EXHIBIT 10(i)
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
This Agreement of Merger and Plan of Reorganization ("Agreement")
dated May 1, 1998 is by and among ClearWorks Technologies, Inc., a Delaware
corporation, (the "Buyer"), Millennium Integration Technologies, Inc. a Texas
corporation, (the "Subsidiary"), InfraResources, LLC, a Texas limited liability
company, (the "Company") and Xxxxxx Energy Incorporated, a Texas Corporation,
the major interest holder of the Company and other interest holders of Company
(collectively referred to as the "Sellers").
WHEREAS, the Sellers collectively own all of the outstanding
interest of the Company;
WHEREAS, the Company is engaged in the business (the "Business") of
providing information technology professionals;
WHEREAS, the Buyer desires to acquire by purchase all of Seller's
interest in the Company;
WHEREAS, for U.S. federal income tax purposes, it is intended that
this merger shall qualify as a tax-free reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises and
representations, warranties and agreements contained herein, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
CLOSING
Section I.1 CLOSING. Subject to the provisions of this Agreement,
the Merger shall be consummated by filing with the Secretary of State of the
State of Texas a certificate of merger, in such form as required by, and signed
and attested in accordance with, the relevant provisions of the Texas Business
Corporation Act (the "TCBA") (the time of such filing or such later time and
date as is specified in such filing being the "Effective Time"). The closing of
the purchase and sale provided for herein (the "Closing") is to take place on
May 26, 1998 ("Closing
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Date") at the offices of Xxxxxx & Fleschler, 0000 Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx 00000, concurrently with the execution and delivery hereof.
Section 1.2 EFFECT OF CLOSING. By virtue of the Merger and without
the necessity of any action by or on behalf of the parties hereto:
(a) At the Effective Time, (i) the separate existence of the Company
shall cease and the Company shall be merged with and into the Subsidiary
(the Subsidiary and the Company are sometimes referred to herein as the
"Constituent Corporations" and the Subsidiary is sometimes referred to
herein as the "Surviving Corporation"), (ii) the Certificate of
Incorporation of the Subsidiary shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter amended and (iii) the
By-laws of the Subsidiary as in effect immediately prior to the Effective
Time shall be the By-laws of the Surviving Corporation until thereafter
amended.
(b) At and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises as well as
of a public and of a private nature, and be subject to all the
restrictions, disabilities and duties, of each of the Constituent
Corporations; and all and singular the rights, privileges, powers and
franchises of each of the Constituent Corporations, and all property,
real, personal and mixed, and all debts due to either of the Constituent
Corporations on whatever account, as well as for stock subscriptions and
member interest as all other things in action or belonging to each of the
Constituent Corporations shall be vested in the Surviving Corporation; and
all property, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter the property of the Surviving
Corporation as they were of the respective Constituent Corporations, and
the title to any real estate vested by deed or otherwise, in either of the
Constituent Corporations, shall not revert or be in any way impaired; but
all rights of creditors and all liens upon any property of either of the
Constituent Corporations shall be preserved unimpaired; and all debts,
liabilities and duties of the respective Constituent Corporations shall
thenceforth attach to the Surviving Corporation and may be enforced
against it to the same extent as if said debts and liabilities had been
incurred or contracted by it, except as otherwise provided by law or
contract.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section II.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of any holder of
interest of the Company or shares of capital stock of the Subsidiary:
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(a) CAPITAL STOCK OF SUBSIDIARY. Each issued and outstanding share
of the capital stock of the Subsidiary shall continue to be an issued and
outstanding share of capital stock of the Surviving Corporation. Each
certificate representing immediately prior to the Effective Time issued
shares of capital stock of the Subsidiary shall continue to evidence
ownership of the same number of shares of capital stock of the Surviving
Corporation.
(b) REPRESENTATION OF INTEREST. All interest whether issued or
un-issued in the Company is represented in this Agreement and there are no
interests outstanding that are not represented herein.
(c) EXCHANGE RATIO FOR COMPANY COMMON STOCK. Subject to Section 2.2,
each issued and outstanding interest holder in the Company shall be
converted into the right to receive a number of shares of Buyer Common
Stock exchanged at a ratio of each one percent (1%) interest in the
Company for 800 fully paid and nonassessable shares of Buyer Common Stock
(such fully paid and nonassessable shares of Buyer Common Stock being
hereinafter referred to as the "Stock Consideration"). As of the Effective
Time, all interest in the Company shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such interest shall cease to have
any rights with respect thereto, except the right to receive the Stock
Consideration therefor upon the surrender of such certificate in
accordance with Section 2.2 hereof, without interest.
(d) DISCHARGE OF DEBT. Buyer shall discharge existing Bank debt due
to Sterling Bank N.A. in an amount limited to $40,000.00 plus accrued
interest to the date of Closing.
(e) CASH. Buyer shall retain all cash received after April 30, 1998
and Seller shall retain all cash received prior to that date.
(f) PREPAID ACCOUNTS. Seller shall retain all interest in all
prepaid accounts existing as of the date of Closing.
(g) Assets. All computer equipment of the Company shall be
liquidated and be sold to Xxxxxx Energy Incorporated for the sum of one
dollar ($1) as evidenced by a Xxxx of Sale attached hereto as Exhibit A-1
and made a part hereof.
Section II.2 EXCHANGE OF CERTIFICATES. (a) On the Closing Date, each
Seller shall surrender to Xxxxxxx X. XxXxxxx, 000 Xxxxx Xxxx Xxxxx 000, Xxxxxxx,
Xxxxx, 00000, President and CEO of the Buyer, all certificates representing
interest in the Company. Upon surrender of the interest certificates in the
Company, such Seller shall be entitled to receive the
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amount of Buyer Common Stock specified in Section 2.1. All shares of Buyer
Common Stock issued upon the surrender for exchange of interest in the Company
in accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such interest in the Company, and there
shall be no further registration of transfers of interest in the Company after
the Effective Time.
Section II.3 AUDIT. Within sixty (60) days of Closing, the interest
holders in the Company shall cooperate at no charge to Buyer, in conducting an
audit of the combined financial statements of the Company as of April 30, 1998
(the "Audit Date"), in accordance with generally accepted auditing standards and
generally accepted accounting principles ("GAAP"). The certificate of such
Accounting Firm having no qualifications or limitations.
Section II.4 SHAREHOLDERS' AGREEMENT. At the Closing, the Sellers
and/or their respective agents, designees and representatives will each enter
into a Shareholders' Agreement which contains provisions concerning the
transferability of stock of the Buyer in substantially the form of Exhibit S,
attached hereto and made a part hereof.
Section II.5 TAXES UPON CONVEYANCE AND TRANSFER. The Sellers shall
pay any and all sales, use, transfer or similar taxes payable in connection with
the sale, transfer and assignment of the interest in the Company to Buyer. The
Company has properly filed or caused to be filed all federal, state, local and
foreign income and other tax returns, reports and declarations that are required
by applicable law to be filed by them, and have paid, or made full and adequate
provisions for the payment of, all federal, state, local and foreign income and
other taxes properly due for the periods covered by such returns, reports and
declarations, particularly for all periods prior to April 30, 1998.
Section II.6 MAIL RECEIVED AFTER CLOSING. Following the Closing,
Buyer may receive and open all mail addressed to the Sellers and, to the extent
that such mail and the contents thereof relate to the Business of the Company,
deal with the contents thereof in its discretion. Buyer shall notify the Sellers
of (and provide the Sellers copies of) any mail that on its face obliges the
Sellers to take any action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
The Sellers, jointly and severally, represent and warrant to Buyer
the following:
Section III.1 COMPANY STATUS AND GOOD STANDING. The Company is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Texas, with full corporate power and authority
under its certificate or articles of organization
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and regulations to own and lease its properties and to conduct the Business. The
Company is duly qualified to do business as a foreign corporation in all states
in which the nature of its business requires such qualification and the failure
to do so would have an adverse effect on the Company or the interest in the
Company.
Section III.2 CAPITAL STRUCTURE. As of the Closing Date, the
interest in the Company is duly authorized, validly issued, fully paid and
non-assessable and is not subject to preemptive rights or rights of any person
to acquire interest in the Company. The interest holders in the Company
represent all of the outstanding interest in the Company and are owned
beneficially and of record by the interest holders, in the amounts listed on
Exhibit A, attached hereto and made a part hereof. The Company has not issued
(i) any securities convertible or exchangeable for interest in the Company; or
(ii) any options, warrants, calls, rights (including preemptive rights),
commitments or agreements to which the Company is bound. As of the Closing Date,
there are no interest holder agreements, voting trusts or other agreements or
understandings to which either of the Sellers or the Company is a party that
will limit in any way the transactions described in the Agreement or the free
and clear ownership of interest in the Company by Buyer.
Section III.3 AUTHORIZATION. Each of the Sellers has full power and
authority to execute and deliver this Agreement and the exhibits hereto, to
consummate the transactions contemplated herein and to take all actions required
to be taken by each of them pursuant to the provisions hereof, and each of the
Sellers agree that this Agreement and the exhibits attached hereto constitutes
the valid and binding obligation of the Sellers and is enforceable in accordance
with its terms. To the extent any spouse or former spouse of the Seller has any
community property interest in the Company, such spouse or former spouse has
executed a counterpart hereof.
Section III.4 NON-CONTRAVENTION. Except as set forth in Exhibit B,
attached hereto and made a part hereof, neither the execution and delivery of
this Agreement or any documents executed in connection herewith, nor the
consummation of the transactions contemplated herein or therein, does or will
violate, conflict with, result in breach of or require notice or consent under
any law, the charter or regulations of the Company or any provision of any
agreement or instrument to which the Company is a party. The Sellers
collectively own 100% of the outstanding interest in the Company. The last
regularly prepared annual income statement for the Company shows revenues of
less than $1,013,700, and the last regularly prepared balance sheet of the
Company shows assets of less than $1,000,000. The Sellers are collectively the
ultimate parent entity of the Company and, assuming the accuracy of the
representation in Section 4.3, no filing under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx") is required in connection with the
transactions contemplated by this Agreement.
Section III.5 VALIDITY. There are no pending or threatened judicial
or
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administration actions, proceedings or investigations which question the
validity of this Agreement or any action taken or contemplated by the Company or
the Sellers in connection with this Agreement.
Section III.6 BROKER INVOLVEMENT. The Sellers have not hired,
retained or dealt with any broker or finder in connection with the transactions
contemplated by this Agreement.
Section III.7 LITIGATION. Except as set forth on Exhibit C, attached
hereto and made a part hereof, there is no investigation, claim or proceeding or
litigation of any type pending or threatened involving or that might have an
adverse effect on the Sellers or Buyer as the owner of interest in the Company,
and Sellers are unaware of any claims, judgment, order, writ, injunction or
decree of any court, government or governmental agency, or arbitral tribunal
against or involving Sellers or the Company that might have an adverse effect on
Sellers or Buyer as the owner of interest in the Company.
Section III.8 TITLE. The Sellers are the true and lawful owners of
all interest in the Company, free and clear of any and all liens, encumbrances,
mortgages, options, security interests, restrictions, liabilities, pledges and
assignments of any kind, and each of the Sellers has the full right to sell and
transfer to Buyer good and marketable title to the interest in the Company, free
and clear of any and all liens and encumbrances of any nature or description.
The delivery to Buyer of the instruments of transfer of ownership contemplated
by this Agreement will vest good and marketable title to all interest in the
Company to Buyer, free and clear of all liens and encumbrances of any nature or
description.
Section III.9 CONTINUITY PRIOR TO CLOSING DATE. Except as set forth
on Exhibit D, attached hereto and made a part hereof, from the Letter of Intent
Date to and including the Closing Date, the Company has not conducted its
business otherwise than in the usual and customary manner and in the ordinary
course of business, consistent with its historical practice, and there has not
been:
(a) any sale, lease, distribution, transfer, mortgage, pledge or
subjection to lien of Company's assets, except sales of obsolete or
surplus equipment in the ordinary and usual course of business and the
creation of liens for taxes not yet due and payable, materialmen's,
mechanics', workmen's, repairmen's or other like liens;
(b) any material transaction by the Company not in the ordinary and
usual course of business;
(c) any material damage, destruction or loss to the assets of the
Company or any other assets used in the Business, whether or not covered
by insurance;
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(d) a termination, or a threatened termination, or material
modification, in each case not in the ordinary course of business, of any
material contract or the relationship of the Company with any customer or
supplier;
(e) any change by the Company in accounting methods or principles or
the application thereof or any change in the Company's policies or
practices with respect to items affecting working capital;
(f) any delay or reduction in capital expenditures in contemplation
of this Agreement or otherwise, or any failure to continue to make capital
expenditures in the ordinary course of business consistent with past
practice;
(g) any acceleration of shipments, sales or orders or other similar
action in contemplation of this Agreement or otherwise not in the ordinary
course of business consistent with past practice;
(h) any bonus payments, salary increases, commission increases or
modifications, the execution of any employment agreement, severance
arrangement, consulting arrangement or similar document or agreement, or
other changes in employee benefits or other compensation;
(i) any waiver by the Company of any rights that, singly or in the
aggregate, are material to the Business, the Company member interest, the
assets of the Company or the financial condition or results of operation
of the Company;
(j) any labor strikes, union organizational activities or other
similar occurrence; or
(k) any contract or commitment by the Company to do or cause to be
done any of the foregoing, except in connection with this Agreement and
the transactions contemplated hereby.
Section III.10 CONTRACTS AND COMMITMENTS. Exhibit E, attached hereto
and made a part hereof, lists all agreements, commitments, contracts,
undertakings or understandings to which the Company is a party and which relate
to the Business or the Company, including but not limited to trademark, trade
name or patent license agreements, service agreements, lease, purchase or sale
agreements, supply agreements, distribution or distributor agreements, purchase
orders, customer orders and equipment rental agreements. The Company is not in
breach of or default under any agreement, lease, contract or commitment listed
in Exhibit E, attached hereto and made a part hereof, (collectively, the
"Agreements"). Each Agreement is a valid, binding and enforceable agreement of
the Company and the other parties thereto. There has not occurred any
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breach or default under any Agreement on the part of the other parties thereto,
and no event has occurred which with the giving of notice or the lapse of time,
or both, would constitute a default under any Agreement. There is no dispute
between the parties to any Agreement as to the interpretation thereof or as to
whether any party is in breach or default thereunder, and no party to any
Agreement has indicated its intention to, or suggested it may evaluate whether
to, terminate any Agreement.
Section III.11 TRADEMARKS, TRADE NAMES AND INTELLECTUAL PROPERTY.
Exhibit F, attached hereto and made a part hereof, contains an accurate and
complete list of (i) all patents, pending patent applications and invention
memoranda relating to the Company's Business or the interest in the Company,
(ii) all registered United States and foreign trademarks, trade names, logos and
copyrights owned or used by the Company in connection with its Business or
interest in the Company, and all registrations thereof, and (iii) all
unregistered United States and foreign trademarks, trade names, logos and
copyrights used by the Company in connection with its Business or the interest
in the Company. The Company has the right to use all trademarks, trade names,
logos, copyrights, patents, pending patent applications and invention memoranda
referred to herein. There is no pending or threatened action or claim that would
impair any such right.
Section III.12 FINANCIAL RECORDS.. The unaudited financial
statements of the Company as of and for the year ended December 31, 1997 and as
of and for each month ending April 30, 1998 and attached hereto as Exhibit G and
made a part hereof, delivered to Buyer (the "Financial Statements"), are
accurate and complete, were prepared on a consistent basis (except as set forth
therein) and fairly present the financial condition and results of operations of
the Company. The audited financial statements referred to in Section 2.3 will be
completed within sixty (60) days of the Effective Time, and will be prepared in
accordance with GAAP applied on a consistent basis and will fairly present the
financial condition and results of operations of the Company. Exhibit H,
attached hereto and made a part hereof, reflects all inter-company transactions
between the Company and its interest holders or its affiliates since January 1,
1996.
Section III.13 EMPLOYEES AND RELATED MATTERS. Exhibit I, attached
hereto and made a part hereof, is a complete list of all employees of the
Company, listing the title or position held, base salary, any commissions or
other compensation paid or payable, all employee benefits received by such
employees and any other terms of any oral or written agreement with the Company.
Section III.14 NO MATERIAL CHANGE. There has been no material
adverse change in the interest in the Company or its value or in the Business
from the Letter of Intent Date to and including the Closing Date, and no event
has occurred which could be expected to lead to or cause such a material adverse
change.
Section III.15 INVESTMENT INTENTION. Sellers are acquiring the Buyer
Common
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Stock hereunder for investment, solely for its own account and not with a view
to, or for resale in connection with, the distribution or other disposition
thereof.
Section III.16 COMPLIANCE WITH LAW. The Company is not in violation
of any provision of any law, decree, order, regulation, license, permit,
consent, approval, authorization or qualification or order, including, without
limitation, those relating to health, the environment or Hazardous Substances,
and the Company has received no notice of any alleged violation of such law,
decree, order, regulation, license, permit, consent, approval, authorization or
qualification or order.
Section III.17 GOVERNMENT LICENSES, PERMITS AND RELATED APPROVALS.
Exhibit J, attached hereto and made a part hereof, sets forth a list of all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities required for the conduct of the Business by
the Company as currently conducted, all of which are in full force and effect.
Section III.18 SAFETY REPORTS. Exhibit K, attached hereto and made a
part hereof, sets forth a complete listing of all injury reports, worker's
compensation reports and claims, safety citations and reports, OSHA reports and
all documents relating to any of the foregoing.
Section III.19 TRANSACTIONS WITH CERTAIN PERSONS. Except as set
forth on Exhibit L, attached hereto and made a part hereof, during the past
three years the Company has not, directly or indirectly, purchased, leased or
otherwise acquired any property or obtained any services from, or sold, leased
or otherwise disposed of any property or furnished any services to, or otherwise
dealt with (except with respect to remuneration for services rendered as a
director, officer, interest holder, or employee of the Company), in the ordinary
course of business or otherwise, (i) any officer, director or interest holder of
the Company or any subsidiary thereof or (ii) any person, firm or corporation
which, directly or indirectly, alone or together with others, controls, is
controlled by or is under common control with the Company or any interest holder
of the Company. The Company does not owe any amount to, or have any contract
with or commitment to, any of its interest holders, directors, officers,
employees or consultants (other than compensation for current services not yet
due and payable and reimbursement of expenses arising in the ordinary course of
business not in excess of $2,000 in the aggregate), and none of such persons
owes any amount to the Company.
Section III.20 STUDIES, ETC. Exhibit M, attached hereto and made a
part hereof, sets forth a complete list of all studies, reports, plans, analyses
or similar documents (whether prepared by the Company's employees or others) in
the possession or control of the Company or any affiliate thereof relating to
safety, the environment, Hazardous Substances, as defined in Section 6.1,
intellectual property, markets, competitors, strategic planning, product
liability, warranties or otherwise relating in any way to the Business.
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Section III.21 DISCLOSURE. All schedules to this Agreement are
complete and accurate. No representation or warranty by the Sellers in this
Agreement or in any exhibit to this Agreement, or in any statement or
certificate or other document furnished to Buyer by the Sellers or any
representative of the Sellers, contains or will contain any untrue statement of
a material fact or omits or will omit a material fact necessary to make the
statements therein not misleading.
Section III.22 EMPLOYEE BENEFITS. Exhibit N, attached hereto and
made a part hereof, contains a complete list of "employee welfare plans" (as
that term is defined in Section 3(1) of ERISA) in which active or former
employees of the Company (collectively, the "Affected Employees") participate
(which plans as applied to such Affected Employees are hereinafter referred to
as "Welfare Plans"). Exhibit N also contains a complete list of "employee
pension benefit plans" as that term is defined in Section 3(2) of ERISA in which
Affected Employees participate (which plans as applied to such Affected
Employees are hereinafter referred to as "Pension Plans"). No Affected Employees
participate in any "multiemployer plan" (as that term is defined in Section
3(37) of ERISA). The Welfare Plans and Pension Plans are hereinafter
collectively referred to as "Company's Plans." Each of the Company's Plans is in
compliance with the provisions of all applicable laws, rules and regulations,
including, without limitation, ERISA and the Code. None of the Pension Plans
have incurred any "accumulated funding deficiency" (as defined in Section 412(a)
of the Code). The Company has not incurred any liability to the Pension Benefit
Guaranty Corporation under Sections 4062, 4063 or 4064 of ERISA, or any
withdrawal liability under Title IV of ERISA with respect to any multiemployer
plan. The Company has no employees covered by a collective bargaining agreement.
Section III.23 DISTRIBUTED PRODUCTS. Exhibit O, attached hereto and
made a part hereof, sets forth a complete listing of all products (i)
distributed by the Company (and the manufacturer thereof and the person, if
different, for whom the Company distributes such product) or (ii) manufactured
or sold by the Company and distributed by others (and the name of such
distributor). Such schedule also sets forth the terms of each such distribution
arrangement. The Company has full right to distribute all products referred to
in clause (i) of the preceding sentence.
Section III.24 CUSTOMERS. Exhibit P, attached hereto and made a art
hereof, sets forth a complete listing of the Company's customers. The transfer
of the interest in the Company and the transactions contemplated by this
Agreement will not result in the loss of any of the Company's customers.
Section III.25 ACCOUNTS RECEIVABLE. Exhibit Q, also attached hereto
and made a part hereof, sets forth a complete listing of all accounts receivable
or notes receivable ("Accounts Receivable"). All of the Accounts Receivable are
owned by the Company, free and clear of all liens, and are fully collectible,
with the exception of that $5,000.00 allowance granted to Sellers by Buyer for
the uncollectibility of specific accounts receivable, which are more
particularly
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described in Exhibit Q-1, attached hereto and made a part hereof. It is further
understood that Buyer will own all the Accounts Receivable, free and clear of
all liens, from April 30, 1998 and continuing thereafter.
Section III.26 ACCOUNTS PAYABLE. Exhibit R, attached hereto and made
a part hereof, sets forth a complete listing of all accounts payable and/or
notes payable. ("Accounts Payable"). The Accounts Payable list contains a
complete description of debts validly owed by the Company. Sellers expressly
agree that no charges will be incurred by Buyer for Sellers services or services
provided by interest holders in the Company after April 30, 1998 and that
Exhibit R represents all debts owed by the Company. It is further understood
that Buyer will be liable for Accounts Payable on April 30, 1998 and continuing
thereafter.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Sellers the following:
Section IV.1 CORPORATE STATUS AND GOOD STANDING. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority under its
respective certificate or articles of incorporation and by-laws to conduct its
business as the same exists on the date hereof and on the Closing Date.
Section IV.2 AUTHORIZATION. Each of the Buyer and the Subsidiary has
full corporate power and authority under its respective certificate or articles
of incorporation and by-laws, and its respective board of directors has taken
all necessary corporate action to authorize it to execute and deliver this
Agreement and the exhibits and schedules attached hereto, to consummate the
transactions contemplated herein and to take all actions required to be taken by
it pursuant to the provisions hereof or thereof, and each of this Agreement and
the exhibits attached hereto to which it is a party constitutes the valid and
binding obligation of the Buyer or the Subsidiary, as the case may be,
enforceable in accordance with its terms. The Buyer Common Stock is duly
authorized, validly issued, fully paid and non-assessable.
Section IV.3 NON-CONTRAVENTION. Neither the execution and delivery
of this Agreement and the schedules and exhibits hereto, nor the consummation of
the transactions contemplated herein or therein, does or will violate, conflict
with or result in breach of or require notice or consent under any law, the
charter or bylaws of Buyer of the Subsidiary or any provision of any agreement
or instrument to which it is a party.
Section IV.4 VALIDITY. There are no pending or threatened judicial
or administrative actions, proceedings or investigations which question the
validity of this Agreement or any action taken or contemplated by Buyer in
connection with this Agreement.
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Section IV.5 BROKER INVOLVEMENT. Neither the Buyer nor the
Subsidiary has hired, retained or dealt with any broker or finder in connection
with the transactions contemplated by this Agreement.
Section IV.6 COME ALONG. In the event Buyer agrees to sell all of
the shares of stock owned by it to an unaffiliated third party pursuant to the
terms of a bona fide written offer to acquire all the issued and outstanding
stock for cash, by merger or otherwise, then, upon notice from Buyer, each of
the shareholders of Buyer common stock from this transaction hereby agrees to
sell all of their respective shares of Buyer's common stock to the third party
in accordance with the terms of the offer, and shall take all other action
reasonably necessary in order to effect the sales and exchange of all of the
Buyer s common stock pursuant to the offer.
ARTICLE V
COVENANTS
Section V.1 COVENANT AGAINST COMPETITION. As an essential
consideration for the obligations of the Buyer under this Agreement, the Sellers
hereby agree and covenant that, for a period of three years following the
Closing Date, neither of the Sellers nor any affiliate thereof shall engage in
any manner in providing, marketing or brokering services of the same general
type as those provided or marketed by the Company, or associated services, in
the geographic areas in which the Company has operated since its inception,
unless employed by the Buyer, an affiliate of Buyer or the Company. If Buyer
believes the Sellers or any affiliate has violated the provisions of this
Section 5.1, Buyer shall have the right to seek relief from any court of
competent jurisdiction. The Sellers acknowledge that money damages alone will
not adequately compensate Buyer in the event of a breach of the covenants of
this Section. Therefore, the Sellers agree that in addition to all remedies
available at law, in equity or under this Agreement, Buyer shall be entitled to
injunctive relief for the enforcement of this covenant. Each of the Sellers
agree that the covenants in this Section are reasonable with respect to their
duration, scope and geographical area. If, at the time of enforcement of this
Section, a court should hold that the restrictions herein are unreasonable under
the circumstances then existing or otherwise, the parties agree that the maximum
duration, scope or geographical area legally permissible under such
circumstances will be substituted for the duration, scope or area stated herein.
Section V.2 FURTHER ASSURANCES. The Sellers and the Buyer shall
execute and deliver, at Closing or thereafter, any other instrument which may be
requested by a party and which is reasonably appropriate to perfect or evidence
any of the sales, assignments, transfers, conveyances or other transactions
contemplated by this Agreement or to transfer any interest in the Company after
Closing.
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Section V.3 CONSENTS. After the Closing, the Sellers will use their
best efforts to obtain any consents required in connection with the transactions
contemplated hereby that are requested by Buyer and that have not been
previously obtained.
ARTICLE VI
INDEMNIFICATION
Section VI.1 SELLERS' INDEMNITY OBLIGATIONS. Each of the Sellers
agree to jointly and severally indemnify and hold the Buyer and the Subsidiary
(including their officers, directors, employees and agents) harmless from and
against any and all claims, actions, causes of action, arbitration's,
proceedings, losses, damages, liabilities, judgments and expenses (including,
without limitation, reasonable attorneys' fees) ("Indemnified Amounts") incurred
by the Buyer or the Subsidiary as a result of (a) any error, inaccuracy, breach
or misrepresentation in any of the representations and warranties made by or on
behalf of either of the Sellers in this Agreement, (b) any violation or breach
by either of the Sellers of or default by either of the Sellers under the terms
of this Agreement, (c) any act or omission occurring, or condition or
circumstances existing, prior to the Closing Date, or any condition or
circumstances caused by any act or omission occurring prior to the Closing Date,
by either of the Sellers or with respect to the interest in the Company or the
Business not fully covered by a specific accrual liability or reserve on the
unaudited financial statements, including the items set forth on Exhibit C, (d)
the past or present presence, release, remediation or clean-up of, or exposure
to, Hazardous Substances (as defined below) relating to or located on, within or
under the Assets of the Company, (e) any product liability or other claims
concerning services provided or products sold by the Company prior to the
Closing Date not fully covered by a specific accrual liability or reserve on the
unaudited financial statements and (f) any debts, liabilities or obligations of
Sellers, direct or indirect, fixed, contingent or otherwise, that are not
expressly assumed by Buyer or the Subsidiary in this Agreement. The foregoing is
not an exclusive remedy, and both the Buyer and the Subsidiary shall be entitled
to recover its reasonable and necessary attorneys' fees and litigation expenses
incurred in connection with successful enforcement of its rights under this
Section.
"Hazardous Substances" means any pollutant, toxic substance,
asbestos, hazardous waste, or any constituent of any such substance, waste or
product, whether solid, liquid or gaseous in form, described in or regulated
under RCRA, CERCLA, Superfund or under any other federal, state or local law,
statute, ordinance, rule, regulation, order, judicial decision, arbitration
decision or determination of any governmental authority, and shall include
petroleum, natural gas, natural gas liquids, crude oil and any fraction or
product thereof.
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Section VI.2 BUYER'S INDEMNITY OBLIGATIONS. Buyer shall indemnify
and hold Sellers harmless from and against any and all Indemnified Amounts
incurred by the Sellers as a result of (a) any error, inaccuracy, breach or
misrepresentation in any of the representations and warranties made by or on
behalf of the Buyer in this Agreement, (b) any violation or breach by the Buyer
of or default by the Buyer under the terms of this Agreement, or (c) any
liabilities or obligations of Sellers expressly assumed by Buyer in this
Agreement. The failure of the Buyer to cure, remediate or otherwise repair any
condition or circumstance existing at the Closing or caused by the Sellers shall
not be deemed an "omission" for purposes hereof. The Sellers shall be entitled
to recover its reasonable and necessary attorneys' fees and litigation expenses
incurred in connection with successful enforcement of its rights under this
Section.
Section VI.3 SURVIVAL. The representations, warranties and
indemnities set forth in this Agreement and in any certificate or instrument
delivered in connection herewith shall be continuing and shall survive the
Closing. The covenants and agreements entered into pursuant to this Agreement to
be performed after the Closing shall survive the Closing without limitation.
Section VI.4 INDEMNIFICATION PROCEDURES. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall with reasonable promptness (i) notify the party from
whom indemnification is sought (the "Indemnifying Party") of any third-party
claim or claims asserted against the Indemnified Party ("Third Party Claim") for
which indemnification is sought and (ii) transmit to the Indemnifying Party a
copy of all papers served with respect to such claim (if any) and a written
notice ("Claim Notice") containing a description in reasonable detail of the
nature of the Third Party Claim, an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible (which estimate
shall not be conclusive of the final amount of such claim) and the basis of the
Indemnified Party's request for indemnification under this Agreement.
Within 15 days after receipt of any Claim Notice (the "Election
Period"), the Indemnifying Party shall notify the Indemnified Party whether the
Indemnifying Party disputes its potential liability to the Indemnified Party
with respect to such Third Party Claim.
If the Indemnifying Party does not dispute its potential liability
to the Indemnified Party within the Election Period, the Indemnified Party shall
give the Indemnifying Party an opportunity to control negotiations toward
resolution of such claim without the necessity of litigation, and if litigation
ensues, to defend the same with counsel reasonably acceptable to the Indemnified
Party, at the Indemnifying Party's expense, and the Indemnified Party shall
extend reasonable cooperation in connection with such defense. The Indemnified
Party shall be entitled to participate in, but not to control, the defense of
any Third Party Claim resulting in litigation, at its own cost and expense;
provided, however, that if the parties to any suit or proceeding shall
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include the Indemnifying Party as well as the Indemnified Party and the
Indemnified Party shall have been advised by counsel that one or more legal
defenses may be available to it that may not be available to the Indemnifying
Party, then the Indemnified Party shall be entitled to participate in the
defense of such suit or proceeding along with the Indemnifying Party, but the
Indemnified Party shall be obligated to bear the fees and expenses of counsel of
the Indemnified Party, which shall be selected by the Indemnified Party in its
complete and sole discretion. If the Indemnifying Party does not dispute its
potential liability to the Indemnified Party within the Election Period and the
Indemnified Party fails to assume control of the negotiations prior to
litigation or to defend such action within a reasonable time, the Indemnifying
Party shall be entitled, but not obligated, to assume control of such
negotiations or defense of such action, and the Indemnifying Party shall be
liable to the Indemnified Party for its expenses reasonably incurred or amounts
paid in connection therewith. If the Indemnifying Party disputes its potential
liability to the Indemnified Party within the Election Period, then the
Indemnified Party shall be entitled to assume control of such negotiations or
defense of action and the liability for the expense thereof, as well as any
liability with respect to such Third Party Claim, shall be determined as
provided in Section 7.5 below.
Neither the Indemnifying Party nor the Indemnified Party shall
settle, compromise, or make any other disposition of any Third Party Claim which
would or might result in any liability to the Indemnified Party or the
Indemnifying Party under this Article VII without the written consent of such
other party.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder that does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim to the extent
feasible (which estimate shall not be conclusive of the final amount of such
claim) and the basis of the Indemnified Party's request for indemnification
under this Agreement. If the Indemnifying Party does not notify the Indemnified
Party within 15 days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Party hereunder.
Section VI.5 GENERAL. The indemnification obligations under this
Article VI shall apply regardless of whether any suit or action results solely
or in part from the active, passive or concurrent negligence of the Indemnified
Party. The rights of the parties to indemnification under this Article VI shall
not be limited due to any investigations heretofore or hereafter made by such
parties or their representatives, regardless of negligence in the conduct of any
such investigations. All representations, warranties and covenants and
agreements made by the parties shall not be deemed merged into any instruments
or agreements delivered in connection with the Closing or otherwise in
connection with the transactions contemplated
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hereby.
ARTICLE VII
ACTIONS TO BE TAKEN AT CLOSING
Section VII.1 ACTIONS TO BE TAKEN BY THE SELLERS AT THE CLOSING. The
Sellers shall take the following actions at the Closing:
(a) Each of the Sellers shall execute and deliver a Shareholder
Agreement.
(b) The Sellers shall endorse and deliver pursuant to Section 2.2
interest certificates conveying all of the interest in the
Company to Buyer.
Section VII.2 ACTIONS TO BE TAKEN BY BUYER AT THE CLOSING. Buyer
shall take the following actions at the Closing:
(a) Buyer shall deliver to Sellers a copy certified by its Secretary
of resolutions duly adopted by the board of directors of Buyer authorizing
and approving the execution and delivery of this Agreement, including the
exhibits and schedules hereto, issuance of the Buyer Common Stock and the
consummation of the transactions contemplated herein.
(b) Buyer shall make the payments of funds specified for payment at
Closing under Section 2.1 above.
ARTICLE VIII
GENERAL PROVISIONS
Section VIII.1 CONFIDENTIALITY; PUBLICITY; BOOKS AND RECORDS. (a)
After the Closing, the Sellers will not, directly or indirectly, disclose or
provide to any other person any non-public information of a confidential nature
concerning the Business, the interest in the Company or the business or
operations of the Company, except as is required in governmental filings or
judicial, administrative or arbitration proceedings. The parties hereto will
promptly advise, and obtain the approval of, the other parties before issuing
any press release with respect to this Agreement or the transactions
contemplated hereby.
(b) For a period of five years after the Closing Date, Buyer will
preserve and retain the books
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and records constituting part of the assets of the Company and make such books
and records available at the then current administrative headquarters of Buyer
to Sellers, upon reasonable prior written notice and at reasonable times,
without cost or expense, it being understood that the requesting party shall be
entitled to make copies of any such books and records as shall be reasonably
necessary.
Section VIII.2 EXPENSES. The parties hereto shall pay their own
respective expenses, including the fees and disbursements of their respective
counsel in connection with the negotiation, preparation and execution of this
Agreement and the consummation of the transactions contemplated herein. The
Company shall not bear the expenses of Sellers.
Section VIII.3 ENTIRE AGREEMENT. This Agreement, including all
schedules and exhibits attached hereto, constitutes the entire agreement of the
parties with respect to the subject matter hereof, and may not be modified,
amended or terminated except by a written instrument specifically referring to
this Agreement signed by all the parties hereto.
Section VIII.4 WAIVERS AND CONSENTS. All waivers and consents given
hereunder shall be in writing. No waiver by any party hereto of any breach or
anticipated breach of any provision hereof by any other party shall be deemed a
waiver of any other contemporaneous, preceding or succeeding breach or
anticipated breach, whether or not similar.
Section VIII.5 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been received only if
and when (i) personally delivered or (ii) on the third day after mailing, by
United States mail, first class, postage prepaid, by certified mail return
receipt requested, addressed in each case as follows (or to such other address
as may be specified by like notice):
(a) If to Buyer or the Subsidiary, to:
CLEARWORKS Technologies, Inc.
000 X. Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. XxXxxxx
(b) If to Seller, to:
InfraResources
0000 XX 0000 Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
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Section VIII.6 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, legal representatives and assigns. No third party shall
have any rights hereunder. No assignment shall release the assigning party.
Section VIII.7 TITLE AND RISK OF LOSS. Title to, liability for and
in connection with, and risk of loss of Company Common Stock shall remain with
the Sellers in every instance until the Closing.
Section VIII.8 LIMITATION ON INTEREST. Regardless of any provision
contained herein or any other document executed in connection with this
Agreement, the parties hereto shall not be obliged to pay, and the parties
hereto shall never be entitled to charge, reserve, receive, collect or apply, as
interest (it being understood that interest shall be calculated as the aggregate
of all charges that are contracted for, charged, reserved, received, collected,
applied or paid that constitute interest under applicable law) payable hereunder
any amount in excess of the maximum nonusurious contract rate of interest
allowed from time to time by applicable law, and in the event any of the parties
hereto ever charges, reserves, receives, collects or applies, as interest, any
such excess, at the option of the payor of such interest, such amount shall be
deemed a partial prepayment of the amount payable hereunder or promptly refunded
to the payor of such interest.
Section VIII.9 CHOICE OF LAW. This Agreement shall be governed by
the laws of the State of Texas (without regard to the choice of law provisions
thereof).
Section VIII.10 SECTION HEADINGS. The section headings and table of
contents contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
Section VIII.11 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first above written.
CLEARWORKS TECHNOLOGIES, INC.
By:/s/XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. XxXxxxx
Title:President and CEO
InfraResources, LLC
By:/s/XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: President
Xxxxxx Energy Incorporated
By:/s/XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: President
Xxxxxxx Childrens' Trust of 1992
By:/s/XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx, Co-Trustee
By:/s/XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx, Individually
By:/s/XXXX X. XXXXX
Name: Xxxx X. Xxxxx, Individually
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EXHIBIT S - SHAREHOLDERS AGREEMENT
The Shareholder will acknowledge that the Buyer Common Stock issued to
Shareholder will not be registered with the SEC for resale. As such, these
shares of Common Stock will be subject to SEC Rule 144 limitations on their
sale. Shareholder agrees not to transfer shares of Buyer Common Stock received
in the transaction for the period during which such sale is prohibited.
1. Buyer's Right of First Refusal
In the event that the Shareholder elects to sell any portion of his stock
in Buyer, Buyer shall have the right of first refusal for thirty days
after receiving written notification by Shareholder that Shareholder
wishes to sell any portion of his stock in Buyer. Buyer shall be deemed to
have received notice of such intention no later than three days after
Shareholder mails notice of the same to Buyer. The sales price of any such
shares of stock shall be the price quoted for such stock in the WALL
STREET JOURNAL as of market opening on the date written notification is
mailed or delivered (whichever is sooner) to Buyer. If, after thirty
calendar days from the date of delivery or mailing (whichever is earlier),
the Buyer does not elect to purchase any portion of the stock Shareholder
wishes to sell, or fails to pay the purchase price as provided for below,
Shareholder is free to sell the stock subject to any and all SEC
requirements or restrictions. 2. Payment of Purchase Price The purchase
price for the shares of stock in Buyer owned by Shareholder may be paid by
Buyer as follows: The purchase price for the shares of capital stock in
the Corporation will be satisfied by a cash payment to the Shareholder at
the time of the closing for the full amount of the purchase price. Buyer
agrees to take such acts as are necessary, including but not limited to
adoption or amendment of appropriate articles of incorporation or by-laws,
to effectuate the following: (a) In the event Buyer or its Affiliates
proposes to register an offering of its securities under the federal
securities laws, other than for an employee benefit plan or pursuant to a
plan of merger or acquisition, Buyer shall use their best efforts to cause
Shareholder's securities to be included in the registration so as to
permit the public sale of those securities.
XXXXXX ENERGY INCORPORATED
By:/s/XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: President
XXXXXXX CHILDRENS' TRUST OF 1992
By:/s/XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx, Co-Trustee
By:/s/XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx, Individually
By:/s/XXXX XXXXX
Name: Xxxx Xxxxx, Individually
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Many pages of copy to follow, no file.
