AGREEMENT AND PLAN OF REORGANIZATION
AMONG
US LIQUIDS, INC.
A DELAWARE CORPORATION
AMIGO ACQUISITION, INC.
A TEXAS CORPORATION
XXXXX XXXXX
XXXX XXXXX
AND
AMIGO DIVERSIFIED SERVICES, INC.,
A TEXAS CORPORATION
TABLE OF CONTENTS
PAGE
1. THE MERGER...........................................................1
1.01 GENERAL.......................................................1
1.02 ARTICLES OF INCORPORATION; BYLAWS; BOARDS OF
DIRECTORS; OFFICERS...........................................2
1.03 CONVERSION AND EXCHANGE OF SHARES.............................3
1.04 LIABILITIES AND EXCLUDED ASSETS...............................5
1.05 THE CLOSING...................................................6
1.06 DELIVERIES AT THE CLOSING.....................................6
2. POST-CLOSING ADJUSTMENTS.............................................6
2.01 GENERAL......................................................6
2.02 CALCULATION OF NET WORKING CAPITAL AT CLOSING DATE...........6
2.03 PAYMENT OF ADJUSTMENT AMOUNTS.................................7
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION............7
3.01 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS............7
3.02 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY.......8
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY...............10
4.01 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER.............10
4.02 CAPITALIZATION...............................................11
4.03 NONCONTRAVENTION.............................................11
4.04 BROKERS' FEES................................................11
4.05 TITLE TO ASSETS..............................................11
4.06 NO SUBSIDIARIES OR EQUITY INVESTMENTS........................12
4.07 FINANCIAL STATEMENTS.........................................12
4.08 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END.............12
4.09 UNDISCLOSED LIABILITIES......................................13
4.10 TAX MATTERS..................................................13
4.11 REAL PROPERTY................................................14
4.12 INTELLECTUAL PROPERTY........................................16
4.13 TANGIBLE ASSETS..............................................17
4.14 CONTRACTS....................................................17
4.15 HAZARDOUS MATERIALS; DISPOSAL SITES..........................18
4.16 PERMITS AND ENVIRONMENTAL MATTERS............................19
4.17 REPORTS, ETC.................................................20
4.18 APPLICABLE LAWS COMPLIANCE...................................20
4.19 ENVIRONMENT, HEALTH, AND SAFETY..............................21
4.20 NOTES AND ACCOUNTS RECEIVABLE................................21
4.21 POWERS OF ATTORNEY...........................................22
4.22 INSURANCE....................................................22
4.23 LITIGATION...................................................22
4.24 EMPLOYEES....................................................23
4.25 EMPLOYEE BENEFITS............................................23
4.26 GUARANTIES...................................................23
4.27 CERTAIN BUSINESS RELATIONSHIPS...............................23
4.28 SECURITIES MATTERS...........................................23
4.29 SUFFICIENCY OF ASSETS........................................24
5. PRE-CLOSING COVENANTS...............................................24
5.01 GENERAL......................................................24
5.02 NOTICES AND CONSENTS.........................................24
5.03 OPERATION OF BUSINESS........................................24
5.04 PRESERVATION OF BUSINESS.....................................25
5.05 FULL ACCESS..................................................25
5.06 NOTICE OF DEVELOPMENTS.......................................25
5.07 EXCLUSIVITY..................................................25
6. POST-CLOSING COVENANTS..............................................25
6.01 GENERAL......................................................25
6.02 TRANSITION...................................................26
6.03 CONFIDENTIALITY..............................................26
6.04 TAX RETURNS AND FILINGS......................................26
6.05 SAN ANTONIO LAND TRANSFER....................................26
7. CONDITIONS TO OBLIGATION TO CLOSE...................................27
7.01 CONDITIONS TO OBLIGATION OF PARENT...........................27
7.02 CONDITIONS TO OBLIGATION OF THE SHAREHOLDERS.................28
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.............................29
8.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES......29
8.02 INDEMNIFICATION PROVISIONS FOR BENEFIT OF PARENT.............30
8.03 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SHAREHOLDERS...30
8.04 LIMITATION ON LIABILITY......................................30
8.05 MATTERS INVOLVING THIRD PARTIES..............................30
8.05 DETERMINATION OF ADVERSE CONSEQUENCES........................31
8.06 OTHER INDEMNIFICATION PROVISIONS.............................31
9. TERMINATION.........................................................32
9.02 TERMINATION OF AGREEMENT.....................................32
9.02 EFFECT OF TERMINATION. .....................................33
10. CERTAIN DEFINITIONS.................................................33
11. GENERAL.............................................................36
11.01 INCORPORATION OF EXHIBITS AND SCHEDULES......................36
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11.02 NO THIRD-PARTY BENEFICIARIES.................................36
11.03 ENTIRE AGREEMENT.............................................36
11.04 SUCCESSION AND ASSIGNMENT....................................36
11.05 COUNTERPARTS.................................................37
11.06 HEADINGS.....................................................37
11.07 NOTICES......................................................37
11.08 GOVERNING LAW................................................38
11.09 AMENDMENTS AND WAIVERS.......................................38
11.10 SEVERABILITY.................................................38
11.11 EXPENSES.....................................................38
11.12 CONSTRUCTION.................................................38
11.13 SPECIFIC PERFORMANCE.........................................38
11.14 LITIGATION EXPENSES..........................................39
11.15 ARBITRATION..................................................39
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement"), is entered
into as of April __, 1998 by and among US Liquids, Inc., a Delaware corporation
("Parent"), Amigo Acquisition, Inc, a Texas corporation, a wholly owned
subsidiary of Parent ("Subsidiary"), Amigo Diversified Services, Inc., a Texas
corporation (the "Company"), and Xxxxx Xxxxx and Xxxx Xxxxx (the
"Shareholders"). Parent, Subsidiary, Company and the Shareholders are referred
to collectively herein as the "PARTIES."
The Shareholders own all of the outstanding capital stock of the
Company.
The respective boards of directors of Subsidiary and the Company (which
corporations are hereinafter referred to collectively as the "Constituent
Corporations") deem it advisable and in the best interests of Subsidiary and the
Company and their respective shareholders that Company merge with and into the
Subsidiary pursuant to a forward subsidiary merger (such transactions sometimes
being referred to herein as the "Merger") pursuant to this Agreement and the
applicable provisions of the laws of the State of Texas.
This Agreement contemplates the Merger will be accomplished through the
surrender of all of the outstanding shares of voting common stock of the Company
(the "Shareholder Stock") in exchange for that number of shares of common voting
stock (the "Parent Stock") of Parent set forth in Section 1.03 of this
Agreement, in a transaction intended to qualify for tax purposes as a
reorganization pursuant to Section 368 (a)(2)(D) of the Internal Revenue Code.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. THE MERGER.
1.01 GENERAL.
(a) EFFECT. At the Effective Time (as defined below), the
Company shall be merged with and into the Subsidiary pursuant to
Texas law. Thereupon, the corporate identity and existence of the
Subsidiary, with all its rights, privileges, immunities, powers
and purposes, shall continue unaffected and unimpaired by the
Merger, and the corporate identity and existence, with all the
rights, privileges, immunities, powers and purposes of the
Company shall be merged into the Subsidiary, as the corporation
surviving the Merger and the Subsidiary shall be fully vested
therewith. The separate identity, existence and corporate
organization of the Company shall cease upon the Merger becoming
effective as herein provided and thereupon the Subsidiary and the
Company shall each be a single corporation (herein sometimes
referred to as the "Surviving Corporation").
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(b) FILINGS. At the Closing, the Constituent Corporations
will cause all necessary documents and certificates necessary to
effect the Merger to be executed and attested and filed as
provided by Texas law (the "Merger Documents").
(c) EFFECTIVE TIME OF MERGER. The Merger shall be
effective immediately upon the filing of the Merger Documents
(the effective time of the Merger being referred to herein as the
"Effective Time").
(d) FURTHER ASSURANCES. If at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that
any further deeds, assignments or assurances in law or in or
equity or that any other things are necessary, desirable or
proper to vest, perfect or confirm of record or otherwise, in the
Surviving Corporation the title to any property or rights
acquired or to be acquired by the Surviving Corporation by reason
of, or as a result of, the Merger, the Constituent Corporations,
and their officers and directors shall and will execute and
deliver all such proper deeds, assignments and assurances in law
or equity and do all things necessary, desirable or proper to
vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of
this Agreement, and the officers and directors of the Constituent
Corporations and the officers and directors of the Surviving
Corporation are fully authorized in the name and on behalf of the
Constituent Corporations and the Surviving Corporation or
otherwise to take any and all such actions.
1.02 ARTICLES OF INCORPORATION; BYLAWS; BOARDS OF DIRECTORS;
OFFICERS.
(a) ARTICLES OF INCORPORATION. The Articles of
Incorporation of the Subsidiary, as in effect immediately prior
to the Effective Time, shall be, and may be separately certified
as, the Articles of Incorporation of the Surviving Corporation,
as the same may thereafter be amended from time to time in
accordance with Texas law.
(b) BYLAWS. The Bylaws of the Subsidiary, as in effect
immediately prior to the Effective Time, shall be the Bylaws of
the Surviving Corporation, as the same may thereafter be altered
or amended from time to time or until repealed in accordance with
Texas law, its Articles of Incorporation and said Bylaws.
(c) BOARDS OF DIRECTORS. The directors of the Subsidiary
shall serve as the directors of the Surviving Corporation,
subject to the provisions of the Articles of Incorporation and
Bylaws of the Surviving Corporation, until their successors are
elected and qualified.
(d) OFFICERS. The officers of the Subsidiary shall serve
as the officers of the Surviving Corporation, each such officer
to serve, subject to the provisions of the Articles of
Incorporation and Bylaws of the Surviving Corporation, until his
successor is elected and qualified.
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1.03 CONVERSION AND EXCHANGE OF SHARES. At the Effective Time,
the issued and outstanding shares of Subsidiary, the Shareholder Stock,
the Parent Stock and shall, by virtue of the Merger and without any
action on the part of any holder thereof, be converted and exchanged as
follows:
(a) SUBSIDIARY STOCK. Each outstanding share of common
stock of Subsidiary held of record by Parent will automatically
be converted into one fully paid and non-assessable share of
common stock of the Surviving Corporation.
(b) SHAREHOLDER STOCK. The Shareholder Stock shall be
converted into, and become exchangeable for:
(i) $5,200,000 worth of Parent's common stock (the
"Parent Stock") at a strike price of $20.85 per share (the
"Valuation Price"), for a total number of 249,400 shares
of common stock of Parent Stock; and
(ii) cash in the amount of $1,300,000 less the
amount of Long Term Liabilities as of the Closing (the
"Cash Payment"); and
(iii) The property described in Schedule 1.03
attached hereto and incorporated herein by reference (the
"In Kind Consideration").
In connection therewith, the Shareholders will surrender to
Parent for cancellation duly executed certificates in valid form
evidencing all of the Shareholder Stock, duly endorsed in blank
or accompanied by duly executed stock powers. The Parent Stock
and Cash Payment shall be divided and apportioned between the
shareholders so as to give each of such shareholders, as nearly
as is practicable without issuing fractional shares, such
percentage of such Parent Stock and Cash Payment as is specified
for each Shareholder in SECTION 1.03(B) of the Disclosure
Schedule (as defined herein).
(c) VALIDITY; OTHER MATTERS. The Parent Stock, when issued
and delivered as provided herein, will be duly authorized and
validly issued, fully paid, nonassessable and free of any
preemptive rights, and will be covered by a then-effective
registration statement under the Securities Act of 1933, as
amended (the "Securities Act"). Subsidiary shall file, or cause
Parent to file, with the American Stock Exchange ("AMEX") a
subsequent listing application such that the Parent Stock shall
be tradable on such exchange, immediately following the Closing.
(d) RESALE OF PARENT STOCK. For a period of one year after
the Closing Date, Sellers shall comply with the resale
requirements of Rule 145(d) under the Securities Act, more
specifically, the volume limitations, broker transactions, and
manner of sale provisions of Rule 144(e), (f) and (g),
respectively. Sellers agree that $1,000,000 worth (based on the
Valuation Price) of the Parent Stock (the "One-Year Restricted
Stock") shall not be sold assigned, exchanged, transferred,
encumbered, pledged, distributed or otherwise disposed of for a
period of one (1) year after
3
issuance and an additional $1,000,000 worth (based on the
Valuation Price) of the Parent Stock (the "Two-Year Restricted
Stock") shall not be sold assigned, exchanged, transferred,
encumbered, pledged, distributed or otherwise disposed of for a
period of two (2) years after issuance.
(e) LEGEND. Shareholders acknowledge and agree that all
Parent Stock shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF RULE 145(D) PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AND MAY NOT BE TRANSFERRED OR
DISPOSED OF BY THE HOLDER WITHOUT COMPLIANCE WITH SAID
RULE.";
PROVIDED, HOWEVER, that pursuant to Rule 145(d) of the Securities
Act, on the first anniversary following the Closing Date, the
foregoing legend shall be removed from such certificates, and
Subsidiary (or Parent) shall issue a certificate without such
legend to the Shareholders upon request.
The One-Year Restricted Stock shall also bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
VOLUNTARILY SOLD, ASSIGNED, EXCHANGED, TRANSFERRED,
ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE
DISPOSED OF, AND ISSUER SHALL NOT BE REQUIRED TO GIVE
EFFECT TO ANY ATTEMPTED VOLUNTARY SALE, ASSIGNMENT,
EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION,
APPOINTMENT OR OTHER DISPOSITION OF ANY OF THESE SHARES,
DURING THE ONE-YEAR PERIOD ENDING ON [APPROPRIATE DATE].
The Two-Year Restricted Stock shall also bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
VOLUNTARILY SOLD, ASSIGNED, EXCHANGED, TRANSFERRED,
ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE
DISPOSED OF, AND ISSUER SHALL NOT BE REQUIRED TO GIVE
EFFECT TO ANY ATTEMPTED VOLUNTARY SALE,
4
ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION OF ANY OF
THESE SHARES, DURING THE TWO-YEAR PERIOD ENDING ON
[APPROPRIATE DATE].
(f) EXPENSES OF ISSUANCE OF PARENT STOCK. With respect to
the initial issuance of the Parent Stock, Subsidiary (or Parent)
shall pay all customary fees, costs and expenses of such
issuance, including without limitation all registration, filing
and AMEX fees, printing expenses and fees and disbursements of
counsel and accountants for Subsidiary or Parent.
1.04 LIABILITIES AND EXCLUDED ASSETS. As of the Closing, Company
shall not have any liabilities of Shareholders or the Company except
Current Liabilities and the Long Term Liabilities of the Company set
forth in SECTION 1.04 of the Disclosure Schedule. SECTION 1.04 of the
Disclosure Schedule sets forth Shareholders' approximation of the Long
Term Liabilities including all amounts required to be paid under any
equipment leases in order for the Company to obtain free and clear title
and ownership to all of the assets of the Company (collectively, the
"Assumed Liabilities"). Within sixty (60) days after the Closing Date
Parent shall provide Shareholders with a report showing the actual
assumption or payoff amounts as of the Closing Date (the "Final Payoff
Report"). If the actual payoff amounts calculated as of the Closing Date
are greater than the amount set forth on SECTION 1.04 of the Disclosure
Schedule, then the difference shall be paid by Shareholders to Parent,
in Parent Stock, within five (5) days of Shareholders approval or deemed
approval of the Final Payoff Report. If the actual payoff amounts
calculated as of the Closing Date is less than the amount set forth on
SECTION 1.04 of the Disclosure Schedule, then the difference shall be
paid by Parent to Shareholders, in Parent Stock, within five (5) days of
Shareholders approval or deemed approval of the Final Payoff Report.
Shareholders agree to use their best efforts, in cooperation with
Subsidiary and Parent, to obtain statements from each of the lenders or
lessors of the equipment showing the final pay-off amount, on or before
Closing. Notwithstanding anything to the contrary herein, the Company
shall not have any Long Term Liabilities at the closing in excess of
$1,300,000.
If within thirty (30) days following the delivery of the Final Payoff
Report, Shareholders have not given Parent notice of their objection to
the Final Payoff Report (such notice must contain a statement of the
basis of Shareholders' objection), then the Final Payoff Report will be
deemed final. If Shareholders give such notice of objection, then the
issues in dispute will be submitted to Ernst & Young, certified public
accountants (the "Resolution Accountants") for resolution. If issues in
dispute are submitted to the Resolution Accountants for resolution, (i)
each party will furnish to the Resolution Accountants such work papers
and other documents and information relating to the disputed issues as
the Resolution Accountants may request and are available to that party
or its Affiliate (or its independent public accountants), and will be
afforded the opportunity to present to the Resolution
5
Accountants any material relating to the determination and to discuss
the determination with the Resolution Accountants; (ii) the
determination by the Resolution Accountants, as set forth in a notice
delivered to both parties by the Resolution Accountants, will be binding
and conclusive on the Parties; and (iii) Parent and Shareholders will
each bear 50% of the fees of the Resolution Accountants for such
determination.
1.05 THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Akin,
Gump, Strauss, Xxxxx & Xxxx, L.L.P., NationsBank Plaza, 000 Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxx 00000, commencing at 10:00 a.m.
local time on the third business day after the conditions to Closing set
forth in SECTION 7, below are satisfied, or such other date as the
Parties may agree to in writing (the "CLOSING DATE").
1.06 DELIVERIES AT THE CLOSING. At the Closing, (a) the
Shareholders will deliver to Parent the various certificates,
instruments, and documents referred to in SECTION 7.01 below, (b) Parent
will deliver to the Shareholders the various certificates, instruments,
and documents referred to in SECTION 7.02 below, (c) the Shareholders
will deliver to Parent stock certificates representing all of the
Shareholder Stock, endorsed in blank or accompanied by duly executed
assignment documents, (d) Parent will deliver to the Shareholders the
Cash Payment, certificates representing the Parent Stock and the In Kind
Consideration pursuant to SECTION 1.03 above, (e) Parent will deliver
the Parent's Legal Opinion (as defined and described in SECTION 7.02(G)
of this Agreement), and (f) Parent will deliver a tax representation
letter.
2. POST-CLOSING ADJUSTMENTS.
2.01 GENERAL. The parties acknowledge that the consideration
payable to the Shareholders hereunder was determined on the assumption
that the Company would have the same Net Working Capital as reflected in
the December 31, 1997 balance sheet of the Company attached hereto as
Schedule 2.01 (the "Year End Balance Sheet"). Therefore, the Parties
agree to make the post-closing adjustments as set forth in this SECTION
2.
2.02 CALCULATION OF NET WORKING CAPITAL AT CLOSING DATE. On or
before the date that is ninety (90) days after the Closing Date,
Parent's accountants shall compute the amount of Net Working Capital of
the Company as of the Closing Date (but without taking into account any
termination of leases, notes, consulting agreements or other
transactions effected in order to accomplish the Shareholders' exchange
of Shareholder Stock) in accordance with GAAP, and shall provide the
Shareholders a summary reflecting how such computations were made. The
Shareholders and their accountants shall have the opportunity to review
such computations.
If within thirty (30) days following the delivery of the Net Working
Capital computation (the "Computation"), Shareholders have not given
Parent notice of their objection to the Computation (such notice must
contain a statement of the basis of Shareholders' objection), then the
Computation will be deemed final. If Shareholders give such notice of
objection, then the issues in dispute will be submitted to the
Resolution Accountants for resolution. If
6
issues in dispute are submitted to the Resolution Accountants for
resolution, (i) each party will furnish to the Resolution Accountants
such work papers and other documents and information relating to the
disputed issues as the Resolution Accountants may request and are
available to that party or its Affiliate (or its independent public
accountants), and will be afforded the opportunity to present to the
Resolution Accountants any material relating to the determination and to
discuss the determination with the Resolution Accountants; (ii) the
determination by the Resolution Accountants, as set forth in a notice
delivered to both parties by the Resolution Accountants, will be binding
and conclusive on the Parties; and (iii) Parent and Shareholders will
each bear 50% of the fees of the Resolution Accountants for such
determination.
2.03 PAYMENT OF ADJUSTMENT AMOUNTS. If the Net Working Capital as
of the Closing Date is greater than the Net Working Capital as of the
Year End Balance Sheet, then Parent shall, within five business days of
Shareholders' approval or deemed approval of the Computation, pay the
Shareholders, in cash, an amount equal to the positive amount on the
Closing Date. If the Net Working Capital as of the Closing Date is less
than the Net Working Capital as of the Year End Balance Sheet, then the
Shareholders, within five business days of Shareholders' approval or
deemed approval of the Computation, shall pay Parent, in cash an amount
equal to the negative amount on the Closing Date.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
3.01 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The
Shareholders jointly and severally represent and warrant to Parent that
the statements contained in this SECTION 3.01 are correct and complete
as of the date of this Agreement and 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
3.01):
(a) AUTHORIZATION OF TRANSACTION. The Shareholders have
full power and authority to execute and deliver this Agreement
and to perform their obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of
Shareholders, enforceable in accordance with its terms and
conditions. Except as set forth in SECTION 3.01(A) of the
Disclosure Schedule, Shareholders are not required to give any
notice to, make any filing with, or obtain any authorization,
consent, or approval of, any government or governmental agency in
order to consummate the transactions contemplated by this
Agreement.
(b) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Shareholders
are subject or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any material agreement,
contract, lease, license, instrument, or other arrangement to
which either of the
7
Shareholders is a party or by which they are bound or to which
any material amount of their assets are subject.
(c) BROKERS' FEES. Shareholders do not have any Liability
or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by
this Agreement for which Subsidiary or Parent could become liable
or obligated.
(d) SHAREHOLDER STOCK. Shareholders hold of record and own
beneficially the number of shares of Shareholder Stock set forth
next to their names in SECTION 4.02 of the Disclosure Schedule,
free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws),
Taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands.
Shareholders are not a party to any option, warrant, purchase
right, or other contract or commitment that could require
Shareholders to sell, transfer, or otherwise dispose of any
capital stock of the Company (other than this Agreement).
Shareholders are not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any
capital stock of the Company.
3.02 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY.
Parent and Subsidiary jointly and severally represent and warrant to the
Shareholders that the statements contained in this SECTION 3.02 are
correct and complete as of the date of this Agreement and 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 3.02):
(a) ORGANIZATION OF PARENT AND SUBSIDIARY. (i) Parent is
duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware. Parent has
all requisite corporate power to own and operate its properties
and assets and to carry on its business as presently conducted.
Parent is duly qualified to do business and is in good standing
in all jurisdictions where failure to qualify would have a
material adverse effect; (ii) Subsidiary is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of Texas.
(b) AUTHORIZATION OF TRANSACTION. Parent and Subsidiary
have been duly authorized by all necessary corporate action and
have full power and authority to execute and deliver this
Agreement and to perform their obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of
both Parent and Subsidiary, and is enforceable against both
Parent and Subsidiary in accordance with its terms and
conditions. Neither Parent nor Subsidiary need give any notice
to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
8
(c) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Parent or
Subsidiary is subject or any provision of the charter or bylaws
of either Parent or Subsidiary or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate,
modify, or cancel, result in the creation or imposition of a
lien, charge or encumbrance or require any notice under any
material agreement, contract, lease, license, instrument, or
other arrangement to which Parent or Subsidiary is a party or by
which either is bound or to which any material amount of its
assets is subject, subject to Laws Affecting Creditors Rights (as
defined herein).
(d) BROKERS' FEES. Neither Parent nor Subsidiary has any
Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Shareholders could
become liable or obligated.
(e) PARENT STOCK. All of the issued and outstanding shares
of capital stock of the Parent have been duly authorized, are
validly issued, fully paid, and non-assessable. The Parent Stock,
upon its delivery to Shareholders at Closing, shall be duly
authorized, validly issued, fully paid and non-assessable, and
free of all claims liens, pledges, options, charges, Security
Interests, mortgages, deeds of trust, encumbrances or rights of
any third party of any nature whatsoever. The issuance of the
Parent Stock to Shareholders will not give rise to any preemptive
rights or rights of first refusal and will not violate any laws
to which the Parent or any its assets are subject.
(f) CAPITALIZATION OF PARENT. As of December 31, 1997, the
authorized capital stock of the Parent consists of preferred
stock, Series A 72 percent cumulative preferred stock and
30,000,000 shares of common stock, par value $.01 per share (the
"Common Stock"), of which 7,303,164 shares were issued and
outstanding. Except as set forth in the required forms, reports
and documents which Parent has filed with the SEC (collectively
the "SEC Reports"), at the Closing there will be not other
warrants, options, subscriptions or other rights or preferences
(including conversion or preemptive rights) outstanding to
acquire capital stock of the Parent or its subsidiaries, or
notes, securities or other instruments convertible into or
exchangeable for capital stock of the Parent, nor any
commitments, agreements or understandings by or with the Parent
with respect to the issuance thereof, nor any obligation to
repurchase or redeem any capital stock of the Parent. Except as
set forth in the SEC Reports, no shareholders of the Parent have
any right to require the registration of any securities of the
Parent or to participate in any such registration. All
outstanding securities of the Parent have been issued, in all
material respects, in full compliance or in compliance with an
exemption or exemptions from the registration and prospectus
delivery requirements of the Securities Act and from the
registration and qualification requirements of all applicable
state securities laws. The representations
9
and warranties set forth in this Section 3.02(f) shall not apply
to any items which are not in the aggregate material to the
financial condition, results of operations or business of Parent
and its subsidiaries taken as a whole.
(g) PARENT'S SEC REPORTS. Parent has filed all required
SEC Reports, all of which complied when filed in all material
respects with all applicable requirements of the Securities Act
and the Exchange Act. None of such forms, reports or documents,
including, without limitation, any financial statements or
schedules included therein, when filed contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. The balance sheets (including
the related notes) included in Parent's Annual Report on Form
10-K for the year ended December 31, 1997 fairly presents the
consolidated financial position of Parent and its consolidated
subsidiaries as of the respective dates thereof and the other
related statements (including the related notes) included therein
fairly present the consolidated statements of income and
consolidated statements of cash flow of Parent and its
consolidated statements for the respective fiscal periods as of
the respective dates set forth therein. The representations and
warranties set forth in this Section 3.02(g) shall not apply to
any non-compliances, non-conforming filings, non-filings,
misstatements, omissions or failures to present fairly or conform
to generally accepted accounting principles which are not in the
aggregate material to the financial condition, results of
operations or business of Parent and its subsidiaries taken as a
whole.
(h) TAX MATTERS. Parent and Subsidiary make the
representation and warranties contained in the letter attached as
Exhibit " F " (the "Tax Representation Letter").
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.
The Shareholders jointly and severally represent and warrant to Parent
that the statements contained in this SECTION 4 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date, including with respect to any assets acquired by, or transferred to, the
Company after the date hereof (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this SECTION 4),
except as set forth in the disclosure schedule delivered by the Shareholders to
Parent on the date hereof (the "DISCLOSURE SCHEDULE"). Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Disclosure Schedule identifies the
exception in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Disclosure Schedule will be
arranged in sections corresponding to the numbered paragraphs contained in this
Agreement.
4.01 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The
Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State
10
of Texas, and is duly authorized to conduct business and in good
standing under the laws of each jurisdiction where such failure to
qualify would have a material adverse effect. The Company has full
corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the business in which it is engaged
and in which it presently proposes to engage and to own and use the
properties owned and used by it. SECTION 4.01 of the Disclosure Schedule
lists the directors and officers of the Company and contains correct and
complete copies of the articles and bylaws of the Company (as amended to
date). The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of
the Company are correct and complete. The Company is not in default
under or in violation of any provision of its articles or bylaws.
4.02 CAPITALIZATION. The entire authorized and issued capital
stock of the Company and its tax identification number and the
Shareholders' Social Security Numbers and addresses are as set forth in
SECTION 4.02 of the Disclosure Schedule. All of the shares of issued and
outstanding Shareholder Stock have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by the
Shareholders as set forth in SECTION 4.02 of the Disclosure Schedule.
There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue,
sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the
Company.
4.03 NONCONTRAVENTION. Except as set forth in SECTION 4.03 of the
Disclosure Schedule, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Company is subject or any provision of the articles or bylaws of the
Company or (b) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, result in the
creation or imposition of a lien, charge or encumbrance or require any
notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Company is a party or by which it is
bound or to which any of its assets are subject which is material to the
Company (or result in the imposition of any Security Interest upon any
of its assets) subject to Laws Affecting Creditors Rights. Except as set
forth in SECTION 4.03 of the Disclosure Schedule, the Company is not
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
4.04 BROKERS' FEES. The Company does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
11
4.05 TITLE TO ASSETS. Except for any liens set forth in SECTION
4.05 of the Disclosure Schedule the Company has good and marketable
title to, or a valid leasehold interest in, the properties and assets
used by it, located on its premises, or shown on the Most Recent Balance
Sheet or acquired after the date thereof, free and clear of all Security
Interests.
4.06 NO SUBSIDIARIES OR EQUITY INVESTMENTS. Except as set forth
in SECTION 4.06 of the Disclosure Schedule, the Company does not have
any subsidiaries, and does not control, directly or indirectly, or have
any direct or indirect equity participation in, any corporation,
partnership, trust, or other business association.
4.07 FINANCIAL STATEMENTS. Attached hereto as SECTION 4.07 of the
Disclosure Schedule are the following financial statements (collectively
the "FINANCIAL STATEMENTS"): (a) reviewed balance sheets and statements
of income, changes in stockholders' equity, and cash flow as of and for
the twelve months ended December 31, 1995 and 1996; (b) the unaudited
balance sheet and statement of income for the year ended December 31,
1997 (the "MOST RECENT FISCAL YEAR END") for the Company; and (c)
unaudited balance sheets and statements of income, changes in
stockholders' equity, and cash flow (the "MOST RECENT FINANCIAL
STATEMENTS") as of and for the three months ended March 31, 1998 (the
"MOST RECENT FISCAL MONTH END") for the Company. The Financial
Statements (including the notes thereto) have been prepared in
accordance with GAAP, applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the
Company as of such dates and the results of operations of the Company
for such periods and are consistent with the books and records of the
Company; PROVIDED, HOWEVER, that the unaudited Financial Statements are
subject to normal year-end adjustments and lack footnotes and other
presentation items. Except as set forth in SECTION 4.07 of the
Disclosure Schedule, the Company has not changed its accounting policies
and practices in the past three years. No prior period adjustment is
reflected in the statements of income, changes in stockholders' equity
and cash flow contained in the Company's Most Recent Financial
Statements.
4.08 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except as
set forth in SECTION 4.08 of the Disclosure Schedule, since the Most
Recent Fiscal Month End, there has not been any material adverse change
in the business, financial condition, operations, results of operations,
or to the best of Shareholders' Knowledge, future prospects of the
Company. Without limiting the generality of the foregoing, except as set
forth at SECTION 4.08 of the Disclosure Schedule, since such date:
(a) the Company has not sold, leased, transferred, or
assigned any material asset, and has not entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than
$10,000;
(b) the Company has not made any capital expenditure (or
series of related capital expenditures) involving more than
$10,000;
(c) the Company has not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or
12
capitalized lease obligation either involving more than $10,000
singly or $25,000 in the aggregate;
(d) the Company has not delayed or postponed the payment
of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(e) there has been no change made or authorized in the
articles or bylaws of the Company, and the Company has not
issued, sold, or otherwise disposed of any of its capital stock,
or granted any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange, or exercise) any of
its capital stock;
(f) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital
stock (whether in cash or in kind);
(g) the Company has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its
property;
(h) the Company has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement,
and has not granted any increase in the base compensation of any
of its directors, officers, and Key Employees (as defined
herein), or adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and
employees; and
(i) the Company has not committed to any of the foregoing.
4.09 UNDISCLOSED LIABILITIES. Except as set forth in SECTION 4.09
of the Disclosure Schedule, the Company does not have any Liability (and
to the best of Shareholders' Knowledge there is no basis for any present
or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against the Company giving rise to any
Liability), except for (i) Liabilities reflected or reserved against in
the Most Recent Balance Sheet and (ii) Liabilities which have arisen
after the date of the Most Recent Balance Sheet in the Ordinary Course
of Business (none of which results from, arises out of, relates to, is
in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
4.10 TAX MATTERS. Except as set forth in SECTION 4.10 of the
Disclosure Schedule, with respect to the Company, (a) all Tax Returns
and all similar filings required to be filed on or before the Closing
Date by the Company (true and correct copies of which have been
furnished to Parent) with respect to any Taxes have been timely filed
with the appropriate governmental agencies in all jurisdictions in which
such Tax Returns are required to be filed, and all such Tax Returns
reflect the liability of the Company for Taxes in substantial compliance
with the Code for the periods, properties or events covered thereby; (b)
all Taxes payable with respect to the Tax Returns, and all Taxes
accruable with respect to events occurring through the date of the Most
Recent Balance Sheet, whether disputed or not, and
13
whether or not shown on any Tax Return, will have been paid in full
prior to the Closing Date, or an adequate accrual is provided with
respect thereto on the Most Recent Balance Sheet; (c) no deficiency in
respect of any Taxes which has been assessed against the Company
remains unpaid and there are no unassessed Tax deficiencies or any
audits or investigations pending or threatened against the Company with
respect to any Taxes, (d) there is in effect no extension for the filing
of any Tax Return and the Company has not extended or waived the
application of any statute of limitations of any jurisdiction regarding
the assessment or collection of any Tax; (e) no claim has ever been made
by any Tax authority in a jurisdiction in which the Company does not
file Tax Returns that it is or may be subject to taxation by that
jurisdiction; (f) there are no liens for Taxes upon any asset of the
Company except for liens for current Taxes not yet due; (g) no issues
have been raised in any examination by any Tax authority with respect to
the Company which, by application of similar principles, reasonably
could be expected to result in a proposed deficiency for any other
period not so examined; (h) the Company is not a party to any Tax
allocation or sharing agreement or otherwise under any obligation to
indemnify any person with respect to any Taxes; (i) the Company is not a
party to any joint venture, partnership or other arrangement that is
treated as a partnership for federal income tax purposes; (j) there are
no accounting method changes or proposed accounting method changes of
the Company that could give rise to an adjustment under section 481 of
the Code for periods after the Closing Date; (k) there are no requests
for rulings in respect of any Tax pending between the Company and any
Tax authority; (l) the Company has never been a member of any affiliated
group as defined in Section 1504 of the Code; (m) the Company has timely
made all deposits required by law to be made with respect to employees'
withholding and other employment taxes; (n) the Company has not filed
any consent under Section 341(f) of the Code; and (o) none of the assets
of the Company are treated as owned by any other person under the "safe
harbor lease" provisions of former Section 168(f)(8) of the Code.
4.11 REAL PROPERTY. SECTION 4.11 of the Disclosure Schedule lists
and describes briefly all real property owned, leased or subleased to
the Company. The Shareholders have delivered to Parent correct and
complete copies of the leases and subleases listed in SECTION 4.11 of
the Disclosure Schedule (as amended to date). With respect to each lease
and sublease listed in SECTION 4.11 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(b) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on
identical terms immediately following the consummation of the
transactions contemplated hereby;
(c) to the Knowledge of Shareholders, no party to the
lease or sublease is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or
acceleration thereunder;
(d) no party to the lease or sublease has repudiated any
provision thereof;
14
(e) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(f) to the Knowledge of Shareholders, with respect to each
sublease, the representations and warranties set forth in
SUBSECTIONS (A) THROUGH (E) above are true and correct with
respect to the underlying lease;
(g) the Company has not assigned, transferred, conveyed,
mortgaged, conveyed by deed of trust, or encumbered any interest
in the leasehold or subleasehold;
(h) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations in all material respects;
(i) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities; and
With respect to the Land:
(k) none of the Company or the Shareholders, or to the
Shareholders' Knowledge, any third party has ever conducted
landfill operations on the Land. The Land is fully licensed,
permitted and authorized for operation under all Applicable Laws;
(l) the Land can be used after the Closing as it has been
used by the Company prior the Closing 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 Knowledge of Shareholders, 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
Company to use the Land as contemplated after the Closing Date;
(m) Shareholders have made available to Parent all
engineering, geologic and other similar reports, documentation
and maps relating to the Land in the possession or control of
Shareholders;
(n) none of the Company, the Shareholders or the Land is
or, to the Knowledge of Shareholders 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;
(o) to the Knowledge of Shareholders, no Person, other
than the Company, has a present or future right to possession of
all or any part of the Land;
15
(p) no portion of the Land contains any areas that could
be characterized as disturbed, undisturbed or man made wetlands
or "waters of the United States" pursuant to any Applicable Laws
or the procedural manuals of the Environmental Protection Agency,
U.S. Army Corps of Engineers or the Texas Natural Resources
Conservation Commission, whether such characterization reflects
current conditions or historic conditions which have been altered
without the necessary permits or approvals;
(q) no work has been performed on the Land within 120 days
of the date hereof for which a mechanic's lien could be filed;
(r) there are no levied or pending special assessments
affecting all or any part of the Land owed to any governmental
entity and, to the Knowledge of Shareholders, none is threatened;
(s) there are no pending or, to the Knowledge of
Shareholders, threatened condemnation or eminent domain
proceedings affecting all or any part of the Land;
(t) the Shareholders have 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 governmental agencies;
(u) no liens with respect to environmental liability have
been imposed against the Land under CERCLA, any comparable Texas
statute or other Applicable Law and, to the Knowledge of
Shareholders, no facts or circumstances exist which is reasonably
likely to give rise to same; and
(v) 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 and none of the
Company or Shareholders is listed as a potentially responsible
party under CERCLA, any comparable Texas statute or other
Applicable Law, and none of the Company or Shareholders has
received a notice of such a listing.
4.12 INTELLECTUAL PROPERTY.
(a) The Company owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of its Business. Each item
of Intellectual Property owned or used by the Company immediately
prior to the Closing hereunder will be owned or available for use
by the Company on identical terms and conditions immediately
subsequent to the Closing hereunder. The Company has taken all
reasonably necessary action to maintain and protect each item of
Intellectual Property that it owns or uses.
16
(b) to the Knowledge of the Shareholders, the Company has
not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property
rights of third parties, and none of the Shareholders and the
directors and officers (and employees with responsibility for
Intellectual Property matters) of the Company has ever received
any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation
(including any claim that the Company must license or refrain
from using any Intellectual Property rights of any third party).
To the Knowledge of any of the Shareholders and the directors and
officers (and employees with responsibility for Intellectual
Property matters) of the Company, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(c) SECTION 4.12 of the Disclosure Schedule identifies
each patent or registration which has been issued to the Company
with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which
the Company has made with respect to any of its Intellectual
Property, and identifies each license, agreement, or other
permission which the Company has granted to any third party with
respect to any of its Intellectual Property. The Shareholders
have delivered to Parent correct and complete copies of all such
patents, registrations, applications, licenses, agreements, and
permissions (as amended to date). SECTION 4.12 of the Disclosure
Schedule also identifies each trade name or unregistered
trademark used by the Company in connection with the Business.
4.13 TANGIBLE ASSETS. SECTION 4.13 of the Disclosure schedule
lists all personal property and other tangible assets of the Company.
The Company owns or leases all buildings, machinery, equipment, and
other tangible assets necessary for the conduct of its Business. Each
material tangible asset has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it
presently is used. For purposes of this representation, "material
tangible asset" will be a tangible asset with a net book value, net of
deprecation, of greater than $10,000.
4.14 CONTRACTS. Except as otherwise specified therein, SECTION
4.14 of the Disclosure Schedule lists the following contracts and other
agreements to which the Company is a party:
(a) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for
lease payments in excess of $10,000 per annum;
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies,
products, or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over a
period of more than one year, result in a material loss to the
Company, or involve consideration in excess of $10,000;
17
(c) any agreement (or group of related agreements) under
which the Company has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $10,000 or under which the Company has
imposed a Security Interest on any of its assets, tangible or
intangible;
(d) any agreement with any of the Shareholders or their
Affiliates, or regarding the loaning of money to employees,
directors or agents of the Company;
(e) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other
plan, agreement or arrangement for the benefit of current or
former directors, officers, employees and independent
contractors; and any agreement for the employment or engagement
of any Person;
(f) any material agreement concerning confidentiality or
noncompetition;
(g) any agreement concerning a partnership or joint
venture;
(h) any collective bargaining agreement; and
(i) any agreement under which the consequences of a
default or termination reasonably likely to have a material
adverse effect on the business, financial condition, operations,
results of operations, or future prospects of the Company; or any
other agreement (or group of related agreements) the performance
of which involves consideration in excess of $10,000.
The Shareholders have delivered to Parent a correct and complete copy of
each written agreement listed in SECTION 4.14 of the Disclosure Schedule
(as amended to date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in SECTION 4.14 of the
Disclosure Schedule. With respect to each such agreement, subject to
Laws Affecting Creditors Rights: (i) the agreement is legal, valid,
binding, enforceable, and in full force and effect; (ii) the agreement
will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms immediately following the
consummation of the transactions contemplated hereby; (iii) no party is
in breach or default, and to Shareholders' Knowledge, no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (iv) no party has repudiated any provision of the
agreement.
4.15 ENVIRONMENTAL MATTERS, HAZARDOUS MATERIALS.
(a) HAZARDOUS MATERIALS OPERATIONS. The Company's business
operations include providing services in facilities
decontamination, closure and restoration, emergency response,
hydrocarbon recycling, storage tank management, ground water
remediation and soil remediation. In the course of providing
theses services, the Company manages (E.G., generation, storage,
transport and/or recycling of) petroleum products, hazardous
wastes, and hazardous materials. In the normal and customary
course of
18
operations, the Company has experienced and is expected to
experience the release of DE MINIMUS quantities of these
materials that have no material adverse effect on the company.
(b) COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company has been, and is
operated in compliance with, all Environmental Laws (as
hereinafter defined) and all permits related to Environmental
Laws, except where the failure to be in compliance would not
have a material adverse effect on the Company. As used herein,
the term "Environmental Laws" includes, but is not limited to,
any federal, state or local statute, law, rule, regulation,
ordinance, code, policy or rule of common law now in effect
relating to the environment, human health or safety, or
Hazardous Materials (as hereinafter defined) including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42
U.S.C.ss.ss.9601, ET SEQ. ("CERCLA"); the Hazardous Materials
Transportation Act, as amended, 49 U.S.C.ss.ss.1801, ET SEQ.;
the Resource Conservation and Recovery Act of 1976, as amended,
42 U.S.C.ss.ss.6901, ET SEQ.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C.ss.ss.1201, ET SEQ.; the Toxic
Substances Control Act, 15 U.S.C. ss.ss.2601, ET SEQ.; the Clean
Air Act, 42 U.S.C.ss.ss.7401, ET SEQ.; the Safe Drinking Water
Act, 42 U.S.C.ss.ss.3g08, ET SEQ.; the Federal Insecticide,
Fungicide and Rodenticide Act, as amended, 7 U.S.C.ss.136, ET
SEQ.; and the term "Hazardous materials" includes, but is not
limited to, (i) any petroleum or petroleum products, natural
gas, or natural gas products, radioactive materials, asbestos,
urea formaldehyde foam insulation, transformers or other
equipment that contains dielectric fluid containing levels of
polychlorinated biphenyls ("PCBs"), and radon gas; (ii) any
chemicals, materials, waste or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous waste," "restricted
hazardous wastes," "toxic substances," or "toxic pollutants."
(c) EXISTENCE OF AN ACTION. Except as disclosed in Section 4.15 of
Company's Disclosure Schedule, the Company has not received any
notice from any Governmental Authority or other person alleging
or concerning any material claim against the Company under any
Environmental Law, whether for personal injuries or property
damages. Except as disclosed in Section 4.15 of Company's
Disclosure Schedule, there is no action pending or, to the
knowledge of the Company, threatened affecting the Company
alleging or concerning any material claim under any
Environmental Law, whether for personal injuries or property
damages, nor does the Company have any knowledge of any fact or
condition that could give rise to such a claim.
(d) ENVIRONMENTAL PERMITS. The Company is in possession of, and in
compliance with, all material permits required under the
Environmental Laws with respect to the operation of its
business. There are no actions pending or, to the Knowledge of
the Company, threatened which seek to modify, revoke or deny
renewal of any of such permit. The Company has no Knowledge of
any fact or condition that is reasonably likely to give rise to
any action to modify, revoke or deny renewal of any of such
19
permit. The consummation of the transactions contemplated by
this Agreement will not violate, alter, impair, or invalidate,
in any respect, any such permit.
(e) MISCELLANEOUS. Without in any way limiting the generality of the
foregoing, to the knowledge of the Company, none of the off-site
locations where the Company has transported, released,
discharged, stored, disposed or arranged for the disposal of
Hazardous Materials has been identified as a facility that is
subject to an existing claim under any Environmental Law or is
the subject of any threatened claim by any person.
4.16 PERMITS AND ENVIRONMENTAL MATTERS. The Company has all
permits necessary for or customary in connection with the operation of
the Business, none of which permits are or will be terminated or
otherwise adversely affected by the Merger (and, except as set forth in
SECTION 4.03 of the Disclosure Schedule, the Merger will not require the
approval of any agency or authority to continue the effectiveness of
such permits). SECTION 4.16 of the Disclosure Schedule contains a
complete and accurate list and summary description as of the date hereof
of all permits, titles (including motor vehicles titles and current
registrations), fuel permits, licenses, franchises and other,
certificates, owned or held by the Company, to the extent such relate to
the Business or operation thereof, none of which permits, titles,
licenses, franchises and certificates 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 in SECTION 4.16 of the Disclosure Schedule,
all such permits, titles, licenses, franchises and certificates required
by law have been obtained, are in good standing and are adequate for the
operation of the Business.
4.17 REPORTS, ETC. The Company has made available to Parent at
the Company's offices, a description and copies, as of the date of this
Agreement, of all material notifications, permits, licenses, engineering
studies, environmental impact studies, assessments and audits and all
notifications from governmental agencies relating to: (a) each actual
and current material violation of Applicable Laws, hereinafter defined,
by the Company relating to the Business, or any operations or activities
in connection therewith, and all, if any, claims in respect thereof; (b)
the discharge, leakage, spillage, transport, disposal or release of any
Hazardous Waste (as defined herein)into the environment by the Company,
the Shareholders or otherwise relating to the Business or any operations
or activities in connection therewith; and (c) employee health, public
health or the environment related to the Business or any operations or
activities in connection therewith (collectively, the "Environmental
Documents").
4.18 APPLICABLE LAWS COMPLIANCE. Except as set forth in
SECTION 4.18 of the Disclosure Schedule:
(a) The Company and the Land are fully licensed, permitted
and authorized under all federal, state and local statutes, laws,
rules, regulations, orders, permits (including, without
limitation, zoning restrictions and land use requirements) and
licenses affecting or otherwise applicable to the Business and
any operations or activities in connection therewith
(collectively, the "Applicable Laws");
20
(b) All activities and operations conducted in connection
with the Business, by the Company have complied with all
Applicable Laws;
(c) None of the Company or the Shareholders is now nor has
ever been involved in any litigation or administrative
proceedings seeking to impose fines, penalties or other
liabilities or seeking injunctive relieve for violation of any
Applicable Laws and there are no facts or circumstances that
would give rise to same;
(d) No liens with respect to environmental liability have
been imposed against any assets of the Company under the CERCLA,
any comparable Texas, or other Applicable Laws and no facts or
circumstances exist which would give rise to the same; and
(e) None of the Company or the Shareholders is in default
under any Applicable Laws or under any order of any court or
governmental administrative body having jurisdiction over the
Company, or any operations, and there are no claims, actions,
suits or proceedings, pending or to the Knowledge of Shareholders
threatened, against or affecting the Company or the Shareholders
at law or in equity, or before or by any administrative body
having jurisdiction; no notice of any claim, action, suit or
proceeding, whether pending or threatened, has been received
which, if adversely determined would have a material adverse
effect; and there are no facts or circumstances which would give
rise to the same.
4.19 HEALTH AND SAFETY. Except as set forth in SECTION 4.19 of
the Disclosure Schedule:
(a) The Company has complied with all Health and Safety
Laws, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply.
Without limiting the generality of the preceding sentence, the
Company and has obtained and been in compliance with all of the
terms and conditions of all permits, licenses, and other
authorizations which are required under, and have complied with
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Health and Safety Laws.
(b) To Shareholders' knowledge, the Company does not have
any for any illness of or personal injury to any employee or
other individual, or for any reason under any Health and Safety
Law.
4.20 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of the Company are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims,
are collectible, and will be collected in accordance with their terms at
their recorded amounts, net of reserves.
21
4.21 POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the Company.
4.22 INSURANCE. SECTION 4.22 of the Disclosure Schedule sets
forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and
workers' compensation coverage and bond and surety arrangements) to
which the Company has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past three years:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and
amount (including a description of how deductibles and ceilings
are calculated and operate) of coverage; and
(e) a description of any retroactive premium adjustments
or other loss- sharing arrangements.
With respect to each such insurance policy for the current year: (i) the
policy is legal, valid, binding, enforceable, and in full force and
effect; (ii) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms immediately
following the consummation of the transactions contemplated hereby;
(iii) none of the Company or any other party to the policy is in breach
or default (including with respect to the payment of premiums or the
giving of notices), and to Shareholders' Knowledge, no event has
occurred which, with notice or the lapse of time, would constitute such
a breach or default, or permit termination, modification, or
acceleration, under the policy; and (iv) to Shareholders' Knowledge, no
party to the policy has repudiated any provision thereof. The Company
has been covered since its inception by insurance in scope and amount
customary and reasonable for the business in which it has engaged during
the aforementioned period. SECTION 4.22 of the Disclosure Schedule
describes any self-insurance arrangements affecting the Company.
4.23 LITIGATION. SECTION 4.23 of the Disclosure Schedule sets
forth each instance in which any of the Company (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or
(ii) is a party or, to the Knowledge of the Shareholders and the
directors and officers (and employees with responsibility for litigation
matters) of the Company, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator. None of the actions,
suits, proceedings, hearings, and investigations set forth in SECTION
4.23 of the Disclosure Schedule is reasonably likely to result in any
material adverse change in the business, financial
22
condition, operations, results of operations, or future prospects of the
Company. Except as set forth in SECTION 4.23 of the Disclosure Schedule,
no proceeding is pending or, to the Knowledge of Shareholders
threatened, as to which any assets of the Company are or would be
subject.
4.24 EMPLOYEES. SECTION 4.24 of the Disclosure Schedule sets
forth a complete and accurate list of all officers, directors and Key
Employees (as defined herein) of the Company, and the rate of
compensation (and the portions thereof attributable to salary, bonus and
other compensation, respectively) of each such person. "Key Employees"
shall be those employees of the Company which are listed in SECTION 4.24
of the Disclosure Schedule. To the Knowledge of the Shareholders and the
directors and officers of the Company no executive, Key Employee, or
group of employees has given notice of their intention to terminate
employment with the Company. The Company is not a party to or bound by
any collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective
bargaining disputes. The Company has not committed any unfair labor
practice. None of the Shareholders and the directors and officers of the
Company has any Knowledge of any organizational effort presently being
made or threatened by or on behalf of any labor union with respect to
employees of the Company.
4.25 EMPLOYEE BENEFITS. Except for the plans disclosed in SECTION
4.25 of the Disclosure Schedule ("Plans") which shall be terminated
prior to the Closing, the Company (a) does not currently sponsor or
maintain any employee benefit plan within the meaning of section 3(3) of
ERISA and (b) has not since its inception sponsored, maintained or
contributed to any qualified employee pension benefit plan within the
meaning of sections 3(2) of ERISA and 401 of the Code, in which any
employees of the Company are or were participants (whether or not on an
active or frozen basis). The Company does not currently contribute to,
nor has it since its inception contributed (or been obligated to
contribute) to, any multi-employer pension plan within the meaning of
section 3(37) of ERISA on behalf of any employees of the Company. The
Company has complied in all material respects with the Consolidated
Omnibus Budget Reconciliation Act of 1985, and does not currently have,
and since its inception has not had, any retiree medical plan.
4.26 GUARANTIES. The Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any
other Person.
4.27 CERTAIN BUSINESS RELATIONSHIPS. Except as set forth in
SECTION 4.27 of the Disclosure Schedule, none of the Shareholders and
their Affiliates has been involved in any business arrangement or
relationship with the Company within the past 12 months (other than as
employees), and none of the Shareholders and their Affiliates owns any
asset, tangible or intangible, which is used in the Business.
4.28 SECURITIES MATTERS. Shareholders represent that they have
received the Prospectus covering the Parent Stock dated September 18,
1997, Prospectus Supplement No.1 and Prospectus Supplement No. 2, and a
copy of all documents incorporated therein by reference. The
Shareholders further represent that they have been afforded an
opportunity to ask questions of, and receive responses from, officers or
agents of Parent and to investigate
23
the business and affairs of Parent to their satisfaction. The
Shareholders further represent that they are satisfied with the results
of their investigation and that they are relying on such investigation,
not on any particular representations made by Subsidiary or Parent, in
their determination to invest in the Parent Stock. The Shareholders
further represent that they are entirely familiar with the nonhazardous
liquid waste and nonhazardous oilfield waste industries as a result of
their positions with the Company and that, in regard to an investment in
such industry, they are sophisticated investors and "accredited
investors" as such term is defined in the Securities Act. The
Shareholders further represent that they understand that although the
Parent Stock which they are receiving pursuant to this Agreement will be
registered under the Securities Act of 1933, as amended, based on their
relationship to the Company they will be subject to certain limitations
in their ability to dispose of such Parent Stock under applicable rules
of the SEC.
4.29 SUFFICIENCY OF ASSETS. As of the Closing Date the Company
will have all of the properties, rights and assets of every type and
description, real, personal and mixed, tangible and intangible, have
been used or employed or held for use by the Company or its predecessors
or Affiliates in operating the Business during the past 12 months, other
than property sold or otherwise disposed of in the Ordinary Course of
Business and consistent with past practices.
5. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.01 GENERAL. Each of the Parties will use its reasonable efforts
to take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set
forth in SECTION 7 below). In the event the Closing does not take place,
Parent will treat and hold as such all of the Confidential Information,
refrain from using any of the Confidential Information except in
connection with this Agreement, and deliver promptly to the Shareholders
or destroy, at the request and option of the Shareholders, all tangible
embodiments (and all copies) of the Confidential Information which are
in its possession.
5.02 NOTICES AND CONSENTS. The Shareholders will cause the
Company to give any notices to third parties, and will use reasonable
efforts to cause the Company to obtain any third-party consents, that
Parent reasonably may request in connection with the transactions
contemplated by this Agreement. Each of the Parties will (and the
Shareholders will cause the Company to) give any notices to, make any
filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the transactions contemplated by this
Agreement. Neither Party shall be required to pay any material sum or to
incur any material obligation in order to obtain a consent.
5.03 OPERATION OF BUSINESS. The Shareholders will not cause or
permit the Company to engage in any practice, take any action, or enter
into any transaction outside the
24
Ordinary Course of Business. Without limiting the generality of the
foregoing, the Shareholders will not cause or permit the Company to (i)
declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase, or otherwise acquire
any of its capital stock, or (ii) otherwise engage in any practice, take
any action, or enter into any transaction of the sort described in
SECTION 4.08 above.
5.04 PRESERVATION OF BUSINESS. The Shareholders use reasonable
efforts to cause the Company to keep its business and properties
substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees.
5.05 FULL ACCESS. The Shareholders will permit, and the
Shareholders will cause the Company to permit, representatives of Parent
to have full access at all reasonable times, and in a manner so as not
to interfere with the normal business operations of the Company, to all
premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to the Company.
5.06 NOTICE OF DEVELOPMENTS. The Shareholders will give prompt
written notice to Parent of any material adverse development causing a
breach of any of the representations and warranties in SECTION 4 above.
Each Party will give prompt written notice to the others of any material
adverse development causing a breach of any of its own representations
and warranties in SECTION 3 above.
5.07 EXCLUSIVITY. For a period commencing on the date hereof
until the Closing, or the termination of this Agreement, the
Shareholders will not (and the Shareholders will not cause or permit the
Company to) (a) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any
capital stock or other voting securities, or any substantial portion of
the assets of, the Company (including any acquisition structured as a
merger, consolidation, or share exchange) or any other transaction or
series of transactions that would cause the representations and
warranties of the Company set forth in SECTION 4 to be incorrect in any
respect, or would otherwise prevent or hinder the transactions
contemplated by this Agreement, or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist
or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The
Shareholders will not vote their Shareholder Stock in favor of any such
acquisition structured as a merger, consolidation, or share exchange.
The Shareholders will notify Parent immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the
foregoing.
6. POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following the
Closing:
6.01 GENERAL. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other
25
Party reasonably may request, provided that any out-of-pocket expenses
in connection therewith shall be at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to
indemnification therefor under SECTION 8 below). The Shareholders
acknowledge and agree that from and after the Closing Parent will be
entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the
Company.
6.02 TRANSITION. Shareholders will take no action that is
designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of the Company
from maintaining the same business relationships with the Company after
the Closing as it maintained with the Company prior to the Closing.
Shareholders will refer all customer inquiries relating to the Business
to Parent from and after the Closing.
6.03 CONFIDENTIALITY. Shareholders will treat and hold as such
all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement or
their employment with the Company, and deliver promptly to Parent or
destroy, at the request and option of Parent, all tangible embodiments
(and all copies) of the Confidential Information which are in its
possession. In the event that Shareholders are requested or required (by
oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, Shareholders
will notify Parent promptly of the request or requirement so that Parent
may seek an appropriate protective order. If, in the absence of a
protective order, Shareholders are, on the advice of counsel, compelled
to disclose any Confidential Information to any tribunal or else stand
liable for contempt, Shareholders may disclose the Confidential
Information to the tribunal. The foregoing provisions shall not apply to
any Confidential Information which is generally available to the public
immediately prior to the time of disclosure.
6.04 TAX RETURNS AND FILINGS; PAYMENT OF TAXES. Shareholders
agree to timely pay all taxes for which they are primarily liable in
connection with the transfer of Shareholder Stock and the receipt of
Parent Stock and other consideration in exchange therefor.
7. CONDITIONS TO OBLIGATION TO CLOSE.
7.01 CONDITIONS TO OBLIGATION OF PARENT. The obligation of Parent
to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in
SECTION 3.01 and SECTION 4 above shall be true and correct at and
as of the Closing Date;
(b) the Shareholders and Company shall have performed and
materially complied with all of their covenants hereunder through
the Closing, Shareholders and the Company shall have revoked all
prior authorizations with respect to bank accounts
26
and credit lines, and Shareholders and Company shall have
revoked all powers of attorney;
(c) no action, suit, or proceeding shall be pending before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement, (ii) cause
any of the transactions contemplated by this Agreement to be
rescinded following consummation, (iii) affect adversely the
right of Parent to own the Shareholder Stock and to control the
Company, or (iv) affect adversely the right of the Company to own
its assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(d) the Shareholders shall have delivered to Parent a
certificate to the effect that each of the conditions specified
above in SUBSECTIONS (A) THROUGH (C) is satisfied in all material
respects;
(e) Shareholders shall have executed and delivered to
Parent Noncompetition Agreements in the forms attached as Exhibit
A;
(f) Parent shall have received from counsel to the
Shareholders an opinion in form and substance as set forth in
Exhibit B attached hereto, addressed to the Parent, and dated as
of the Closing Date;
(g) Shareholders shall have obtained the execution of, and
delivered to Parent a Spousal Consent in the form attached as
Exhibit C;
(h) Parent shall have received the resignations, effective
as of the Closing, of each director and officer of the Company;
(i) All necessary consents of and filings with any
governmental authority relating to the consummation of the
transactions contemplated herein shall have been obtained and
made, including, without limitation, all consents for, and
filings relating to, the transfer of any franchise agreements,
licenses, permits necessary for or customary with the operation
of the Business, and no action or proceeding shall have been
instituted or threatened to restrain or prohibit the consummation
of the transaction contemplated herein, and no governmental
authority or body shall have taken any other action or made any
request of Subsidiary or Parent as a result of which Subsidiary
or Parent deems it inadvisable to proceed with the transactions
hereunder;
(j) Shareholders shall have delivered to Parent an
instrument dated the Closing Date releasing Company from any and
all claims of Shareholders against Company arising prior to
Closing;
27
(k) Parent, through its authorized representatives, must
have completed a satisfactory due diligence review of Company and
the Business, including, without limitation, the compliance with
federal, state and local laws and regulations governing the
respective operations of Company and the Business; and
(l) Shareholders and Company shall have taken all such
further actions, and delivered to Parent all such further
instruments, certificates, and other documents as Parent shall
reasonably request in writing (such request being received at
least two days (2) prior to the Closing Date) to fully evidence
or effect the transactions contemplated by this Agreement. All
actions to be taken by Shareholders and Company in connection
with consummation of the transactions contemplated hereby and all
instruments, certificates, and other documents required to effect
the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Parent.
Parent may waive any condition specified in this SECTION 7.01 if it
executes a writing so stating at or prior to the Closing.
7.02 CONDITIONS TO OBLIGATION OF THE SHAREHOLDERS. The obligation
of the Shareholders to consummate the transactions to be performed by
them in connection with the Closing is subject to satisfaction of the
following conditions:
(a) the representations and warranties set forth in
SECTION 3.02 above shall be true and correct at and as of the
Closing Date;
(b) Parent shall have performed and complied with all of
its covenants hereunder through the Closing;
(c) no action, suit, or proceeding shall be pending before
any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement or (ii) cause
any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(d) Parent shall have delivered to the Shareholders a
certificate to the effect that each of the conditions specified
above in SUBSECTIONS (A) THROUGH (C) is satisfied in all
respects;
(e) Parent shall have obtained the execution of, and
delivered to the Shareholders, the Employment Agreements in the
forms attached hereto as Exhibit D and Exhibit E;
28
(f) No action or proceeding shall have been instituted or
threatened to restrain or prohibit the consummation of the
transaction contemplated herein, and no governmental authority or
body shall have taken any other action (including, but not
limited to, a decision on tax treatment of the transaction) or
made any request of Shareholders or Company as a result of which
Shareholders or Company deem it inadvisable to proceed with the
transaction hereunder;
(g) Parent shall have delivered to Shareholders the Parent
Stock, the Cash Payment and a legal opinion of Parent's counsel
in the form attached hereto as Exhibit G (the "Parent's Legal
Opinion");
(h) Parent shall execute and deliver the Tax
Representation Letter; and
(i) all actions to be taken by Parent in connection with
consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Shareholders.
The Shareholders may waive any condition specified in this SECTION 7.02
if they execute a writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
8.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES.
The representations, warranties, covenants and agreements set
forth in Sections 3.01(c), 3.02(d), 4.02, 4.04, 4.05, 4.10, 4.25, 6.01,
6.02, 6.03, 6.04 and Sections 8, 11 and 12 will survive the Closing
until the expiration of all applicable federal, state, local and foreign
statutory periods of limitations (after giving effect to any waiver,
mitigation or extension of any such statutory periods of limitations).
All of the other representations, warranties, covenants and agreements
set forth in this Agreement or in any certificate or other writing
delivered pursuant to this Agreement (and the indemnity obligations with
respect thereto under Sections 8.02 and 8.03) will survive the Closing
until the second anniversary of the Closing. Notwithstanding the
foregoing, in the case of the Shareholders, if either of the
Shareholders had Knowledge as of the Closing of the inaccuracy of a
representation or warranty made by the Shareholders, or in the case of
the Parent or Subsidiary, if the Parent or Subsidiary had Knowledge as
of the Closing of the inaccuracy of a representation or warranty made by
the Parent or Subsidiary, such representations and warranties shall
survive the Closing indefinitely. Furthermore, notwithstanding any
provision to the contrary set forth in the preceding sentences of this
Section or elsewhere in this Agreement or any certificate or other
writing delivered pursuant to or in connection with this Agreement, any
representation , warranty, covenant or agreement in respect of which
indemnity may be sought under Section 8.02 or 8.03 will survive the time
at which such representation , warranty, covenant or agreement would
otherwise terminate pursuant to the preceding sentences of this Section
if notice of the incorrectness or breach of such representation,
warranty, covenant or agreement giving rise to such right to indemnity
is given to the party from which indemnity
29
is sought prior to the time at which such representation, warranty,
covenant or agreement would otherwise terminate pursuant to the
preceding sentences of this Section. Any such notice must describe the
event, condition or contingency giving rise to the claimed incorrectness
or breach of such representation, warranty, covenant or agreement and
the Section or Sections or other divisions of this Agreement or any
certificate or other writing delivered pursuant to or in connection with
this Agreement upon which such right to indemnity is based.
8.02 INDEMNIFICATION PROVISIONS FOR BENEFIT OF PARENT.
(a) In the event (i) the Shareholders breach any of their
representations, warranties and covenants contained herein , and
(ii) the Company or Parent suffer any loss, claim, cost or change
in connection with the litigation disclosed in Section 4.23 of
the Disclosure Schedule without regard to the Threshold Amount
(as defined herein), then the Shareholders jointly and severally
agree to indemnify Parent from and against the entirety of any
Adverse Consequences Parent or Company may suffer through and
after the date of the claim for indemnification resulting from,
arising out of, relating to, in the nature of, or caused by such
breach, loss, claim, cost or damage.
(b) Shareholders jointly and severally agree to indemnify
Parent from and against the entirety of any Adverse Consequences
Parent may suffer resulting from, arising out of, relating to, in
the nature of, or caused by any Liability of the Company for the
unpaid Taxes of any Person (other than the Company) under Treas.
Reg. ss.1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or
otherwise.
8.03 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SHAREHOLDERS.
In the event Subsidiary or Parent breaches any of its representations,
warranties, and covenants contained herein, then Subsidiary and Parent
agree to indemnify the Shareholders from and against the entirety of any
Adverse Consequences the Shareholders may suffer through and after the
date of the claim for indemnification resulting from, arising out of,
relating to, in the nature of, or caused by such breach, loss, claim,
cost or damage.
8.04 LIMITATION ON LIABILITY. The defense and/or indemnification
obligations set forth in SECTION 8.02 shall apply only after the
aggregate amount of such obligations exceeds $100,000 (the "Threshold
Amount"), at which time the defense and/or indemnification obligations
shall be effective as to all amounts including the first $100,000;
provided, however, that such defense or indemnification shall not
exceed, in the aggregate, an amount equal to $6,500,000. Shareholders
shall have the option (providing they are reasonably qualified to do
so), of providing, within a reasonable time, in accordance with
Environmental Laws, remedial actions to cure breaches regarding
environmental matters before paying any amounts for which they are
liable pursuant to the terms of this Agreement.
30
8.05 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against any other Party (the "Indemnifying Party") under this
SECTION 8, then the Indemnified Party shall promptly notify the
Indemnifying Party thereof in writing; PROVIDED, HOWEVER, that no
delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent that)
the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel
of its choice reasonably acceptable to the Indemnified Party so
long as the Indemnifying Party provides the Indemnified Party
with evidence reasonably 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, (ii) the Third Party Claim
involves only money damages and does not seek an injunction or
other equitable relief, (iii) settlement of, or an 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 materially adverse to the
continuing business interests of the Indemnified Party, and (iv)
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
8.04(B) above, (i) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (ii) the Indemnified Party will
not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party, 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,
unless (A) there is no finding or admission of any violation of
law or any violation of the rights of the Indemnified Party and
no effect or any other laws that may be made against the
Indemnifying Party, and (B) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Party.
(d) Notwithstanding the foregoing, if an Indemnified Party
determines in good faith that there is a reasonable probability
that a Third Party Claim may adversely affect it other than as a
result of monetary damages for which it would be entitled under
this Agreement, the Indemnified Party may, by notice to the
Indemnifying Party, assume the exclusive right to defend,
compromise, or settle such Third Party Claim, but the
Indemnifying Party will not be bound by any determination of any
Third Party Claim so defended or any compromise or settlement
effected without its consent, which may not be unreasonably
withheld.
31
8.05 DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
include interest at the Applicable Rate from the date any sums were
expended by the party to be indemnified hereunder in determining Adverse
Consequences for purposes of this SECTION 8.
8.06 OTHER INDEMNIFICATION PROVISIONS. Shareholders hereby agree
that they will not make any claim for indemnification against the
Company by reason of the fact that they were a director, officer,
employee, or agent of the Company or was serving at the request of the
Company as a partner, trustee, director, officer, employee, or agent of
another entity (whether such claim is for judgments, damages, penalties,
fines, costs, amounts paid in settlement, losses, expenses, or otherwise
and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit,
proceeding, complaint, claim, or demand brought by Parent against
Shareholders (whether such action, suit, proceeding, complaint, claim,
or demand is pursuant to this Agreement, applicable law, or otherwise).
9. TERMINATION.
9.01 TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement at any time prior to the Closing Date:
(a) By mutual written consent at any time prior to the
Closing;
(b) By Parent if any of the conditions specified in
SECTION 7.01 has not been met or waived by Parent (provided that
Parent is not otherwise in material breach of its
representations, warranties, covenants or agreements under this
Agreement);
(c) By Shareholders if any of the conditions specified in
SECTION 7.02 has not been met or waived by Shareholders (provided
Shareholders are not otherwise in material breach of their
representations, warranties, covenants or agreements under this
Agreement);
(d) By Parent if there has been a material breach on the
part of Shareholders of any representation, warranty, covenant or
agreement by Shareholders set forth in this Agreement, which
breach, if capable of cure, has not been cured within five (5)
business days following receipt by Shareholders of written notice
of such breach, unless such breach has been waived in writing by
Parent and Subsidiary in which case such waiver shall constitute
a waiver for all purposes, including indemnification and such
breach shall be accepted as a condition of the Business;
(e) By Shareholders if there has been a material breach on
the part of Subsidiary or Parent of any representation, warranty,
covenant or agreement by Subsidiary or Parent set forth in this
Agreement, which breach, if capable of cure, has not been cured
within five (5) business days following receipt by Parent of
written notice of such breach; or
32
(f) By Parent or Shareholders upon written notice given in
compliance with this Agreement if any governmental authority of
competent jurisdiction shall have issued a final permanent order
enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby and, in any such case the time
for appeal or petition for reconsideration of such order shall
have expired without such appeal or petition being granted.
9.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or Shareholders as provided above, this
Agreement shall forthwith become void and, except for termination
pursuant to Section 9.01(d) or 9.01(e), there shall be no liability on
the part of Subsidiary, Parent or Shareholders; provided that SECTIONS
3.01(A), 3.01(C), 3.02(B), 3.02(D) , 4.01, 4.04, 5.01 and this SECTION
9.02 and the provisions of SECTION 11 shall survive the termination.
10. CERTAIN DEFINITIONS.
As used herein, the following terms have the definitions set forth or
referred to below:
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12-2 of the regulations
promulgated under the Securities Exchange Act.
"APPLICABLE LAWS" has the meaning set forth in SECTION 4.18 above.
"APPLICABLE RATE" means the base rate of interest announced from time to
time by Chemical Bank, N.A. plus 3 additional points.
"BUSINESS" means the fuel oil processing, blending, and recycling
services of the Company performed under name Alamo Petroleum Exchange, the
emergency response, asbestos and lead abatement, and liquid disposal services of
the Company performed under the name Alamo Environmental, and other businesses
engaged in by the Company.
"CLOSING" has the meaning set forth in SECTION 1.05 above.
"CLOSING DATE" has the meaning set forth in SECTION 1.05 above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the preface above; PROVIDED,
HOWEVER, that for purposes of the representations and warranties set forth in
SECTION 4 above, the "COMPANY" includes
33
any subsidiary of the Company in the event any liability or obligation is
imposed upon or incurred by the Company in connection with the actions or
operations of such subsidiary.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Company that is not already generally available to
the public.
"CURRENT ASSETS" means the amounts reflected as current assets of the
Company on its financial statements determined in accordance with GAAP and
includes, but is not limited to, items such as cash and cash equivalents,
accounts receivable (less reserves for doubtful accounts), short-term
investments, inventory and current prepaid assets.
"CURRENT LIABILITIES" means the amounts reflected as current liabilities
of the Company on its financial statements determined in accordance with GAAP
and includes, but is not limited to, items such as accounts payable, current
maturities of long-term debt, accrued expenses, and unpaid accrued taxes.
"DISCLOSURE SCHEDULE" has the meaning set forth in SECTION 4 above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 4.07 above.
"GAAP" means United States generally accepted accounting principles as
in effect on the date hereof.
"HEALTH AND SAFETY LAWS" means the Occupational Safety and Health Act of
1970, each as amended, together with all other laws (including rules,
regulations and codes) of federal, state, local, and foreign governments (and
all agencies thereof) concerning public health and safety, or employee health
and safety.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 8.04 above.
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 8.04 above.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations- in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and
34
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (d) all computer software (including data and related
documentation), (e) all other proprietary rights, and (f) all copies and
tangible embodiments thereof (in whatever form or medium).
"KNOWLEDGE" means as to any Person, that which such Person actually
knows; and with respect to the Shareholders such actual knowledge as
Shareholders have obtained in interviews with Key Employees.
"LAND" means all real property owned or leased by the Company including,
but not limited to all real property listed in SECTION 4.11 of the Disclosure
Schedule.
"LAWS AFFECTING CREDITORS' RIGHTS" means any bankruptcy, fraudulent
conveyance or transfer, insolvency, moratorium, reorganization, or other law
affecting the enforcement of creditors rights generally, and any general
principles of equity.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"LONG TERM LIABILITIES" means all of the liabilities of the Company on
its financial statements determined in accordance with GAAP other than Current
Liabilities.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the
Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in SECTION
4.07 above.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in SECTION 4.07
above.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in SECTION 4.07
above.
"NET WORKING CAPITAL" means the difference between the Current Assets
and the Current Liabilities of the Company as of the date of computation.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice.
.
"PARENT STOCK" has the meaning set forth in the preface above.
"PARTY" has the meaning set forth in the preface above.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
35
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmens',
and similar liens, (b) liens for Taxes not yet due and payable and (c) purchase
money liens and liens securing rental payments under capital lease arrangements.
"SHAREHOLDERS" has the meaning set forth in the preface above.
"SHAREHOLDER STOCK" means any and all shares of the Company.
"TAXES" means any taxes, duties, assessments, fees, levies or similar
governmental charges, together with any interest, penalties and additions to
tax, imposed by any taxing authority, wherever located (I.E. whether federal,
state, local, municipal or foreign), including without limitation all net
income, gross income, gross receipts, net receipts, sales, use, transfer,
franchise, privilege, profits, social security, disability, withholding,
payroll, unemployment, employment, excise, severance, property, windfall
profits, value added, AD VALOREM, occupation or any other similar governmental
charge or imposition.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including without limitation
any schedule or attachment thereto, any amendment thereof, and any estimated
report or statement.
"THIRD PARTY CLAIM" has the meaning set forth in SECTION 8.04 above.
11. GENERAL.
11.01 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
11.02 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.
11.03 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations
by or among the Parties, written or oral, to the extent they related in
any way to the subject matter hereof.
11.04 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either
this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of Parent and the Shareholders;
PROVIDED, HOWEVER, that Parent may (i) assign any or all of its rights
and interests hereunder to one or more of its Affiliates, or any
successor to all or any substantial part of the business and assets of
Parent, and (ii) designate one or more of its Affiliates to perform its
obligations
36
hereunder (in any or all of which cases Parent nonetheless shall remain
responsible for the performance of all of its obligations hereunder).
11.05 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.06 HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.07 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed
to the intended recipient as set forth below:
If to the Shareholders: Xxxxx Xxxxx
14922 Tropical Wind
Xxx Xxxxxxx, Xxxxx 00000
and
Xxxx Xxxxx
0000 Xxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
With a copy to:
Xxxx Xxxxxxxxxx
Akin, Gump, Strauss, Xxxxx & Xxxx,
L.L.P.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
If to Subsidiary or Parent: US Liquids Inc.
000 X. Xxx Xxxxxxx Xxxx. X., Xxxxx
000
Xxxxxxx, Xxxxx 00000
with a copy to:
Xxxx X. Xxxxx, Esq.
Best Best & Xxxxxxx LLP
00000 Xxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
37
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any Party set forth
above may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving
the other Parties notice in the manner herein set forth.
11.08 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.
11.09 AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and
signed by Parent and Shareholders. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.
11.10 SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
11.11 EXPENSES. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby. The
Shareholders agree that the Company has not borne, and the Company will
not bear, any of the Shareholders' costs and expenses (including any of
its legal fees and expenses) in connection with this Agreement or any of
the transactions contemplated hereby.
11.12 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law shall
be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including"
shall mean including without limitation. The Parties intend that each
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) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
38
11.13 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each
of the Parties agrees that the other Parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the
matter, in addition to any other remedy to which they may be entitled,
at law or in equity.
11.14 LITIGATION EXPENSES. The Parties agree that, in the case of
any dispute arising over the terms of this Agreement, the prevailing
party shall be entitled to receive as a component of its recovery all of
its costs and expenses of litigation (including, without limitation,
costs of investigation, attorneys' fees and expenses, and court costs).
11.15 ARBITRATION. The Parties agree that any controversy or
claim arising out of or relating to this Agreement, or any breach
thereof, shall be settled by binding arbitration in accordance with the
Commercial Arbitration rules of the American Arbitration Association in
San Antonio, Bexar County, Texas, and judgement upon the award rendered
by the arbitrator may be entered in any court having jurisdiction
thereof, and shall not be appealable.
SIGNATURE PAGE TO FOLLOW
39
SIGNATURE PAGE OF
AGREEMENT AND PLAN OF REORGANIZATION
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
PARENT:
US Liquids, Inc.
a Delaware corporation
By: /s/ C. XXXX XXXXXX
Name: C. Xxxx Xxxxxx
Title: Attorney-in-fact
SUBSIDIARY:
Amigo Acquisition, Inc.
a Texas corporation
By: /s/ C. XXXX XXXXXX
Name: C. Xxxx Xxxxxx
Title: Attorney-in-fact
COMPANY:
Amigo Diversified Services, Inc.
a Texas corporation
By: /s/ XXXX XXXXX
Name: Xxxx Xxxxx
Title: ____________________________
SHAREHOLDERS:
/s/ XXXXX XXXXX
Xxxxx Xxxxx
/s/ XXXX XXXXX
Xxxx Xxxxx
40
