EXHIBIT 10.55
PURCHASE AND SALE OF ASSETS AGREEMENT
THIS PURCHASE AND SALE OF ASSETS AGREEMENT (the "Agreement") is
executed and delivered as of March 16, 1998, to be effective March 15, 1998,
between ENVIRONMENT MANAGEMENT, INC., a Texas corporation ("Buyer"); BUG MASTER
EXTERMINATING SERVICE, INC., a Texas corporation ("Seller"); and ▇▇▇ ▇▇▇▇▇, its
majority stockholder ("Stockholder").
P R E M I S E S:
WHEREAS, Seller operates a non-hazardous commercial waste
transportation business in the Austin, Texas area (the "Business");
WHEREAS, Seller also operates a pest control service business (the
"Excluded Business");
WHEREAS, Buyer desires to purchase and acquire certain assets,
properties and contractual rights of Seller used in connection with the Business
(but not the Excluded 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, Stockholder holds a majority of the outstanding capital
stock of Seller and Buyer is unwilling to enter into this Agreement without the
covenants and promises of Stockholder herein set forth; and
NOW, THEREFORE, in consideration of Ten Dollars ($10), the mutual
promises and covenants herein contained and other good and valuable
consideration, received to the full satisfaction of each of them, the parties
hereby agree as follows:
A G R E E M E N T:
ARTICLE 1. 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) the equipment listed on Schedule 1.1(a) attached hereto and made
a part hereof (the "Equipment");
(b) the motor vehicles 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) a copy of all manual and automated routing and billing
information about customers of the Business (but not the Excluded
Business);
(d) all contractual rights of Seller with Seller's customers
(whether oral or in writing) relating to the conduct of the Business (but
not the Excluded 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
and Related Approvals shall be delivered to Buyer simultaneously with the
execution and delivery of this Agreement;
(e) all permits, licenses, franchises, consents and other approvals
relating to the Business (but not the Excluded Business) set forth on
Schedule 1.1(e), attached hereto and made a part hereof (the "Permits")
(true and complete copies of which shall be delivered to Buyer
simultaneously with the execution and delivery of this Agreement);
(f) all of Seller's existing documents, files and other material
related to all current or past customers of the Business (but not the
Excluded 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) and all buildings on and fixtures to all real property of Seller
(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 all
commitments, lists, leases, permits, licenses, consents, approvals, franchises
and other instruments not relating to the Customer Accounts or the Business; (e)
all employment contracts to which Seller is a party or by which Seller is bound;
(f) all of Seller's right, title and interest in and to the name "Bug Master
-2-
Exterminating Service"; (g) all assets and obligations related to the Excluded
Business; and (h) any items listed on Schedule 1.2.
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 assignment.
SECTION 1.4 SELLER ACCOUNTS RECEIVABLE. (a) Buyer shall have no
liability or obligation whatsoever to Seller in connection with the
Accounts Receivable and Buyer shall not be responsible for collecting 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 as set forth in Section 1.4(b)
below. Attached hereto as Schedule 1.4 is a true and complete list of all
Accounts Receivable of Seller as of __________, 1998.
(b) All sums representing Accounts Receivable as set forth on
Schedule 1.4 collected by Buyer from the customers set forth on Schedule
1.1(d) shall be conclusively presumed to be receipts from the collection
of the oldest Accounts Receivable of such customer unless the customer
specifically indicates otherwise in writing. All such sums received by
Buyer shall be remitted to Seller on a regular basis (but at least
monthly), together with an itemized list of the sources thereof. Seller
shall be entitled to take such action as may be necessary in order to
collect its unpaid Accounts Receivable; provided, however, that Seller
agrees not to deliver any such Accounts Receivable to a collection agency
or institute any litigation related to any Accounts Receivable without the
prior written consent of Buyer, which consent shall not be unreasonably
withheld.
SECTION 1.5 PRORATION OF CASH ON HAND. The parties
-3-
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 in connection with the
Business (but not the Excluded Business). Seller shall be entitled to all such
sums allocable to services performed on or before the close of business on the
date of Closing in connection with the Business (but not the Excluded Business)
and Buyer shall be entitled to all such sums allocable to services to be
performed thereafter in connection with the Business (but not the Excluded
Business).
ARTICLE 2. PURCHASE PRICE
SECTION 2.1 AGGREGATE PURCHASE PRICE. Subject to Section 2.3 below,
on the Closing Date U S Liquids Inc., a Delaware corporation ("Parent") shall
pay to Seller for the Assets and the restrictive covenants set forth herein: (A)
the sum of $209,000 in immediately available funds; and (B) that total number of
shares of the common stock of Parent, $.01 par value, which shall have an
aggregate Agreed Value of $209,000 calculated in accordance with Section 2.2
below (the "Parent Stock").
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
a period of five consecutive trading days. The days used to obtain the average
will be the tenth trading day through the sixth trading day before the date of
Closing.
SECTION 2.3 PAYMENT OF DEBTS OF SELLER. Seller agrees that on the
Closing Date all of the Assets (whether owned or leased) shall be delivered to
Buyer free of all debts, liens and other encumbrances whatsoever (including bank
debt, lease payments and lease end buy-out provisions). Seller shall be
responsible, at its sole cost, for the payment in full of all such debts, liens
and other encumbrances. At Seller's request and direction, Buyer agrees to cause
a portion of the purchase price set forth in Section 2.1(A) above otherwise
payable to Seller on the Closing Date to be paid directly to creditors of
Seller. Set forth on Schedule 2.3 is a listing of all debts, liens, and other
encumbrances relating to the Assets and their respective payoff amounts as of
the Closing Date.
ARTICLE 3. CLOSING
SECTION 3.1 TIME AND PLACE OF CLOSING. Unless the parties otherwise
agree, this transaction shall be closed
-4-
simultaneously with the execution and delivery of this Agreement and the other
documents and instruments referred to in this Article 3 (the "Closing") to be
effective on March 15, 1998 (the "Closing Date"). The Closing shall take place
at a location mutually acceptable to Buyer and Seller.
SECTION 3.2 DELIVERIES BY SELLER AND STOCKHOLDER. At the Closing,
Seller and Stockholder shall deliver to Buyer, all duly executed:
(a) a General Conveyance, Assignment and ▇▇▇▇ of Sale, in form and
substance satisfactory to Buyer and Seller, conveying, selling,
transferring and assigning to Buyer all of the Assets (the "▇▇▇▇ 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) a release by Seller and Stockholder for claims against Buyer or
the Assets (not including any claims pursuant to this Agreement);
(e) 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;
(g) 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; and
(h) such other separate instruments of sale, assignment or transfer
reasonably required by 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 (B).
ARTICLE 4. COVENANTS OF SELLER AND STOCKHOLDER
SECTION 4.1 TRANSITION. Neither Seller nor Stockholder will take any
action that is designed or intended to have the effect of 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 Stockholder will refer all customer inquiries
-5-
relating to the Business to Buyer from and after the Closing. Further, Seller
and Stockholder 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,
subject to the time Stockholder needs to operate the Excluded Business. Such
assistance shall include, without limitation, Seller and Stockholder assisting
Buyer to obtain contracts with Seller's current customers, routing transition
activities and development of sufficient information to allow Buyer to compile
accurate customer ▇▇▇▇▇▇▇▇.
SECTION 4.2 SURVIVAL. Each of the covenants set forth in this
Article 4 shall survive the Closing and the transfer of the Assets.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER
AND STOCKHOLDER
SECTION 5.1 Seller and Stockholder, 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 Stockholder
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
instrument or other agreement to which Seller or Stockholder are a
party or by which Seller or Stockholder are bound. This Agreement
constitutes a valid obligation of Seller and Stockholder enforceable
against Seller and Stockholder in accordance with its terms except
as limited by bankruptcy, insolvency, reorganization or other such
laws concerning the rights of creditors.
(ii) Stockholder 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) A majority of the issued and outstanding shares of
Seller are owned of record and beneficially by Stockholder, free and
clear of all liens, security interests and encumbrances whatsoever.
-6-
(b) COMPLIANCE WITH LAW. Neither Seller nor Stockholder 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 Stockholder 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
-7-
and marketable title to all of the Assets constituting personal property,
free and clear of all liens, encumbrances, security interests, equities or
restrictions whatsoever 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. The Assets include all of the permits, licenses, franchises,
consents and other approvals necessary or desirable to conduct the
Business.
(g) TITLE TO REAL PROPERTY. Seller currently owns property located
at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Land") and has never owned,
leased or otherwise occupied, had an interest in or operated any real
property other than the Land. Except as set forth on Schedule 5.1(g):
(i) The Land is, and at all times during operation of the
Business has been, fully licensed, permitted and authorized for the
operation of the Business under all Applicable Laws relating to the
protection of the environment, the Land and the conduct of the
Business thereon (including, without limitation, all zoning
restrictions and land use requirements).
(ii) Neither Seller, Stockholder nor the Land now is or ever
has been involved in any litigation or administrative proceeding
seeking to impose fines, penalties or other liabilities or seeking
injunctive relief for violation of any Applicable Laws relating to
the environment.
(h) LITIGATION. Except as set forth on Schedule 5.1(h) hereof, there
is no claim, litigation, action, suit or proceeding, administrative or
judicial, pending or threatened against Seller or Stockholder, 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 Stockholder 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.
-8-
(i) EMPLOYEES. Attached as Schedule 5.1(i) 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.
(j) EMPLOYEE RELATIONS AND BENEFIT PLANS. Set forth on Schedule
5.1(j) 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.
(k) FINANCIAL STATEMENTS. Seller has delivered to Buyer copies of
Seller's balance sheet as of December 31, 1997 (the "Balance Sheet Date"),
and a statement of income, cash flow and retained earnings for the period
then ended (the "Financial Statements"). The Financial Statements
(including any footnotes thereto) have been prepared in accordance with
generally accepted accounting principles ("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).
(l) TAXES. No federal, state, local or other tax returns or reports
filed by Seller (whether filed prior to,
-9-
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.
(m) HAZARDOUS MATERIALS. Neither Seller nor Stockholder 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 Resource Conservation and Recovery Act of 1976; 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 the Land or into the environment. Further, no portion of
the Land 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(m) 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 Stockholder is listed as a potentially
responsible party under CERCLA or any comparable or similar Texas statute;
neither Seller nor Stockholder has received any notice of such a listing;
and neither Seller nor Stockholder knows of any facts or circumstances
which could give rise to such a listing.
(n) GOVERNMENT NOTICES. Seller has delivered to
-10-
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.
(o) 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.
(p) GROSS REVENUES. The gross revenues generated by the Business for
the 12-month period immediately preceding the month in which the Closing
occurs were $______________.
(q) UNDERGROUND STORAGE TANKS. Except for the Land, Seller has never
owned, leased or operated any real estate having any underground storage
tanks containing petroleum products or wastes or other hazardous
substances regulated by 40 CFR 280 and/or other applicable federal, state
or local laws, rules and regulations and requirements. Set forth on
Schedule 5.1(q) is a list of all above and below ground tanks located on
the Land, each of which are being used and maintained in accordance with
Applicable Laws.
(r) 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 Stockholder
become aware of any fact or circumstance which would change a
representation or warranty of Seller or Stockholder 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 Stockholder 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 Stockholder 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 5 shall survive the Closing and the transfer of the
Assets.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
SECTION 6.1 Buyer and Parent represent and warrant to
-11-
Seller and Stockholder 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 6 shall survive the Closing and the transfer of the
Assets.
ARTICLE 7. NONCOMPETITION
SECTION 7.1 NONCOMPETITION COVENANTS. Seller and Stockholder,
jointly and severally, agree that for a period of five years following the date
of Closing, none of them shall directly or indirectly, through a subsidiary or
affiliate, 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
-12-
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 a radius of 100 air miles of Austin,
Texas (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 one year 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 Stockholder or for which Seller or Stockholder 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.
-13-
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit Seller or Stockholder from: (A) 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; or (B)
owning, operating or selling the Excluded Business.
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
Stockholder 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 Section 7 impose a reasonable restraint on
Seller and Stockholder in light of the activities and business of the Buyer on
the date of the execution of this Agreement and the future plans of the Buyer.
SECTION 7.4 SEVERABILITY OF COVENANTS. The covenants in this Section
7 are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. 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
Section 7 shall be construed as an agreement independent of any other provision
of this Agreement, and the existence of any claim or clause of action of Seller
or Stockholder 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 Stockholder is in violation of any provision of this Section 7 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 Stockholder or in which any person
contests the validity of such agreements and covenants or their enforceability
or seeks to avoid their performance or enforcement.
-14-
SECTION 7.6 MATERIALITY. Seller and Stockholder hereby agree that
the foregoing noncompetition covenants are a material and substantial part of
this transaction.
ARTICLE 8. NON-ASSUMPTION OF LIABILITIES; INDEMNIFICATION
SECTION 8.1 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 Stockholder 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 Stockholder; (d) the generation, collection,
transportation, storage or disposal by Seller or Stockholder of any materials,
including, without limitation, Hazardous Materials; (e) an agreement or
arrangement between Seller and the employees of Seller or Stockholder 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 Stockholder or to which Seller or Stockholder 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 Stockholder; (g) the debts of Seller or Stockholder; (h) any
litigation against Seller or Stockholder, whether or not listed on Schedule
5.1(h); (i) any liability, obligation, cost or expense related to the Excluded
Assets or the Excluded Business; (j) any liability, obligation cost or expense
related to the Land, including, without limitation, the environmental condition
thereof; and (k) the liabilities or obligations of Seller or Stockholder for
brokerage or other commissions relative to this Agreement or the transactions
contemplated hereunder. Seller and Stockholder each
-15-
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. Buyer agrees to
perform all of Seller's contractual obligations related to the Customer Accounts
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 STOCKHOLDER.
Notwithstanding investigation at any time made by or on behalf of Buyer, Seller
and Stockholder, 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
Stockholder in this Agreement;
(b) breach of any representation or warranty under this Agreement by
Seller or Stockholder;
(c) failure of Seller or Stockholder duly to perform and observe any
term, provision, covenant, agreement or condition under this Agreement;
(d) liability of Seller or Stockholder 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(m) hereof);
(e) misrepresentation in or omission from any Schedule to this
Agreement;
(f) failure of Seller or Stockholder 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 Stockholder imposed upon Buyer as a
result of Seller's failure to comply with the bulk transfer law of Texas;
-16-
(h) liability of Seller or Stockholder resulting from one or more
pending or threatened lawsuits whether or not listed on Schedule 5.1(h);
(i) liability of Seller or Stockholder to creditors of Seller or
Stockholder which is imposed on Buyer whether as a result of bankruptcy
proceedings or otherwise and whether as an account payable by Seller or
Stockholder 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 Seller 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, paid 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 Notice 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 injunctive or equitable
-17-
relief or involve the possibility of 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 injunctive or equitable relief or involves the possibility of 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 9. GENERAL
SECTION 9.1 FURTHER ASSURANCE. From time to time after the Closing,
Seller and Stockholder 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
-18-
promptly, and if any be unobtainable, to use their best efforts to provide Buyer
with the benefits thereof in some other manner. Seller and Stockholder 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 the Closing.
SECTION 9.2 JOINT AND SEVERAL OBLIGATIONS. All representations,
warranties and agreements of Seller or Stockholder under this Agreement, the
Schedules and the transactions contemplated hereby shall be joint and several.
SECTION 9.3 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; not shall any waiver of any single breach or
default be deemed a waiver of any other breach of default occurring before or
after that waiver.
SECTION 9.4 TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
SECTION 9.5 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 to Seller or Stockholder:
____________________________
____________________________
____________________________
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Davidson & ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to Buyer:
U S Liquids Inc.
-19-
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: W. ▇▇▇▇▇▇▇ ▇▇▇
with a copy to:
U S Liquids Inc.
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
3200 National City Center
▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Notice shall be deemed given and effective the day personally delivered, the day
after being 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 9.6 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 9.7 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 9.8 EXPENSES OF TRANSACTION. Seller shall pay all costs and
expenses incurred by Seller or Stockholder in connection with this Agreement and
the transactions contemplated hereby and thereby, including, without limitation,
the fees and
-20-
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 9.9 BROKER'S COMMISSION. Seller and Stockholder represent
and warrant to Buyer and Buyer represents and warrants to Seller and Stockholder
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 9.10 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 9.11 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 9.12 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:
-21-
ENVIRONMENT MANAGEMENT, INC.
By:___________________________
Its:__________________________
SELLER:
BUG MASTER EXTERMINATING
SERVICE, INC.
(EIN: ______________)
By:___________________________
Its:__________________________
STOCKHOLDER:
______________________________
▇▇▇ ▇▇▇▇▇
(SSN: _____________)
-22-
LIST OF SCHEDULES
Schedule 1.1(a) -- Equipment
Schedule 1.1(b) -- Rolling Stock
Schedule 1.1(d) -- Customer Accounts and Related Approvals
Schedule 1.1(e) -- Permits
Schedule 1.2 -- Excluded Assets
Schedule 1.3 -- Customer Accounts Requiring Consent to Assignment
Schedule 1.4 -- Accounts Receivable
Schedule 2.3 -- Debt Payoff Amounts
Schedule 5.1(g) -- Real Property Disclosure
Schedule 5.1(h) -- Litigation
Schedule 5.1(i) -- Employees
Schedule 5.1(j) -- Employee Agreements
Schedule 5.1(m) -- List of Disposal Sites
Schedule 5.1(q) -- Storage Tanks
-23-