EXHIBIT 10.17
PURCHASE AGREEMENT
This Purchase Agreement (hereafter "Agreement") is entered into this 15th
day of July, 1998 to be effective as of June 26, 1998 (hereafter "Effective
Date") by and between Xxxxxxx, Xxxxxxxxx & Xxxxxxx (U.S.), Inc. (hereafter
"SRK") and National Environmental Service Company (hereafter "NESCO").
WHEREAS, SRK owns and operates a consulting engineering business with an
office located in Columbia, South Carolina (hereafter "Business") and desires to
sell certain assets of such Business and NESCO proposes to purchase those assets
under the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged the parties hereto agree
as follows:
1. Assets to be Purchased -
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A. Accounts Receivable - SRK agrees to sell, assign and transfer to
NESCO, and NESCO agrees to purchase for cash all bonafide accounts
receivable at 100% of invoice amount. Bonafide accounts receivable shall be
all receivables as of the Effective Date whose invoice date is equal or less
than 90 days prior to the Effective Date listed on Attachment A attached
hereto. Bonafide receivables shall not include any receivables that are
known by SRK to be in dispute or uncollectible. Within ten (10) days of
Closing (as defined herein), SRK shall provide NESCO with a schedule of all
relevant accounts receivable collected by SRK from the Effective Date to the
Closing Date (as defined herein) and shall pay NESCO in cash for any amounts
owed to NESCO pursuant to such schedule. If SRK receives payment after
Closing of any accounts receivable purchased by NESCO, SRK agrees to forward
such amounts received to NESCO within seven (7) days of receipt. If NESCO
receives payment after Closing of any of SRK's accounts receivable not
purchased by NESCO, NESCO agrees to forward such amounts received to NESCO
within seven (7) days of receipt.
B. Work in Progress - SRK agrees to sell, assign and transfer to
NESCO, and NESCO agrees to purchase for cash all receivables as of the
Effective Date not invoiced but accrued as work in progress at 100% of the
accrued amount as scheduled by the attached summary marked Attachment B.
For any amount of work-in-process accrued for by SRK up through the
Effective Date but for which a "change-order" does not exist, NESCO agrees
to pay SRK in cash for such work-in-progress within seven (7) days of
receipt of a change order, invoice or payment for such work.
C. Fixed Assets - SRK agrees to sell, assign and transfer to NESCO,
and NESCO
agrees to purchase for cash all fixed assets at 100% of the "net book value"
at June 26, 1998, as shown on the attached Attachment C. Net book value
shall be defined as the original cost booked by SRK less all depreciation
through June 26, 1998.
2. Assumption of Leases - NESCO agrees to assume the liability as of the
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Effective Date for the leases and the remainder of the payments for such leases
as set forth on Attachment D, attached hereto (the "Assumed Leases").
3. Liabilities -
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A. It is understood that SRK will pay all liabilities prior to the
Effective Date for which it is obligated (excluding the Assumed Leases) with
regard to the Business including but not limited to: accounts payable; notes
payable; all payroll and payroll taxes through the Effective Date; all other
benefits due SRK employees through the Effective Date except for accrued
vacation which has been assumed by NESCO; and all rent, utilities, taxes,
and assessments due through the Effective Date.
B. NESCO shall be responsible for all liabilities as of the Effective
Date with regard to the Business. After Closing, SRK shall provide NESCO
with a schedule listing (I) any liabilities of the Business arising as of
the Effective Date that have been paid by SRK and (ii) any liabilities that
were prepaid by SRK and prorating such liabilities through the Effective
Date and (iii) deposits paid relating to the Business (collectively, the
"Prepaid Liabilities"). NESCO shall pay in cash to SRK the amount of the
Prepaid Liabilities within seven (7) days of receipt of the Prepaid
Liabilities schedule.
4. Assignment - SRK will use their best endeavors to assign without
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penalty or loss to NESCO all existing material contracts, backlog, customer
lists, good and merchantable title to the purchased assets, purchased accounts
receivable, purchased receivables accrued as work in progress and not invoiced,
licenses that are assignable, and such other rights as SRK presently enjoys at
its Columbia office.
5. Purchase Price - NESCO shall pay to SRK the total purchase price set
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forth below (the "Purchase Price") in cash or immediately available funds on or
before July 17, 1998. If the Purchase Price is not received by SRK before 5:00
p.m., Denver time, on July 17, 1998, this Purchase Agreement shall be null and
void.
The Purchase Price shall be allocated as follows:
A. Cash (all amounts in US $):
Accounts Receivable $ 110,063.28
Work in Progress $ 271,756.21
Assets (Fixed Assets at Net Book Value) $ 55,976.21
Goodwill $ 50,000.00
Accrued Vacation (Attachment E attached) ($15,109.78)
TOTAL $ 472,685.92
B. NESCO common stock to be issued from the authorized but unissued
shares: 12,500 shares
Any adjustments made pursuant to subparagraphs 1.A, 1.B, 1.C, or 3.B.
above shall be treated as adjustments to the Purchase Price.
6. Payment of Accounts Payable - SRK agrees to pay in full within two (2)
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weeks of Closing all accounts payable that it has received for the Business and
furnish NESCO evidence of such payment. Should any additional payables for the
period on or before July 15, 1998, be received by NESCO, SRK agrees to pay said
invoices within seven (7) days and furnish NESCO evidence of such payment.
NESCO agrees to invoice such amounts to clients if these are recoverable and
reimburse SRK for amounts paid by clients within seven (7) days of receipt of
payment of such invoice.
7. Insurance - SRK and NESCO will each maintain errors and omissions
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insurance in the minimum amount of US $2,000,000 following the Closing Date for
a period of at least three (3) years. SRK agrees to be responsible for any
professional liability claims on work completed or performed prior to the
Closing Date. NESCO agrees to be responsible for any professional liability
claims on work completed or performed after the Closing Date.
8. Indemnification -
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A. SRK agrees to indemnify NESCO against (I) professional liability,
bodily injury or property damage claims asserted against NESCO for work
performed by SRK or its subcontractors on or prior to the Closing Date, and
(ii) third-party claims for liabilities arising prior to the Effective Date
not assumed by NESCO under this Agreement. On receipt of notice of any such
claim, NESCO shall immediately notify SRK of the claim and allow SRK to
defend such claim. NESCO will provide SRK with reasonable assistance in
defending such claims.
B. NESCO agrees to indemnify SRK against any claims (including
professional liability, bodily injury, property damage or third party
claims) asserted against
SRK for liabilities assumed by NESCO under this Agreement.
9. Confidentiality - Each party shall keep confidential any information
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with respect to the other party that is not otherwise generally available to the
public or has been made available to the public by persons other than such
party, its representatives, agents, or employees, except as is necessary in
connection with the preparation of the definitive agreement relating to the
transaction or as may be required by applicable law or stock exchange rules. If
for any reason the transaction is abandoned or terminated prior to being
consummated, each party will return promptly all information containing
confidential or proprietary information disclosed to the other party and this
paragraph shall survive termination of this Agreement.
10. Publicity - Except as may be required by NESCO by applicable law or
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securities laws or rules, neither party hereto shall make any public
announcement or any press release regarding this proposal or the transaction or
the subject matter hereof or thereof without the prior consent of the other
party.
11. Expenses - Each party hereto will separately bear its own expenses
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incurred in connection with this proposal and the transaction, regardless of
whether the transaction is consummated.
12. Interim Operations - SRK shall continue to operate in a manner which
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will maintain the SRK Columbia office's value, customers, reputation, and
goodwill during the time period between the acceptance of this proposal and the
earlier of the Closing Date, or the termination date. Pending execution of the
Agreement, SRK agrees that it will conduct its Business only in the ordinary
course and not engage in any extraordinary transaction without NESCO's prior
consent.
13. Employee's - NESCO shall make offers of employment to all staff
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currently employed by SRK in the Business under NESCO's normal policies and
procedures.
14. Contracts - NESCO will provide to SRK within fourteen (14) days of
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Closing, a schedule listing each current work order that continues past the
Closing Date and identifying the work performed by SRK prior to the Closing
Date. Furthermore, for any current work orders that are contracted to or with
any other SRK offices relating to work for the Business, NESCO agrees that such
arrangements can continue and the respective offices can finalize their work on
such projects.
15. Exemption from Registration - NESCO represents to SRK that the
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issuance of the shares of NESCO to SRK pursuant to the transaction shall be
exempt from the registration requirement of federal and applicable state
securities laws. SRK shall provide at Closing such representations and
commitments as may be necessary or appropriate, to the extent that SRK can make
such representations and commitments, to comply with applicable exemptions from
such registration requirements.
16. Closing Date - The closing of the transactions contemplated hereby
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("Closing") date shall be on July 15, 1998 ("Closing Date"), with transfer of
funds by bank wire transfer and approval of the NESCO and SRK's respective
boards of directors.
17. Assistance to SRK - NESCO shall provide reasonable assistance to SRK
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at no cost to assist SRK with the collection of receivables not purchased by
NESCO for a period of ninety (90) days after the Closing Date.
18. Delivery of NESCO Stock - Within fourteen (14) days of Closing, NESCO
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shall issue to SRK 12,500 shares of it's common stock, free and clear of all
liens and encumbrances, to SRK.
19. Waiver of Bulk Sales - The parties waive compliance with the
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provisions of the applicable uniform commercial code relating to bulk transfers
in connection with the transactions contemplated by this Agreement.
20. Applicable Law - This agreement shall be governed by and construed in
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accordance with the laws of the State of Colorado. The parties agree that
jurisdiction and venue will be in the District Court of Richland County, South
Carolina.
21. Attorney's Fees - In the event suit or action is instituted on account
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of the breach of this agreement by either party, the losing party shall pay the
prevailing party such additional sum as the court may adjudge reasonable
attorney's fees.
DULY AUTHORIZED:
Xxxxxxx, Xxxxxxxxx & Xxxxxxx (U.S.), Inc.
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Xxxxxx X. Xxxxxxx - President
National Environment Service Company
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Xxxx Xxxxxxxxx - Chairman & CEO
