MESA PROCESSING, INC.
0000 X. XXXXX
XXXX XXXXX, XXXXX 00000
September 9, 0000
Xxxxx Xxxxx By-Products Company, Inc.
C\O Xxxxx Xxxxxxx
X.X. Xxx 000
Xxx Xxxxxxx, Xxxxx
RE: STOCK PURCHASE AGREEMENT
Dear Xxxxx,
This letter shall represent and contain the major terms and conditions of our
agreement to purchase all of the outstanding stock of South Texas By-Products
Company, Inc. ("STBP"), a Texas corporation and shall be considered as the
contract to purchase the stock. In addition, the parties to this contact will
agree to sign the necessary and customary closing documents in a transaction
of this type.
The basic terms and conditions of the purchase are as follows:
1. Mesa Processing, Inc. ("Purchaser") shall purchase all of the outstanding
stock of STBP on or before September 30, 1996 from Xxxx X. Xxxxxxx ("Seller")
who owns all the outstanding stock of STBP.
2. The total purchase price for the stock shall be $675,000 payable as
follows:
A. $75,000 cash down payment, $37,500 due at closing (on or before
September 30, 1996) and balance of the down payment of $37,500 due on
January 2, 1997.
B. The balance of the purchase price shall be represented by a promissory
note from the Purchaser to the Seller in the amount of $600,000 payable over
six (6) years in the amount of $100,000 per year. The payments shall be
monthly in the amount of $8,333.33, all principal, beginning January 15,
1997. The note shall be a non-interest bearing note with no penalty for early
payment or full prepayment.
C. Seller shall retain a lien secured by a Deed of Trust for the full amount
of the balance due of $600,000 covering the real property (approximately 184
acres of land) only. The stock will be transferred to the Purchaser by Seller
free and clear of any liens.
D. Seller shall deliver (1) stock certificates representing the shares owned,
properly endorsed, transferring the shares to the Purchaser, (2) resignations
as Director and Officer of STBP.
E. Seller shall deliver (1) the signed Non-Competition Agreement as shown on
Exhibit "A" and (2) the signed Letter of Understanding and Co-Operation
Agreement as shown on Exhibit "B", both attached hereto.
3. The representations and warranties contained herein will survive the
closing for two years and any losses incurred and not remedied by Seller
within 60 days of presentation of such losses and not excepted to by
Purchaser (i.e., accident claim) shall be deducted from amount owed to
Seller on the promissory note on a pro-rata basis. A separate agreement will
be signed at closing containing the provisions of this paragraph 3.
Seller warrants and represents the following:
A. STBP is a corporation in good standing with State of Texas, which will be
evidenced by a current certificate issues by the State of Texas stating same.
B. Xxxx X. Xxxxxxx is the owner of all the outstanding shares of STBP and all
other shares are owned by STBP and in the treasury as Treasury Stock. There
are no other shareholders or any classes of stock, except Common stock.
C. STBP has no subsidiary companies.
D. STBP has proper title to all assets owned by the Company as shown on the
attached financial statements dated 8-31-96 and all the assets are in a
workable condition for their intended uses.
E. STBP has paid and will continue to pay all taxes (State, Federal, City,
County, etc) due for past operations and through the anticipated closing
date, excluding federal income taxes due for calander year 1996. All
government agency tax returns have been filed that are due and will be filed
that will be due prior to closing.
F. The financial statements of STBP for the years ended December 31, 1994 abd
1995 and the eight months ended August 31, 1996 presented to Purchaser by
Seller present fairly and contain all the assets, liabilities, income and
expenses existing and incurred in prior years and to the date of the last
financial statements to be given to the Purchaser by the Seller. There are no
material omissions or misstatements in these financial statements. The
liabilities as reflected by the above described financial statements are all
of the liabilities that are in existence as of the date of closing and their
are no undisclosed liabilities associated with STBP, except for the possible
liability related to an accident involving an STBP truck in which an
individual has a potential claim of an undetermined amount and which is
covered by a maximum of $20,000 by STBP insurance coverage. The Purchaser
agrees to assume this potential insurance claim for all amounts over $20,000
(or insurance coverage, whichever is greater). Assumption of this claim by
Purchaser is subject to Purchaser reviewing all files and case history with
all appropriate legal counsels and making its own estimate of liability, said
task to be accomplished within two weeks of date hereof.
G. STBP has no commitments or obligations under any employment contracts,
retirement plans, employee benefit plans or any other labor matters.
H. STBP has all necessary permits, licenses and authorizations to conduct
business in the State of Texas as a rendering and grease processing plant
and copies of such documents are available in company records located at the
offices of STBP.
I. STBP is in compliance with all applicable laws governing the grease and
rendering business and is in compliance with any and all agreements which
STBP is a party.
J. STBP is not a Planiff or Defendant in any lawsuit and no other potential
lawsuits are pending, to best of your knowledge, regarding any matter,
except the accident claim mentioned above in paragraph 3F above.
K. STBP shall be operated by present management until the day of closing in
ordinary and customary businesslike manner and no adverse changes will occur
in any asset, contact or positive business arrangements from this date until
closing.
L. STBP and all owners, officers and directors agree to and will evidence
same in appropriate minutes of meetings of Stockholders and Board of Directors
the sale of the stock of the company to Purchaser. All minutes of
Stockholders and Board of Directors for prior years have been typed and are
signed by the appropriate officers and/or directors and are located in the
corporate records.
M. STBP and all Stockholders of STBP are aware of any environmental matters or
problems from any government agency and consider the company to be in
compliance with all known regulations applicable to STBP.
N. STBP does not expect or anticipate the loss of any raw material suppliers
that affect the amount of raw materials by greater than a two percent (2%)
loss of volume for the immediate thirty (30) days subsequent to closing.
4. Seller shall be allowed to retain the income in the approximate amount of
$11,400 per year which is generated by signage located on property owned by
STBP. This sign income will be collectible by Purchaser when the promissory
note is paid in full.
5. Purchaser shall obtain and pay for a term life insurance policy on
Xxx Xxxxxxx in the maximum amount of $300,000 and the minimum amount of the
remaining balance of the promissory note and name the Seller as the
beneficiary.
6. Seller agrees to retain as employees for a minimum for one year, if job
performance is satisfactory, the following individuals and to negotiate
employment terms with each prior to closing:
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx
Continued employment shall be contingent on job performance as determined by
Purchaser.
7. Purchaser and/or its representatives shall be requesting copies of and
access to certain company records and documents prior to closing and Seller
agrees to provide these in a timely manner. These documents include but are
not limited to the following items:
Federal Tax Returns and all supporting schedules (1993, 1994, 1995)
Customer List (Vendors and Sales Customers) with any contracts or agreements
All vehicle records (maintenance, mileage, title documents, liens etc.)
Form 940 and 941 returns for last 12 months
Copy of corporate charter, articles, by-laws, minutes of meetings of
stockholders and BOD
Stock records, Treasury Stock certificates
Survey or plot plan of plant site and extra land, plant layout
Detail listing of all assets (Vehicles, Equipment, Accounts Receivable, etc.)
Documentation/copies of all TNRCC permits, city/county permits, etc.
Monthly volume reports 1994, 1995, 1996
List of current employees with annual compensation, tenure, accrued vacation
times
Copies of all insurance policies (Vehicles, Liability, F&EC, Hospitalization,
Work Comp., etc.)
Copies and details on Life Insurance on books
Detailed list of all Accounts Payable as of 8/31/96 and as of closing date.
Copies of all files related to Notes Payable and/or Lease obligations.
8. Seller and Purchaser agree to sign all reasonable and customary documents
associated with the proper and legal closing of a transaction of this nature,
subject to review of documents.
9. Seller, as defined in the attached Non-Competition Agreement to be signed
at closing, agrees to sign the attached Non-Competition Agreement in which
they agree not to engage or participate in the collection, processing and
sale of restaurant and/or inedible grease and the rendering business
including routes, processing and sales for a period of five (5) years after
closing in the State of Texas.
THE SIGNING OF THIS LETTER CONTRACT SHALL BIND THE PARTIES TO THE PROVISIONS
CONTAINED HEREIN AND PURCHASER AGREES TO ADVANCE $1,000 AS XXXXXXX MONEY AND
CONSIDERATION TO SELLER AS PART OF THE DOWN PAYMENT TO BE PAID AT CLOSING.
Signed this the 10th day of September, 1996.
Seller: Xxxx X. Xxxxxxx Purchaser: Mesa Processing, Inc.
/s/ Xxxx X. Xxxxxxx /s/ Xxx Xxxxxxx - Pres
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By: Xxx Xxxxxxx, President
Agreed to Terms and Conditions above.
South Texas By-Products Company, Inc.
/s/ Xxxx X. Xxxxxxx
-------------------
By: President
WARRANTIES AND REPRESENTATIONS
OF
XXXX X. XXXXXXX
Reference is made to one certain Stock Purchase Agreement dated September 10,
1996 between Xxxx X. Xxxxxxx, ("Seller") and holder of 100% of the
outstanding stock of South Texas By-Products Company, Inc. ("STBP") and Mesa
Processing, Inc. ("Purchaser") wherein Seller agreed to sign a separate
document containing all of the warranties and representations contained
therein.
The representations and warranties contained herein will survive the closing
for two years and any losses incurred and not remedied by Seller within 60
days of presentation of such losses and not excepted to by Purchaser (i.e.,
accident claim) shall be deducted from amount owed to Seller on the
promissory note on a pro-rata basis.
Seller warrants and represents the following:
A. STBP is a corporation in good standing with State of Texas, which will be
evidenced by a current certificate issues by the State of Texas stating same.
B. Xxxx X. Xxxxxxx is the owner of all the outstanding shares of STBP and all
other shares are owned by STBP and in the treasury as Treasury Stock. There
are no other shareholders or any classes of stock, except Common stock.
C. STBP has no subsidiary companies.
D. STBP has proper title to all assets owned by the Company as shown on the
attached financial statements dated 8-31-96 and all the assets are in a
workable condition for their intended uses.
E. STBP has paid and will continue to pay all taxes (State, Federal, City,
County, etc.) due for past operations and through the anticipated closing
date, excluding federal income taxes due for calendar year 1996. All
government agency tax returns have been filed that are due and will be filed
that will be due prior to closing.
F. The financial statements of STBP for years ended December 31, 1994 and
1995 and the eight months ended August 31, 1996 (Attached hereto as Exhibit
"A" and "A-1") presented to Purchaser by Seller present fairly and contain
all the assets, liabilities, income and expenses existing and incurred in
prior years and to the date of the last financial statements to be given to
the Purchaser by the Seller. There are no material omissions or misstatements
in these financial statements. The liabilities as reflected by the above
described financial statements are all of the liabilities that are in
existence as of the date of closing and their are no undisclosed liabilities
associated with STBP, except for the possible liability related to an
accident involving an STBP truck in which an individual has a potential claim
of an undetermined amount and which is covered by a maximum of $20,000 by
STBP insurance coverage. The Purchaser agrees to assume this potential
insurance claim for all amounts over $20,000 (or insurance coverage,
whichever is greater).
G. STBP has no commitments or obligations under any employment contracts,
retirement plans, employee benefit plans or any other labor matters.
H. STBP has all necessary permits, licenses and authorizations to conduct
business in the State of Texas as a rendering and grease processing plant and
copies of such documents are available in company records located at the
offices of STBP.
I. STBP is in compliance with all applicable laws governing the grease and
rendering business and is in compliance with any and all agreements which
STBP is a party.
J. STBP is not a Planiff or Defendant in any lawsuit and no other potential
lawsuits are pending, to best of your knowledge, regarding any matter, except
the accident claim mentioned above in paragraph 3F above.
K. STBP shall be operated by present management until the day of closing in
ordinary and customary businesslike manner and no adverse changes will occur
in any asset, contact or positive business arrangement from this date until
closing.
L. STBP and all owners, officers and directors agree to and will evidence
same in appropriate minutes of meetings of Stockholders and Board of
Directors the sale of the stock of the company to Purchaser. All minutes of
Stockholders and Board of Directors for prior years have been typed and are
signed by the appropriate officers and/or directors and are located in the
corporate records.
M. STBP and all stockholders of STBP are aware of any environmental matters
or problems from any government agency and consider the company to be in
compliance with all known regulations applicable to STBP.
N. STBP does not expect or anticipate the loss of any raw material suppliers
that affect the amount of raw materials by greater than a two percent (2%)
loss of volume for the immediate thirty (30) days subsequent to closing.
SIGNED THIS THE 10TH DAY OF SEPTEMBER, 1996
XXXX X. XXXXXXX
/s/ Xxxx X. Xxxxxxx
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