1
Execution
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
CONTINENTAL CASUALTY COMPANY
CNA REALTY CORP.
CLE, INC.
KTI PLASTIC RECYCLING, INC.
AND
TIMBER ENERGY INVESTMENT INC.
DATED NOVEMBER 22, 1996
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TABLE OF CONTENTS
1. Purchase and Sale ..................................................... 1
1.1 Purchase and Sale of Assets .................................. 1
1.2 Method of Conveyance ......................................... 1
1.3 No Assumed Obligations ....................................... 2
2. Purchase Price and Closing; Conditions Subsequent to Closing .......... 2
2.1 Purchase Price ............................................... 2
2.2 Allocation of Purchase Price ................................. 2
2.3 Closing ...................................................... 2
2.4 Payment of Purchase Price .................................... 2
2.5 Shutdowns .................................................... 2
2.6 LC Bank Release .............................................. 3
2.7 Sellers Lien ................................................. 3
2.8 Failure to Obtain CCC Release ................................ 3
3. Representations, Warranties and Agreements of the Sellers ............. 4
3.1 Corporate Organization ....................................... 4
3.2 Authorization ................................................ 4
3.3 No Violation ................................................. 4
3.4 Documentation of the Securities .............................. 5
3.5 Brokers and Finders .......................................... 6
3.6 Accuracy of Representations and Documents .................... 6
4. Representations and Warranties of Buyer ............................... 6
4.1 Corporate Organization, Etc .................................. 6
4.2 Authorization Etc ............................................ 6
4.3 No Violation ................................................. 6
5. Certain Covenants and Agreements ...................................... 7
5.1 Full Access .................................................. 7
5.2 Notice of Claims and Investigations .......................... 7
5.3 Press Releases ............................................... 7
5.4 Consummation of Transactions ................................. 7
5.5 Post-Closing Cooperation ..................................... 7
5.6 Risk of Loss ................................................. 7
5.7 Post-Closing Authority ....................................... 8
6. Sellers' Letter to Shareholders ....................................... 8
7. Conditions to the Obligations of Sellers .............................. 8
7.1 Representations and Warranties True .......................... 9
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7.2 No Proceeding; Litigation; Injunction ........................ 9
7.3 Organizational Documents ..................................... 9
7.4 Sellers Lien ................................................. 9
7.5 Release ...................................................... 9
7.6 Additional Payment ........................................... 9
8. Conditions to the Obligations of Buyer ................................ 9
8.1 Representations and Warranties True .......................... 10
8.2 Performance by Sellers ....................................... 10
8.3 Representations and Warranties of, and Performance by, TEII
Entities ..................................................... 10
8.4 No Proceeding, Litigation, Injunction ........................ 16
8.5 Additional Documents ......................................... 16
8.6 Board of Directors Approval .................................. 16
8.7 Xxxx-Xxxxx-Xxxxxx ............................................ 16
9. Survival of Representations and Warranties; Indemnification ........... 17
9.1 Survival of Representations .................................. 17
9.2 Statements as Representations and Warranties ................. 17
9.3 Remedies Cumulative .......................................... 17
9.4 Buyer's Indemnity ............................................ 17
9.5 Sellers' Indemnity ........................................... 17
9.6 Successors to Sellers ........................................ 18
9.7 Indemnity Procedure .......................................... 18
10. Termination ........................................................... 19
10.1 Methods of Termination ....................................... 19
10.2 Procedure Upon Termination ................................... 19
10.3 Effect of Termination ........................................ 19
11. Miscellaneous Provisions .............................................. 20
11.1 Amendment and Modification ................................... 20
11.2 Waiver of Compliance ......................................... 20
11.3 Expenses ..................................................... 20
11.4 Notices ...................................................... 20
11.5 Binding Effect: Assignment ................................... 21
11.6 Governing Law ................................................ 21
11.7 Counterparts ................................................. 21
11.8 Headings ..................................................... 22
11.9 Entire Agreement ............................................. 22
11.10 Third Parties ................................................ 22
11.11 Severability ................................................. 22
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Exhibits
Exhibit A Form of Pledge and Security Agreement from Buyer in favor of Sellers
Exhibit B Form of Management Agreement
Exhibit C Form of Release
Schedules
Schedule A Description of Securities being sold, Allocation of Purchase Price and Description of Collateral
Schedule B Description of TEII Entity (Non-CNA) Debt
Schedule C List of Leases
Schedule D August 31, 1996 Financial Statements of the TEII Entities
Schedule E List of all TEII Entity Employee Welfare Benefit Plans
Schedule F Description of Automobile to be conveyed to Seller
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Execution
SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT dated as of November 22, 1996, by and among Continental
Casualty Company, an Illinois insurance company ("CCC"), CNA Realty Corp., a
Delaware corporation ("Realty"), CLE, Inc., a Nevada corporation ("CLE"), (CCC,
Realty and CLE are collectively referred to herein as the "Sellers" and each is
individually referred to herein as a "Seller"), KTI Plastic Recycling, Inc., a
Delaware corporation (the "Buyer") and Timber Energy Investment Inc., a Delaware
corporation ("TEII").
Buyer desires to purchase from Sellers, and Sellers desire to sell,
assign and transfer to Buyer, all of Sellers' interests and investments in TEII
and all of its subsidiaries (each a "TEII Entity" and collectively, the "TEII
Entities"), consisting of all debt instruments and securities and all preferred
stock and common stock of such entities now owned by Sellers (collectively, the
"Securities") as more specifically described in Schedule A of the disclosure
schedules attached hereto (the "Disclosure Schedules"), all on the terms and
subject to the conditions hereinafter set forth.
1. Purchase and Sale.
1.1 Purchase and Sale of Assets. On the terms and subject to
the conditions herein set forth, the Buyer proposes to purchase from
Sellers all of the Securities owned by the Sellers or in which any
Seller has an interest.
1.2 Method of Conveyance.
(a) The sale, transfer, conveyance, assignment and
delivery by Sellers of the Securities to the Buyer or its
designee in accordance with Section 1.1 hereof shall be
effected on the Closing Date (as hereinafter defined) by
Sellers' execution and delivery of customary assignments,
bills of sale, endorsements and other instruments of
conveyance and transfer as applicable (collectively, the
"Instruments of Conveyance").
(b) At the Closing (as hereinafter defined), good and
valid title to all of the Securities and all Collateral (as
hereinafter defined) shall be transferred, conveyed, assigned
and delivered by the Sellers to Buyer or its designee pursuant
to this Agreement and the Instruments of Conveyance, free and
clear of any and all Liens (as defined below) other than the
Sellers Lien (as hereinafter defined), but subject to the
provisions regarding reconveyance set forth in Section 6
hereof. For the purposes of this Agreement, the term "Lien"
shall mean any mortgage, pledge, security interest, retained
interest, encumbrance, lien or charge or claim of any kind
whatsoever.
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1.3 No Assumed Obligations. Pursuant to this Agreement, Buyer
or its assignee does not assume any of the liabilities or obligations
of TEII or of any other TEII Entity, whether absolute, accrued,
contingent or otherwise whenever incurred. At the Closing, Buyer or its
assignee shall not assume any of the liabilities or obligations of TEII
or of any other TEII Entity, whether absolute, accrued, contingent or
otherwise.
2. Purchase Price and Closing; Conditions Subsequent to Closing.
2.1 Purchase Price. The consideration for the Securities to be
sold, transferred and conveyed by the Sellers to Buyer or its assignee
pursuant to this Agreement shall be $1,850,000, together with the CCC
Release described in Section 2.6 hereof, the payment described in
Section 7.6 hereof.
2.2 Allocation of Purchase Price. The Buyer and Sellers hereby
agree that the Purchase Price for all purposes, including for federal
income tax purposes, will be allocated among the Securities being
purchased as agreed to between the Sellers and the Buyers in writing;
provided, however, that not less than all of the Securities will be
transferred pursuant hereto. Notwithstanding the foregoing, the
allocation of the Purchase Price shall in no event limit the liability
of Sellers to Buyer with respect to damages, liabilities or expenses
incurred by Buyer with respect to any breach of Sellers'
representations, warranties, covenants or agreements set forth herein.
2.3 Closing. Subject to the provisions contained herein, the
closing of the transactions provided for in this Agreement (the
"Closing") shall take place at the offices of Xxxxxx & Xxxxxxx LLP,
Pillsbury Center South, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000-0000 at 10:00 A.M. (Central Prevailing time) or at such other
place and time, and on a date on or prior to November 22, 1996, as the
parties hereto may agree. The date on which the Closing actually occurs
is herein referred to as the "Closing Date."
2.4 Payment of Purchase Price. At the Closing, Buyer or its
designee shall pay the $1,850,000 cash included in the Purchase Price
by the wire transfer of immediately available funds to the Sellers on
the Closing Date in such proportions as the Sellers may direct in
writing not less than five business days prior to the Closing Date.
Such written direction shall include any necessary wire transfer
instructions.
2.5 Shutdowns. TEII has disclosed to the Sellers and the Buyer
that the Telogia, Florida power plant facility (the "Telogia Facility")
owned and operated by Timber Energy Resources, Inc. ("XXXX") has
sustained (i) a shutdown of its boiler systems for approximately two
weeks in October 1996 which is expected to result in a loss of revenues
to XXXX (the "Boiler
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Shutdown"), and (ii) damage to its tubing system, which TERI's
consultants have estimated will cost in excess of $500,000 to repair
and replace, and such repair and replacement will cause the Telogia
Facility to be shut down for a period of approximately 33 days (the
"Tubing System Shutdown").
2.6 LC Bank Release. On or before the date which is nine
months after the date of Closing (August 22, 1997, if the Closing
occurs on November 22, 1996)(the "CCC Release Cut-off Date"), XXXX
shall have obtained an Alternate Letter of Credit (as defined in the
Indenture pursuant to which the Liberty County Bonds were issued) or
remarketed or refunded the Liberty County Bonds, as the same be amended
or refunded, the effect of which will be there being delivered to CCC
from the Bank of Montreal (the "LC Bank") a release or termination of
CCC's obligations with respect to that certain Standby Bond Purchase
Agreement dated as of April 1, 1994 between CCC and the LC Bank, with
respect to the Liberty County Bonds, all in form and substance
reasonably satisfactory to CCC (the "CCC Release").
2.7 Sellers Lien. In order to secure the Buyer's undertaking
to obtain the CCC Release, as of the Closing Date, the Buyer shall
grant to CCC a first priority security interest (the "Sellers Lien") in
certain of the Securities and other property as described in, and
pursuant to, a Pledge and Security Agreement in substantially the form
attached hereto as Exhibit A (the "Security Agreement").
2.8 Failure to Obtain CCC Release. If for any reason XXXX
shall fail to obtain the CCC Release on or before the CCC Release
Cut-off Date, then the Sellers may realize on their security interest
in the Sellers Lien and shall refund to the Buyer, in immediately
available funds on the CCC Release Cut-off Date, an amount equal to
$1,750,000, less the following amounts:
(a) reasonable costs incurred by CCC in realizing on
CCC's security interest represented by the Sellers Lien;
(b) management fees, if any, paid to Buyer or any
affiliate of the Buyer pursuant to the Management Agreement
described in Section 8.3(b) hereof;
(c) during the period in which the Management
Agreement is in effect after the Closing Date, but only with
respect to the number of days in which the Telogia Facility is
operational (to the same extent it was as operations were
reflected in the August 31, 1996 financial statements) (the
"EBITDA Test Period"), if the amount of earnings before
interest, taxes, depreciation and amortization ("EBITDA") for
XXXX for such period is less than an assumed EBITDA of
$200,000 per
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month for the number of months occurring during the EBITDA
Test Period and prorated for any partial month occurring in
the EBITDA Test Period, the amount of such difference;
provided, however, that any costs, fees and expenses with
respect to the Telogia Facility, including without limitation
the Boiler Shutdown or the Tubing System Shutdown or any other
extraordinary rebuilding or maintenance, or site ash removal,
and the resulting loss of earnings, shall be disregarded in
the calculation of EBITDA; and
(d) any costs of overhead allocated to any TEII
Entity by the Buyer and paid to the Buyer, and any transaction
costs paid by any TEII Entity in cooperating with the Buyer
and Sellers in attempting to obtain the CCC Release.
3. Representations, Warranties and Agreements of the Sellers. Sellers
hereby represent and warrant to Buyer and agree that:
3.1 Corporate Organization. Each Seller is duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of organization and has all requisite power and authority
to carry on its business as it is now being conducted to sell the
Securities which it owns.
3.2 Authorization. Each Seller has all requisite power and
authority to execute, deliver and perform its obligations under this
Agreement. Each Seller has taken all action required by law or
otherwise to be taken to authorize Sellers' execution and delivery of
this Agreement and Sellers' consummation of the transactions
contemplated hereby. This Agreement is, and when executed and
delivered, the Instruments of Conveyance will be, the legal, valid and
binding obligations of Sellers, enforceable in accordance with their
respective terms, except as the enforcement thereof may be limited by
bankruptcy, reorganization, insolvency, liquidation, readjustment of
debt, moratorium, or other similar laws affecting or limiting the
rights of creditors generally or as may be limited by general
principles of equity.
3.3 No Violation. Neither the execution and delivery of this
Agreement by the Sellers nor the consummation of the transactions
contemplated hereby will (i) violate any provision of the Certificates
of Incorporation or Organization or By-Laws of the Sellers or, (ii)
violate any statute or law or any judgment, decree, order, regulation
or rule of any domestic or foreign court or governmental authority.
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3.4 Documentation of the Securities.
(a) To the best of our knowledge after due inquiry,
Schedule A contains an accurate and complete list of all
Securities (i)specifying the class, the number of shares,
certificate numbers and registered owner of those Securities
constituting preferred stock or common stock (collectively,
the "CNA-owned Equity Securities"), (ii)listing each Security
constituting a debt instrument or obligation of any of the
TEII Entities owed to any of the Sellers (collectively, the
"CNA Debt Liabilities"), indicating the balance due on the CNA
Debt Liabilities, including any accrued and unpaid interest
thereon as of the end of the month preceding the Closing Date,
together with per diem interest rates for the month in which
the Closing occurs, and (iii)listing all documents relating to
or providing mortgages, liens, security interests in or other
collateral for the repayment of the CNA Debt Liabilities
(collectively, the "Collateral") and of all UCC statements or
other filings filed with respect thereto. To the extent any
item constituting Securities or Collateral not listed on
Schedule A becomes known or is located by any Seller following
the Closing, such Seller hereby waives all rights in and to
such item and agrees to promptly turn it over to Buyer. The
parties hereto acknowledge that prior to Closing the TEII
Entity that has title to the automobile identified in Schedule
F will convey and transfer title to such automobile to a
Seller, and in consideration such Seller shall credit the fair
market value of the automobile (being the average "blue book"
published value of such automobile) to the accrued and unpaid
interest on item no.6 of CNA Debt Liabilities, as shown on
Schedule A.
(b) To the best of our knowledge after due inquiry,
Schedule B hereto contains an accurate and complete list of
all debt of TEII or of any other TEII Entity (other than the
CNA Debt Liabilities), the party to whom such debt is owed
indicating the balance due, including accrued and unpaid
interest thereon, as of the close of the preceding month and a
per diem interest factor for the month in which the Closing
occurs.
(c) Each Seller has, and will have at the Closing,
good and valid title to the Securities being conveyed by it
hereunder, subject to no Liens.
(d) The Seller shall deliver complete copies of the
Securities and all Collateral to the Buyer not later than ten
(10) business days prior to the Closing Date.
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3.5 Brokers and Finders. No person has been authorized by the
Sellers, or by anyone acting on their behalf, or their respective
officers, directors or employees, to act as a broker, finder or in any
other similar capacity in connection with the transactions contemplated
by this Agreement.
3.6 Accuracy of Representations and Documents. No
representation or warranty made by either Seller in this Agreement or
in the Disclosure Schedules hereto (each of which is an integral part
hereof) nor any statement, certificate or other document furnished as
an exhibit hereto, or any other document furnished or caused to be
furnished by Sellers to Buyer or any of its representatives in
connection with this Agreement is, or will be when so furnished, false
or misleading in any material respect of contains any material
misstatement of fact or omits to state any fact necessary to be stated
make the statements made in any such representation or warranty false
or misleading in any material respect.
4. Representations and Warranties of Buyer. Buyer represents and
warrants to Sellers as follows:
4.1 Corporate Organization, Etc. Buyer is a corporation duly
formed, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to carry on
its business as it is now being conducted and to own, lease and operate
its properties and assets as and in the places where such business is
now conducted and where such properties and assets are now owned,
leased or operated.
4.2 Authorization Etc. Buyer has all requisite power and
authority to execute, deliver and perform its obligations under this
Agreement. This Agreement is valid and binding upon Buyer, enforceable
in accordance with its terms.
4.3 No Violation. Neither the execution and delivery of this
Agreement by Buyer nor the consummation of the transactions
contemplated hereby by Buyer will violate any provisions of the
Certificate of Incorporation of Buyer, or be in conflict with, or
constitute a default (or an event which, with or without notice, lapse
of time or both, would constitute a default) under, or result in the
termination or invalidity of, or accelerate the performance required
by, or cause the acceleration of the maturity of any debt or obligation
pursuant to, any agreement or commitment to which Buyer is a party or
by which Buyer is bound, or violate any statute or law or any judgment,
decree, order, regulation or rule of any court or governmental
authority.
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5. Certain Covenants and Agreements.
5.1 Full Access. TEII will afford Buyer and its counsel,
accountants and other representatives, after the date hereof, full
access during normal business hours to the plants, offices, warehouses,
properties, employees, counsel, accountants and other representatives,
books and records, including accountant's workpapers of the TEII
Entities in order that Buyer may have full opportunity to make such
investigations as it shall desire to make of the affairs of the TEII
Entities.
5.2 Notice of Claims and Investigations. Each party will
immediately give notice to the other of, and confer with the other with
respect to, any claims, investigations by governmental authorities or
threatened litigation relating to the transactions contemplated by this
Agreement.
5.3 Press Releases. Without the written consent of the other
parties, which shall not be unreasonably withheld, each of the parties
hereto agrees not to make any public announcements or press releases
regarding the transactions contemplated hereby until such transactions
are consummated.
5.4 Consummation of Transactions. Each of the parties agrees
to use commercially reasonable efforts to bring about the satisfaction
of the conditions required to be performed, fulfilled or complied with
by it hereunder and to take or cause to be taken, all action, and to
do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement as expeditiously as
practicable. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement,
the appropriate party will take all such necessary action, including
without limitation, the execution and delivery of such further
instruments and documents as may be reasonably requested by the other
party or parties for such purposes or otherwise to complete or perfect
the transactions contemplated hereby.
5.5 Post-Closing Cooperation. After the Closing, Buyer and
Sellers shall cooperate fully with each other and shall make available
to each other all information, records or documents reasonably
requested in connection with matters involved in the sale of the
Securities.
5.6 Risk of Loss. Prior to the Closing, the risk of loss on
the Securities shall remain with the Sellers.
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5.7 Post-Closing Authority.
(a) Each Seller hereby agrees that it will promptly
and reasonably cooperate with Buyer, its successors and
assigns, from and after the Closing, on behalf of and for the
sole benefit of Buyer, its successors and assigns, in
connection with Buyer's efforts to demand or collect from time
to time any and all of the Securities, and in connection with
any proceedings at law, in equity or otherwise which Buyer or
its successors or assigns may deem necessary or desirable in
order to receive, collect, assert or enforce any right, title,
benefit or interest of any kind in or to the Securities, or to
defend and compromise any and all actions, suits or
proceedings in respect of the Securities and to execute any
instruments in relation thereto as Buyer or its successors or
assigns shall reasonably deem advisable.
(b) Each Seller agrees that, unless duly authorized
in writing by Buyer, or required by law, it will not at any
time reveal, divulge or make known to any person (other than
to the Buyer or to any affiliate of Buyer) any confidential or
proprietary data or information relating to any TEII Entity's
business.
6. Sellers' Letter to Shareholders. The parties hereto acknowledge that
Realty is a party to that certain Stockholder Agreement dated as of June 29,
1994 (the "Stockholder Agreement") among the owners of the common stock of TEII,
pursuant to which any owner desiring to sell its shares of stock in TEII will
give notice to, and a right to purchase the stock to be sold on the same terms
and conditions of a bona fide offer to purchase (collectively, the "Purchase
Rights").
Realty shall send a letter to all non-Seller shareholders of TEII upon
execution of this Agreement advising such shareholders that Sellers are selling
their interests in TEII and its subsidiaries, which notice shall include a copy
of this Agreement to disclose the terms and conditions of such sale and
purchase, and the Purchase Price for the Securities being sold. If any such
non-Seller stockholder exercises his or her Purchase Rights within the time
provided for in the Stockholder Agreement, then the Buyer shall promptly
retransfer all (and not less than all) of the Securities to Realty for sale to
such non-Seller stockholder, and the entire Purchase Price specified in Section
2.1 hereof shall be immediately returned to the Buyer and this Agreement,
including the Buyer's obligations to obtain the CCC Release, shall terminate.
7. Conditions to the Obligations of Sellers. Each and every obligation
of Sellers under this Agreement to be performed on or before the Closing shall
be subject to the satisfaction, on or before the Closing, of each of the
following conditions, unless waived in writing by Sellers.
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7.1 Representations and Warranties True. The representations
and warranties of Buyer contained in this Agreement shall be true,
complete and accurate in all material respects as of the date when made
and at and as of the Closing as though such representations and
warranties were being made at and as of the Closing Date, and except
for changes expressly permitted or contemplated by the terms of this
Agreement.
7.2 No Proceeding; Litigation; Injunction. No suit, action,
investigation, inquiry or other proceeding by any governmental body or
other person shall have been instituted which arises out of or relates
to this Agreement or the transactions contemplated hereby or seeks to
obtain substantial damages in respect thereof, and, on the Closing
Date, there shall be no effective permanent or preliminary injunction,
writ, temporary restraining order or any order of any nature issued by
a court of competent jurisdiction directing that the transactions
provided for herein not be consummated as so provided.
7.3 Organizational Documents. Buyer shall have furnished
Sellers with (i) a copy of its Certificate of Incorporation, certified
by the Secretary of State of Delaware, (ii) certified copies of minutes
of action taken by the Board of Directors of Buyer approving the
execution and delivery of this Agreement and related documents and the
consummation of the transaction contemplated hereunder; and (iii) a
Certificate of Incumbency setting forth the officers and directors of
the Buyer.
7.4 Sellers Lien. Buyer shall have executed and delivered the
Security Agreement, together with all documents required thereby.
7.5 Release. Sellers shall have received from TEII a release
in the form attached hereto as Exhibit C pursuant to which TEII shall
release any claims or defenses against the Sellers with respect to the
Securities. Notwithstanding such release, in the event after Closing
TEII shall assert any claim against Sellers with respect to the
Securities and realize upon such claim, KTI shall pay to Sellers an
amount equal to any such net recovery received by TEII with respect to
such claim.
7.6 Additional Payment. Sellers shall have received a receipt
from Xxxxxx Xxxxxxxxx ("Xxxxxxxxx") for payment in full of all amounts
agreed upon between Sellers and Wentworth, in form and substance
satisfactory to Sellers.
8. Conditions to the Obligations of Buyer. Each and every obligation of
the Sellers under this Agreement to be performed on or before the Closing shall
be
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subject to the satisfaction, on or before the Closing, of each of the
following conditions, unless waived in writing by the Buyer.
8.1 Representations and Warranties True. The representations
and warranties of Sellers contained in this Agreement including the
Disclosure Schedules attached hereto, shall be true, complete and
accurate in all material respects as of the date when made and at and
as of the Closing Date as though such representations and warranties
were being made at and as of the Closing Date (except that
representations and warranties which refer to conditions existing on a
specific date, such as representations and warranties regarding the
Financial Statements, shall continue to refer to that date) and except
for changes expressly permitted or contemplated by the terms of this
Agreement.
8.2 Performance by Sellers. Sellers shall have performed,
fulfilled and complied in all material respects with all agreements,
obligations and conditions required by this Agreement to be performed,
fulfilled or complied with by them on or prior to the Closing,
including delivery to Buyer of all of the Securities.
8.3 Representations and Warranties of, and Performance by,
TEII Entities. The TEII Entities shall have performed, fulfilled and
complied in all material respects with all agreements, obligations and
conditions required by this Agreement to be performed, fulfilled or
complied with by them on or before the Closing, including the
following:
(a) TEII shall have provided to the Buyer a
certificate dated the Closing Date executed by a duly
authorized officer of TEII, stating:
(i) Organization. That TEII, Timber Energy
Plastic Recycling, Inc. ("TEPRI") and Timber Energy
Trucking, Inc. ("XXXX") each is a corporation duly
organized and validly existing under the laws of the
State of Delaware and XXXX is a corporation duly
organized and validly existing under the laws of the
State of Texas, and each such TEII Entity is in good
standing under the laws of each of the states in
which such TEII Entity does business, having all
requisite corporate power and authority to own and/or
lease its assets and properties and to carry on its
businesses as now conducted;
(ii) Subsidiaries. That the only
subsidiaries of TEII are XXXX, TEPRI and XXXX;
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(iii) Financial Statements. The consolidated
and unconsolidated financial statements of TEII, XXXX
and TEPR attached as Schedule D to this Agreement
consisting of balance sheets as of August 31, 1996
and statements of income for the eleven-month period
then ended (A) are in accordance with the books and
records of TEII, XXXX and TEPR, as applicable, (B)
present fairly and accurately in all material
respects the results of operations of the TEII
Entities for the periods covered by such statements,
subject to normal year-end adjustments which in the
aggregate will not be material; (D) have been
prepared in accordance with generally accepted
accounting principles applied on a consistent basis
with past practices; (E) include all adjustments
consisting only of normal recurring accruals that are
necessary for a fair presentation of the consolidated
financial condition of the TEII Entities and the
results of their business operations for the period
covered by such statements, (F) include appropriate
reserves for all taxes and other liabilities accrued
as of August 31, 1996 but not then due and payable;
(G) and as of August 31, 1996 the TEII Entities had
no other debts, liabilities or obligations of any
nature which are not reflected in such financial
statements or on Schedule B of the Disclosure
Schedules and (H) no material adverse changes have
occurred since August 31, 1996 with respect to any
TEII Entity that have not been disclosed to the
Sellers and the Buyers in writing;
(iv) Capitalization. The authorized capital
stock of TEII consists of 150,000 shares of -0- par
value common stock of which 150,000 shares are issued
and outstanding, all of which shares are fully paid
and nonassessable. The authorized capital stock of
XXXX consists of 1,000,000 shares of -0- par value of
common stock of which 106,500 shares are issued and
outstanding, 29,271.070 shares of $1,000 par value
Class A preferred stock of which 29,271.070 shares
are issued and outstanding, and 20,904.344 shares of
$1,000 par value Class B preferred stock of which
20,904.344 shares are issued and outstanding, all of
which shares are fully paid and nonassessable. There
are no outstanding subscriptions, options, warrants,
contracts, calls, commitments or other purchase
rights of any nature or character (including
preemptive rights) relating to any authorized but
unissued stock of any TEII Entity.
(v) Share Ownership. The ownership of the
issued and outstanding common stock of TEII and the
ownership of the
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issued and outstanding common stock and preferred
stock of TEII disclosed on Schedule A is correct and
accurate.
(vi) Schedule C contains a complete and
accurate list of all real and personal property
leases, subleases, conditional sales agreements or
other title retention agreements (collectively the
"Leases" and individually a "Lease") to which any
TEII Entity is a party, as lessee. All Leases are
valid and binding on all parties thereto and
enforceable against such parties in accordance with
their terms, and are in full force and effect; and
with respect to each such Lease, there are no
existing defaults thereunder (whether or not waived
by lessor) and no event has occurred which (whether
with or without notice, lapse of time or both, or the
happening of any other event) would constitute
default thereunder.
(b) TEII shall deliver to Buyer, a fully executed
management agreement between Buyer (or its designated
affiliate) and the TEII Entities in substantially the form
attached as Exhibit B (the "Management Agreement") providing
for the management of the properties and businesses of the
TEII Entities.
(c) Each TEII Entity obligated on each of the
Securities constituting a debt instrument owed to any of the
Sellers (collectively, the "CNA Debt Liabilities"), shall
deliver to the Buyer an estoppel certificate, indicating the
balance due on the CNA Debt Liabilities, including any accrued
and unpaid interest thereon, as of the end of the preceding
month, together with a per diem interest rate during the month
in which the Closing occurs.
(d) The appropriate TEII Entity shall provide to the
Buyer a certificate for each creditor, other than with respect
to Trade Accounts Payable (as hereinafter defined) of any TEII
Entity obligated on such debt, other than the CNA Debt
Liabilities and the Liberty County Bonds (collectively, the
"Third Party Funded Debt"), each certificate indicating the
balance due on the Third Party Funded Debt, including any
accrued and unpaid interest thereon, as of the end of the
preceding month, together with a per diem interest rate during
the month in which the Closing occurs, and a statement that no
other Third Party Funded Debt has been incurred by any TEII
Entity.
(e) Each TEII entity shall provide to the Buyer a
certificate signed by such TEII Entity indicating the balance
of trade accounts payable ("Trade Accounts Payable") due to
third parties, including any
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accrued and unpaid interest thereon, as of the end of the
preceding month, together with a per diem interest rate during
the month in which the Closing occurs.
(f) The Trustee of the Liberty County Bonds shall
deliver to the Buyer an estoppel certificate, including the
par amount of the Liberty County Bonds outstanding, including
any accrued and unpaid interest thereon, together with any
accrued and unpaid other amounts, such as Trustee's, Issuer's
or LC Bank's fees and expenses (the "Bond Liabilities") as of
the end of the preceding month, together with a per diem
interest rate during the month in which the Closing shall
occur. The estoppel certificate shall also indicate all fund
balances in each account and any other fees or expenses
payable.
(g) TEII shall deliver complete copies of all Leases
to the Buyer not less than ten (10) business days prior to the
Closing Date. Each lessor under a Lease with a TEII entity
shall provide to the Buyer an estoppel certificate
satisfactory in form and substance to the Buyer.
(h) TEII shall deliver a certificate stating whether
TEII and each of its subsidiaries have been duly and
accurately filed or caused to be filed all tax reports and
returns (including information returns) required to be filed
in connection with their business for all periods ending on
the date hereof and will make all such filings required to be
made prior to the Closing Date. The certificate shall further
state whether TEII and each of its subsidiaries have duly paid
or provided for in accordance with generally accepted
accounting principles, consistently applied, all taxes and
other charges due or claimed to be due from it to any federal,
state, local or foreign taxing authority (including, without
limitation, those due in respect of properties, income,
franchise, licenses, sales or payrolls), except for taxes
being contested in good faith.
(i) TEII shall deliver complete copies of all of the
tax returns for the TEII Entities, both income tax and
otherwise, for all tax years beginning after October 1, 1990
to the Buyer, not less than ten (10) business days prior to
the Closing.
(j) TEII shall deliver a certificate to the Buyer
stating whether there are any outstanding agreements or
waivers binding on any TEII Entity (or the filer of any return
of any consolidated group in which TEII, or any of its
subsidiaries, is a member), which extend the statutory period
of limitations applicable to any tax return for any period,
not less than ten (10) business days prior to the date of
Closing.
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(k) TEII shall deliver a certificate containing an
accurate and complete list of all policies of fire,
disability, workers' compensation, products liability, and
other forms of insurance owned or held by or beneficially for
TEII or any subsidiary of TEII which relate to or provide
coverage for the business of TEII or of any subsidiary of
TEII. TEII shall deliver a copy of each such policy to the
Buyer not less than ten (10) business days prior to the
Closing.
(l) TEII shall deliver a certificate stating whether
all such policies are in full force and effect, all premiums
with respect thereto covering all periods through the Closing
have been or will be paid by TEII or other TEII Entity, and no
notice of cancellation or termination has been received with
respect to any such policy.
(m) TEII shall deliver a certificate stating whether
such policies are sufficient for compliance with all
requirements of law and of all agreements to which either TEII
or any subsidiary of TEII is a party, are valid, outstanding
and enforceable policies; provide adequate insurance coverage
for the assets and operations of such entity's business; and,
with respect to periods prior to the Closing will not in any
way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement.
(n) TEII shall deliver a certificate stating whether
any TEII entity has any bonus, deferred compensation, pension,
profit sharing, retirement, stock purchase, stock option,
phantom stock, medical, post-retirement medical or any other
employee benefit plan, arrangement or practice, whether
written or unwritten (an "Employee Benefit Plan").
(o) TEII shall deliver to the Buyer true copies of
each written Employee Benefit Plan and an accurate and
complete written description of each oral Employee Benefit
Plan and shall deliver a certificate stating the annual
amounts paid or accrued in connection with each Employee
Benefit Plan as of September 30, 1996, and an estimate of the
amounts payable or accruable in connection therewith through
the Closing Date, to the extent such amounts are presently
fixed or determinable, all not less than ten (10) business
days prior to the Closing Date.
(p) TEII shall deliver a certificate listing each
"employee pension benefit plan" in the meaning of the Employee
Retirement Income Security Act of 1974 and the regulations
thereunder ("ERISA"), maintained or contributed to by an TEII
Entity (the "Pension Plans")
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and certifying, except as noted thereon, no Pension Plan is a
"multi-employer plan" within the meaning of ERISA. TEII shall
deliver a certificate stating whether there have been any
"prohibited transaction," to which any TEII Entity has been a
party, within the meaning of Section 4975 of the Internal
Revenue Code of 1986 (the "Code"), or Section 406 of ERISA,
with respect to any Pension Plan which might subject any such
plan or related trust, or any trustee or administrator
thereof, or the Buyer to the tax or penalty imposed by Section
4975 of the Code or to a civil penalty imposed by Section 502
of ERISA, TEII shall certify, except as set forth in such
certificate, that (1) each of the Pension Plans is and has
been in material compliance with the applicable provisions of
ERISA and the Code; (2) the present value of all accrued
benefits, whether vested or not, under the Pension Plans
subject to Title IV of ERISA do not exceed the value of the
assets of such plans allocable to such accrued benefits; (3)
none of the Pension Plans subject to Title IV of ERISA has,
since December 31, 1995, been completely or partially
terminate, nor has there been any "reportable event" as such
term is defined in Section 4043(b) of ERISA, with respect to
any such plan since the effective date of said Section
4043(b); and (4) none of the Pension Plans or trusts have
incurred any "accumulated funding deficiency," as such term is
defined in Section 412 of the Code, whether or not waived,
since the effective date of said Section 412. Such certificate
shall be delivered to the Buyer not less than ten (10)
business days prior to the date of Closing.
(q) TEII shall deliver a certificate to Buyer
stating: (1) whether Schedule E is a list of all "employee
welfare benefit plans," within the meaning of ERISA, whether
or not insured, maintained by either Seller ("Welfare Plans").
Except as set forth in the certificate, each Welfare Plan is
and has been in material compliance with the applicable
provisions of ERISA and the Code; and (2) whether TEII and
each of its subsidiaries have complied in all material
respects with all of their obligations, if any, including the
making of all required contributions, under each of the
Welfare Plans.
(r) From the date hereof until the Closing, and
except as otherwise expressly consented to or approved by
Buyer in writing:
(i) Regular Course of Business.
(A) The business of each TEII Entity
shall have been carried on in substantially
the same manner as conducted before the date
of this Agreement.
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(B) The assets of each TEII Entity
shall have been maintained in substantially
the same condition and repair as such assets
are maintained as of the date of this
Agreement, ordinary wear and tear excepted,
and to take all reasonable steps necessary
to maintain and protect such assets.
(ii) Insurance; Property. All of the
property, real, personal and mixed, tangible and
intangible, which is owned or leased by any TEII
Entity, shall have continued to be insured against
all ordinary and insurable risks in the amounts and
coverages applicable to such property as in effect on
the date hereof.
(iii) No Default. Each TEII Entity shall not
have done any act or omitted to do any act, or permit
any act or omission to act, which has caused a breach
of any material contract or commitment with respect
to the business of each such TEII Entity.
8.4 No Proceeding, Litigation, Injunction. No suit, action,
investigation, inquiry or other proceeding by any governmental body or
other person shall have been instituted or threatened which arises out
of or relates to this Agreement or the transactions contemplated hereby
or seeks to obtain substantial damages in respect thereof, and, on the
Closing Date, there shall be no effective permanent or preliminary
injunction, writ, temporary restraining order or any order of any
nature issued by a court of competent jurisdiction directing that the
transactions provided for herein not to be consummated as so provided.
8.5 Additional Documents. Sellers shall have delivered or
caused to be delivered to Buyer, and each TEII Entity shall have
delivered to Buyer, such other documents, instruments and certificates
as shall be reasonably requested by Buyer for the purpose of effecting
the transactions provided for and contemplated by this Agreement.
8.6 Board of Directors Approval. Buyer shall have received the
approval of its Board of Directors prior to Closing.
8.7 Xxxx-Xxxxx-Xxxxxx. Buyer shall have received on or prior
to the closing evidence to its satisfaction that this transaction is
exempt from the rules issued by the Federal Trade Commission under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
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9. Survival of Representations and Warranties; Indemnification.
9.1 Survival of Representations. All representations and
warranties of Sellers and Buyer contained in this Agreement shall
survive the Closing, the indemnification obligations contained herein
shall terminate on April 15, 1998, except with respect to
(i) indemnification claims arising from fraudulent actions or
statements of Sellers or Buyer, (ii)claims based upon Section 3.4(a)
hereof and (iii) claims made by the Buyer or Sellers prior to April 15,
1998, but which are not resolved by that date.
9.2 Statements as Representations and Warranties. All
statements contained herein, in the Disclosure Schedule, or in any
other schedule, certificate, list or other document delivered or to be
delivered pursuant to this Agreement shall be deemed representations
and warranties as such terms are used in this Agreement and any
material misstatement or omission in any thereof shall be deemed a
breach of a representation or warranty hereunder.
9.3 Remedies Cumulative. The remedies provided herein shall be
cumulative and shall not preclude assertion by any party of any other
rights or the seeking of any other remedies against any other party.
9.4 Buyer's Indemnity. The Buyer agrees to defend, indemnify
and hold harmless the Sellers from, against and in respect of any and
all demands, claims, actions or causes of action, losses, liabilities,
damages, assessments, deficiencies, taxes, costs and expenses,
including without limitation, interest, penalties and reasonable
attorneys' fees and expenses, asserted against, imposed upon or paid,
incurred or suffered by Sellers as a result of, arising from, in
connection with or incident to (i) any breach or inaccuracy of any
representation or warranty of Buyer contained in this Agreement or (ii)
any breach of any covenant or agreement of Buyer contained in this
Agreement.
9.5 Sellers' Indemnity.
(a) The Sellers agree to defend, indemnify and hold
harmless Buyer from, against and in respect of any and all
demands, claims, actions or causes of action, losses,
liabilities, damages, assessments, deficiencies, taxes, costs
and expenses, including without limitation, interest,
penalties and reasonable attorneys' fees and expenses,
asserted against, imposed upon or paid, incurred or suffered
by Buyer:
(i) as a result of, arising from, in
connection with or incident to (A) any breach or
inaccuracy of any representation or warranty of any
Seller in this Agreement or in any Instrument of
Conveyance, or (B) any breach of any covenant or
agreement
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of any Seller contained in this Agreement or in any
Instrument of Conveyance; and/or
(ii) as a result of, or with respect to, any
and all obligations or liabilities of any Seller
raised as a defense to the ownership, collections or
exercise of rights by the Buyer with respect to any
of the Securities; and/or
(iii) arising out of any acts or omissions
by any Seller prior to Closing Date.
9.6 Successors to Sellers. The merger, consolidations,
liquidation, dissolution or winding up of, or any similar transaction
with respect to, any Seller shall not affect in any manner the
obligations of any other Seller pursuant to this Section or any other
term or provision of this Agreement, and Sellers covenant and agree to
make adequate provision for such liabilities and obligations hereunder
in the event of any such transaction.
9.7 Indemnity Procedure.
(a) A party agreeing to indemnify against any matter
pursuant to this Agreement is referred to herein as the
"Indemnifying Party" and the other party claiming indemnity is
referred to herein as the "Indemnified Party."
(b) An Indemnified Party under this Agreement shall
give prompt written notice to the Indemnifying Party of any
liability which might give rise to a claim for indemnity under
this Agreement. As to any claim, action, suit or proceeding by
a third party, the Indemnifying Party shall have the right,
exercisable by notifying the Indemnified Party within twenty
days after receipt of such notice from the Indemnified Party,
to assume the entire control of the defense, compromise or
settlement thereof, all at the Indemnifying Party's expense
including employment of counsel, and in connection therewith
the Indemnified Party shall cooperate fully to make available
to the Indemnifying Party all pertinent information under its
control. The Indemnified Party may at its expense, if it so
elects, designate its own counsel to participate with counsel
designated by the Indemnifying Party in the conduct of any
such defense. If the defense of any such matter is tendered to
the Indemnifying Party by notice as set forth above and the
Indemnified Party is entitled to indemnification pursuant
hereto with respect to such matter, and the Indemnifying Party
declines or otherwise fails to (1) promptly pay or settle the
same, or (2) vigorously investigate and defend the same, the
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Indemnified Party may investigate and defend the same and the
Indemnifying Party will reimburse the Indemnified Party for
all judgments, settlement payments and reasonable expenses,
including reasonable attorneys' fees, incurred and paid by it
in connection therewith.
(c) An Indemnified Party shall not make any
settlement of any claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably
withheld.
(d) Except as set forth in subsection (b), in the
event of any litigation brought by either party hereto to seek
indemnity under this Agreement, the prevailing party shall be
entitled to recover attorneys' fees upon final judgment on the
merits.
10. Termination.
10.1 Methods of Termination. Anything herein or elsewhere to
the contrary notwithstanding, the transaction contemplated hereby may
be terminated and abandoned at any time prior to the Closing:
(a) by mutual consent of Buyer and Sellers; or
(b) by Sellers if, on the Closing Date, any of the
conditions set forth in Section 7 shall not have been met; or
(c) by Buyer if, on the Closing Date, any of the
conditions set forth in Section 8 shall not have been met; or
(d) by either party if, without fault of the
terminating party, the Closing shall not have occurred on or
prior to November 15, 1996.
10.2 Procedure Upon Termination. In the event termination and
abandonment pursuant to Section 10.1 hereof, written notice thereof
shall forthwith be given to the other parties hereto and this Agreement
shall terminate and the transactions contemplated hereby shall be
abandoned without further action by Buyer or Sellers.
10.3 Effect of Termination. In the event of Termination of
this Agreement as expressly provided in Section 10.1 above, this
Agreement shall forthwith become void (except for Section 9) and
neither Buyer, on the one hand, nor Sellers, on the other, shall have
any liability to the other; provided, however, that if such termination
shall result from the misrepresentation or breach of warranty when made
by a party or the nonfulfillment of any
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covenant, agreement or condition required hereunder, then such party
shall be fully liable to the other party for all costs and expenses
(including reasonable attorneys' fees and disbursements) incurred by
the other party in connection with its due diligence and the
negotiation, preparation and execution of this Agreement and the
transactions contemplated hereby and for all damages sustained or
incurred by the other party as a result of such misrepresentation,
breach or nonperformance.
11. Miscellaneous Provisions.
11.1 Amendment and Modification. This Agreement may be
amended, modified and supplemented by the parties hereto only by
written instrument signed by or on behalf of the party to be charged
thereunder.
11.2 Waiver of Compliance. Any failure of Sellers, on the one
hand, or Buyer on the other hand, to comply with any obligation,
covenant, agreement or condition herein may be expressly waived in
writing by an authorized offer of the other party, but such waiver or
failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to any subsequent or other failure.
11.3 Expenses. Each of the parties hereto agrees to pay all
for the respective expenses incurred by it in connection with the
negotiation, preparation, execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby.
11.4 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given if delivered by hand or mailed,
certified or registered mail, with postage prepaid as follows:
If to Sellers: Continental Casualty Company
XXX Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Senior Vice President,
Secretary and General Counsel-43S
Fax: (000) 000-0000
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CNA Realty Corp.
XXX Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Senior Vice President,
Secretary and General Counsel-43S
Fax: (000) 000-0000
CLE, Inc.
XXX Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Senior Vice President,
Secretary and General Counsel-43S
Fax: (000) 000-0000
If to Buyer: KTI Plastic Recycling, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Whitney LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
or to such other person or address as Buyer shall furnish to Sellers in
writing.
11.5 Binding Effect: Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, administrators, executors,
legal representatives, such successors and assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior
written consent of the other parties; provided, however, that Buyer may
freely assign this Agreement or all or any rights it may have hereunder
to any of its subsidiaries or affiliated companies, but no such
assignment shall relieve Buyer of its obligations hereunder.
11.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New
York, without giving effect to conflict of law principles thereof.
11.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute the same instrument.
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11.8 Headings. The headings of the sections and articles of
this Agreement are inserted for convenience only and shall not
constitute a part hereof or affect in any way the meaning or
interpretation of this Agreement.
11.9 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto in respect of the
subject matter contained herein, and supersedes all prior agreements,
promises, letters of intent, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any party
hereto or by any Related Person of any party hereto. All exhibits
attached hereto, the Disclosure Schedules, any exhibits thereto and all
certificates, documents and other instruments delivered or to be
delivered pursuant to the terms hereof are hereby expressly made a part
of this Agreement as fully as though set forth herein, and all
references herein to the terms "this Agreement", "hereunder", "herein",
"hereby" or "hereto" shall be deemed to refer to this Agreement and all
such writings.
11.10 Third Parties. Except as specifically set forth or
referred to herein, nothing in this Agreement, expressed or implied, is
intended or shall be construed to confer upon or give to any person,
firm, partnership, corporation or other entity other than the parties
hereto and their successors or permitted assigns, any rights or
remedies under or by reason of this Agreement.
11.11 Severability. The invalidity of any one or more of the
words, phrases, sentences, clauses, sections or subsections contained
in this Agreement shall not affect the enforceability of the remaining
portions of this Agreement or any part hereof, all of which are
inserted conditionally on their being valid in law, and, in the event
that any one or more of the words, phrases, sentences, clauses,
sections or subsections contained in this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence
or sentences, clause or clauses, section or sections, or subsection or
subsections had not been inserted.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CNA REALTY CORP. CONTINENTAL CASUALTY COMPANY
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxx Xxxxxxx
-------------------------- ----------------------------
Title: Title:
CLE, INC. KTI PLASTIC RECYCLING, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------------- ----------------------------
Title: Title: President
TIMBER ENERGY INVESTMENT INC. And: /s/ Xxxxxx X. Xxxxxx
----------------------------
By: Title: Senior Vice President and
-------------------------- General Counsel
Title:
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