, 7-7 Merger, and the Shareholders named therein.
E. Secured Party has requested that Debtor pledge the Collateral
(as defined below) to secure (i) Debtor's obligations and liabilities under the
Stock Put Agreement, including without limitation Debtor's obligation to pay to
Secured Party the Repurchase Price, (ii) the Note, if executed, and (ii)
Debtor's performance of the covenants more fully set forth herein.
F. Reference is hereby made to Schedule I, attached hereto and
incorporated herein by reference, for certain defined terms used in this
Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which Debtor acknowledges, Debtor
and Secured Party agree as follows:
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ARTICLE I
COLLATERAL AND SECURED OBLIGATIONS
1.1 Grant of Security Interest. Debtor hereby assigns, transfers,
and pledges to Secured Party, and Debtor hereby grants to Secured Party a
security interest in, the following described collateral (collectively, the
"Collateral"):
(a) Shares. All issued and outstanding shares of common
stock of 7-7 Merger and of Ohio 7-7, including without limitation those shares
evidenced by the certifies described in Schedule II attached hereto and
incorporated herein, and any replacements, substitutions, or exchanges of such
certificates; and any additional shares of common stock of 7-7 Merger or Ohio
7-7 subsequently delivered to Secured Party as described in Section 4.8 below
(the above described stock is sometimes collectively referred to as the
"Shares"); and any options, rescission rights, registration rights, conversion
rights, subscription rights, contractual or quasi-contractual rights, warrants,
redemption rights, redemption proceeds, calls, preemptive rights and all other
rights and benefits pertaining to the Shares;
(b) Merger Agreement. All of Debtor's rights, title,
interests, and benefits now existing or hereafter arising under the Merger
Agreement and under or pursuant to any other documents, agreements, or other
instruments executed in connection with the Merger Agreement, the transaction
evidenced thereby, or the closing thereunder;
(c) Accounts. All accounts and rights now or hereafter
attributable to any of the Collateral described in (a) or (b) above, and all
rights of Debtor now or hereafter arising under any agreement with 7-7 Merger
pertaining to the Collateral described in (a) above, including without
limitation all distributions, proceeds, fees, dividends, preferences, payments
or other benefits of whatever nature which Debtor are now or may hereafter
become entitled to receive with respect to any Collateral described in (a)
above; and
(d) Additional Property. "Collateral" shall also include
the following property (collectively, the "Additional Property") which Debtor
becomes entitled to receive or shall receive in connection with any other
Collateral: (i) any stock certificate, including without limitation, any
certificate representing a stock dividend or any certificate in connection with
any recapitalization, reclassification, merger, consolidation, conversion, sale
of assets, combination of shares, stock split or spin-off; (ii) any option,
warrant, subscription or right, whether as an addition to or in substitution of
any other Collateral; (iii) any dividends or distributions of any kind
whatsoever, whether distributable in cash, stock or other property; (iv) any
interest, premium or principal payments; and (v) any conversion or redemption
proceeds.
(e) Proceeds. All proceeds (cash and non-cash) arising
out of the sale, exchange, collection or other disposition of all or any
portion of the Collateral described in (a), (b), (c), or (d) above, including
without limitation proceeds in the form of stock, accounts, chattel paper,
instruments, documents, goods, inventory and equipment.
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The foregoing notwithstanding, until the occurrence of an Event of Default (as
hereinafter defined), Debtor shall be entitled to all cash dividends and all
interest paid on the Collateral free of the security interest created under
this Agreement.
The security interest in the Collateral hereby granted by Debtor to Secured
Party may sometimes be referred to in this Agreement as the "Security
Interest."
1.2 Obligations. This Agreement and the Security Interest shall
secure full and punctual payment and performance of the following indebtedness,
duties and obligations (the "Obligations");
(a) All covenants, obligations, and liabilities of Debtor
to Secured Party under the Stock Put Agreement, including without limitation
Debtor's obligation to repurchase the EXSO Stock and to pay to Secured Party
the Repurchase Price as provided in the Stock Put Agreement;
(b) All principal, interest, fees and other amounts
payable to the Secured Party pursuant to the Note, if and when executed and
delivered pursuant to the Stock Put Agreement, including all future advances,
extensions, renewals, modifications, increases, or substitutions thereof;
(c) All liabilities and obligations of Debtor to Secured
Party under and pursuant to this Agreement; and
(d) (i) all indebtedness, obligations and liabilities of
Debtor to Secured Party of any kind or character, now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several or joint and several, arising from,
connected with, or related to the Stock Put Agreement, the Note, or any other
document, agreement, or instrument executed in connection therewith, (ii) all
accrued but unpaid interest on any of the indebtedness described in (i) above,
(iii) all obligations of Debtor to Secured Party under any documents
evidencing, security, governing and/or pertaining to all or any part of the
indebtedness described in (i) and (ii) above, (iv) all costs and expenses
incurred by Secured Party in connection with the collection and administration
of all or any part of the indebtedness and obligations described in (i), (ii)
and (iii) above or the protection or preservation of, or realization upon, the
collateral securing all or any part of such indebtedness and obligations,
including without limitation all reasonable attorneys' fees, and (v) all
renewals, extensions, modifications and rearrangements of the indebtedness and
obligations described in (i), (ii), (iii) and (iv) above.
(e) All sums expended or advanced by Secured Party
pursuant to any term or provision of this Agreement (i) to collect and/or
enforce the Obligations, (ii) to maintain, protect and preserve the Collateral,
and (iii) all other sums now or hereafter loaned or advanced by Secured Party
to Debtor, or expended by Secured Party for the account of Debtor or otherwise
owing by Debtor to Secured Party, in respect to the Obligations.
1.3 Voting Rights. As long as no Event of Default shall have
occurred hereunder, any voting rights incident to any stock or other securities
pledged as Collateral may be exercised by
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Debtor; provided, however, that Debtor will not exercise, or cause to be
exercised, any such voting rights, without the prior written consent of Secured
Party, if the direct or indirect effect of such vote will result in an Event of
Default hereunder.
ARTICLE II
DEBTOR'S REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO COLLATERAL
Debtor hereby represents and warrants to Secured Party as follows:
2.1 Ownership of Collateral. Debtor has good and marketable title
to the Collateral free and clear of any liens, security interests, shareholders
agreement, calls, charge, or encumbrance, except for this Security Interest.
No financing statement or other instrument similar in effect covering all or
any part of the Collateral is on file in any recording office, except as may
have been filed in favor of Secured Party relating to this Agreement.
2.2 Power & Authority. Debtor has the lawful right, power, and
authority to grant the Security Interest in the Collateral. This Agreement,
together with all filings and other actions necessary or desirable to perfect
and protect such security interest, which have been duly taken, create a valid
and perfected first priority security interest in the Collateral securing the
payment and performance of the Obligations.
2.3 No Agreements. The Shares are not subject to any right of
redemption by 7-7 Merger or any call or put options, voting trust, proxy,
shareholders agreement, right of first refusal or any provision of the articles
of incorporation or bylaws of 7-7 Merger or any other document or agreement
which would in any way impair or adversely affect this Security Interest or the
rights of Secured Party under this Agreement.
2.4 Location. Debtor's principal place of business is located at
0000 Xxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxxx, 00000, and Debtor's
chief executive office is located in Jackson, Xxxxx County, Mississippi. The
office where the records concerning the Collateral are kept is located at
Debtor's principal place of business.
2.5 Solvency of Debtor. As of the date hereof, and after giving
effect to this Agreement and the completion of all other transactions
contemplated by Debtor at the time of the execution of this Agreement, (i)
Debtor is and will be solvent, (ii) the fair saleable value of Debtor's assets
exceeds and will continue to exceed Debtor's liabilities (both fixed and
contingent), (iii) Debtor is paying and will continue to be able to pay its
debts as they mature, and (iv) if Debtor is not an individual, Debtor has and
will have sufficient capital to carry on Debtor's businesses and all businesses
in which Debtor is about to engage.
2.6 Securities. Any certificates evidencing securities pledged as
Collateral are valid and genuine and have not been altered. All securities
pledged as Collateral have been duly authorized
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and validly issued, are fully paid and non-assessable, and were not issued in
violation of the preemptive rights of any party or of any agreement by which
Debtor or the issuer thereof is bound. No restrictions or conditions exist
with respect to the transfer or voting of any securities pledged as Collateral,
except as has been disclosed to Secured Party in writing. To the best of
Debtor's knowledge, no issuer of such securities (other than securities of a
class which are publicly traded) has any outstanding stock rights, rights to
subscribe, options, warrants or convertible securities outstanding or any other
rights outstanding entitling any party to have issued to such party capital
stock of such issuer, except as has been disclosed to Secured Party in writing.
2.7 Ownership of Shares. Debtor is, as of the date hereof, the
legal and beneficial owner of the Shares, and Debtor has paid the full purchase
price or other consideration for the Shares on the date hereof.
2.8 Shares Issued and Paid. All of the Shares are validly issued
and outstanding shares of capital stock of 7-7 Merger and are fully paid and
nonassessable.
ARTICLE III
DEBTOR'S OTHER REPRESENTATIONS AND WARRANTIES
3.1 Good Standing - Debtor. Debtor is a duly formed Arkansas
corporation, duly organized and in good standing under the laws of Arkansas,
qualified to do business in and in good standing in each state or country in
which such qualification is necessary for the conduct of its business, and has
the power to own its property and to carry on its business in each jurisdiction
in which Debtor operates.
3.2 Good Standing - Subsidiaries. Each Subsidiary (as more fully
described below) is a duly formed corporation under the laws of the state of
its incorporation, duly organized and in good standing under the laws of the
state of its incorporation, qualified to do business in and in good standing in
each state or country in which such qualification is necessary for the conduct
of its business, and has the power to own its property and to carry on its
business in each jurisdiction in which it operates. As of the date hereof, the
Subsidiaries constitute all the subsidiaries of Debtor.
3.3 Authority and Compliance. Debtor and each Subsidiary has full
power and authority to enter into this Agreement. Debtor has full power and
authority to execute the Stock Put Agreement and all other documents related to
the transaction evidenced and governed by this Agreement and the Stock Put
Agreement (collectively, the "Transaction Documents"), all of which has been
duly authorized by all proper and necessary corporate action. Each Subsidiary
has full power and authority to execute this Agreement and to execute and
deliver its respective guaranty of the Obligations, all of which has been duly
authorized by all proper and necessary corporate action. No further consent or
approval of any public authority is required as a condition to the validity of
this Agreement, the Stock Put Agreement, or any other Transaction Documents.
Debtor and each Subsidiary is in compliance with all Laws to which it is
subject.
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3.4 Binding Agreement. This Agreement and the Stock Put Agreement
constitute, and the Note when issued and delivered pursuant to the Stock Put
Agreement will constitute, valid and legally binding obligations of Debtor in
accordance with their terms, subject to the applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally.
3.5 Litigation. There are no proceedings pending or, to the
knowledge of Debtor or any Subsidiary, threatened before any court or
administrative agency which will or may have a material adverse effect on the
financial condition or operations of Debtor or any Subsidiary or upon Debtor's
or any Subsidiary's ability to perform its obligations under this Agreement,
the Stock Put Agreement, or any other Transaction Document, except as disclosed
to Secured Party in writing prior to the date of this Agreement.
3.6 No Conflicting Agreements. There are no charter, bylaw or
stock provisions of Debtor and no provisions of any existing agreement,
mortgage, indenture or contract binding on Debtor or affecting its property,
which would conflict with or in any way prevent the execution, delivery, or
carrying out of the terms of this Agreement, the Stock Put Agreement, and the
other Transaction Documents. There are not charter, bylaw or stock provisions
of any Subsidiary and no provisions of any existing agreement, mortgage,
indenture or contract binding on any Subsidiary or affecting its property,
which would conflict with or in any way prevent the execution, delivery, or
carrying out of the terms of this Agreement and each such Subsidiary's Guaranty
Agreement.
3.7 Ownership of Assets. Debtor has good title to the Collateral,
and the Collateral is owned free and clear of liens, charges, claims, security
interests, and other encumbrances. Debtor will at all times maintain its
tangible property, real and personal, in good order and repair taking into
consideration reasonable wear and tear.
3.8 Taxes. Debtor and each Subsidiary has filed all tax returns
required to be filed and has paid taxes shows thereon to be due, including
interest and penalties, except such taxes, if any, as are being contested in
good faith and as to which adequate reserves have been provided. The charges,
accruals, and reserves on the books of Debtor or the Subsidiary in respect of
any taxes or other governmental charges are, in the opinion of Debtor and such
Subsidiary, adequate.
3.9 Financial Statements. The books and records of Debtor
properly reflect Debtor's financial condition, and the financial statements of
Debtor submitted to Secured Party properly reflect Debtor's financial condition
as of such date and were prepared in accordance with generally accepted
accounting principles, consistently applied.
3.10 ERISA Plan. No "Reportable Event" or "Prohibited Transaction"
(as those terms are defined by ERISA) has occurred with respect to any employee
benefit plan of Debtor or any Subsidiary which is subject to ERISA. Neither
Debtor not any Subsidiary has incurred any material accumulated unfunded
deficiency within the meaning of ERISA, and neither Debtor nor any Subsidiary
has incurred any material liability to the Pension Benefit Guaranty Corporation
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established under ERISA (or any successor thereto under ERISA) in connection
with any such benefit plan.
ARTICLE IV
DEBTOR'S COVENANTS WITH RESPECT TO COLLATERAL
Debtor covenants and agrees that from the date hereof and until the
payment and performance in full of the Obligations unless Secured Party
otherwise consents in writing:
4.1 Delivery of Instruments and/or Certificates.
Contemporaneously herewith, Debtor covenants and agrees to deliver to Secured
Party any certificates, documents, or instruments representing or evidencing
the Collateral, with Debtor's endorsement thereof and/or accompanied by
property instruments of transfer and assignment duly executed in blank with, if
requested by Secured Party, signatures guaranteed by a member or member
organization in good standing of an authorized Securities Transfer Agents
Medallion Program, all in form and substance satisfactory to Secured Party.
4.2 Further Assurances. Debtor will contemporaneously with the
executed hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all further
action necessary or appropriate or that Secured Party may request in order (i)
to perfect and protect the security interest created or purported to be created
hereby and the first priority of such security interest, (ii) to enable Secured
Party to exercise and enforce its rights and remedies hereunder in respect of
the Collateral, and (iii) to otherwise effect the purposes of this Agreement,
including without limitation: (A) executing and filing any financing or
continuation statements, or any amendments thereto; (B) obtaining written
confirmation from the issuer of any securities pledged as Collateral of the
pledge of such securities, in form and substance satisfactory to Secured Party;
(C) cooperating with Secured Party in registering the pledge of any securities
pledged as Collateral with the issuer of such securities; (D) delivering notice
of Secured Party's security interest in any securities pledged as Collateral to
any securities or financial intermediary, clearing corporation or other party
required by Secured Party, in form and substance satisfactory to Secured Party;
and (E) obtaining written confirmation of the pledge of any securities
constituting Collateral from any securities or financing intermediary, clearing
corporation or other party required by Secured Party, in form and substance
satisfactory to Secured Party. If all or any part of the Collateral is
securities issued by an agency or department of the United States, Debtor
covenants and agrees, at Secured Party's request, to cooperate in registering
such securities in Secured Party's name or with Secured Party's account
maintained with a Federal Reserve Bank.
4.3 Additional Property. All Additional Property received by
Debtor shall be received in trust for the benefit of Secured Party. All
Additional Property and all certificates or other written instruments or
documents evidencing and/or representing the Additional Property that is
received by Debtor, together with such instruments of transfer as Secured Party
may request, shall immediately be delivered to or deposited with Secured Party
and held by Secured Party as Collateral under the term of this Agreement. If
the Additional Property received by Debtor shall be shares of
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stock or other securities, such shares of stock or other securities shall be
duly endorsed in blank or accompanied by proper instruments of transfer and
assignment duly executed in blank with, if requested by Secured Party,
signatures guaranteed by a member or member organization in good standing of an
authorized Securities Transfer Agents Medallion Program, all in form and
substance satisfactory to Secured Party. Secured Party shall be deemed to have
possession of any Collateral in transit to Secured Party or its agent.
4.4 Sale, Transfer. Debtor will not sell, transfer, mortgage, or
otherwise encumber any Collateral in any manner without Secured Party's prior
written consent, and any such sale, mortgage, transfer, or encumbrance shall
not be construed to be a waiver of this provision in respect to any subsequent
proposed sale, mortgage, transfer or encumbrance.
4.5 Liens. Neither Debtor nor any person acting on Debtor's
behalf has, or shall have any right, power, or authority to and shall not
create, incur, or permit to be placed or imposed, or continued upon the
Collateral, any lien of any type or nature whatsoever, other than the liens in
favor of Secured Party.
4.6 Matters or Occurrences Affecting Collateral or this Agreement.
Debtor will promptly notify Secured Party of any and all matters or occurrences
that may have a material adverse effect on the status or value of the
Collateral or this Agreement, including without limitation the occurrence of an
Event of Default, or an event which, with giving of notice or lapse of time, or
both, would constitute an Event of Default.
4.7 Agreements Pertaining to Collateral. Debtor will not enter
into any type of contract or agreement pertaining to any of the Collateral or
in any way transfer any voting rights pertaining to the Collateral to any
person.
4.8 Delivery of Additional Shares. In the event that 7-7 Merger
declares a stock split or stock dividend, the Debtor shall deliver to Secured
Party all certificates evidencing shares of 7-7 Merger that are attributable to
the Shares, within three (3) days of receipt of such certificates, along with
such endorsements or stock powers at the Secured Party may request.
4.9 Change of Name. Debtor shall not change its name (or any
assumed name or other name under which Debtor does business) unless at least
thirty (30) days prior to the effective date of any such name changes, Debtor
gives Secured Party written notice of such intended name change and the new
name. Debtor shall execute all such documents and agreements (including
without limitation security agreements, financing statements, and amendments to
financing statements) as Secured Party may reasonably request in connection
with any such name change.
4.11 Dilution of Ownership. As to any securities pledged as
Collateral, Debtor will not consent to or approve of the issuance of (i) any
additional shares of any class of securities of such issuer (unless immediately
upon issuance all such additional securities are pledged and delivered to
Secured Party pursuant to the terms hereof), (ii) any instrument convertible
voluntarily by the holder
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thereof or automatically upon the occurrence or non-occurrence of any event or
condition into, or exchangeable for, any such securities, or (iii) any
warrants, options, contracts or other commitments entitling any third party to
purchase or otherwise acquire any such securities.
4.12 Restrictions on Securities. Debtor will not enter into any
agreement creating, or otherwise permit to exist, any restriction upon the
transfer, voting or control of any securities pledge as Collateral, except as
consented to in writing by Secured Party.
ARTICLE V
DEBTOR'S AFFIRMATIVE COVENANTS
Until payment and performance of all Obligations, Debtor covenants and
agrees as follows:
5.1 Financial Statements. Debtor and each Subsidiary shall
maintain a system of accounting reasonably satisfactory to Secured Party and in
accordance with generally accepted accounting principles consistently applied,
and will permit Secured Party's officers or authorized representatives to visit
and inspect Debtor's and Subsidiary's books of account and other records at
such reasonable times and as often as Secured Party may desire during office
hours and after reasonable notice to Debtor and the applicable Subsidiary, and
will pay the reasonable fees and disbursements of any accountants or other
agents of Secured Party selected by Secured Party for the foregoing purposes.
Unless written notice of another location is given to Secured Party, Debtor's
books and records will be located at Debtor's address set forth above. Debtor
and each Subsidiary further agree that Debtor and the Subsidiaries will
promptly provide Secured Party with such additional information, reports or
statements respecting their business operations and financial condition as
Secured Party may reasonably request from time to time. Debtor shall deliver
to Lender, concurrently with filing same, all annual, periodic, and other
filings made by Debtor with the Securities and Exchange Commission.
5.2 Insurance. Debtor and each Subsidiary shall maintain
insurance with responsible insurance companies on such of its properties, in
such amounts and against such risks as is customarily maintained by similar
businesses operating in the same vicinity, specifically to include a policy of
fire and extended coverage insurance covering all assets, and liability
insurance, all to be with such companies and in such amounts satisfactory to
Secured Party and to contain a mortgage clause naming Secured Party as its
interest may appear. Evidence of such insurance will be supplied to Secured
Party.
5.3 Existence and Compliance. Debtor and each Subsidiary shall
maintain its corporate existence in good standing and comply with all Laws
applicable to it or to any of its property, business operations and
transactions. Debtor and each Subsidiary shall qualify as a foreign
corporation in all jurisdictions wherein any property now or hereafter owned or
any business now or hereafter transacted by Debtor or such Subsidiary makes
such qualifications necessary.
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5.4 Adverse Conditions or Events. Debtor and the Subsidiaries
shall promptly advise Secured Party in writing of any litigation filed against
Debtor or any Subsidiary and of any condition, event or act which comes to its
attention that would or might have a material adverse effect on Debtor's or any
Subsidiary's financial condition or on Debtor's ability to perform the
Obligations or any Subsidiary's ability to perform under its guaranty agreement
executed in favor of Secured Party with respect to the Obligations, including
without limitation any Environmental Condition that might have such a material
adverse effect the financial condition of Debtor or any Subsidiary, any
Reportable Event, or any event that could be the basis for institution of
proceedings by the Pension Benefit Guaranty Corporation to terminate a plan
subject to ERISA.
5.5 Taxes. Debtor and each Subsidiary shall pay all taxes as they
become due and payable.
5.6 Maintenance. Debtor and each Subsidiary shall maintain all of
its tangible property in good condition and repair, reasonable wear and tear
excepted, and make all necessary replacements thereof, and preserve and
maintain all licenses, privileges, franchises, certificates and the like
necessary for the operation of their respective business.
5.7 Environmental. Debtor and each Subsidiary shall promptly give
Secured Party written notice of any investigation, claim, demand, lawsuit or
other action by any governmental or regulatory agency or private party
involving any property owned or leased by Debtor or any Subsidiary and any
Hazardous Substance or Environmental Law of which Debtor or any Subsidiary has
knowledge. If Debtor or any Subsidiary learns, or is notified by any
governmental or regulatory authority, that any removal or other remediation of
any Hazardous Substance affecting any property owned by Debtor or any
Subsidiary is necessary, Debtor or such Subsidiary shall promptly take all
necessary remedial actions in accordance with Environmental Law.
5.8 Subsidiaries. Subsidiary means (a) Consolidated Environmental
Services, Inc., an Arkansas corporation, (b) Cierra, Inc., an Arkansas
corporation; (c) Larco Environmental Services, Inc., a Louisiana corporation;
(d) KR Industrial Service of Alabama, Inc., an Alabama corporation; (e)
Exsorbet Technical Services, Inc., an Arkansas corporation d/b/a SpilTech
Services, Inc.; (f) Eco-Systems, Inc., an Arkansas corporation; and (g) 7-7
Merger, Inc., an Arkansas corporation. Each Subsidiary has executed a Guaranty
Agreement in favor of Secured Party guaranteeing, inter alia, the Obligations.
Debtor and Secured Party contemplate that, from time to time, additional
subsidiaries, either directly or indirectly wholly-owned by Debtor, may be
formed. Upon such formation, each such new subsidiary shall sign a Guaranty
Agreement in the form substantially the same as those executed in connection
herewith. Each such new subsidiary shall be deemed a "Subsidiary" as defined
in and used in this Agreement and shall be subject to the terms, conditions,
and covenants of this Agreement.
5.9 Consummation of Merger. Debtor covenants and agrees that the
merger transaction as set forth in the Merger Agreement shall be consummated
and finalized and all requisite
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documents, certificates, and articles shall be filed with appropriate public
authorities within ten (10) days after the effective date of this Agreement.
ARTICLE VI
NEGATIVE COVENANTS
Until payment and performance of all Obligations, Debtor covenants and
agrees that Debtor and each of its Subsidiaries will not, without the prior
written consent of Secured Party:
6.1 Transfer of Assets. Enter into any merger or consolidation,
or sell, lease, assign or otherwise dispose of or transfer any assets except in
the normal course of its business. Notwithstanding the foregoing, Secured
Party acknowledges that Debtor has disclosed to Secured Party that Debtor
intends to merge into a Delaware corporation, whereby such Delaware corporation
will be the surviving corporation and to change the name of Debtor to
Consolidated Eco-Systems, Inc. Such merger and name change shall be permitted
hereunder provided that (i) the surviving corporation expressly assumes all
covenants, agreements, obligations, and liabilities under this Agreement and
all other Transaction Documents to which Debtor is a party, and (ii) the
surviving corporation executes such additional documents, agreements, and
instruments as Secured Party deems necessary, including without limitation
execution of replacement Transaction Documents, and amendments to UCC financing
statements.
6.2 Change in Ownership or Structure. Dissolve or liquidate;
become a party to any merger or consolidation; reorganize as a professional
corporation; acquire by purchase, lease or otherwise all or substantially all
of the assets or capital stock of any corporation or other entity; or sell,
transfer, lease, or otherwise dispose of all or any substantial part of its
property or assets or business.
6.3 Liens. Knowingly grant, suffer, or permit liens on or
security interests in Debtor's or such Subsidiary's assets, or fail to promptly
pay all lawful claims, whether for labor, materials, or otherwise, except for
purchase money security interests arising in the ordinary course of business.
6.4 Loans. Make any loans, advances or investments to or in any
joint venture, corporation or other entity, except for the purchase of U.S.
Government obligations or the purchase of Federally-insured certificates of
deposit.
6.5 Borrowings. Create, incur, assume, or become liable in any
manner for any indebtedness (for borrowed money, deferred payment for the
purpose of assets, lease payments, as surety or guarantor of the debt of
another, or otherwise) other than to Secured Party without Secured Party's
prior written consent, except trade debts incurred in the ordinary course of
business.
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ARTICLE VII
DEFAULT AND REMEDIES
7.1 Events of Default. An Event of Default (herein so called)
shall exist if any one or more of the following events shall occur:
(a) The failure of Debtor to timely pay any amount of
principal under and/or interest on the Note, or any other amounts due under the
Note;
(b) Debtor's breach of a covenant in this Agreement or
any other failure to perform its obligations under this Agreement;
(c) Any representation or warranty made in this Agreement
shall be false or materially misleading, as determined in the reasonable
discretion of Secured Party;
(d) The occurrence of an Event of Default or any other
Transaction Document;
(e) If Debtor or any other party obligated to pay any
portion of the Obligations: (i) becomes insolvent, or makes a transfer in fraud
of creditors, or makes an assignment for the benefit of creditors, or admits in
writing its inability to pay its debts as they become due; (ii) generally is
not paying its debts as such debts become due; (iii) has a receiver, trustee or
custodian appointed for, or take possession of, all or substantially all of the
assets of such party or any of the Collateral, either in a proceeding brought
by such party or in a proceeding brought against such party and such
appointment is not discharged or such possession is not terminated with sixty
(60) days after the effective date thereof or such party consents to or
acquiesces in such appointment or possession; (iv) files a petition for relief
under the United States Bankruptcy Code or any other present or future federal
or state insolvency, bankruptcy or similar laws (all of the foregoing
hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary
petition for relief is filed against such party under any Applicable Bankruptcy
Law and such involuntary petition is not dismissed within sixty (60) days after
the filing thereof, or an order for relief naming such party is entered under
any Applicable Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is
requested or consented to by such party; (v) fails to have discharged within a
period of sixty (60) days any attachment, sequestration or similar writ levied
upon any property of such party; or (vi) fails to pay within thirty (30) days
any final money judgment against such party; or
(f) The issuer of any securities constituting Collateral
files a petition for relief under any Applicable Bankruptcy Law, an involuntary
petition for relief is filed against any such issuer under any Applicable
Bankruptcy Law and such involuntary petition is not dismissed within thirty
(30) days after the filing thereof, or an order for relief naming any such
issue is entered under any Applicable Bankruptcy Law.
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7.2 Secured Party's Remedies. Upon the occurrence of an Event of
Default:
(a) Secured Party may declare the Obligations in whole or
part immediately due and may enforce payment and performance of the same and
exercise any rights under the Texas UCC, rights and remedies of Secured Party
under this Agreement, or otherwise.
(b) Secured Party may, at Secured Party's option and at
the expense of Debtor, either in Secured Party's own right or in the name of
Debtor and in the same manner and to the same extent that Debtor might
reasonably so act if this Agreement had not been made: (i) do all things
requisite, convenient, or necessary to enforce the performance and observance
of all rights, remedies and privileges of Debtor arising from the Collateral,
or any party thereof, including without limitation compromising, waiving,
excusing, or in any manner releasing or discharging any obligation of any party
to or arising from the Collateral; (ii) take possession of the books, papers,
chattel paper, documents of title, and accounts or Debtor, wherever located,
relating to the Collateral; (iii) xxx or otherwise collect and receive money
attributable to the Collateral; and (iv) exercise any other lawfully available
powers or remedies, and do all other things which Secured Party deems
requisite, convenient or necessary or which the Secured Party deems proper to
protect the Security Interest.
(c) Secured Party may foreclose this Agreement in the
manner now or hereafter provided or permitted by law and may upon such
reasonable notification prior thereto as may be required by applicable law
(debtor hereby agreeing that ten days' notice is commercially reasonable),
sell, assign, transfer, or otherwise dispose of the Collateral at public or
private sale, in whole or in part, and Secured Party may, in its own name or as
Debtor's attorney-in-fact effectively assign and transfer the Collateral, or
any part thereof, absolutely, and execute and deliver all necessary
assignments, conveyances, bills of sale, and other instruments with power to
substitute one or more persons or corporations with like power. Any such
foreclosure sale, assignment, transfer, or other disposition shall, to the
extent permitted by law, be a perpetual bar, both at law and in equity, against
Debtor and all persons and corporations lawfully claiming by or through or
under Debtor. Any such foreclosure sale may be adjourned from time to time.
Upon any sale, Secured Party may bid for and purchase the Collateral, or any
part thereof, and upon compliance with the terms of sale may hold, retain,
possess and dispose of the Collateral, in its absolute right without further
accountability. Secured Party shall have the right to be credited on the
amount of its bid a corresponding amount of the Obligations as of the date of
such sale.
(d) If, in the opinion of Secured Party, there is any
question that a public sale or distribution of any Collateral will violate any
state or federal securities law, Secured Party (i) may offer and sell
securities privately to purchasers who will agree to take them for investment
purposes and not with a view to distribution and who will agree to imposition
of restrictive legends on the certificates representing the security, or (ii)
may sell such securities in an intrastate offering under Section 3(a)(11) of
the Securities Act of 1933, and no sale so made in good faith by Secured Party
shall be deemed to be not "commercially reasonable" because so made.
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(e) Not in limitation of any other provision of this
Agreement, Secured Party shall have all rights and remedies of a secured party
under the Texas UCC.
7.3 Application of Proceeds. Secured Party may apply the proceeds
of any foreclosure sale hereunder or from any other permitted disposition of
the Collateral or any part thereof as follows: (a) first, to the payment of
all reasonable costs and expenses of any foreclosure and collection hereunder
and all proceedings in connection therewith, including reasonable attorneys'
fees, (b) then, to the reimbursement of Secured Party for all disbursements
made by Secured Party for taxes, assessments or liens superior to the Security
Interest and which Secured Party shall deem expedient to pay, (c) then, to the
reimbursement of Secured Party of any other disbursements made by Secured Party
in accordance with the terms hereof, (d) then, to or among the amounts of fees,
interest and principal then owing and unpaid in respect of the Obligations, in
such priority as Secured Party may determine in its discretion; and (e) the
remainder of such proceeds, if any, shall be paid to Debtor. If such proceeds
shall be insufficient to discharge the entire Obligations, Secured Party shall
have any other available legal recourse against Debtor and all other persons
obligated under, or for the performance of, the Stock Put Agreement, or on the
Note if issued, for the deficiency, together with interest thereon at fifteen
percent (15%) per annum.
7.4 Enforcement of Obligations. Nothing in this Agreement or in
any other agreement shall affect or impair the unconditional and absolute right
of the Secured Party to enforce the Obligations as and when the same shall
become due in accordance with the terms of the Note.
7.5 Voting Rights. Upon the occurrence of an Event of Default,
Debtor will not exercise any voting rights with respect to securities pledged
as Collateral. Debtor hereby irrevocably appoints Secured Party as Debtor's
attorney-in-fact (such power of attorney being coupled with an interest) and
proxy to exercise any voting rights with respect to Debtor's securities pledged
as Collateral upon the occurrence of an Event of Default.
7.6 Dividend Rights and Interest Payments. Upon the occurrence of
an Event of Default:
(a) all rights of Debtor to receive and retain the dividends and
interest payments which it would otherwise be authorized to receive and retain
pursuant to any provision of this Agreement shall automatically cease, and all
such rights shall thereupon become vested with Secured Party which shall
thereafter have the sole right to receive, hold and apply as Collateral such
dividends and interest payments; and
(b) all dividend and interest payments which are received by
Debtor contrary to the provisions of clause (i) of this Subsection shall be
received in trust for the benefit of Secured Party, shall be segregated from
other funds of Debtor, and shall be forthwith paid over to Secured Party in the
exact form received (properly endorsed or assigned if requested by Secured
Party), to be held by Secured Party as Collateral.
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ARTICLE VIII
RIGHTS OF SECURED PARTY
8.1 Subrogation. Upon the occurrence of an Event of Default,
Secured Party, at its election, may subrogate to all of the interest, rights
and remedies of the Debtor, in respect to any of the Collateral or agreements
pertaining thereto.
8.2 Secured Party Appointed Attorney-in-Fact. Debtor hereby
appoints Secured Party as attorney-in-fact of Debtor, with full authority in
the place and stead of Debtor and in the name of Debtor, Secured Party or
otherwise, from time to time on Secured Party's discretion and upon the
occurrence of an Event of Default, to take any action and to execute any
instrument which Secured Party may deem necessary or advisable to accomplish
the purposes of this Agreement, including without limitation: (a) to ask,
demand, collect, xxx for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral (b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) of this
Section 8.2; (c) to file any claims or take any action or institute any
proceeding which Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party against any of the Collateral; and (d) to assign and Offer the
Collateral, or any part thereof, absolutely and to execute and deliver
endorsements, assignments, conveyances, bills of sale and other instruments
with power to substitute one or more persons or corporation with like power.
8.3 Performance of Secured Party. If Debtor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause the
performance of, such agreement, and the reasonable expenses of Secured Party
incurred in connection therewith shall be payable by Debtor under Section 8.8.
In no event, however, shall Secured Party have any obligation or duties
whatsoever to perform any covenant or agreement of Debtor contained herein, and
any such performance by Secured Party shall be wholly discretionary with
Secured Party.
8.4 Duties of Secured Party. The powers conferred upon Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for money
actually received by it hereunder, Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
Without limiting the generality of the foregoing, Secured Party shall not have
any obligation, duty or responsibility to do any of the following: (a)
ascertain any maturities, calls, conversions, exchanges, offers, tenders or
similar matters relating to the Collateral or informing Debtor with respect to
any such matters, (b) fix, preserve or exercise any right, privilege or option
(whether conversion, redemption or otherwise) with respect to the Collateral
unless (i) Debtor makes written demand to Secured Parry to do so, (ii) such
written demand is received by Secured Party in sufficient time to permit
Secured Party to take the action demanded in the ordinary course of its
business, and (iii) Debtor provides additional collateral, acceptable to
Secured Party in its sole discretion; (c) collect any amounts payable in
respect of the Collateral (Secured Party being liable to
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account to Debtor only for what Secured Party may actually receive or collect
thereon), (d) sell all or any portion of the Collateral to avoid market loss;
(e) sell all or any portion of the Collateral unless and until (i) Debtor makes
written demand upon Secured Party to sell the Collateral, and (ii) Debtor
provides additional collateral, acceptable to Secured Party in its sole
discretion; or (f) hold the Collateral for or on behalf of any party other than
Debtor.
8.5 No Liability of Secured Party. Neither the acceptance of this
Agreement by Secured Party, nor the exercise of any rights hereunder by Secured
Party, shall be construed in any way as an assumption by Secured Party of any
obligations, responsibilities, or duties of Debtor arising in connection with
the Collateral assigned hereunder or otherwise bind Secured Party to the
performance of any obligations respecting the Collateral, it being expressly
understood that Secured Party shall not be obligated to perform, observe, or
discharge any obligation, responsibility, duty, or liability of Debtor in
respect of any of the Collateral, including without limitation appearing in or
defending any action, expending any money or incurring any expense in
connection therewith.
8.6 Right of Secured Party to Defend Action Affecting Security.
Secured Party may, at the expense of Debtor, appear in and defend any action or
proceeding at law or in equity purporting to affect Secured Party's Security
Interest under this Agreement.
8.7 Right of Secured Party to Prevent or Remedy Default. If
Debtor shall fail to perform any of the covenants, conditions and agreements
required to be performed and observed by Debtor under the Note, or any other
instruments secured hereby, or in respect of the Collateral (subject to any
applicable default cure period), Secured Party (a) may but shall not be
obligated to take any action Secured Party deems necessary or desirable to
prevent or remedy any such default by Debtor or otherwise to protect the
Security Interest, and (b) shall have the absolute and immediate right to take
possession of the Collateral or any part thereof (to the extent Secured Party
has not previously taken possession) to such extent and as often as the Secured
Party, in its sole discretion, deems necessary or desirable in order to prevent
or to cure any such default by Debtor, or otherwise to protect the security of
this Agreement. Secured Party may advance or expend such sums of money for the
account of Debtor as Secured Party in its sole discretion deems necessary for
any such purpose.
8.8 Secured Party's Expenses. All reasonable advances, costs,
expenses, charges and attorneys' fees which Secured Party may make, pay or
incur under any provision of this Agreement for the protection of its security
or for the enforcement of any of its rights hereunder, or in foreclosure
proceedings commenced and subsequently abandoned, or in any dispute or
litigation in which Secured Party or the holder of any of the Obligations may
become involved by reason of or arising out of the Note, or the Collateral
shall be a part of the Obligations and shall be paid by Debtor to Secured
Party, upon demand, and shall bear interest until paid at the rate otherwise
chargeable on the Note, but not to exceed the maximum rate of interest
permitted by applicable law, from the date of such payment until repaid by
Debtor.
8.9. Convertible Collateral. Secured Party may present for
conversion any Collateral which is convertible into any other instrument or
investment security or a combination thereof with cash, but
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Secured Party shall not have any duty to present for conversion any Collateral
unless it shall have received from Debtor detailed written instructions to that
effect at a time reasonably far in advance of the final conversion date to make
such conversion possible.
8.10 Secured Party's Right of Set-Off. Upon the happening of any
event entitling Secured Party to pursue any remedy provided herein, or if
Secured Party shall be served with garnishment process in which Debtor shall be
named as defendant, whether or not Debtor shall be in default hereunder at the
time, Secured Party may, but shall not be required to, set-off any indebtedness
owing by Secured Party to Debtor against any of the Obligations without first
resorting to the security hereunder and without prejudice to any other rights
or remedies of Secured Party or its Security Interest.
8.11 Remedies. No right or remedy herein reserved to Secured Party
is intended to be exclusive of any other right or remedy, but each and every
such remedy shall be cumulative, not in lieu of, but in addition to any other
rights or remedies given under this Agreement and all other security documents.
Any and all of Secured Party's rights and remedies may be exercised from time
to time and as often as such exercise as deemed necessary or desirable by
Secured Party.
8.12 Dividends. Upon the occurrence of an Event of Default,
Secured Party shall be entitled to any cash dividends, fees, receipts, payments
or other disbursements attributable in any way to the Collateral. Debtor shall
take all actions necessary to cause the payor of such disbursements to make
such disbursements directly to Secured Party on account of Debtor. Such
amounts, when received by Debtor, will be applied to the outstanding balance on
the Note.
8.13 Debtor's Waivers. Debtor waives notice of the creation,
advance, increase, existence, extension, or renewal of, and of any indulgence
with respect to, the Obligations; waives notice of intent to accelerate, notice
of acceleration, notice of intent to demand, presentment, demand, notice of
dishonor, and protest; waives notice of the amount of the Obligations
outstanding at any time, notice of any change in financial condition of any
person liable for the Obligations or any part thereof, notice of any Event of
Default, and all other notices respecting the Obligations; and agrees that
maturity of the Obligations and any part thereof may be accelerated, extended,
or renewed one or more times by Secured Party in its discretion, without notice
to Debtor.
8.14 Other Parties and Other Collateral. No renewal or extension
of or any other indulgence with respect to the Obligations or any part thereof,
no release of any security, no release of any person (including any maker,
endorser, guarantor, or surety) liable on the Obligations, no delay in
enforcement of payment, and no delay or admission or lack of diligence or care
in exercising any right or power with respect to the Obligations or any
security therefor or guaranty thereof or under this Agreement shall in other
manner impair or affect the rights of Secured Party under the law, under this
Agreement, or under any other agreement pertaining to the other security for
the Obligations, before foreclosing upon the Collateral for the purpose of
paying the Obligations. Debtor waives any right to the benefit of or to
require or control application of any other security or proceeds thereof, and
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Debtor agrees that Secured Party shall have no duty or obligation to Debtor to
apply to the Obligations any such other security or proceeds thereof.
ARTICLE IX
MISCELLANEOUS
9.1 Terms Commercially Reasonable. The terms of this Agreement shall
be deemed commercially reasonable within the meaning of the Texas UCC.
9.2 Notices. Any notices or demands required or permitted to be
given hereunder shall be deemed sufficiently given if in writing and personally
delivered or mailed (with all postage and charges prepaid), addressed to
Secured Party or to Debtor their respective addresses set forth below, or at
such other address as the above parties may from time to time designate by
written notice to the other given in accordance with this Section 9.2. Any
such notice, if personally delivered or transmitted by telex or telegram, shall
be deemed to have been given on the date so delivered or transmitted or, if
mailed, be deemed to have been given on the day after such notice is placed in
the United States mail in accordance with this Section 9.2.
Secured Party: 0000 Xxxxxxx xx Xxxxx Xxx, Xxxxx 000
Xxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000
Attn: Xx. Xxxxx X. Xxxx, Xx.
with copy to: Xxxxxxx X. XxXxxx, Esq.
Xxxxx, Xxxxx & Werkenthin, P.C.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Debtor: 0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxxx 00000
9.3 Parties Bound. Secured Party's rights under this Agreement
and the Security Interest shall inure to the benefits of its successors and
assigns, and in the event of any assignment or transfer of any of the
Obligations or the Collateral, Secured Party thereafter shall be fully
discharged from any responsibility with respect to the Collateral so assigned
or transferred, but Secured Party shall retain all rights and powers hereby
given with respect to any of the Obligations or Collateral not so assigned or
transferred. All representations, warranties, and agreements of Debtor if more
than one are joint and several, and all shall be binding upon the personal
representatives, heirs, successors, and assigns of Debtor.
9.4 Waiver. No delay of Secured Party in exercising any power or
right shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof or
the exercise of any other power or right. No waiver by Secured Party of any
right hereunder of any default by Debtors shall be binding upon Secured Party
unless in writing, and no
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failure by Secured Party to exercise any power or right hereunder or waiver of
any default by Debtor shall operate as a waiver of any other or further
exercise of such right or power of any further default.
9.5 Agreement Continuing. This Agreement shall constitute a
continuing agreement, applying to all future as well as existing transactions,
whether or not of the character contemplated at the date of this Agreement, and
if all transactions between Secured Party and Debtor shall be closed at any
time, shall be equally applicable to any new transactions thereafter.
Provisions of this Agreement, unless by their terms exclusive, shall be in
addition to other agreements between the parties.
9.6 Definitions. Unless the context indicated otherwise,
definitions in the Texas Business and Commerce Code Section 1.1 et seq.
("Texas UCC") apply to words and phrases in this Agreement; if Texas UCC
definitions conflict, Chapter 9 definitions apply.
9.7 Miscellaneous. In this Agreement, whenever the context so
requires, the neuter gender includes the masculine and feminine, and the
singular number includes the plural and vice versa. The headings of paragraphs
herein are inserted only for convenience and shall in no way define, describe
or limit the scope of intent of any provisions of this Agreement. No change,
amendment, modification, cancellation, or discharge of any provision of this
Agreement shall be valid unless consented to in writing by Secured Party.
9.8 Assignment of Secured Party's Interest. Secured Party shall
have the right to assign all or any portion of its rights in this Agreement to
any subsequent holder or holders of the Note.
9.9. Applicable Laws. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.
9.10 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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EXECUTED this 30 day of September, 1996.
DEBTOR:
EXSORBET INDUSTRIES, INC.
(an Idaho corporation)
By: /s/ Xxxxx X. Xxxxxxx, Xx.
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SECURED PARTY:
AMERICAN PHYSICIANS SERVICE GROUP, INC.
(a Texas corporation)
By: /s/ Xxxxx Xxxx
-----------------------------------
Name: Xxxxx Xxxx
---------------------------------
Title: Senior VP
--------------------------------
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Schedule I
To Assignment and Security Agreement
"Environmental Laws" means all Laws that relate to health, safety or
environmental protection, including without limitation the (i) Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, the Solid Waste Disposal Act Amendments of 1980, and the hazardous and
Solid Waste Amendments of 1984; (ii) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986; (iii) the Toxic Substances Control Act; (iv)
the Americans with Disabilities Act of 1990, and (iv) the Clean Air Act; all as
amended from time to time and including all regulations promulgated pursuant to
any one or more of them.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended, together with all rules and regulations issued pursuant thereto and
all rulings or interpretations adopted by any Governmental Entity thereunder.
"Governmental Entity" means any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency, or other
governmental authority having jurisdiction over Debtor, any Subsidiary, or any
of its or their respective businesses, operations, assets, or properties.
"Hazardous Material" means those substances defined as toxic or
hazardous substances by or under any Environmental Laws.
"Laws" shall mean all applicable laws, ordinances, statutes. orders,
regulations, judgments, writs, or decrees of any Governmental Entity.
"Subsidiary" means (a) Consolidated Environmental Services, Inc., an
Arkansas corporation, (b) Cierra, Inc., an Arkansas corporation; (c) Larco
Environmental Services, Inc., a Louisiana corporation; (d) KR Industrial
Service of Alabama, Inc., an Alabama corporation; (e) Exsorbet Technical
Services, Inc., an Arkansas corporation, d/b/a SpilTech Services, Inc.; (f)
Eco-Systems, Inc., a Mississippi corporation; and (g) 7-7 Merger, Inc., a
Delaware corporation.
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Schedule II
[To be Completed]
