PURCHASE AND SALE OF ASSETS AGREEMENT
THIS PURCHASE AND SALE OF ASSETS AGREEMENT (the "Agreement") is executed
and delivered as of April 1, 1998, between MESA PROCESSING, INC., a Texas
corporation ("Buyer"); XXXXX PUMP SERVICE, INC., a Texas corporation ("Seller"),
XXXXX XXXXX, the sole shareholder of Seller ("Shareholder").
W I T N E S S E T H:
WHEREAS, Seller operates a used cooking oil and grease trap, collection,
transportation and disposal services business throughout Texas, Louisiana and
Arkansas (the "Business"), and also operates a sludge de-watering business in
Kemp, Texas;
WHEREAS, Buyer desires to purchase and acquire certain assets,
properties and contractual rights of Seller used in connection with the
Business, and Seller desires to sell such assets, properties and contractual
rights to Buyer, all in accordance with the terms and conditions set forth in
this Agreement;
WHEREAS, Shareholder holds all of the outstanding capital stock of
Seller and Buyer is unwilling to enter into this Agreement without the covenants
and promises of Shareholder herein set forth; and
NOW, THEREFORE, in consideration of Ten Dollars ($10.00), the mutual
promises and covenants herein contained and other good and valuable
consideration, receive to the full satisfaction of each of them, the parties
hereby agree as follows:
ARTICLE I
SALE OF ASSETS
SECTION 1.1 DESCRIPTION OF ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement, Seller does hereby grant, convey, sell,
transfer and assign to Buyer the following assets, properties and contractual
rights of Seller, wherever located, subject to the exclusions hereinafter set
forth:
(a) all equipment used or for use in the operations of the
Business, including, without limitation, the equipment listed on
Schedule 1.1(a) attached hereto and made a part hereof (the
"Equipment");
(b) all of the motor vehicles used or for use in the Business,
and all radios, attachments, accessories and materials handling
equipment now located in or on such motor vehicles (the "Rolling
Stock"), as the same are listed and more completely described by
manufacturer, model number and model year on Schedule 1.1(b), attached
hereto and made a part hereof;
(c) all manual and automated routing and billing information and
components thereof, including without limitation all routing and billing
computer hardware, software and programs containing any customer
information;
(d) all contractual rights of Seller with Seller's customers
(whether oral or in writing) relating to the conduct of the Business
(the "Customer Accounts"), and all commitments, lists, leases, permits,
licenses, consents, approvals, franchises and other instruments relating
to the Customer Accounts (the "Related Approvals"); a complete and
accurate list of the Customer Accounts and the Related Approvals is set
forth on Schedule 1.1(d), attached hereto and made a part hereof, and
true and complete copies of all Customer Accounts (or descriptions of
unwritten arrangements) and Related Approvals shall be delivered to
Buyer simultaneously with the execution and delivery of this
Agreement;
(e) all of Seller's inventory of parts, tires, supplies and
accessories of every kind, nature and description used or for use in
connection with the Business (the "Inventory");
(f) all right, title and interest of Seller in and to all trade
secrets, proprietary rights, symbols, trademarks, service marks, logos
and trade names used in the Business;
(g) all permits, licenses, franchises, consents and other
approvals relating to the Business set forth on Schedule 1.1(g),
attached hereto and made a part hereof, including without limitation,
Seller's pending Type V permit and all notes, records and information
associated therewith (the "Permits"), true and complete copies of which
are attached to Schedule 1.1(g);
(h) all of Seller's right, title and interest in and to the name
"Xxxxx Pump Service, Inc." and the right to use such name (the "Business
Name");
(i) all of Seller's existing documents, files and other material
related to all current or past customers of the Business;
(j) all of Seller's shop tools, nuts and bolts relating to the
Business; and
(k) all of the goodwill of the Business.
All of the foregoing assets, properties and contractual rights are hereinafter
sometimes collectively called the "Assets."
SECTION 1.2 EXCLUDED ASSETS. The parties agree that there shall be
excluded from the Assets the following which are not being sold to Buyer
pursuant to this Agreement ( the "Excluded Assets"): (a) all cash on hand and on
deposit of Seller, except as set forth in Section 1.5 hereof; (b) all accounts
receivable of Seller ("Accounts Receivable") as of the close of business on the
date of Closing (hereinafter defined); (c) all real property (whether owned or
leased); (d) all contracts and contract rights and obligations of Seller
(whether oral or in writing) other than the Customer Accounts and any other
contracts expressly assigned to Buyer hereunder, (e) all commitments, lists,
leases, permits, licenses, consents, approvals, franchises and other instruments
not relating to the Customer Accounts or the Business; (f) all employment
contracts to which Seller is a party or by which Seller is bound; (g) all motor
vehicles of Seller that are not Rolling Stock, and (h) all assets used or for
use in the Seller's waste water treatment business.
SECTION 1.3 NON-ASSIGNMENT OF CERTAIN CUSTOMER ACCOUNTS. Notwithstanding
anything to the contrary in this Agreement, to the extent that the assignment
hereunder of any Customer Account shall require the consent of any third party,
neither this Agreement nor any action taken pursuant to its provisions shall
constitute an assignment or an agreement to assign if such assignment or
attempted assignment would constitute a breach thereof or result in the loss or
diminution thereof; provided, however, that in each such case, Seller shall use
its best efforts to obtain the consent of such other party to such assignment to
Buyer. If such consent is not obtained, Seller shall cooperate with Buyer in any
reasonable arrangement designed to provide for Buyer the benefits under any such
Customer Account, including without limitation, an adjustment of the purchase
price set forth in Section 2.1 hereof and enforcement for the account and
benefit of Buyer, of any and all rights of Seller against any other person
arising out of the breach or cancellation of any such Customer Account by such
other person, or otherwise. Attached hereto as Schedule 1.3 is a list of all
Customer Accounts requiring consent to their agreement.
SECTION 1.4 SELLER ACCOUNTS RECEIVABLE. Buyer shall have no liability or
obligation whatsoever to Seller in connection with the Accounts Receivable.
However, if Buyer receives any payments which are designated by the customer as
being toward such Accounts Receivable, then Buyer shall forward such payments to
Seller on a regular basis (but at least monthly),
together with an itemized list of the sources thereof. Seller shall make no
attempt to collect the Accounts Receivable for a period of 90 days after the
date of Closing. Attached hereto as Schedule 1.4 is a true and complete list of
all Accounts Receivable of Seller as of March 27, 1998.
SECTION 1.5 PRORATION OF CASH ON HAND. The parties shall prorate, as of
the close of business on the date of Closing, all cash on hand or on deposit
with Seller consisting of sums paid to Seller pursuant to the advance billing
practice of Seller or otherwise representing a prepayment to Seller of services
to be rendered after the Closing. Seller shall be entitled to all such sums
allocable to services performed on or before the close of business on the date
of Closing and Buyer shall be entitled to all such sums allocable to services to
be performed thereafter. Buyer and Seller agree that the amount of such prepaid
services to be credited to Buyer is $0.00.
SECTION 1.6 CHANGE OF NAME. On the date of Closing, Seller shall take
all necessary action to change Seller's current Business Name to a name not the
same as or similar to Xxxxx Pump Service, Inc. or any other symbol, trademark,
service xxxx, logo or trade name now used by Seller. Seller shall, on the date
of closing, deliver to Buyer, in form suitable for filing, such certificates,
consents and other documents as are necessary to effect the transfer of the
registration of the Business Name conveyed by Buyer pursuant to this Agreement
in Texas, Louisiana and Arkansas and shall grant any consents and take any other
and further action, all at Seller's own expense, requested by Buyer to enable
Buyer to reserve or register any such name for use of Buyer in Texas, Louisiana
and Arkansas.
ARTICLE II
PURCHASE PRICE
SECTION 2.1 PURCHASE PRICE.
(a) Subject to Sections 2.3 below, Buyer shall pay to Seller for
the Assets and the restrictive covenants set forth herein up to
$1,950,000 (the "Purchase Price").
(b) The Purchase Price shall be payable on the Closing Date as
follows:
(i) Buyer shall pay Seller cash in the amount of
$847,473 (subject to adjustment in accordance with
Section 2.3 below;
(ii) Buyer shall assume the Assumed Debt (as defined in
Section 2.3 below); and
(iii) Buyer shall deliver to Seller that total number of
whole shares of common stock, par value $.01 per
share ("Parent Stock"), of U S Liquids, Inc., a
Delaware corporation and the parent corporation of
Buyer ("Parent"), which shall have an aggregate
Agreed Value (as defined in Section 2.2 below) of
$600,000 calculated in accordance with Section 2.2
below, and subject to the restrictions set forth in
Section 2.4 below.
SECTION 2.2 AGREED VALUE OF PARENT STOCK. For purposes of this
Agreement, the "Agreed Value" per share of Parent Stock shall be the average of
the closing prices of a share of the common stock of Parent, $.01 par value per
share, on the American Stock Exchange as reported in THE WALL STREET JOURNAL for
the five trading days immediately preceding the five trading days immediately
prior to the date of issuance, adjusted for any stock splits, stock
dividends and other capital changes between the first date of the valuation
period and the date of issuance. Only whole shares shall be delivered. Any
fractional shares resulting from applying the Agreed Value to the amount of
consideration payable shall be paid in cash.
SECTION 2.3 ASSUMPTION OF DEBT; ADJUSTMENTS. As a portion of the
Purchase Price
payable in Section 2.1 above, Buyer shall assume or pay off at Closing, the
actual debt of Seller of $502,527, which amount constitutes all of the debts of
Seller (including lease payments and lease-end buy-out payments) related to the
Assets (the "Assumed Debt"). Attached hereto as Schedule 2.3 is a listing of all
Assumed Debt and evidence establishing the amount required to pay off the
Assumed Debt in full on the date of Closing. If the Assumed Debt is less than
$502,527, the purchase price payable in Section 2.1(b)(i) shall be increased by
an amount equal to the difference between $502,527 and the Assumed Debt. If the
Assumed Debt is more than $502,527, the purchase price payable in Section
2.1(b)(i) shall be reduced by an amount equal to the difference between the
Assumed Debt and $502,527.
SECTION 2.4 RESTRICTION ON RESALE OF PARENT STOCK. Seller agrees that
fifty percent (50%) of the shares of Parent Stock to be delivered to Seller
pursuant to Section 2.1(b)(iii) hereunder shall not be transferred, sold, traded
or otherwise disposed of for a period of one year following the Closing Date.
Seller acknowledges that certificates representing such shares shall bear
legends referencing such restrictions and that the transfer agent of the Parent
shall be given appropriate stop transfer notification with respect to such
shares.
ARTICLE III
CLOSING
SECTION 3.1 TIME AND PLACE OF CLOSING. Unless the parties otherwise
agree, this transaction shall be closed simultaneously with the execution and
delivery of this Agreement and the other documents and instruments referred to
in this Article III (the "Closing"). The Closing shall take place at a location
mutually acceptable to Buyer and Seller.
SECTION 3.2 DELIVERIES BY SELLER AND SHAREHOLDER. At the Closing, Seller
and Shareholder shall deliver to Buyer, all duly executed:
(a) a General Conveyance, Assignment and Xxxx of Sale, in form
and substance satisfactory to Buyer and Seller, conveying, selling,
transferring and assigning to Buyer all of the Assets (the "Xxxx of
Sale");
(b) motor vehicle Certificates of Title and/or registrations to
the Rolling Stock, properly endorsed to Buyer;
(c) a receipt acknowledging payment by Buyer of the Purchase
Price;
(d) fully executed consents to the assignment of the Customer
Accounts set forth on Schedule 1.3, if any, in form and substance
satisfactory to Buyer;
(e) the documents evidencing Seller's change of name as required
by Section 1.6;
(f) a certified copy of the resolutions of the shareholders and
directors of Seller authorizing the execution of this Agreement, the
sale of the Assets to Buyer, and the consummation of the transactions
contemplated herein, along with an incumbency certificate of Seller;
(g) such other separate instruments of sale, assignment or
transfer reasonably required by Buyer; and
(h) evidence of payment in full by Seller of all outstanding
amounts owed to Buyer.
SECTION 3.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver to
Seller the Purchase Price set forth in Section 2.1(a) and (d) and shall assume
or make payment in full on the Assumed Debt.
ARTICLE IV
COVENANTS OF SELLER AND SHAREHOLDER
SECTION 4.1 USE OF BUSINESS NAME. Seller and Shareholder covenant not to
use Business Name or any similar names from and after the close of business on
the date of Closing; provided, however, that Seller may continue to use the name
"Xxxxx Environmental" after the Closing date.
SECTION 4.2 TRANSITION. Neither Seller nor Shareholder will take any
action that is designed or intended to have the effect or discouraging any
customer or business associate of Seller from maintaining the same business
relationships with Buyer after the Closing that it maintained with Seller before
the Closing. Seller and Shareholder will refer all customer inquiries relating
to the Business to Buyer from and after the Closing. Further, Seller and
Shareholder agree that for a period of 90 days following the date of Closing,
they will, without additional consideration, assist Buyer with the orderly
transition of the operations of the Business from Seller to Buyer. Such
assistance shall include, without limitation, Seller and Shareholder assisting
Buyer to obtain contacts with Seller's current customers, routing transition
activities and development of sufficient information to allow Buyer to compile
accurate customer xxxxxxxx.
SECTION 4.3 SURVIVAL. Each of the covenants set forth in this Article IV
shall survive the Closing and the transfer of the Assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDER
SECTION 5.1 Seller and Shareholder, jointly and severally, represent and
warrant to Buyer that:
(a) AUTHORITY.
(i) Seller is a corporation duly formed, validly existing
and in good standing under the laws of the State of Texas. The
execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the compliance by Seller and
Shareholder with the terms of this Agreement do not and will not
conflict with or result in a breach of any terms of, or
constitute a default under, the articles of incorporation or
bylaws of Seller, or any instruments or other agreement to which
Seller or Shareholder are a party or by which Seller or
Shareholder are bound. This Agreement constitutes a valid
obligation of Seller and Shareholder enforceable against Seller
and Shareholder in accordance with its terms except as limited by
bankruptcy, insolvency, reorganization or other such laws
concerning the rights of creditors.
(ii) Shareholder is competent, under no duress or legal
restraint, and has all necessary authority to enter into this
Agreement, perform his obligations hereunder and consummate the
transactions contemplated hereby.
(iii) All of the issued and outstanding shares of Seller
are owned of record and beneficially by Shareholder, free and
clear of all liens, security interests and encumbrances
whatsoever.
(b) COMPLIANCE WITH LAW. Neither Seller nor the Shareholder is in
default under any applicable federal, state or local laws, statutes,
ordinances, permits, licenses, orders, approvals, variances, rules or
regulations or judicial or administrative decisions ("Applicable Laws")
which would have an adverse effect upon the Assets or the Business.
Seller has been granted all licenses, permits, consents, authorizations
and approvals from federal, state and local government regulatory bodies
necessary or desirable to carry on the Business, all of which are
currently in full force and effect. Each of the Assets
complies in all respects with all federal, state and local laws,
statutes, ordinances, permits, licenses, approvals, rules and
regulations applicable thereto.
(c) EQUIPMENT. Listed on Schedule 1.1(a) hereto is a complete and
accurate list of all equipment used or for use in connection with the
Business. Each piece of Equipment is in good working order and repair.
(d) ROLLING STOCK. Listed on Schedule 1.1(b) hereto is a complete
and accurate list of all Rolling Stock. Each motor vehicle, attachment,
accessory and piece of materials handling equipment comprising the
Rolling Stock is in good working order and repair.
(e) CUSTOMER ACCOUNTS. Listed on Schedule 1.1(d) hereto is a
complete and accurate list of the Customer Accounts as of the date
hereof. Except as set forth on Schedule 1.3, all Customer Accounts are
(and will be immediately following the Closing) in full force and effect
and are valid, binding and enforceable against the respective parties
thereto in accordance with their respective provisions, and Seller is
not in default in, nor has there occurred an event or condition
(including Seller's execution and delivery of or performance under this
Agreement) which with the passage of time or the giving of notice (or
both) would constitute a default, with regard to the payment or
performance of any obligation under any Customer Account; no claim of
such a default has been asserted and there is no reasonable basis upon
which such a claim could validly be made. Neither Seller nor Shareholder
has received any notice that any person intends or desires to modify,
waive, amend, rescind, release, cancel or terminate any Customer
Account. By virtue of the grant, conveyance, sale, transfer and
assignment of the Customer Accounts by Seller to Buyer hereunder, Buyer
shall own and hold all right, title and interest of Seller in and to the
Customer Accounts, without the consent or approval of any other person
or entity.
(f) TITLE TO THE PERSONAL PROPERTY. Seller has good and
marketable title to all of the Assets constituting personal property,
free and clear of all liens, encumbrances, security interests, equities
or restrictions whatsoever except the Assumed Debt and, by virtue of the
grant, conveyance, sale, transfer, and assignment of the Assets
hereunder, Buyer shall receive good and marketable title to all of the
Assets constituting personal property, free and clear of all liens,
lease payments (including lease-end buy-out payments), encumbrances,
security interests, equities or restrictions whatsoever except the
Assumed Debt. The Assets include all of the permits, licenses,
franchises, consents and other approvals necessary or desirable to
conduct the Business.
(g) LITIGATION. Except as set forth on Schedule 5.1(g) hereof,
there is no claim, litigation, action, suit or proceeding,
administrative or judicial, pending or threatened against Seller or
Stockholders, or involving the Assets or the Business, at law or in
equity, before any federal, state or local court or regulatory agency,
or other governmental authority. Neither Seller nor Stockholders has
received any notice of any of the above and no facts or circumstances
exist which would, with the passage of time or giving of notice (or
both), give rise to any of the above.
(h) EMPLOYEES. Attached as Schedule 5.1(h) hereof is a complete
list of all employees of Seller and their respective rates of
compensation (including a breakdown of the portion thereof attributable
to salary, bonus and other compensation, respectively) as of the date of
Closing. Each employee is an employee at will and there are no
collective bargaining agreements affecting any employee of Seller. Buyer
shall not be obligated to hire any of Seller's employees.
(i) EMPLOYEE RELATIONS AND BENEFIT PLANS. Set forth on Schedule
5.1(i) is an accurate and complete list of all agreements of any kind
between Seller and its employees or group of employees, including,
without limitation, employment agreements, collective bargaining
agreements and benefit plans. Buyer shall not, by the execution and
delivery of this Agreement or otherwise, become obligated to or assume
any liabilities or contractual obligations with respect to any employee
of Seller or otherwise become liable
for or obligated in any manner (contractual or otherwise) to any
employee of Seller, including, without limiting the generality of the
foregoing, any liability or obligation pursuant to any collective
bargaining agreement, employment agreement, or pension, profit sharing
or other employee benefit plan (within the meaning of Section 3(3) of
the Employment Retirement Income Security Act of 1974, as amended) or
any other fringe benefit program maintained by Seller or to which Seller
contributes or any liability for the withdrawal or partial withdrawal
from or termination of any such plan or program by Seller.
(j) FINANCIAL STATEMENTS. Attached hereto as Schedule 5.1(j) are
copies of Seller's balance sheet as of December 31, 1997, and a
statement of income, cash flow and retained earnings for the year ended
December 31, 1997, and Seller's balance sheet as of February 28, 1998
(the "Balance Sheet Date"), and a statement of income, cash flow and
retained earnings for the two-month period then ended (the "Financial
Statements"). The Financial Statements (including any footnotes thereto)
have been prepared in accordance with GAAP, applied on a consistent
basis throughout the periods indicated. The Financial Statements
(including all footnotes thereto) are true, complete and correct and
present fairly the financial condition and the results of the operations
of Seller for the period indicated thereon. All reserves for contingent
risks have been estimated in accordance with GAAP and are appropriate
and sufficient to cover all costs reasonably expected to be incurred
from such risks. The Financial Statements are consistent with the books
and records of Seller (which books and records are correct and complete.
(k) TAXES. No federal, state, local or other tax returns or
reports filed by Seller (whether filed prior to, on or after the date
hereof) with respect to the Business or the Assets will result in any
taxes, assessments, fees or other governmental charges upon the Assets
or Buyer, whether as a transferee of the Assets or otherwise. All
federal, state and local taxes due and payable with respect to the
Business or the Assets have been paid, including, without limiting the
generality of the foregoing, all federal, state and local income, sales,
use franchise, excise and property taxes.
(l) HAZARDOUS MATERIALS. Neither Seller nor Shareholder has ever
generated, transported, stored, handled recycled, reclaimed, disposed
of, or contracted for the disposal of, hazardous materials, hazardous
wastes, hazardous substances, toxic wastes or substances, infectious or
medical waste, radioactive waste or sewage sludges as those terms are
defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"); the Atomic Energy Act of 1954; the
Toxic Substances Control Act; the Occupational Health and Safety Act;
any comparable or similar Texas statute; or the rules and regulations
promulgated under any of the foregoing, as each of the foregoing may
have been from time to time amended (collectively, "Hazardous
Materials"). Seller has never owned, operated, had an interest in,
engaged in and/or leased a waste transfer, recycling, treatment, storage
or disposal facility, business or activity other than the Business.
Seller has obtained and maintained all necessary trip tickets, signed by
the applicable waste generators, and other records demonstrating the
nature of the waste transported in connection with the Business. No
employee, contractor or agent of Seller has, in the course and scope of
employment with Seller, been harmed by exposure to Hazardous Materials.
Seller has no direct or contingent liability or obligation for or in
connection with any claimed release, discharge or leak of any substance
onto any property or into the environment. Further, no portion of the
facilities operated by Seller is listed on the CERCLA list or the
National Priorities List of Hazardous Waste Sites or any similar list
maintained by the State of Texas. Attached hereto as Schedule 5.1(l) is
a complete list of the names and addresses of all disposal sites at any
time now or in the past utilized by Seller, none of which sites is
listed on the CERCLA list or the National Priorities List of Hazardous
Waste Sites or any comparable Texas list. Neither Seller nor Shareholder
is listed as a potentially responsible party under CERCLA or any
comparable or similar state statute; neither Seller nor Shareholder has
received any notice of such a listing; and neither Seller nor
Shareholder knows of any facts or circumstances which could give rise to
such a listing.
(m) GOVERNMENT NOTICES. Seller has delivered to Buyer, a
description and copies, as of the date of this Agreement, of all
notifications, filed or submitted, or required to be filed or submitted,
to governmental agencies and of all material notifications from such
governmental agencies relating to Seller and the Assets or relating to
the discharge or release of materials into the environment or otherwise
relating to the protection of the public health or the environment.
(n) ABSENCE OF PRICE RENEGOTIATION CONTRACTS. Seller is not now
nor has ever been a party to any governmental contracts subject to price
redetermination or renegotiation.
(o) GROSS REVENUES. The gross revenues generated by the Business
for the 12- month period ending December 31, 1997 were $1,587,203.93.
(p) COMPLETENESS OF DISCLOSURE. This Agreement and the Schedules
hereto and all other documents and information furnished to Buyer and
its representatives pursuant hereto do not and will not include any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. If Seller or
Shareholder become aware of any fact or circumstance which would change
a representation or warranty of Seller or Shareholder in this Agreement,
the party with such knowledge shall immediately give notice of such fact
or circumstance to Buyer. However, such notification shall not relieve
Seller or Shareholder of their obligations under this Agreement, and at
the sole option of Buyer, the truth and accuracy of any and all
warranties and representations of Seller and Shareholder at the date of
this Agreement shall be a precondition to the consummation of this
transaction.
SECTION 5.2 SURVIVAL. Each of the representations and warranties
set forth in this Article V shall survive the Closing and the transfer
of the Assets.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
SECTION 6.1 Buyer and Parent represent and warrant to Seller and
Shareholder that:
(a) CORPORATE ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) AUTHORIZATION. Buyer and Parent each have all requisite corporate
power and corporate authority to enter into this Agreement, perform its
respective obligations hereunder and consummate the transactions contemplated
hereby. The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the compliance by Buyer and Parent with the
terms of this Agreement do not and will not conflict with or result in a breach
of any terms of, or constitute a default under, Buyer's Articles of
Incorporation or Bylaws or any other agreement or instrument to which Buyer or
Parent is a party or by which Buyer or Parent is bound. All necessary corporate
action has been taken by Buyer and Parent with respect to the execution and
delivery of this Agreement, and this Agreement constitutes a valid obligation of
Buyer and Parent enforceable in accordance with its terms except as limited by
bankruptcy, insolvency, reorganization or other such laws concerning the rights
of creditors.
(c) PARENT STOCK. The Parent Stock to be delivered to Seller in
connection with this Agreement, when delivered in accordance with the terms of
this Agreement, will constitute valid and legally issued shares, fully paid and
nonassessable, and will be registered and free from any restriction on transfer
other than restrictions imposed by the Securities Act of 1993, as amended, or
the regulations promulgated thereunder.
SECTION 6.2 SURVIVAL. Each of the representations and warranties set
forth in this Article VI shall survive the Closing and the transfer of the
Assets.
ARTICLE VII
NONCOMPETITION
SECTION 7.1 NONCOMPETITION COVENANTS. Seller and Shareholder, jointly
and severally, agree that for a period of ten years following the date of
Closing, neither of them shall directly or indirectly, through a subsidiary or
affiliate (including without limitation, Xxxxx Environmental or any of its
successors or assigns), without the prior express written consent of Buyer:
(i) engage, whether as a corporation on its own account, or as an
officer, director, shareholder, owner, partner, joint venturer,
investor, agent, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in the business of: siting, developing, constructing,
permitting or operating a facility for the processing, treatment or
disposal of non-hazardous liquid waste (including, without limitation,
waste oil, waste water, grease trap waste, grit trap waste and oil
contaminated water); siting, developing, constructing, permitting or
operating a facility for the processing, treatment and disposal of
non-hazardous oilfield waste (including, without limitation, chlorides,
heavy metals, cuttings, contaminated soils, drilling fluids and pit
sludges); and transportation or collection of any such materials, in
each case within the states of Texas, Louisiana and Arkansas (the
"Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of Buyer in a managerial capacity for the purpose
or with the intent of enticing such employee away from or out of the
employ of Buyer;
(iii) call upon any person or entity which is, at that time, or
which has been, within two years prior to that time, a customer of
Seller or Buyer, as the case may be, within the Territory for the
purpose of: siting, developing, constructing, permitting or operating a
facility for the processing, treatment or disposal of non-hazardous
liquid waste (including, without limitation, waste oil, waste water,
grease trap waste, grit trap waste and oil contaminated water); siting,
developing, constructing, permitting or operating a facility for the
processing, treatment and disposal of non-hazardous oilfield waste
including, without limitation, chlorides, heavy metals, cuttings,
contaminated soils, drilling fluids and pit sludges); and transportation
or collection of any such materials, in each case within the Territory;
(iv) call upon any prospective acquisition candidate, on their
own behalf or on behalf of any competitor, which candidate was either
called upon by Seller or Shareholder or for which Seller or Shareholder
made an acquisition analysis for Seller or Buyer;
(v) disclose the identity of Buyer's customers, whether in
existence or proposed, to any person, firm, partnership, corporation or
business for any reason or purpose whatsoever; or
(vi) promote or assist, financially or otherwise (including,
without limitation, lending, guaranteeing loans or otherwise providing
financial assurance in any way), any person, firm, partnership,
corporation or other entity whatsoever to do any of the above.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Seller or Shareholder from (i) continuing to carry on its current
sludge de-watering operations from its present location and providing services
of a nature currently provided to clean water plants and publicly operated
treatment works, or (ii) acquiring as an investment not more than one percent of
the capital stock of a competing business, whose stock is traded on a national
securities exchange or over-the-counter.
SECTION 7.2 INJUNCTIVE RELIEF. Because of the difficulty of measuring
economic losses
to Buyer as a result of the breach of the foregoing covenant, and because of the
immediate and irreparable damage that would be caused to Buyer for which it
would have no other adequate remedy, Seller and Shareholder agree that, in the
event of breach by any of them of the foregoing covenant, the covenant may be
enforced by Buyer by, without limitation, injunctions and restraining orders.
SECTION 7.3 REASONABLENESS OF COVENANTS. It is agreed by the parties
that the foregoing covenants in this Article VII impose a reasonable restraint
on Seller and Shareholder in light of the activities and business of the Buyer
on the date of the execution of this Agreement and future plans of the Buyer.
SECTION 7.4 SEVERABILITY OF COVENANTS. The covenants in this Article VII
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenants. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
SECTION 7.5 INDEPENDENT COVENANTS. All of the covenants in this Article
VII shall be construed as an agreement independent of any other provision of
this Agreement, and the existence of any claim or cause of action of Seller or
Shareholder against Buyer, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Buyer of such covenants. It
is specifically agreed that the duration of the noncompetition covenants stated
above shall be computed by excluding from such computation any time during which
Seller or Shareholder is in violation of any provision of this Article VII and
any time during which there is pending in any court of competent jurisdiction
any action (including any appeal from any judgment brought by any person,
whether or not a party to this Agreement, in which action Buyer seeks to enforce
the agreements and covenants of Seller or Shareholder or in which any person
contests the validity or such agreements and covenants or their enforceability
or seeks to avoid their performance or enforcement.
SECTION 7.6 MATERIALITY. Seller and Shareholder hereby agree that the
foregoing noncompetition covenants are a material and substantial part of this
transaction.
ARTICLE VIII
NON-ASSUMPTION OF LIABILITIES; INDEMNIFICATION
SECTION 8 NON-ASSUMPTION OF LIABILITIES. Except as explicitly set forth
in Section 8.2 below, Buyer shall not, by the execution and performance of this
Agreement or otherwise, assume, become responsible for or incur any liability or
obligation of any nature of Seller or Shareholder whether legal or equitable,
matured or contingent, known or unknown, foreseen or unforeseen, ordinary or
extraordinary, patent or latent, whether arising out of occurrences prior to, at
or after the date of this Agreement, including, without limiting the generality
of the foregoing, any liability or obligation arising out of or relating to: (a)
any occurrence or circumstance (whether known or unknown) which occurs or exists
on or prior to the date of this Agreement and which constitutes, or which by the
lapse of time or giving notice (or both) would constitute, a breach or default
under any lease, contract, or other instrument or agreement whether written or
oral); (b) any injury to or death of any person or damage to or destruction of
any property, whether based on negligence, breach of warranty, or any other
theory; (c) a violation of the requirements of any governmental authority or of
the rights of any third person, including, without limitation, any requirements
relating to the reporting and payment of federal, state, local or other income,
sales, use, franchise, excise or property tax liabilities of Seller or
Shareholder; (d) the generation, collection, transportation, storage or disposal
by Seller or Shareholder of any materials, including, without limitation,
hazardous materials; (e) an agreement or arrangement between Seller and the
employees of Seller or Shareholder or any labor or collective bargaining unit
representing any such employees; (f) the severance pay obligation of Seller or
any employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended) or any other fringe benefit
program maintained or sponsored by Seller or Shareholder
or to which Seller or Shareholder contributes or any contributions, benefits or
liabilities therefor or any liability for the withdrawal or partial withdrawal
from or termination of any such plan or program by Seller or Shareholder; (g)
the debts of Seller or Shareholder other than the Assumed Debt; (h) any
litigation against Seller or Shareholder, whether or not listed on Schedule
5.1(h); (i) any liability, obligation cost or expense related to any facility
operated by Seller, including, without limitation, the environmental condition
thereof; and (k) the liabilities or obligations or Seller or Shareholder for
brokerage or other commissions relative to this Agreement or the transactions
contemplated hereunder. Seller and Shareholder each agree to indemnify Buyer,
its successors and assigns from and against all of the above liabilities and
obligations in accordance with Section 8.3 below.
SECTION 8.2 ASSUMPTION OF SPECIFIC LIABILITIES. In addition to the
payment of the Assumed Debt, Buyer agrees to perform all of Seller's contractual
obligations related to the Customer Contracts to the extent, and only to the
extent, such obligations first mature and are required to be performed after the
close of business on the Closing Date.
SECTION 8.3 INDEMNIFICATION BY SELLER AND SHAREHOLDER. Notwithstanding
investigation at any time made by or on behalf of Buyer, Seller and Shareholder,
jointly and severally, agree to defend, indemnify and hold harmless Buyer, its
officers, shareholders, directors, divisions, subdivisions affiliates, parent,
employees, agents, successors, assigns and the Assets from and against all
losses, claims, actions, causes of action, damages, liabilities, expenses and
other costs of any kind or amount whatsoever (including, without limitation,
reasonable attorneys' fees), whether equitable or legal, matured or contingent,
known or unknown, foreseen or unforeseen, ordinary or extraordinary, patent or
latent, which result, either before or after the date of this Agreement, from:
(a) inaccuracy in any representation or warranty made by Seller
or Shareholder in this Agreement;
(b) breach of any representation or warranty under this Agreement
by Seller or Shareholder;
(c) failure of Seller or Shareholder duly to perform and observe
any term, provision, covenant, agreement or condition under this
Agreement;
(d) liability of Seller or Shareholder imposed upon Buyer
(including, without limitation, all liability for the generation,
collection, transportation, storage or disposal of any materials,
including, without limitation, Hazardous Materials, whether or not
disclosed on Schedule 5.1(l) hereof);
(e) misrepresentation in or omission from any Schedule to this
Agreement;
(f) failure of Seller or Shareholder to obtain consent to a
Customer Account requiring such consent (including, without limitation,
reimbursement to Buyer of the value of such nonassigned Customer
Account);
(g) liability of Seller or Shareholder imposed upon Buyer as a
result of Seller's failure to comply with any applicable bulk transfer
law;
(h) liability of Seller or Shareholder resulting from one or more
pending or threatened lawsuits whether or not listed on Schedule 5.1(g);
(i) liability of Seller or Shareholder to creditors of Seller or
Shareholder which is imposed on Buyer whether as a result of bankruptcy
proceedings or otherwise and whether as a result of bankruptcy
proceedings or otherwise and whether as an account payable by Seller or
Shareholder or as a claim of alleged fraudulent conveyance or
preferential payments within the meaning of the United States Bankruptcy
Code or otherwise; and
(j) the existence of creditors of Sellers which are not disclosed
to Buyer;
(k) any of the matters described in Section 8.1(a) - (k) hereof;
and
(l) any claim by a third party that, if true, would mean that a
condition for indemnification set forth in this Section 8.3 had been
satisfied.
Buyer shall be deemed to have suffered such loss, claim, action, cause of
action, damage, liability, expense or other cost, or to have paid or to have
become obligated to pay any sum on account, of, the matters referred to in
subparagraphs (a) - (l) of this Section 8.3 if the same shall be suffered, paid
or incurred by Buyer or any parent, subsidiary, affiliate, or successor of
Buyer. The amount of the loss, claim, action, cause of action, damage,
liability, expense or other cost deemed to be suffered, paid or incurred by
Buyer shall be an amount equal to the loss, claim, action, cause of action,
damage, liability, expense or other cost suffered, aid or incurred by such
parent, subsidiary, affiliate, or successor.
SECTION 8.4 PROCEDURE FOR INDEMNIFICATION. Promptly after a party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person" or the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall, as a condition precedent to a claim with respect thereto being made
against any party obligated to provide indemnification pursuant to this
Agreement (hereinafter the "Indemnifying Party"), give the Indemnifying Party
written notice of such claim or the commencement of such action or proceeding
(the "Notice"). The Notices shall state the nature and the basis of such claim
and a reasonable estimate of the amount thereof. The Indemnifying Party, after
receipt of the Notice, shall defend and settle, at its own expense and by its
own counsel, each such matter so long as the Indemnifying Party pursues the same
diligently and in good faith and the claim does not involve injunction or
equitable relief or involve criminal penalties. The Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records or
information reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. Notwithstanding the foregoing, the
Indemnified Party shall have the right to participate in any matter through
counsel of its own choosing at its own expense, provided that the Indemnifying
Party's counsel shall always be lead counsel and shall determine all litigation
and settlement steps, strategy and the like. After the Indemnifying Party has
received the Notice, the Indemnifying Party shall not be liable for any
additional legal expenses incurred by the Indemnified Party in connection with
any defense or settlement of such asserted liability, except to the extent such
participation is requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying Party for reasonable
additional legal expenses, out-of-pocket and allocable share of employee
compensation incurred in connection with such participation for any employee
whose participation is so requested. The foregoing notwithstanding, if the
Indemnifying Party fails diligently to defend any such matter to which the
Indemnified Party is entitled to indemnification hereunder or if the claim
involves criminal penalties, the Indemnified Party may undertake such defense
through counsel of its choice and at the Indemnifying Party's expense. In each
case where the Indemnifying Party is obligated to pay the costs and expenses of
the Indemnified Party, the Indemnifying Party shall pay the costs and expenses
of the Indemnified Party as such costs and expenses are incurred. If the
Indemnifying Party desires to accept a final and complete settlement of any such
Third Person claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section with
respect to such Third Person claim shall be limited to the amount so offered in
settlement by said Third Person and the Indemnified Party shall reimburse the
Indemnifying Party for any additional costs of defense which it subsequently
incurs with respect to such claim.
ARTICLE IX
FEDERAL SECURITIES ACT RESTRICTIONS ON STOCK
SECTION 9.1 REGISTERED STOCK. Parent represents and warrants to Seller
and Seller acknowledges that all of the shares of Parent Stock to be delivered
to Seller pursuant to this Agreement will be registered under the Securities Act
of 1933, as amended (the "Act") prior to
delivery to Seller.
SECTION 9.2 GENERAL LEGEND. All Parent Stock shall bear the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE PROVISIONS OF RULE 145(D)
PROMULGATED UNDER THE SECURITIES ACT OF 1933,
AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY
THE HOLDER WITHOUT COMPLIANCE WITH SAID RULE.
In addition, all certificates representing shares of Parent Stock which are
subject to the restrictions set forth in Section 2.4 hereof, shall bear the
following additional legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON SALE AND TRANSFER WHICH ARE SET FORTH IN A
CERTAIN PURCASE AND SALE OF ASSETS AGREEMENT DATED AS OF APRIL 1,
1998, A TRUE AND CORRECT COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY.
SECTION 9.3 COMPLIANCE WITH LAW. Seller covenants, warrants and
represents that none of the shares of Parent Stock will be offered, sold,
assigned, pledged, hypothecated, transferred or otherwise disposed of except in
full compliance with the Act and the rules and regulations promulgated
thereunder. Further, Shareholder represents and acknowledges that he has no
current plan or intention to sell, exchange or otherwise dispose of any of the
Parent Stock following the Closing.
ARTICLE X
GENERAL
SECTION 10.1 FURTHER ASSURANCE. From time to time after the Closing,
Seller and Shareholder will, without further consideration, execute and deliver
such other instruments of conveyance and transfer, and take such other action as
Buyer reasonably may request to more effectively convey and transfer to and vest
in Buyer and to put Buyer in possession of the Assets to be transferred
hereunder, and in the case of contracts and rights, if any, which cannot be
transferred effectively without the consents of third parties, to endeavor to
obtain such consents promptly, and if any be unobtainable, to use their best
efforts to provide Buyer with the benefits thereof in some other manner. Seller
and Shareholder will cooperate and use their best efforts to have the present
officers, directors and employees of Seller cooperate with Buyer on and after
the Closing in furnishing information, evidence, testimony and other assistance
in connection with any actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to Closing.
SECTION 10.2 JOINT AND SEVERAL OBLIGATIONS. All representations,
warranties and agreements of Seller or Shareholder under this Agreement, the
Schedules and the transactions contemplated hereby shall be joint and several.
SECTION 10.3 WAIVER. Except as otherwise provided herein, no delay of or
omission in the exercise of any right, power or remedy accruing to any party as
a result of any breach or default by any other party under this Agreement shall
impair any such right, power or remedy, nor shall it be construed as a waiver of
or acquiescence in any such breach or default, or of or in any similar breach or
default occurring later; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default occurring before or after that
waiver.
SECTION 10.4 TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
SECTION 10.5 NOTICE. All notices or communications required or permitted
under this Agreement shall be given in writing and served either by personal
delivery, overnight courier or by deposit in the United States mail and sent by
first class registered or certified mail, return receipt requested, postage
prepaid:
If the Seller and Shareholder:
Xxxxx Pump Service, Inc.
0000 XX. 0000
Xxxx, XX 00000
Attn: Xxxxx Xxxxx
If to Buyer:
Mesa Processing, Inc.
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: W. Xxxxxxx Xxx
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxx & Xxxxxxx, L.L.P.
000 Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Notice shall be deemed given and effective the day personally delivered, the day
after bing sent by overnight courier, subject to signature verification, and
three days after deposit in the U.S. mail as provided above, or when actually
received, if earlier. Either party may change the address for notices or
communications to be given to it by written notice to the other party given as
provided in this Section.
SECTION 10.6 ENTIRE AGREEMENT. This Agreement, the Schedules hereto and
the other agreements referred to herein constitute the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
supersede all prior and contemporaneous agreements and understandings, oral or
written, relative to said subject matter.
SECTION 10.7 BINDING EFFECT; ASSIGNMENT. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon the parties hereto and their respective executors, administrators,
heirs, legal representatives, successors and permitted assigns. Seller shall
have no right to assign this Agreement or any of their respective rights
hereunder. Buyer may assign this Agreement without consent by Seller; provided,
however, that the assignee under such assignment shall agree to assume the
obligations of the assignor under this Agreement. It is further understood and
agreed that Buyer may be merged or consolidated with another entity and that any
such entity shall automatically succeed to the rights, powers and duties of
Buyer hereunder.
SECTION 10.8 EXPENSES OF TRANSACTION. Seller shall pay all costs and
expenses incurred by Seller or Shareholder in connection with this Agreement and
the transactions contemplated hereby and thereby, including, without limitation,
the fees and expenses of Seller's attorneys and accountants and will make all
necessary arrangements so that the Assets will not be charged with or diminished
by any such cost or expense. Buyer shall pay all costs and expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby
and thereby, including without limitation, the fees and expenses of its
attorneys and accountants.
SECTION 10.9 BROKER'S COMMISSION. Seller and Shareholder represent and
warrant to Buyer and Buyer represents and warrants to Seller and Shareholder
that the warranting party has had no dealing with any dealer, broker or agent so
as to entitle such dealer, broker or agent to a
commission or fee in connection with the sale of the Assets to Buyer. If for any
reason any commission or fee shall become due, the party dealing with such
dealer, broker or agent shall pay such commission or fee and agrees to indemnify
and save the other party harmless from all claims for such commission or fee and
from all attorneys' fees, litigation costs and other expense relating to such
claim.
SECTION 10.10 MODIFICATION; REMEDIES CUMULATIVE. This Agreement may not
be changed, amended, terminated, augmented, rescinded or otherwise altered, in
whole or in part, except by a writing executed by all of the parties hereto. No
right, remedy or election given by any term of this Agreement shall be deemed
exclusive but each shall be cumulative with all other rights, remedies and
elections available at law or in equity.
SECTION 10.11 SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties. If such modification is not possible,
such provision shall be severed from this Agreement. In either case the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
SECTION 10.12 GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the internal laws of the State of
Texas, without giving effect to any choice or conflict of law provision or rule
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BUYER:
MESA PROCESSING, INC.
By:______________________________
Name:____________________________
Title:_____________________________
SELLER:
XXXXX PUMP SERVICE, INC.
By:______________________________
Name:____________________________
Title:_____________________________
EIN _____________________________
SHAREHOLDER:
--------------------------------
XXXXX XXXXX
SSN_____________________________
