EXHIBIT 10(a)
MERGER AGREEMENT
AMONG
INSITUFORM MID-AMERICA, INC.
IMA MERGER SUB, INC.
ENVIROQ CORPORATION
AND
NEW ENVIROQ CORPORATION
November 2, 1994
TABLE OF CONTENTS
Page
ARTICLE I
CAPITALIZED TERMS
Section 1.1 Capitalized Terms. . . . . . . . . . . . 1
ARTICLE II
THE MERGER TRANSACTION
Section 2.1 The Merger . . . . . . . . . . . . . . . 1
Section 2.2 Effect of Merger . . . . . . . . . . . . 1
Section 2.3 Conversion of Enviroq Shares . . . . . . 2
Section 2.4 Stock Options. . . . . . . . . . . . . . 2
Section 2.5 Conversion of Capital Stock of the
Merger Subsidiary. . . . . . . . . . . . 2
Section 2.6 Procedure for Payment. . . . . . . . . . 2
Section 2.7 Certificate of Incorporation and
Bylaws . . . . . . . . . . . . . . . . . 3
Section 2.8 Directors and Officers . . . . . . . . . 3
Section 2.9 The Closing. . . . . . . . . . . . . . . 3
Section 2.10 Actions at the Closing . . . . . . . . . 3
Section 2.11 Closing of Transfer Records. . . . . . . 4
Section 2.12 Transaction Costs. . . . . . . . . . . . 4
Section 2.13 Offset for Expense Deficit . . . . . . . 4
ARTICLE III
ADDITIONAL TRANSACTIONS
Section 3.1 Employment Agreement . . . . . . . . . . 4
Section 3.2 Excluded Assets. . . . . . . . . . . . . 5
Section 3.3 Indemnification; Insurance . . . . . . . 5
Section 3.4 Covenant Not to Compete and
Consulting Agreements. . . . . . . . . . 6
Section 3.5 Continuing Obligations . . . . . . . . . 7
ARTICLE IV
COVENANTS
Section 4.1 General. . . . . . . . . . . . . . . . . 7
Section 4.2 Notices and Consents . . . . . . . . . . 7
Section 4.3 Approval of Stockholders of
Enviroq. . . . . . . . . . . . . . . . . 7
Section 4.4 Proxy Statement, Registration
Statement, Etc . . . . . . . . . . . . . 8
Section 4.5 Regulatory Matters and Approvals . . . . 8
Section 4.6 Operation of Business. . . . . . . . . . 9
Section 4.7 Access to Books and Records. . . . . . . 10
Section 4.8 Notice of Developments . . . . . . . . . 10
ARTICLE V
CONDITIONS TO OBLIGATION TO CLOSE
Section 5.1 Conditions to Obligations of
Purchaser and Merger Subsidiary. . . . . 11
Section 5.2 Conditions to Obligation of
Enviroq. . . . . . . . . . . . . . . . . 12
ARTICLE VI
TERMINATION
Section 6.1 Termination of Agreement . . . . . . . . 14
Section 6.2 Effect of Termination. . . . . . . . . . 14
Section 6.3 Objections to Breaches by Enviroq. . . . 15
Section 6.4 Confidentiality Upon Termination . . . . 15
Section 6.5 Non-Solicitation of Employees After
Termination. . . . . . . . . . . . . . . 16
ARTICLE VII
WARRANTIES OF ENVIROQ
Section 7.1 Organization, Qualification, and
Corporate Power. . . . . . . . . . . . . 16
Section 7.2 Capitalization . . . . . . . . . . . . . 16
Section 7.3 Non-contravention. . . . . . . . . . . . 17
Section 7.4 Brokers' Fees. . . . . . . . . . . . . . 17
Section 7.5 Title to Assets. . . . . . . . . . . . . 17
Section 7.6 Subsidiaries . . . . . . . . . . . . . . 17
Section 7.7 Financial Statements . . . . . . . . . . 18
Section 7.8 Events Subsequent to Most Recent
Fiscal Year End. . . . . . . . . . . . . 19
Section 7.9 Undisclosed Liabilities. . . . . . . . . 20
Section 7.10 Legal Compliance . . . . . . . . . . . . 21
Section 7.11 Tax Matters. . . . . . . . . . . . . . . 21
Section 7.12 Real Property. . . . . . . . . . . . . . 21
Section 7.13 Intellectual Property. . . . . . . . . . 23
Section 7.14 Tangible Assets. . . . . . . . . . . . . 24
Section 7.15 Inventory. . . . . . . . . . . . . . . . 24
Section 7.16 Contracts. . . . . . . . . . . . . . . . 24
Section 7.17 Notes and Accounts Receivable. . . . . . 26
Section 7.18 Insurance. . . . . . . . . . . . . . . . 26
Section 7.19 Litigation . . . . . . . . . . . . . . . 27
Section 7.20 Employees. . . . . . . . . . . . . . . . 27
Section 7.21 Employee Benefits. . . . . . . . . . . . 27
Section 7.22 Guaranties . . . . . . . . . . . . . . . 29
Section 7.23 Environment, Health, and Safety. . . . . 29
ARTICLE VIII
WARRANTIES OF PURCHASER
Section 8.1 Organization . . . . . . . . . . . . . . 30
Section 8.2 Financing. . . . . . . . . . . . . . . . 30
Section 8.3 Authorization of Transaction . . . . . . 30
Section 8.4 Non-contravention. . . . . . . . . . . . 30
Section 8.5 Brokers' Fees. . . . . . . . . . . . . . 31
Section 8.6 Registration Statement and Proxy
Statement. . . . . . . . . . . . . . . . 31
ARTICLE IX
LIMITED SURVIVAL AND INDEMNIFICATION
Section 9.1 Survival . . . . . . . . . . . . . . . . 31
Section 9.2 Indemnification by New Enviroq . . . . . 31
Section 9.3 Right of Offset. . . . . . . . . . . . . 32
Section 9.4 Withholding and Offset Procedure . . . . 32
Section 9.5 Limitations on Indemnification by
New Enviroq. . . . . . . . . . . . . . . 32
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations and
Warranties . . . . . . . . . . . . . . . 33
Section 10.2 Press Releases and Public
Announcements. . . . . . . . . . . . . . 33
Section 10.3 No Third-Party Beneficiaries . . . . . . 33
Section 10.4 Entire Agreement . . . . . . . . . . . . 33
Section 10.5 Succession and Assignment. . . . . . . . 34
Section 10.6 Counterparts . . . . . . . . . . . . . . 34
Section 10.7 Headings . . . . . . . . . . . . . . . . 34
Section 10.8 Notices. . . . . . . . . . . . . . . . . 34
Section 10.9 Governing Law. . . . . . . . . . . . . . 35
Section 10.10 Amendments and Waivers . . . . . . . . . 35
Section 10.11 Severability . . . . . . . . . . . . . . 36
Section 10.12 Construction . . . . . . . . . . . . . . 36
Section 10.13 Incorporation of Exhibits and
Schedules. . . . . . . . . . . . . . . . 36
ARTICLE XI
DEFINITIONS
Section 11.1 "Adverse Consequences" . . . . . . . . . 36
Section 11.2 "Affiliate". . . . . . . . . . . . . . . 36
Section 11.3 "Business Day" . . . . . . . . . . . . . 36
Section 11.4 "Certificate of Merger". . . . . . . . . 36
Section 11.5 "Closing". . . . . . . . . . . . . . . . 36
Section 11.6 "Closing Date" . . . . . . . . . . . . . 36
Section 11.7 "Code" . . . . . . . . . . . . . . . . . 36
Section 11.8 "Confidential Information" . . . . . . . 37
Section 11.9 "Delaware General Corporation Law" . . . 37
Section 11.10 "Effective Time" . . . . . . . . . . . . 37
Section 11.11 "Employee Benefit Plan". . . . . . . . . 37
Section 11.12 "Employee Pension Benefit Plan". . . . . 37
Section 11.13 "Employee Welfare Benefit Plan". . . . . 37
Section 11.14 "Environmental, Health, and Safety
Laws" . . . . . . . . . . . . . . . . . 37
Section 11.15 "Enviroq". . . . . . . . . . . . . . . . 37
Section 11.16 "Enviroq Share". . . . . . . . . . . . . 37
Section 11.17 "Enviroq Shareholder". . . . . . . . . . 38
Section 11.18 "ERISA". . . . . . . . . . . . . . . . . 38
Section 11.19 "Extremely Hazardous Substance". . . . . 38
Section 11.20 "Fiduciary". . . . . . . . . . . . . . . 38
Section 11.21 "Financial Statement". . . . . . . . . . 38
Section 11.22 "Financing Commitment" . . . . . . . . . 38
Section 11.23 "GAAP" . . . . . . . . . . . . . . . . . 38
Section 11.24 "Xxxx-Xxxxx-Xxxxxx Act". . . . . . . . . 38
Section 11.25 "Intellectual Property". . . . . . . . . 38
Section 11.26 "Knowledge". . . . . . . . . . . . . . . 38
Section 11.27 "Merger Consideration" . . . . . . . . . 39
Section 11.28 "Merger Subsidiary". . . . . . . . . . . 39
Section 11.29 "Most Recent Balance Sheet". . . . . . . 39
Section 11.30 "Most Recent Financial Statements" . . . 39
Section 11.31 "Most Recent Fiscal Month End" . . . . . 39
Section 11.32 "Most Recent Fiscal Year End". . . . . . 39
Section 11.33 "Multi-employer Plan". . . . . . . . . . 39
Section 11.34 "Objection". . . . . . . . . . . . . . . 39
Section 11.35 "Ordinary Course of Business". . . . . . 39
Section 11.36 "PBGC" . . . . . . . . . . . . . . . . . 39
Section 11.37 "Party". . . . . . . . . . . . . . . . . 39
Section 11.38 "Person" . . . . . . . . . . . . . . . . 39
Section 11.39 "Principal Shareholders" . . . . . . . . 39
Section 11.40 "Prohibited Transaction" . . . . . . . . 39
Section 11.41 "Purchaser". . . . . . . . . . . . . . . 40
Section 11.42 "Reportable Event" . . . . . . . . . . . 40
Section 11.43 "Requisite Stockholder Approval" . . . . 40
Section 11.44 "Exchange Act" . . . . . . . . . . . . . 40
Section 11.45 "Security Interest". . . . . . . . . . . 40
Section 11.46 "Subordinated Promissory Note" . . . . . 40
Section 11.47 "Subsidiary" . . . . . . . . . . . . . . 40
Section 11.48 "Surviving Corporation". . . . . . . . . 40
Section 11.49 "Tax Returns". . . . . . . . . . . . . . 40
Section 11.50 "Taxes". . . . . . . . . . . . . . . . . 41
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") entered into as of
the 2nd day of November, 1994, by and between Insituform Mid-
America, Inc., a Delaware corporation ("Purchaser"), IMA Merger
Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of
the Purchaser ("Merger Subsidiary"), New Enviroq Corporation, a
Delaware corporation ("New Enviroq"), and ENVIROQ Corporation, a
Delaware corporation ("Enviroq"). Purchaser, Merger Subsidiary,
New Enviroq, and Enviroq are referred to collectively herein as the
"Parties."
This Agreement contemplates a transaction in which the
Purchaser will acquire all of the outstanding capital stock of
Enviroq for cash through a reverse subsidiary merger of the Merger
Subsidiary with and into Enviroq.
Now, therefore, in consideration of the premises and the
mutual promises herein made, and in consideration of the warranties
and covenants herein contained, the Parties agree as follows:
ARTICLE I
CAPITALIZED TERMS
Section 1.1 Capitalized Terms. Capitalized terms not
otherwise defined in this Agreement shall have the definitions set
forth in Article XI below.
ARTICLE II
THE MERGER TRANSACTION
Section 2.1 The Merger. On the terms and subject to the
conditions contained in this Agreement, Merger Subsidiary will
merge with and into Enviroq (the "Merger"). Enviroq shall be the
corporation surviving the Merger (the "Surviving Corporation").
The Merger shall become effective at the time (the "Effective
Time") Enviroq and Merger Subsidiary file the Certificate of Merger
with the Secretary of State of the State of Delaware.
Section 2.2 Effect of Merger. At the Effective Time, (a)
the separate existence of Merger Subsidiary shall cease; (b)
Enviroq shall continue as the Surviving Corporation unimpaired and
unaffected by the Merger (except as otherwise set forth herein),
with all the rights, privileges, immunities, and powers, and
subject to all of the duties and liabilities, of a corporation
organized under the laws of the state of Delaware; (c) each of the
issued and outstanding shares of Merger Subsidiary shall be
exchanged for and converted into shares of the Surviving
Corporation, as provided in Section 2.5 below, so that Purchaser
shall own all of the issued and outstanding capital stock of the
Surviving Corporation; (d) each of the issued and outstanding
shares of Enviroq shall be exchanged for and converted into the
right to receive the Merger Consideration, as provided in Section
2.3 below; (e) Enviroq shall possess all of the rights, privileges,
immunities, and powers of Merger Subsidiary and shall be
responsible and liable for all of the liabilities and obligations
of Merger Subsidiary, except as otherwise provided by law; (f)
Enviroq shall be vested with title to all the property, real and
personal, and every other asset of Merger Subsidiary, specifically
excepting the Excluded Assets identified in Section 3.2 below; and
(g) at the Effective Time, Enviroq shall change its name in such a
fashion as to make the name "Enviroq" available for use by New
Enviroq, as provided in Section 3.2 below.
Section 2.3 Conversion of Enviroq Shares. At and as of the
Effective Time, (a) each Enviroq Share shall be converted into the
right to receive its proportional share of the Merger
Consideration, consisting of an amount equal to $15,250,000 in cash
and (b) all shares owned by Purchaser shall be canceled. No
Enviroq Share shall be deemed to be outstanding or to have any
rights other than those set forth above in this Section 2.3 after
the Effective Time. The Merger Consideration shall be in addition
to the payments described in Section 3.4, below, the Excluded
Assets described in Section 3.2, and the obligations of Section
3.5.
Section 2.4 Stock Options. At the Effective Time, each
unexercised option to acquire Enviroq shares whose exercise price
is less than their proportional share of the Merger Consideration
("In-the-Money Options") shall be converted into a right to receive
their proportional share of the Merger Consideration. Each In-the-
Money Option shall be converted into the right to receive cash
equal to the per share value of the Merger Consideration
(determined by taking into consideration all the outstanding
Enviroq shares plus all In-the-Money Options ("Enviroq Shares and
Options") less the exercise price of such In-the-Money Option plus
an amount equal to the aggregate exercise price for all In-the-
Money Options divided by the aggregate number of Enviroq Shares and
Options. All options that are not In-the-Money Options shall
terminate at the Effective Time.
Section 2.5 Conversion of Capital Stock of the Merger
Subsidiary. At and as of the Effective Time, each share of common
stock, $.01 par value per share, of the Merger Subsidiary shall be
converted into one share of common stock, $.01 par value per share,
of the Surviving Corporation, so that thereafter Purchaser will be
the sole owner of all the equity securities of the Surviving
Corporation.
Section 2.6 Procedure for Payment.
(a) Immediately after the Effective Time , (i) Purchaser
will furnish to Amsouth Bank, Birmingham, Alabama or another
qualified transfer agent mutually acceptable to the Parties
("Paying Agent") a corpus ("Payment Fund"), consisting of cash
sufficient in the aggregate for the Paying Agent to make full
payment of the Merger Consideration to the holders of all of the
outstanding Enviroq Shares and (ii) Purchaser will cause the Paying
Agent to mail a letter of transmittal (with instructions for its
use) in customary form to each record holder of outstanding Enviroq
Shares for the holder to use in surrendering the certificates which
represented Enviroq Shares against payment of the Merger
Consideration. No interest will accrue or be paid to the holder of
any outstanding Enviroq Shares.
(b) Purchaser may cause the Paying Agent to pay over to
the Surviving Corporation any portion of the Payment Fund
(including any earnings thereon) remaining one year after the
Effective Time, and thereafter, all former stockholders of Enviroq
shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws) as general
creditors thereof, with respect to the cash payable upon surrender
of their certificates.
(c) If any portion of the Merger Consideration is to be
issued to a person other than the person in whose name the
certificate representing Enviroq Shares surrendered in exchange
therefor is registered, it shall be a condition of the issuance
thereof that the certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer (with such
signature guarantees as may be required by the letter of
transmittal) and that any transfer tax arising therefrom shall be
provided for or paid by the proposed transferor.
Section 2.7 Certificate of Incorporation and Bylaws. The
Certificate of Incorporation and Bylaws of the Surviving
Corporation shall be amended and restated at and as of the
Effective Time to read as did the Certificate of Incorporation and
Bylaws of the Merger Subsidiary immediately prior to the Effective
Time, including the requirement that the name of the Surviving
Corporation will be changed from "Enviroq Corporation," as provided
in Sections 2.2(g) and 3.2 hereof.
Section 2.8 Directors and Officers. The directors and
officers of the Merger Subsidiary shall become the directors and
officers of the Surviving Corporation at and as of the Effective
Time (retaining their respective positions and terms of office).
At the Effective Time, Purchaser shall cause the election of Xxxxx
X. Xxxxx, Xx., as President and Chief Operating Officer of the
Surviving Corporation.
Section 2.9 The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at
the offices of Martin, Ade, Xxxxxxxxxx & Xxxxxxx, P.A., 0000
Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx, commencing at 9:00 a.m.
local time on the tenth (10th) Business Day following the
satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other
than conditions with respect to actions the respective Parties will
take at the Closing itself) or such other date as the Parties may
mutually determine (the "Closing Date"); provided, however, that
the Closing Date shall be no later than February 28, 1995.
Section 2.10 Actions at the Closing. At the Closing, (i)
Enviroq will deliver to Purchaser and the Merger Subsidiary the
various certificates, instruments, and documents referred to in
Section 5.1 below, (ii) Purchaser and the Merger Subsidiary will
deliver to Enviroq the various certificates, instruments, and
documents referred to in Section 5.2 below, (iii) Enviroq and the
Merger Subsidiary will file with the Secretary of State of the
State of Delaware Certificate of Merger in the form attached hereto
as Exhibit "A" (the "Certificate of Merger"), (iv) Purchaser will
cause the Surviving Corporation to deliver the Merger Consideration
to the Enviroq Shareholders in accordance with this Agreement and
(v) Purchaser will deliver to New Enviroq Purchaser's Subordinated
Promissory Note with interest at 6% per annum in respect of New
Enviroq's and the Principal Shareholders' agreements not to compete
as referenced in Section 3.4(a), and New Enviroq hereby expressly
agrees to the subordination provisions set forth therein.
Section 2.11 Closing of Transfer Records. At the Effective
Time, transfers of Enviroq Shares outstanding prior to the
Effective Time shall not be made on the stock transfer books of the
Surviving Corporation.
Section 2.12 Transaction Costs. Each of the parties shall
be responsible for their own expenses in connection with the
negotiation of this Agreement and the consummation of the
transactions contemplated hereby. The expenses paid or incurred by
Enviroq prior to Closing in connection with the transactions
contemplated by this Agreement, including, but not limited to,
those expenses incurred in connection with (i) the separation of
the Excluded Assets; (ii) the registration of New Enviroq shares;
(iii) the Proxy Statement; (iv) Paying Agent charges; (v)
attorneys' fees and disbursements; (vi) accounting fees and
disbursements; (vii) investment banking fees and disbursements,
including costs associated with the fairness opinion referenced in
Section 5.2(h); and (viii) printing costs, shall be the
responsibility of New Enviroq and shall be reimbursed to the
Surviving Corporation at Closing or as soon as practicable
thereafter, but in any event within two years after the Closing
Date. Any such amount due the Surviving Corporation and not paid
at Closing shall be referred to as the "Expense Deficit."
Purchaser may set off against payments due New Enviroq for the
amount of the Expense Deficit pursuant to the terms of Section 2.13
hereof. Neither Enviroq nor New Enviroq shall be responsible for
any expenses incurred by Purchaser in connection with the
transactions contemplated hereby.
Section 2.13 Offset for Expense Deficit. The Purchaser shall
be entitled to withhold payment of and to make offset against, the
amounts due pursuant to Section 3.4(b) (relating to payments for a
consulting agreement) for the Expense Deficit until such Expense
Deficit is reduced to zero.
ARTICLE III
ADDITIONAL TRANSACTIONS
Section 3.1 Employment Agreement. At the Effective Time,
Purchaser shall enter into an employment agreement with Xxxxx X.
Xxxxx, Xx. ("Xxxxx") employing Xxxxx as President and Chief
Operating Officer of the Surviving Corporation on terms that are no
less favorable than the terms of Xxxxx'x current employment in the
opinion of Xxxxx and Purchaser.
Section 3.2 Excluded Assets. Notwithstanding any
provisions herein to the contrary, between the date of execution
and the Closing Date, Enviroq shall remove from its direct
ownership, the assets identified on Schedule 3.2 hereto. It is
anticipated that such assets will be distributed to a newly
created, wholly-owned subsidiary of Enviroq ("New Enviroq"), the
stock of which will be distributed to the Enviroq Shareholders
immediately prior to the Effective Time. Such assets shall include
the corporate name and trade name "Enviroq Corporation" and all
rights related thereto.
Section 3.3 Indemnification; Insurance.
(a) Subject to the provisions of Section 3.3(c), from
and after the Effective Time the Surviving Corporation shall
indemnify, defend and hold harmless each person who is now, or has
been at any time prior to the date of this Agreement or who becomes
prior to the Effective Time, an officer, director or employee of
Enviroq or any of its Subsidiaries (the "Indemnified Parties")
against (i) all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party (which approval shall
not be unreasonably withheld) in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or
was a director, officer or employee of Enviroq or any of its
Subsidiaries ("Indemnified Liabilities"), pertaining to any matter
existing or occurring at or prior to the Effective Time and whether
asserted or claimed prior to, or at or after, the Effective Time
and (ii) all Indemnified Liabilities based in whole or in part on,
or arising in whole or in part out of, or pertaining to this
Agreement or the transactions contemplated hereby, in each case to
the full extent a corporation is permitted under the laws of its
state of incorporation to indemnify its own directors, officers and
employees, as the case may be (and the Surviving Corporation will
pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the full extent
permitted by law). Without limiting the foregoing, in the event
any such claim, action, suit, proceeding or investigation is
brought against any Indemnified Party (whether arising before or
after the Effective Time), (i) the Indemnified Party may retain
counsel satisfactory to it and Enviroq (or, after the Effective
Time, the Surviving Corporation), (ii) Enviroq (or, after the
Effective Time, the Surviving Corporation) will pay all reasonable
fees and expenses of such counsel for the Indemnified Party
promptly as statements therefor are received, and (iii) Enviroq
(or, after the Effective Time, the Surviving Corporation) will use
all reasonable efforts to assist in the vigorous defense of any
such matter, provided that neither Enviroq nor, after the Effective
Time, the Surviving Corporation shall be liable for any settlement
of any claim effected without its written consent, which consent
shall not be unreasonably withheld. Any Indemnified Party wishing
to claim indemnification under this Section 3.3 upon learning of
any such claim, action, suit, proceeding or investigation, shall
notify Enviroq or, after the Effective Time, the Surviving
Corporation (but the failure so to notify an indemnifying party
shall not relieve it from any liability which it may have under
this Section 3.3, except to the extent such failure prejudices such
party), and shall, to the extent required by the laws of the
indemnifying party's state of incorporation, deliver to Enviroq
(or, after the Effective Time, the Surviving Corporation) any
undertaking required prior to payment of expenses in advance of
final disposition. The Indemnified Parties as a group may retain
only one law firm to represent them with respect to each such
matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties. The provisions of this
Section 3.3 are intended to be for the benefit of, and shall be
enforceable by, each Indemnified Party and his or her heirs and
representatives.
(b) Subject to the provisions of Section 3.3(c), for six
(6) years after the Effective Time, the Surviving Corporation shall
use its good faith, best efforts to provide officers' and
directors' liability insurance covering each director and employee
of Enviroq who is currently covered by Enviroq's officers' and
directors' liability insurance or will be so covered at the
Effective Time with respect to actions and omissions occurring at
or prior to the Effective Time (the "Insured Parties"), on terms no
less favorable than such insurance maintained in effect by Enviroq
on the date hereof in terms of coverage and amounts, and shall, as
promptly as practicable after the Effective Time, furnish upon
request evidence that such insurance has been purchased and paid in
full.
(c) Notwithstanding any obligation of this Section 3.3
to the contrary, the aggregate liability of the Surviving
Corporation under this Section 3.3 shall be an amount equal to the
officer and director trust liability reserve reflected on the
Balance Sheet of Enviroq at the time of Closing ("Xxx Xxxx"). The
Surviving Corporation shall first apply The Fund in payment of tail
coverage insurance pursuant to Subsection 3.3(b) hereof and the
balance shall be used to satisfy the Surviving Corporation's
indemnification obligations, if any, under Subsection 3.3(a)
hereof. In the event The Fund is exhausted in satisfying
obligations under this Section 3.3 prior the expiration of six (6)
years following the Effective Time, Surviving Corporation shall not
permit any tail coverage insurance to lapse without first providing
the former Enviroq officers and directors at least sixty (60) days'
notice and the opportunity to continue such insurance in full force
and effect for the six (6) year period.
Section 3.4 Covenant Not to Compete and Consulting
Agreements.
(a) Purchaser, for and in consideration of the agreement
of New Enviroq, and the Principal Shareholders not to compete with
Purchaser as defined in Exhibit "B" hereof for a period of five (5)
years following the Closing Date, shall deliver to New Enviroq the
Subordinated Promissory Note. The agreement not to compete shall
be in form and substance as set forth on Exhibit "B" hereto.
(b) Purchaser, for and in consideration of the agreement
of New Enviroq to consult with Purchaser following the Closing,
shall pay to New Enviroq the sum of $1,000,000, in the aggregate,
payable $200,000 per year beginning on the first anniversary of the
Closing Date and on or before each anniversary of the Closing Date
in each successive year until the aggregate amount of $1,000,000 is
paid in full. The terms of the consulting agreement shall be in
form and substance as set forth on Exhibit "C" hereto.
Section 3.5 Continuing Obligations. Except as otherwise
expressly provided herein, following the effectuation of the
Merger, the Surviving Corporation shall be responsible for all
obligations and liabilities of Enviroq existing at the time of
Closing, including any obligations which may result from the
acceleration of payments due under the City of Jacksonville,
Florida, Industrial Development Revenue Bonds, Series A (Insituform
Southeast, Inc. Project) dated as of December 10, 1985.
ARTICLE IV
COVENANTS
The Parties agree as follows with respect to the period from
and after the execution of this Agreement:
Section 4.1 General. Each of the Parties will use (and
will cause all other Parties within their control to use) their
best efforts to take all action and to do all things necessary,
proper, or advisable 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 Article V below), except where such action, in the case of
Enviroq, would violate the fiduciary duties of Enviroq's Board of
Directors to Enviroq's stockholders.
Section 4.2 Notices and Consents. Each of the Parties will
give any notices (and will cause any of the Parties within their
control to give any notices) to third parties, and will use their
best efforts to obtain (and will cause each of the Parties within
their control to use their best efforts to obtain) any third-party
consents that may be required to consummate the transactions
contemplated hereby.
Section 4.3 Approval of Stockholders of Enviroq. As soon
as practicable after the execution of this Agreement, Enviroq will
take all actions necessary in accordance with applicable law,
NASDAQ rules, this Agreement and Enviroq's Certificate of
Incorporation and By-Laws to duly call and cause to be held a
special meeting of its stockholders (the "Special Meeting") for the
purpose of approving this Agreement, the Merger and, to the extent
necessary, any other matters or transactions contemplated hereby.
Unless the Board of Directors of Enviroq determines in good faith
based upon advice of its outside counsel, that such recommendation
would violate the fiduciary duties of the Board of Directors of
Enviroq to Enviroq's stockholders, the Board of Directors of
Enviroq shall recommend that such stockholders vote for the
approval of this Agreement and the Merger.
Section 4.4 Proxy Statement, Registration Statement, Etc.
(a) In connection with the Special Meeting, Enviroq
shall promptly prepare a proxy statement for submission to the
stockholders of Enviroq in connection with the Special Meeting. As
promptly as practicable, Enviroq shall file such proxy statement in
preliminary form with the Securities and Exchange Commission (the
"SEC"), pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and shall use its best efforts to obtain and
respond to any comments thereof by the SEC or its staff. Enviroq
shall thereafter promptly mail to its stockholders the proxy
statement in definitive form (as amended or supplemented, together
with all information incorporated by reference therein, the "Proxy
Statement"). Purchaser shall promptly furnish Enviroq with all
information concerning its business and financial statements and
affairs which, in the reasonable judgment of Enviroq or its
counsel, may be required or appropriate for inclusion in the Proxy
Statement and shall take such other action as they may reasonably
request in connection with the Proxy Statement.
(b) Enviroq shall promptly prepare and file with the
SEC, pursuant to the Securities Act of 1933, as amended (the
"Securities Act") (or, if counsel for Enviroq deems it appropriate,
pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act")), a registration statement (which registration statement, in
the form it is declared effective under the Securities Act by the
SEC, together with any and all amendments or supplements thereto
and all information incorporated by reference therein, is referred
to herein as the "Registration Statement") with respect to the
shares of stock of New Enviroq to be issued in connection with the
transactions described in Section 3.2 hereof and shall use all
reasonable efforts to have the Registration Statement declared
effective under the Securities Act (or, if appropriate, the
Exchange Act) by the SEC as promptly as practicable. Purchaser
shall promptly furnish Enviroq with all information concerning its
business and financial statements and affairs which, in the
reasonable judgment of Enviroq or its counsel, may be required or
appropriate for inclusion in the Registration Statement and shall
take such other action as Enviroq may reasonably request in
connection with the Registration Statement.
Section 4.5 Regulatory Matters and Approvals. Each of the
Parties will (and will cause all other Parties within their control
to) give any notices to, make any filings with, and use their best
efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the
matters referred to in this Agreement. Without limiting the
generality of the foregoing, each of the Parties will file (and
will cause each of the Parties within their control to file) any
notification that may be required by the SEC and any state
securities laws or regulations and Notification and Report Forms
and related material that they may be required to file with the
Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will
use their best efforts to obtain (and will cause each of the
Parties within their control to use their best efforts to obtain)
an early termination of the applicable waiting period, and will
make (and will cause each of the Parties within their control to
make) any further filings pursuant thereto that may be necessary,
proper, or advisable.
Section 4.6 Operation of Business.
(a) From the date hereof to the Closing Date, except for
transactions which are expressly approved in writing by Purchaser,
the transactions expressly contemplated by Section 3.2 and the
transactions disclosed on Schedules hereto, Enviroq shall refrain
from:
(i) Subjecting any of its assets and properties,
tangible or intangible, to any lien of any kind, exclusive of liens
arising as a matter of law in the Ordinary Course of Business as to
which there is no known default;
(ii) Except for sales of inventory in the Ordinary
Course of Business, selling, assigning, transferring or otherwise
disposing of any material amount of Enviroq's assets and
properties;
(iii) Declaring or paying any dividend, whether
in cash or other property, or effecting or permitting any other
distribution of any kind on or with respect to any of the capital
stock of Enviroq;
(iv) Taking or permitting any other action that, if
taken or permitted immediately prior to the execution of this
Agreement, would constitute a breach of or an exception to
Enviroq's representations and warranties herein; and
(v) Making or becoming obligated to make any
capital expenditures requiring, in the aggregate, the expenditure
of more than $20,000.
(b) From the date hereof to the Closing Date, Enviroq
shall:
(i) Maintain its properties and activities insured
in amounts and with coverage at least as great as the amounts and
coverage in effect on the date of this Agreement;
(ii) Maintain, consistent with past practice,
Enviroq's properties in good repair, order and condition,
reasonable wear and tear excepted, and use reasonable efforts to
preserve Enviroq's possession and control of all of its assets and
properties;
(iii) Use reasonable efforts to keep in faithful
service the present officers and employees of Enviroq and to
preserve the goodwill of those having business relations with
Enviroq;
(iv) Maintain the books, accounts and records of
Enviroq in a manner consistent with past practice;
(v) Comply with all applicable laws, rules,
regulations and ordinances relating to Enviroq or to the conduct of
its business;
(vi) Maintain such quantities of goods, supplies and
materials as will enable the Surviving Corporation to operate
consistent with Enviroq's past practices; and
(vii) Operate only in the Ordinary Course of
Business (including, without limitation, acquisition of contracts
to provide goods and services, the collection of receivables and
payment of payables) and use its reasonable efforts to preserve its
business organization intact, including the goodwill of its
suppliers, customers and others having business relations with
Enviroq.
Section 4.7 Access to Books and Records. Enviroq will (and
will cause each of its Subsidiaries, specifically excluding New
Enviroq, to) permit representatives of Purchaser and its lenders to
have reasonable access at all reasonable times, and in a manner so
as not to interfere with the normal business operations of Enviroq
and its Subsidiaries, to all premises, properties, personnel,
books, records (including tax records), contracts, and documents of
or pertaining to each of Enviroq and its Subsidiaries in accordance
with reasonable procedures required by Enviroq that are designed to
minimize the impact on Enviroq's business. Purchaser will treat
and hold as such any Confidential Information it receives from any
of Enviroq and its Subsidiaries in the course of the reviews
contemplated by this Section 4.7, will not use any of the
Confidential Information except in connection with this Agreement,
and, if this Agreement is terminated for any reason whatsoever,
agrees to return to Enviroq all tangible embodiments (and all
copies) thereof which are in its possession, in addition to the
restrictions contained in Section 6.4 hereof.
Section 4.8 Notice of Developments. Each Party will give
prompt written notice to the others of any material adverse
development causing a breach of any of their own warranties in
Articles VII and VIII below. Such disclosure by Enviroq pursuant
to this Section 4.8 shall be deemed to amend or supplement the
disclosure contained in the Schedules attached hereto to prevent or
cure any misrepresentation, breach of warranty, or breach of
covenant unless Purchaser objects to the information contained in
such disclosure as provided in Section 6.3 below.
ARTICLE V
CONDITIONS TO OBLIGATION TO CLOSE
Section 5.1 Conditions to Obligations of Purchaser and
Merger Subsidiary. The obligation of Purchaser and Merger
Subsidiary to consummate the transactions to be performed by them
in connection with the Closing is subject to satisfaction of the
following conditions:
(a) The warranties of Enviroq set forth in Article VII
below shall be true and correct in all material respects at and as
of the Closing Date, except in such respects as do not materially
and adversely affect the business, financial condition, operations,
or prospects of Enviroq, and except as provided in Section 6.3
hereof;
(b) Enviroq shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
(c) Enviroq and its Subsidiaries shall have procured all
of the third party consents that may be required to consummate the
transactions contemplated hereby, except for any consents the
failure of which to obtain would not have a material adverse effect
on the business or financial condition of Enviroq and its
Subsidiaries;
(d) No action, suit, or proceeding shall be pending or,
to the Knowledge of the Enviroq officers and directors, threatened
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 prevent consummation of any of the
transactions contemplated by this Agreement (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(e) Enviroq shall have delivered to Purchaser and Merger
Subsidiary a certificate to the effect that each of the conditions
specified in Subsections 5.1 (a), (b), and (c) above has been
satisfied;
(f) All applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated and the Parties shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies required to consummate the transactions
contemplated hereby;
(g) Purchaser and Merger Subsidiary shall have received
the resignations, effective as of the Closing, of each director and
officer of Enviroq and its Subsidiaries other than those whom
Purchaser shall have specified in writing at least thirty (30) days
prior to the Closing, and other than Xxxxx X. Xxxxx, Xx., who shall
serve as President and Chief Operating Officer of the Surviving
Corporation;
(h) Purchaser shall have received from counsel to
Enviroq an opinion addressing customary issues regarding this
Agreement and the transactions contemplated hereby reasonably
satisfactory to Purchaser, in the form of the opinion accord of the
Business Law Section of the Florida Bar Association addressed to
Purchaser and dated as of the Closing Date;
(i) All actions to be taken by Enviroq in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Purchaser and Merger
Subsidiary;
(j) New Enviroq and the Principal Shareholders shall
have executed and delivered to Purchaser the Covenant Not to
Compete described in Section 3.4(a) hereof; and
(k) New Enviroq shall have executed and delivered to
Purchaser the Consulting Agreement described in Section 3.4(b)
hereof.
Purchaser and Merger Subsidiary may waive any condition specified
in this Section 5.1 by execution of a writing so stating at or
prior to the Closing.
Section 5.2 Conditions to Obligation of Enviroq. The
obligation of Enviroq to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(a) The warranties of Purchaser set forth in Article
VIII hereof above shall be true and correct in all material
respects at and as of the Closing Date;
(b) Purchaser shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
(c) No action, suit, or proceeding shall be pending or,
to the Knowledge of the officers and directors, threatened 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 prevent consummation of any of the
transactions contemplated by this Agreement (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(d) Each of Purchaser and Merger Subsidiary shall have
delivered to Enviroq a certificate to the effect that each of the
conditions specified in Subsections 5.2 (a) and (b) above has been
satisfied;
(e) This Agreement and the Merger shall have received
the Requisite Stockholder Approval;
(f) The Registration Statement described in Section
4.4(b) hereof shall have been declared effective and no stop order
with respect thereto shall be in effect;
(g) All applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated and the Parties shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies required to consummate the transactions
contemplated hereby;
(h) Enviroq shall have received, on or before the date
the Proxy Statement is mailed to the stockholders of Enviroq, an
opinion of Enviroq's investment banker in form and substance
reasonably satisfactory to Enviroq's Board of Directors and dated
the date of the Proxy Statement, to the effect that, as of the date
thereof, the Merger is fair to the Enviroq Shareholders from a
financial point of view (the "Fairness Opinion"), and such Fairness
Opinion shall not have been withdrawn on or before the Effective
Time;
(i) Enviroq shall have received from counsel to
Purchaser and Merger Subsidiary an opinion addressing customary
issues regarding this Agreement and the transactions contemplated
hereby reasonably satisfactory to Enviroq, addressed to Enviroq,
and dated as of the Closing Date;
(j) All actions to be taken by Purchaser and Merger
Subsidiary in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments,
and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and
substance to Enviroq;
(k) Purchaser shall have executed and delivered to New
Enviroq the Covenant Not to Compete and the Subordinated Promissory
Note described in Section 3.4(a) hereof; and
(l) Purchaser shall have executed and delivered to New
Enviroq the Consulting Agreement described in Section 3.4(b)
hereof.
Enviroq may waive any condition specified in this Section 5.2 by
execution of a writing so stating at or prior to the Closing.
ARTICLE VI
TERMINATION
Section 6.1 Termination of Agreement. This Agreement may
be terminated at any time prior to the Closing:
(a) by mutual written consent of Purchaser and Enviroq
at any time prior to the Effective Time; or
(b) by Enviroq at any time prior to the Effective Time,
if there has been a material breach of a warranty, covenant, or
agreement of Purchaser; or
(c) by Purchaser at any time prior to the Effective
Time, if Enviroq elects not to cure (or fails to cure within the
applicable time period) the Objections (as defined in Section 6.3
below) and the cost of curing such Objections exceeds $250,000 in
the aggregate; or
(d) by Enviroq or Purchaser at any time prior to the
Effective Time, if events have occurred which have made it
impossible to satisfy a condition precedent to the terminating
Party's obligation to consummate the transactions contemplated
hereby, or if the Closing has not occurred by February 28, 1995;
provided, however, that if a Party's willful breach of this
Agreement has prevented the consummation of the transactions
contemplated hereby, that Party shall not be entitled to terminate
this Agreement pursuant to this Subsection 6.1 (d); or
(e) by Enviroq, if prior to obtaining Requisite
Stockholder Approval, Enviroq receives a firm offer with respect to
an acquisition transaction on terms more favorable to Enviroq
Shareholders than are provided for herein and the Board of
Directors of Enviroq determines in good faith, based upon the
advice of counsel, that to proceed with the transactions
contemplated hereby would violate the fiduciary duties of the
Enviroq Board of Directors to Enviroq Shareholders; or
(f) by Purchaser, if within the three (3) Business Days
immediately following the day on which Purchaser receives a
complete set of definitive Schedules to be provided pursuant to the
preamble to Article VII hereof, Purchaser determines in its sole
and absolute discretion that such Schedules are unacceptable and so
notifies Enviroq. Purchaser's right of termination pursuant to
this Subsection 6.1(f) is in addition to and not in lieu of its
right to terminate this Agreement pursuant to Section 6.1(c).
Section 6.2 Effect of Termination. If any Party terminates
this Agreement pursuant to Section 6.1 above, all rights and
obligations of the Parties hereunder shall terminate without any
liability of any Party to any other Party (except for any liability
of any Party then in breach); provided, however, that the
provisions of Sections 6.4 and 6.5 hereof shall survive any such
termination, and provided, further, that (i) if the Agreement is
terminated by Enviroq pursuant to Section 6.1(e) above, Enviroq
shall pay to Purchaser the sum of $500,000.00 in respect of
Purchaser's expenses, liabilities and costs associated with the
transactions contemplated by this Agreement; and (ii) if the
Agreement is terminated by Purchaser for any reason other than as
provided in Sections 6.1(c) or 6.1(f) hereof, and Enviroq has
complied with all material terms and conditions of this Agreement,
Purchaser shall pay $500,000.00 to Enviroq in respect of its
expenses, liabilities and costs associated with the transactions
contemplated by this Agreement. In such event, this remedy shall
be exclusive and in lieu of all other rights or remedies available
to Purchaser and Enviroq, except those obligations set forth in
Sections 6.4 and 6.5.
Section 6.3 Objections to Breaches by Enviroq. Purchaser
shall within five (5) days of discovery notify Enviroq of any
alleged breach of representation, warranty, covenant or agreement
in this Agreement arising prior to the Closing (an "Objection").
Enviroq, upon receipt of such notice, may elect to cure such
Objections. In such event, Enviroq shall provide written notice of
its intent to cure the Objections within five (5) days of its
receipt of the Objections and shall cure the Objections within
twenty (20) days thereafter (or as soon thereafter as may be
practicable if such Objections cannot be cured within twenty (20)
days, but in no event later than forty-five (45) days). If the
cost of cure exceeds $250,000 in the aggregate, Purchaser's only
remedy shall be to terminate this Agreement pursuant to Section 6.1
above. Notwithstanding anything contained herein to the contrary,
Purchaser shall not be entitled to terminate this Agreement
pursuant to Section 6.1 above if the cost to cure all Objections
does not exceed $250,000 in the aggregate.
Section 6.4 Confidentiality Upon Termination. In the event
of any termination of this Agreement for any reason, including any
breach by the other Party, Enviroq, Purchaser and Merger Subsidiary
shall treat as confidential and shall not disclose, or use directly
or indirectly for their benefit or any third party's benefit or to
the detriment of the other Party in any manner whatsoever, or
permit others under their control to disclose, or to use,
Confidential Information concerning the other obtained pursuant to
or in connection with the Merger which is not generally known to
the trade or a matter of public knowledge for the earlier to elapse
of the following periods:
(a) Three (3) years from the date hereof; or
(b) Such earlier time as the information:
(i) is or hereafter becomes ascertainable from
public or published information or trade sources or is otherwise
readily ascertainable from the marketplace other than as a result
of a disclosure by the other Party or its representatives; or
(ii) is obtained rightfully by a Party from a third
party or parties without restriction, provided that such source is
not bound by this or any other confidentiality agreement of which,
after inquiry, the Party is aware.
Section 6.5 Non-Solicitation of Employees After
Termination. In the event of any termination of this Agreement for
any reason, Purchaser and Merger Subsidiary, and Enviroq and New
Enviroq shall refrain from and shall not, directly or indirectly,
for a period of one (1) year following such termination solicit any
of the employees of any other Party to this Agreement to terminate
their employment, with such other Party.
ARTICLE VII
WARRANTIES OF ENVIROQ
Enviroq warrants to Purchaser that the statements contained in
this Article VII as modified by the Schedules referenced herein
which (other than Schedules 3.2 and 7.7 which are attached hereto)
are to be delivered by Enviroq to the Purchaser within twelve (12)
Business Days after the execution of this Agreement (such date of
delivery hereinafter referred to as the "Schedule Delivery Date"),
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 Article VII).
Section 7.1 Organization, Qualification, and Corporate
Power. Each of Enviroq and its Subsidiaries is a corporation duly
organized, validly existing, and in good standing under the laws of
the jurisdiction of its incorporation. Each of Enviroq and its
Subsidiaries is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such
qualification would not have a material adverse effect on the
business, financial condition, operations, results of operations,
or future prospects of Enviroq and its Subsidiaries. Each of
Enviroq and its Subsidiaries has full corporate power and authority
to carry on the businesses in which it is engaged and to own and
use the properties owned and used by it. Schedule 7.1 lists the
directors and officers of each of Enviroq and its Subsidiaries
(specifically excepting New Enviroq).
Section 7.2 Capitalization. The entire authorized common
capital stock of Enviroq consists of 15,000,000 Enviroq Shares, of
which 4,865,387 Enviroq Shares are issued and outstanding and
51,404 Enviroq Shares are held in treasury. All of the issued and
outstanding Enviroq Shares have been duly authorized, are validly
issued, fully paid, and nonassessable. Except as set forth on
Schedule 7.2 , there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could
require Enviroq 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 Enviroq.
Section 7.3 Non-contravention. Except as set forth on
Schedule 7.3 , 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 any of Enviroq or any of its Subsidiaries is subject or any
provision of the charter or bylaws of any of Enviroq or any of its
Subsidiaries or (ii) except with respect to those agreements for
which consent shall be obtained prior to Closing, 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
agreement, contract, lease, license, instrument, or other
arrangement to which Enviroq or any of its Subsidiaries is a party
or by which it is bound or to which any of its assets is subject
(or result in the imposition of any Security Interest upon any of
its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to
give notice, or Security Interest would not have a material adverse
effect on the business, financial condition, operations, results of
operations, or future prospects of Enviroq and its Subsidiaries or
on the ability of the Parties to consummate the transactions
contemplated by this Agreement. Except as set forth specifically
in this Agreement or on Schedule 7.3, neither Enviroq nor any of
its Subsidiaries needs 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, except where the
failure to give notice, to file, or to obtain any authorization,
consent, or approval would not have a material adverse effect on
the business, financial condition, operations, results of
operations, or future prospects of Enviroq and its Subsidiaries or
on the ability of the Parties to consummate the transactions
contemplated by this Agreement.
Section 7.4 Brokers' Fees. None of Enviroq or any of its
Subsidiaries 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.
Section 7.5 Title to Assets. Except as set forth on
Schedule 7.5, Enviroq and its Subsidiaries have good and marketable
title to, or a valid leasehold interest in, the properties and
assets used by them, located on their premises, or shown on the
Most Recent Balance Sheet or acquired after the date thereof, free
and clear of all Security Interests, except for properties and
assets disposed of in the Ordinary Course of Business since the
date of the Most Recent Balance Sheet.
Section 7.6 Subsidiaries. Schedule 7.6 sets forth for each
Subsidiary, other than New Enviroq, of Enviroq (i) its name and
jurisdiction of incorporation, (ii) the number of shares of
authorized capital stock of each class of its capital stock, (iii)
the number of issued and outstanding shares of each class of its
capital stock, the names of the holders thereof, and the number of
shares held by each such holder, and (iv) the number of shares of
its capital stock held in treasury. All of the issued and
outstanding shares of capital stock of each Subsidiary of Enviroq
have been duly authorized and are validly issued, fully paid, and
nonassessable and were issued in accordance with applicable federal
and state securities laws. Except as set forth on Schedule 7.6,
one of Enviroq and its Subsidiaries holds of record and owns
beneficially all of the outstanding shares of each Subsidiary of
Enviroq, free and clear of any restrictions on transfer (other than
restrictions under the Securities Act and state securities laws),
taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. Except as
disclosed on Schedule 7.6(a), there are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or
commitments that could require Enviroq or any of its Subsidiaries
to sell, transfer, or otherwise dispose of any capital stock of any
of its Subsidiaries or that could require any Subsidiary of Enviroq
to issue, sell, or otherwise cause to become outstanding any of its
own capital stock. Except as disclosed on Schedule 7.6(a), there
are no outstanding stock appreciation, phantom stock, profit
participation, or similar rights with respect to any Subsidiary of
Enviroq. Except as specifically provided in this Agreement or with
respect to the Principal Shareholders as disclosed to Purchaser on
or before the date hereof, there are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of
any capital stock of any Subsidiary of Enviroq. Except as set
forth on Schedule 7.6, none of Enviroq and its Subsidiaries
controls directly or indirectly or has any direct or indirect
equity participation in any corporation, partnership, trust, or
other business association which is not a Subsidiary of Enviroq.
Section 7.7 Financial Statements. Schedule 7.7 includes
the following financial statements (collectively the "Financial
Statements"): (i) audited consolidated balance sheets and
statements of income, changes in stockholders' equity, and cash
flows as of and for the fiscal years ended March 28, 1992, March
27, 1993, and March 26, 1994 (the "Most Recent Fiscal Year End")
for Enviroq and its Subsidiaries; and (ii) unaudited consolidated
balance sheets and statements of income, and cash flows (the "Most
Recent Financial Statements") as of and for the three months and
year to date period ended September 30, 1994 (the "Most Recent
Fiscal Month End"), for Enviroq and its Subsidiaries. The
Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby and present fairly the
financial condition of Enviroq and its Subsidiaries as of such
dates and the results of operations of Enviroq and its Subsidiaries
for such periods; provided, however, that the Most Recent Financial
Statements are subject to normal recurring adjustments (which will
not be material individually or in the aggregate) and lack
footnotes and other presentation items. Without limiting the
generality of the foregoing, the Most Recent Financial Statements
accurately reflect anticipated costs to complete all contracts
pursuant to which Enviroq or any of its Subsidiaries (other than
Synox Corporation) have agreed to furnish products and services in
accordance with GAAP applied on a basis consistent with the
Financial Statements for the Most Recent Fiscal Year End.
Section 7.8 Events Subsequent to Most Recent Fiscal Year
End. Since the Most Recent Fiscal Year End, except as set forth on
Schedule 7.7 or 7.8 or with respect to the proposed transfer of the
Excluded Assets contemplated by Section 3.2, there has not been any
material adverse change in the business, financial condition,
operations, results of operations, or future prospects of Enviroq
and its Subsidiaries taken as a whole. Without limiting the
generality of the foregoing, except as set forth on Schedule 7.8,
since that date:
(a) none of Enviroq or any of its Subsidiaries has sold,
leased, transferred, or assigned any material assets, tangible or
intangible, outside the Ordinary Course of Business;
(b) none of Enviroq or any of its Subsidiaries has
entered into any material agreement, contract, lease, or license
outside the Ordinary Course of Business;
(c) no party (including any of Enviroq and its
Subsidiaries) has accelerated, terminated, made material
modifications to, or canceled any material agreement, contract,
lease, or license to which any of Enviroq or any of its
Subsidiaries is a party or by which any of them is bound;
(d) none of Enviroq or any of its Subsidiaries has
imposed any Security Interest upon any of its assets, tangible or
intangible;
(e) none of Enviroq or any of its Subsidiaries has made
any material capital expenditures outside the Ordinary Course of
Business;
(f) none of Enviroq or any of its Subsidiaries has made
any material capital investment in, or any material loan to, any
other Person outside the Ordinary Course of Business;
(g) Enviroq and its Subsidiaries have not created,
incurred, assumed, or guaranteed more than $20,000 in aggregate
indebtedness for borrowed money and capitalized lease obligations;
(h) none of Enviroq or any of its Subsidiaries has
granted any license or sublicense of any material rights under or
with respect to any Intellectual Property;
(i) there has been no change made or authorized in the
charter or bylaws of any of Enviroq or any of its Subsidiaries;
(j) none of Enviroq or any of its Subsidiaries has
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;
(k) none of Enviroq or any of its Subsidiaries has
declared, set aside, or paid any dividend or made any distribution
with respect to its capital stock (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any of its capital
stock;
(l) none of Enviroq or any of its Subsidiaries has
experienced any material damage, destruction, or loss (whether or
not covered by insurance) to its property;
(m) none of Enviroq or any of its Subsidiaries has made
any loan to, or entered into any other transaction with, any of its
directors, officers, and employees outside the Ordinary Course of
Business;
(n) none of Enviroq or any of its Subsidiaries has
entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing
such contract or agreement;
(o) none of Enviroq or any of its Subsidiaries has
granted any increase in the base compensation of any of its
directors, officers, and employees outside the Ordinary Course of
Business;
(p) none of Enviroq or any of its Subsidiaries has
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 (or taken any such action with respect to any other
Employee Benefit Plan);
(q) none of Enviroq or any of its Subsidiaries has made
any other material change in employment terms for any of its
directors, officers, and employees outside the Ordinary Course of
Business; and
(r) none of Enviroq or any of its Subsidiaries has
committed to any of the foregoing.
Section 7.9 Undisclosed Liabilities. Except as set forth
on Schedule 7.9, none of Enviroq or any of its Subsidiaries has any
material liability (whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, and whether
due or to become due, including any liability for taxes), except
for (i) liabilities set forth in the Most Recent Balance Sheet and
(ii) liabilities which have arisen after the Most Recent Fiscal
Month End in the Ordinary Course of Business.
Section 7.10 Legal Compliance. Except as set forth on
Schedule 7.10, each of Enviroq and its Subsidiaries has complied
with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), 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, except where the failure to
comply would not have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of Enviroq and its Subsidiaries.
Section 7.11 Tax Matters. Except as set forth on Schedule
7.11:
(a) Each of Enviroq and its Subsidiaries has duly filed
or caused to be filed on or before the due date thereof with the
appropriate taxing authorities, all Tax Returns that it is required
to file; (ii) each such Tax Return (including any amendment
thereto) is true, correct and complete in all material respects;
and, (iii) all Taxes of Enviroq and each of its Subsidiaries due
with respect to, or shown to be due on, each such Tax Return (or
amendment) or subsequent assessment with regard thereto, have been
timely paid. No other Taxes of Enviroq or any of its Subsidiaries
(whether or not shown on any Tax Return) are due with respect to
any taxable periods or portions of periods ending on or before the
Closing Date.
(b) There is no material dispute or claim concerning any
Tax liability of any of Enviroq and its Subsidiaries either (A)
claimed or raised by any authority in writing or (B) as to which
any of the directors and officers of Enviroq and its Subsidiaries
has Knowledge based upon personal contact with any agent of such
authority.
(c) The unpaid Taxes of Enviroq and its Subsidiaries (A)
did not, as of the Most Recent Fiscal Month End, exceed by any
material amount the reserve for Tax liability (excluding any
reserve for deferred taxes established to reflect timing
differences between book and tax income) set forth on the face of
the Most Recent Balance Sheet (rather than in any notes thereto)
and (B) will not exceed by any material amount that reserve as
adjusted for operations and transactions through the Closing Date
in accordance with the past custom and practice of Enviroq and its
Subsidiaries in filing their Tax Returns.
Section 7.12 Real Property.
(a) Schedule 7.12 lists and describes briefly all real
property that any of Enviroq and its Subsidiaries owns. Except as
set forth on Schedule 7.12 and for the Excluded Property, with
respect to each such parcel of owned real property:
(i) the identified owner has good and marketable
title to the parcel of real property, free and clear of any
Security Interest, easement, covenant, or other restriction, except
for (A) installments of special assessments not yet delinquent,
and (B) recorded easements, covenants, and other restrictions, and
utility easements, building restrictions, zoning restrictions, and
other easements and restrictions existing generally with respect to
properties of a similar character, none of which affect materially
and adversely the current use, occupancy, or value, or the
marketability of title, of the property subject thereto;
Inva there are no pending or, to the Knowledge of
any of the Enviroq directors and officers of Enviroq and its
Subsidiaries, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property or other matters
affecting materially and adversely the current use, occupancy, or
value thereof;
(iii) the legal description for the parcel
contained in the deed thereof describes such parcel fully and
adequately, the buildings and improvements are located within the
boundary lines of the described parcels of land, are not in
material violation of applicable setback requirements, zoning laws,
and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted nonconforming use"
or "permitted non-conforming structure" classifications), and do
not encroach on any easement which may burden the land;
(iv) all facilities have received all approvals of
governmental authorities (including material licenses and permits)
required in connection with the ownership or operation thereof, and
have been operated and maintained in accordance with applicable
laws, rules, and regulations in all material respects;
(v) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to any
party or parties the right of use or occupancy of any portion of
the parcel of real property;
(vi) there are no outstanding options or rights of
first refusal to purchase the parcel of real property, or any
portion thereof or interest therein;
(vii) there are no parties (other than Enviroq
and its Subsidiaries) in possession of the parcel of real property,
other than tenants under any leases disclosed in Schedule 0.xx who
are in possession of space to which they are entitled;
(viii) the plumbing, HVAC, electrical and
mechanical systems located in the facilities are all in good
repair, order and condition subject to reasonable wear and tear;
and
(ix) there are no pending or, to the Knowledge of
the officers and directors of Enviroq or any of its Subsidiaries,
threatened insurance claims with respect to the properties.
(b) Schedule 7.12 lists and describes briefly all real
property leased or subleased to any of Enviroq and its
Subsidiaries. On or before the Schedule Delivery Date, Enviroq
will deliver to Purchaser correct and complete copies of the leases
and subleases listed on Schedule 7.12 (as amended to date) which
shall be deemed to be Schedules for purposes of Section 6.1(f)
hereof. Except as set forth on Schedule 7.12, with respect to each
material lease and sublease listed on Schedule 7.12:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect in all material respects;
(ii) no party to the lease or sublease is in
material breach or default, and no event has occurred which, with
notice or lapse of time, would constitute a material breach or
default or permit termination, modification, or acceleration
thereunder;
(iii) no party to the lease or sublease has
repudiated any material provision thereof;
(iv) there are no material disputes, oral
agreements, or forbearance programs in effect as to the lease or
sublease;
(vn none of Enviroq or any of its Subsidiaries has
assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or subleasehold; and
(vi) all facilities leased or subleased thereunder
have received all approvals of governmental authorities (including
material 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.
Section 7.13 Intellectual Property.
(a) To the best of the Knowledge of their directors and
officers, none of Enviroq or any of its Subsidiaries has interfered
with, infringed upon, misappropriated, or violated any material
Intellectual Property rights of third parties in any material
respect. To the Knowledge of any of the directors and officers of
Enviroq and its Subsidiaries, no third party has interfered with,
infringed upon, misappropriated, or violated any material
Intellectual Property rights of any of Enviroq and its Subsidiaries
in any material respect.
(b) Schedule 7.13 identifies each material item of
Intellectual Property that any third party owns and that any of
Enviroq and its Subsidiaries uses pursuant to license, sublicense,
agreement, or permission. On or before the Schedule Delivery Date,
Enviroq will deliver to Purchaser, or make available for
Purchaser's review, correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to
date), which shall be deemed to be Schedules for purposes of
Section 6.1(f) hereof. With respect to each item of Intellectual
Property required to be identified in Schedule E:
(i) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding, enforceable,
and in full force and effect in all material respects;
(ii) no party to the license, sublicense, agreement,
or permission is in material breach or default, and no event has
occurred which with notice or lapse of time would constitute a
material breach or default or permit termination, modification, or
acceleration thereunder;
(iii) no party to the license, sublicense,
agreement, or permission has repudiated any material provision
thereof; and
(iv) none of Enviroq and its Subsidiaries has
granted any sublicense or similar right with respect to the
license, sublicense, agreement, or permission.
Section 7.14 Tangible Assets. The buildings, machinery,
equipment, and other tangible assets that Enviroq and its
Subsidiaries own and lease are free from material defects (patent
and latent), have been maintained in accordance with normal
industry practice, and are in good operating condition and repair
(subject to normal wear and tear).
Section 7.15 Inventory. The inventory of Enviroq and its
Subsidiaries consists of raw materials and supplies, manufactured
and processed parts, work in process, and finished goods, all of
which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is obsolete, damaged,
or defective, subject only to the reserve for inventory writedown
set forth on the face of the Most Recent Balance Sheet (rather than
in any notes thereto) as adjusted for operations and transactions
through the Closing Date in accordance with the Ordinary Course of
Business of Enviroq and its Subsidiaries.
Section 7.16 Contracts. Schedule 7.16 lists the following
contracts and other agreements to which any of Enviroq and its
Subsidiaries 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 $20,000 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 or involve consideration in excess of
$20,000;
(c) any agreement concerning a partnership or joint
venture;
(d) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $20,000 or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(e) any material agreement concerning confidentiality or
noncompetition;
(f) any material agreement with any Affiliates of
Enviroq;
(g) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other
material plan or arrangement for the benefit of its current or
former directors, officers, and employees;
(h) any agreement for the employment of any individual
on a full-time, part-time, consulting, or other basis providing
annual compensation in excess of $20,000 or providing material
severance benefits;
(i) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, and employees outside
the Ordinary Course of Business;
(j) any agreement under which the consequences of a
default or termination could have a material adverse effect on the
business, financial condition, operations, results of operations,
or future prospects of Enviroq and its Subsidiaries not identified
on any other Schedule hereto; and
(k) any other agreement (or group of related agreements)
the performance of which involves consideration in excess of
$20,000.
On or before the Schedule Delivery Date, Enviroq will deliver to
Purchaser, or make available for Purchaser's review, a correct and
complete copy of each written agreement listed in Schedule 7.16
(as amended to date), which shall be deemed to be Schedules for
purposes of Section 6.1(f) hereof, and a written summary setting
forth the material terms and conditions of each oral agreement
referred to in Schedule 7.16. Except as set forth on Schedule
7.16, to the Knowledge of any of the directors and officers of
Enviroq, with respect to each such agreement: (A) the agreement is
legal, valid, binding, enforceable, and in full force and effect in
all material respects; (B) no party is in material breach or
default, and no event has occurred which with notice or lapse of
time would constitute a material breach or default, or permit
termination, modification, or acceleration, under the agreement;
and (C) no party has repudiated any material provision of the
agreement.
Section 7.17 Notes and Accounts Receivable. All notes and
accounts receivable of Enviroq and its Subsidiaries (other than
those which would be due to New Enviroq) are reflected properly on
their books and records, are valid receivables, are current and
collectible, except for amounts which would be due to New Enviroq,
and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set
forth on the face of the Most Recent Balance Sheet (rather than in
any notes thereto) as adjusted for operations and transactions
through the Closing Date in the Ordinary Course of Business of
Enviroq and its Subsidiaries.
Section 7.18 Insurance. Schedule 7.18 sets forth the
following information with respect to each material insurance
policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety
arrangements) with respect to which any of Enviroq and its
Subsidiaries is a party, a named insured, or otherwise the
beneficiary of coverage:
(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 is 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 material loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is
legal, valid, binding, enforceable, and in full force and effect in
all material respects; (B) neither any of Enviroq and its
Subsidiaries nor any other party to the policy is in material
breach or default (including, but not limited to, with respect to
the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute
such a material breach or default, or permit termination,
modification, or acceleration, under the policy; and (C) no party
to the policy has repudiated any material provision thereof.
Schedule 7.18 describes any material self-insurance arrangements
affecting any of Enviroq and its Subsidiaries.
Section 7.19 Litigation. Schedule 7.19 sets forth each
instance in which any of Enviroq and its Subsidiaries (i) is
subject to any outstanding injunction, judgment, order, decree,
ruling, or charge or (ii) is a party or, to the Knowledge of any of
the directors and officers of Enviroq and its Subsidiaries, 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, and to the Knowledge
of such officers and directors, no reasonable basis therefor
exists.
Section 7.20 Employees. To the Knowledge of the directors
and officers of Enviroq and its Subsidiaries, no executive, key
employee, or significant group of employees plans to terminate
employment with any of Enviroq and its Subsidiaries during the next
four months. None of Enviroq and its Subsidiaries is a party to or
bound by any collective bargaining agreement, nor has any of them
experienced any strike or material grievance, claim of unfair labor
practices, or other collective bargaining dispute within the past
three years.
Section 7.21 Employee Benefits.
(a) Schedule 7.21 lists each Employee Benefit Plan that
any of Enviroq and its Subsidiaries maintains or to which any of
Enviroq and its Subsidiaries contributes. Except as set forth on
Schedule 7.21:
(i) Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund) complies in form and in
operation in all material respects with the applicable requirements
of ERISA, the Code, and other applicable laws.
(ii) All required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1's, and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of Title I
of ERISA and of Code Sec. 4980B have been met in all material
respects with respect to each such Employee Benefit Plan which is
an Employee Welfare Benefit Plan.
(iii) All contributions (including all employer
contributions and employee salary reduction contributions) which
are due have been paid to each such Employee Benefit Plan which is
an Employee Pension Benefit Plan and all contributions for any
period ending on or before the Closing Date which are not yet due
have been paid to each such Employee Pension Benefit Plan or
accrued in accordance with the past custom and practice of Enviroq
and its Subsidiaries. All premiums or other payments for all
periods ending on or before the Closing Date have been paid with
respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(iv) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Sec. 401(a) and has received, within
the last two years, a favorable determination letter from the
Internal Revenue Service.
(v) The market value of assets under each such
Employee Benefit Plan which is an Employee Pension Benefit Plan
(other than any Multi-employer Plan) equals or exceeds the present
value of all vested and nonvested liabilities thereunder determined
in accordance with PBGC methods, factors, and assumptions
applicable to an Employee Pension Benefit Plan terminating on the
date for determination.
(vi) Prior to the Schedule Delivery Date, Enviroq
will deliver to Purchaser correct and complete copies of the plan
documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service,
the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements which
implement each such Employee Benefit Plan.
(b) Except as set forth on Schedule 7.21, with respect
to each Employee Benefit Plan that any of Enviroq and its
Subsidiaries maintains or ever has maintained or to which any of
them contributes, ever has contributed, or ever has been required
to contribute:
(i) No such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any Multi-employer Plan)
has been completely or partially terminated or been the subject of
a Reportable Event as to which notices would be required to be
filed with the PBGC. No proceeding by the PBGC to terminate any
such Employee Pension Benefit Plan (other than any Multi-employer
Plan) has been instituted or, to the Knowledge of any of the
directors and officers of Enviroq and its Subsidiaries, threatened.
Inv There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has any
liability for material breach of fiduciary duty or any other
material failure to act or comply in connection with the
administration or investment of the assets of any such Employee
Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment
of the assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of any of the
directors and officers of Enviroq and its Subsidiaries, threatened.
(iii) None of Enviroq or any of its Subsidiaries
has incurred any material 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) to the PBGC (other than PBGC
premium payments) or otherwise under Title IV of ERISA (including
any withdrawal liability) or under the Code with respect to any
such Employee Benefit Plan which is an Employee Pension Benefit
Plan.
(c) None of Enviroq or any of its Subsidiaries
contribute to, ever has contributed to, or ever has been required
to contribute to any Multi-employer Plan or has any material
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 withdrawal liability, under any
Multi-employer Plan.
(d) None of Enviroq or any of its Subsidiaries maintains
or ever has maintained or contributes, ever has contributed, or
ever has been required to contribute to any Employee Welfare
Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in
accordance with Code Section 4980B).
Section 7.22 Guaranties. Except as set forth on Schedule
7.22, neither Enviroq nor any of its Subsidiaries is a guarantor or
otherwise is responsible for any liability or obligation (including
indebtedness) of any other Person.
Section 7.23 Environment, Health, and Safety. Except as set
forth on Schedule 7.23,
(a) Each of Enviroq and its Subsidiaries (A) has
complied with the Environmental, Health, and Safety Laws in all
material respects, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any such failure to
comply, (B) has obtained and has at all times been and is in
substantial compliance with all of the terms and conditions of all
permits, licenses, and other authorizations, certifications and
training which are required under any of the Environmental, Health,
and Safety Laws, (C) has complied in all material respects with all
other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables
which are contained in the Environmental, Health, and Safety Laws,
and (D) each of Enviroq and its Subsidiaries will provide
Purchaser, within twelve (12) Business Days hereof, with copies
within its possession or control of all environmental assessments,
complaints, claims, consent orders or agreements, notices of
violations, governmental inquiries and permits issued or arising
under or subject or relating or pursuant to any Environmental,
Health and Safety Laws for any property owned, now or in the past
or to be acquired prior to Closing, by Enviroq or any of its
Subsidiaries, and such copies shall be deemed to be Schedules for
purposes of Section 6.1(f) hereof.
(b) None of Enviroq and its Subsidiaries has any
material liability and none of Enviroq, its Subsidiaries, and their
respective predecessors has handled or disposed of any substance,
arranged for the disposal of any substance, exposed any employee or
other individual to any substance or condition, or owned or
operated any property or facility in any manner that could give
rise to any material liability, for contamination or damage to any
site, location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual,
or for any reason under any Environmental, Health, and Safety Law.
Section 7.24 Registration Statement and Proxy Statement.
None of the information supplied or to be supplied by or on behalf
of Enviroq or New Enviroq for inclusion or incorporation by
reference in (i) the Registration Statement will, at the time the
Registration Statement is filed with the SEC and at the time it
becomes effective under the Securities Act or the Exchange Act,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading and (ii) the Proxy
Statement will not, at the date mailed to Enviroq Shareholders ,
and at the time of the Special Meeting to be held in connection
with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE VIII
WARRANTIES OF PURCHASER
Purchaser warrants to Enviroq that the statements contained in
this Article VIII 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 Article
VIII).
Section 8.1 Organization. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of
the state of Delaware. Upon its formation, the Merger Subsidiary
will be a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation.
Section 8.2 Financing. Purchaser shall have furnished to
Enviroq correct and complete copies of written commitments from
third parties (the "Financing Commitments") committing to provide
Purchaser with all of the financing they will require in order to
consummate the Merger.
Section 8.3 Authorization of Transaction. Purchaser has,
and upon its formation Merger Subsidiary will have, full power and
authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally
binding obligation of Purchaser, enforceable in accordance with its
terms and conditions.
Section 8.4 Non-contravention. 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 Purchaser or the
Merger Subsidiary is subject or any provision of the charter or
bylaws of Purchaser, or the Merger 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, or require any notice under any
material agreement, contract, lease, license, instrument or other
arrangement to which any of Purchaser, or the Merger Subsidiary is
a party or by which it is bound or to which any of its assets is
subject. Other than in connection with the provisions of the Xxxx-
Xxxxx-Xxxxxx Act and the corporation laws of the State of
Delaware, neither Purchaser, nor the Merger Subsidiary need 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.
Section 8.5 Brokers' Fees. Neither Purchaser, nor Merger
Subsidiary 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 any of
Enviroq and its Subsidiaries could become liable or obligated.
Section 8.6 Registration Statement and Proxy Statement.
None of the information supplied or to be supplied by or on behalf
of Purchaser for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement
is filed with the SEC and at the time it becomes effective under
the Securities Act or the Exchange Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and (ii) the Proxy Statement will not, at
the date mailed to Enviroq Shareholders , and at the time of the
Special Meeting to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they are made, not misleading.
ARTICLE IX
LIMITED SURVIVAL AND INDEMNIFICATION
Section 9.1 Survival. As provided in this Article IX, the
representations, warranties, covenants and agreements Enviroq set
forth in this Agreement shall survive the Closing and the Merger
and the consummation of the other transactions contemplated herein
notwithstanding any examination made for or on behalf of Purchaser
for a period of one (1) year.
Section 9.2 Indemnification by New Enviroq.
(a) By execution of this Agreement, New Enviroq agrees
to indemnify the Purchaser and the Surviving Corporation and their
respective successors and assigns and hold them harmless against
and in respect of:
(i) any and all loss, liability, cost, expense or
damage (including judgments and settlement payments) incurred by
them incident to, arising in connection with or resulting from any
misrepresentation or violation of any representation or warranty by
Enviroq or New Enviroq made or contained in this Agreement or in
any Exhibit, Schedule, certificate or other document executed and
delivered to the Purchaser by or on behalf of Enviroq or New
Enviroq under or pursuant to this Agreement or the transactions
contemplated herein, provided, however, New Enviroq shall be liable
pursuant to this Section 9.2(a)(i) only if any director or officer
of Enviroq had Knowledge or reasonably should have known (without
investigation), operating in the Ordinary Course of Business, of
such misrepresentation or violation.
(ii) any and all costs, expenses and all other
actual damages incurred by them in remedying any misrepresentation
or violation described above, including, by way of illustration and
not limitation, all legal and accounting fees, other professional
expenses and all filing fees and collection costs reasonably
incident thereto and all such fees, costs and expenses incurred in
defending claims which, if successfully prosecuted, would have
resulted in Damages (as defined below).
(b) Any and all of the items set forth in Section 9.2(a)
for which Purchaser or the Surviving Corporation is entitled to be
indemnified hereunder are collectively referred to as "Damages."
Section 9.3 Right of Offset. The Purchaser shall be
entitled from time to time to withhold payments of and to make
offsets against, the principal and interest payable pursuant to the
Subordinated Promissory Note for all Damages for which Purchaser or
the Surviving Corporation has a right of indemnification hereunder.
The right of offset shall be Purchaser's sole right to recovery
pursuant to this Article IX.
Section 9.4 Withholding and Offset Procedure. When
Purchaser learns that it or the Surviving Corporation has suffered
any Damages for which Purchaser may have the withholding and offset
rights hereunder, Purchaser shall notify the holder of the
Subordinated Promissory Note in writing of the claim, specifying
therein the reasons why it believes that the withholding and offset
rights apply, the amount claimed and the basis on which the amount
has been calculated (the "Notice of Claim"). Upon the giving of
such Notice of Claim and thereafter, the Purchaser may withhold
payment only after it has actually incurred Damage (in the
following order) of (i) principal on the Subordinated Promissory
Note up to the amount claimed in the Notice of Claim, and (ii)
interest on the Subordinated Promissory Note with respect to such
claimed amount.
Section 9.5 Limitations on Indemnification by New Enviroq.
(a) Time Limitation. Notwithstanding the other
provisions of this Article IX, New Enviroq shall not be liable to
indemnify Purchaser or the Surviving Corporation following the
Closing Date for Damages unless the Purchaser delivers a Notice of
Claim to New Enviroq not later than the first anniversary of the
Closing Date.
(b) Limitations on Amount.
(i) Notwithstanding the other provisions of this
Article IX, New Enviroq shall not be liable to indemnify the
Purchaser or the Surviving Corporation for Damages unless and until
the aggregate amount of otherwise indemnifiable Damages suffered by
Purchaser or the Surviving Corporation (including Objections
pursuant to Section 6.3 hereof) is in excess of $250,000 in which
case Purchaser and the Surviving Corporation shall be entitled to
indemnification for all Damages incurred in excess of such amount.
(ii) The aggregate amount of Damages which may give
rise to an indemnification or other claim under this Agreement by
Purchaser or the Surviving Corporation shall be limited to the
unpaid amounts payable by Purchaser under the Subordinated
Promissory Note.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations and Warranties.
Except as expressly provided in Article IX hereof, none of the
representations and warranties in this Agreement shall survive the
Effective Time of the Merger but shall survive the termination of
this Agreement.
Section 10.2 Press Releases and Public Announcements. No
Party shall issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior
written approval of the other Parties; provided, however, that any
Party may make any public disclosure it believes in good faith is
required by applicable law (in which case the disclosing Party will
use its best efforts to advise the other Party at the earliest
possible time prior to making the disclosure).
Section 10.3 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;
provided, however, that the provisions in Articles II and III above
concerning payment of the Merger Consideration and certain
additional agreements are intended for the benefit of Enviroq
Shareholders and directors and officers.
Section 10.4 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.
Section 10.5 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 the other Parties.
Section 10.6 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.
Section 10.7 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.
Section 10.8 Notices. Notices to be given to Purchaser or
Merger Subsidiary hereunder shall be in writing, and delivered
personally to the designated officer of Purchaser, transmitted by
facsimile, or deposited in the United States mail, certified and
return receipt requested, postage prepaid, and addressed to
Purchaser, or Merger Subsidiary at:
Insituform Mid-America, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
or to such other address as may be specified by Purchaser in
writing.
Notices to be given to Enviroq hereunder shall be in writing,
and delivered personally to the designated officer of Enviroq,
transmitted by facsimile, or deposited in the United States mail,
certified and return receipt requested, postage prepaid, and
addressed to Enviroq at:
Enviroq Corporation
11511 Xxxxxxxx Xxxxxxx
Xxxx Xxxxxx Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Xx.
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
with a copy to:
Martin, Ade, Xxxxxxxxxx & Xxxxxxx, P.A.
Attention: Xxxxx X. Xxxxxx
Suite 3000, One Independent Square
Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
or to such other address as may be specified by Enviroq in writing.
Notices delivered personally shall be effective upon delivery.
Notices transmitted by facsimile shall be effective when
transmitted. Notices delivered by mail shall be effective upon the
acceptance or rejection by the person to whom they are addressed.
Section 10.9 Governing Law. This Agreement shall be
governed by and construed in accordance with the domestic laws of
the State of Delaware without giving effect to any choice or
conflict of law provision or rule (whether of the State of Delaware
or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware .
Section 10.10 Amendments and Waivers. The Parties may
mutually amend any provision of this Agreement at any time prior to
the Effective Time with the prior authorization of their respective
boards of directors; provided, however, that any amendment effected
subsequent to stockholder approval will be subject to the
restrictions contained in the Delaware General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by all of the Parties. 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.
Section 10.11 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.
Section 10.12 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 otherwise requires. The word "including" shall mean
including without limitation.
Section 10.13 Incorporation of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
ARTICLE XI
DEFINITIONS
Section 11.1 "Adverse Consequences" means all actions,
suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees, rulings,
damages, dues, penalties, fines, reasonable amounts paid in
settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including reasonable court costs and reasonable
attorneys' fees and expenses.
Section 11.2 "Affiliate" has the meaning set forth in the
regulations promulgated under the Exchange Act.
Section 11.3 "Business Day" means each day on which national
banks in the Jacksonville, Florida area are open for business.
Section 11.4 "Certificate of Merger" has the meaning set
forth in Section 2.10 hereof.
Section 11.5 "Closing" has the meaning set forth in Section
2.9 hereof.
Section 11.6 "Closing Date" has the meaning set forth in
Section 2.9 hereof.
Section 11.7 "Code" means the Internal Revenue Code of 1986,
as amended. All citations to the Code or to the regulations
promulgated thereunder shall include any amendments or any
substitute or successor provisions thereto.
Section 11.8 "Confidential Information" means any
information concerning the businesses and affairs of a Party that
is not already generally available to the public or became known to
the other Party prior to commencement of discussions or
negotiations with respect to the Merger.
Section 11.9 "Delaware General Corporation Law" means Title
8 of the Delaware Code, as amended.
Section Error "Effective Time" has the meaning set forth in
Section 2.1 hereof.
Section 11.11 "Employee Benefit Plan" means any (a) non-
qualified deferred compensation or retirement plan or arrangement
which is an Employee Pension Benefit Plan, (b) qualified defined
contribution retirement plan or arrangement which is an Employee
Pension Benefit Plan, (c) qualified defined benefit retirement plan
or arrangement which is an Employee Pension Benefit Plan (including
any Multi-employer Plan), or (d) Employee Welfare Benefit Plan (or
material fringe benefit plan or program).
Section 11.12 "Employee Pension Benefit Plan" has the meaning
set forth in ERISA Section 3(2).
Section 11.13 "Employee Welfare Benefit Plan" has the meaning
set forth in ERISA Section 3(1).
Section 11.14 "Environmental, Health, and Safety Laws" means
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery Act
of 1976, and the Occupational Safety and Health Act of 1970, each
as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof) concerning pollution
or protection of the environment, public health and safety, or
employee health and safety, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic
materials or waste into ambient air, surface water, ground water,
or lands or otherwise relating to the-manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or waste.
Section 11.15 "Enviroq" has the meaning set forth in the
preface on page 1 hereof.
Section 11.16 "Enviroq Share" means any share of the Common
Stock, $0.44 par value per share, of Enviroq.
Section 11.17 "Enviroq Shareholder" means any Person who or
which holds any Enviroq Shares.
Section 11.18 "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
Section 11.19 "Extremely Hazardous Substance" has the meaning
set forth in Section 302 of the Emergency Planning and Community
Right to Know Act of 1986, as amended.
Section 11.20 "Fiduciary" has the meaning set forth in ERISA
Section 3(21).
Section 11.21 "Financial Statement" has the meaning set forth
in Section 7.7 hereof.
Section 11.22 "Financing Commitment" has the meaning set
forth in Section 8.2 hereof.
Section 11.23 "GAAP" means United States generally accepted
accounting principles as in effect from time to time.
Section 11.24 "Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended.
Section 11.25 "Intellectual Property" means (a) all
inventions (whether patentable or unpatentable), 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 drafts, 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
copyrightable works, all copyrights, and all applications,
registrations, and renewals in connections therewith, (d) all mask
works and all applications, registrations, and renewals in
connection therewith, (e) 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 supplier list, pricing and cost
information, and business and marketing plans and proposals), (f)
all computer software (including data and related documentation),
(g) all other proprietary rights, and (h) all copies and tangible
embodiments thereof in whatever form or medium.
Section 11.26 "Knowledge" means actual knowledge without
independent investigation.
Section 11.27 "Merger Consideration" means an amount equal to
$15,250,000.
Section 11.28 "Merger Subsidiary" has the meaning set forth
in the Preamble to this Agreement.
Section 11.29 "Most Recent Balance Sheet" means the balance
sheet contained within the Most Recent Financial Statements.
Section 11.30 "Most Recent Financial Statements" has the
meaning set forth in Section 7.7 hereof.
Section 11.31 "Most Recent Fiscal Month End" has the meaning
set forth in Section 7.7 hereof.
Section 11.32 "Most Recent Fiscal Year End" has the meaning
set forth in Section 7.7 hereof.
Section 11.33 "Multi-employer Plan" has the meaning set forth
in ERISA Section 3(37).
Section 11.34 "Objection" shall have the meaning set forth in
Section 6.3 hereof.
Section 11.35 "Ordinary Course of Business" means the
ordinary course of business of the subject party consistent with
its past custom and practice (including with respect to quantity
and frequency).
Section 11.36 "PBGC" means the Pension Benefit Guaranty
Corporation.
Section 11.37 "Party" has the meaning set forth in the
preface on page 1 hereof.
Section 11.38 "Person" means an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, limited liability
company, or a governmental entity (or any department, agency, or
political subdivision thereof).
Section 11.39 "Principal Shareholders" means SCE,
Incorporated, an Alabama corporation, and Xxxxxxxxx Securities
Associates, a Florida general partnership.
Section 11.40 "Prohibited Transaction" has the meaning set
forth in ERISA Section 406 and Code Section 4975.
Section 11.41 "Purchaser" has the meaning set forth in the
preface on page 1 hereof.
Section 11.42 "Reportable Event" has the meaning set forth in
ERISA Section 4043.
Section 11.43 "Requisite Stockholder Approval" means the
affirmative vote of the holders of a majority of the Enviroq Shares
in favor of this Agreement and the Merger.
Section 11.44 "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
Section 11.45 "Security Interest" means any mortgage, pledge,
lien, encumbrance, charge, or other security interest, other than
(a) mechanic's, materialman's, and similar liens for work done on
the property to the extent that such liens arise in the Ordinary
Course of Business and are not yet due and payable, (b) liens for
taxes not yet due and payable or for taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under
capital lease arrangements, in each case, where there exists no
default in Enviroq's or any Subsidiary's obligations with respect
to the underlying agreements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the
borrowing of money.
Section 11.46 "Subordinated Promissory Note" means the
promissory note issued to New Enviroq referred to in Section 2.10
which shall be in form and substance as set forth on Exhibit "D"
hereto.
Section 11.47 "Subsidiary" means any corporation with respect
to which a specified Person (or a Subsidiary thereof) owns
(directly or indirectly) a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to
elect a majority of the directors.
Section 11.48 "Surviving Corporation" has the meaning set
forth in Section 2.1 hereof.
Section 11.49 "Tax Returns" means, collectively, (A) all
reports, declarations, estimates, returns, information statements,
and similar documents relating to, or required to be filed in
respect of any Taxes; and (B) all information statements, returns,
reports or similar documents required to be filed with respect to
payments to (or from) third parties or with respect to transactions
in which Company or any Subsidiary participates; and the term "Tax
Return" shall mean any one of the foregoing Tax Returns.
Section 11.50 "Taxes" means, collectively, (A) all net
income, gross income, gross receipts, sales, use, ad valorem,
franchise, profits, license, lease, service, service use,
withholding, employment, payroll, excise, severance, transfer,
documentary, mortgage, registration, stamp, occupation,
environmental, premium, property, windfall, profits, customs,
duties, and other taxes, fees, assessments or charges of any kind
whatever, including any estimates thereof, together with any
interest, penalties and other additions with respect thereto,
imposed by any federal, territorial, state, local or foreign
government; and (B) any penalties, interest, or other additions to
tax for the failure to collect, withhold, or pay over any of the
foregoing, or to accurately file any Tax Return; and the term "Tax"
shall mean any one of the foregoing Taxes. When used with
reference to a specified Person (for example and without
limitation, "Taxes of Enviroq"), the terms "Taxes" and "Tax" shall
include only amounts of, or in respect of, Taxes for which such
Person is, or could become, liable in whole or part (including,
without limitation, any obligation in connection with a duty to
collect, withhold, or pay over any Tax, any obligation to
contribute to the payment of any Taxes determined on a
consolidated, combined, or unitary basis, any liability as a
transferee, or any liability as a result of any express or implied
obligation to indemnity or pay the Tax obligations of another
Person.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the date first above written.
INSITUFORM MID-AMERICA, INC.
BY: s/Xxxxxx Xxxxxxxxx
--------------------------------
Its Chairman
-----------------------------
"Purchaser"
ENVIROQ CORPORATION
BY: s/Xxxxx Xxxxx
--------------------------------
Its President
-----------------------------
"Enviroq"
IMA MERGER SUB, INC.
BY: s/Xxxxxx Xxxxxxxxx
--------------------------------
Its Chairman
-----------------------------
NEW ENVIROQ CORPORATION
BY: s/Xxxxxxx Xxxx
--------------------------------
Its President
----------------------------
