ASSET PURCHASE AGREEMENT
Between
PROBEX CORP.
And
PENNZOIL - QUAKER STATE COMPANY
Dated as of September 6, 2000
ASSET PURCHASE AGREEMENT
ARTICLE I
DEFINITIONS
1.1 Defined Terms...................................................................................2
1.2 Interpretative Matters..........................................................................7
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
RELATED AGREEMENTS OF THE PARTIES
2.1 Assets to be Purchased..........................................................................8
2.2 Assumed Liabilities.............................................................................9
2.3 Liens and Liabilities Not Assumed...............................................................9
2.4 Excluded Assets................................................................................10
2.5 Allocation.....................................................................................10
2.6 Services Agreements............................................................................10
2.7 Preferred Hauler Agreement.....................................................................10
2.8 Corporate Services Agreement...................................................................10
ARTICLE III
CLOSING; CONSIDERATION
3.1 Execution and Delivery of Closing Documents....................................................11
3.2 Delivery of Purchase Consideration.............................................................11
3.3 Acquired Accounts Receivable...................................................................11
3.4 Closing........................................................................................11
3.5 Further Assurances.............................................................................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization and Good Standing.................................................................12
4.2 Authority and Validity of Agreements...........................................................12
4.3 Ownership of the Business......................................................................12
4.4 Outstanding Rights.............................................................................12
4.5 No Violation...................................................................................13
4.6 Consents.......................................................................................13
4.7 Accounts Receivable............................................................................13
4.8 Absence of Certain Changes or Events...........................................................13
4.9 Properties; Leases; Other Data.................................................................14
4.10 Properties; Contracts; Other Data..............................................................15
4.11 Litigation.....................................................................................15
4.12 Employees; Labor Relations.....................................................................16
4.13 Employee Benefit Plans.........................................................................16
4.14 Business Property Rights.......................................................................16
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4.15 Licenses of Intangible Personal Property.......................................................17
4.16 Use of Real Property...........................................................................17
4.17 Condition of Tangible Assets...................................................................17
4.18 Compliance with Law............................................................................17
4.19 Customers......................................................................................17
4.20 Environmental Matters..........................................................................18
4.21 Permits........................................................................................19
4.22 Absence of Certain Business Practices..........................................................19
4.23 Broker's or Finder's Fees......................................................................20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Organization and Good Standing.................................................................20
5.2 Authority and Validity of Agreements...........................................................20
5.3 No Violation...................................................................................20
5.4 Consents.......................................................................................21
5.5 Broker's or Finder's Fees......................................................................21
5.6 Financial Ability..............................................................................21
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Operations; Other Pre-Closing Matters..........................................................21
6.2 Environmental Report...........................................................................22
6.3 Identifiable Event.............................................................................22
6.4 Approval.......................................................................................23
6.5 Expenses; Taxes................................................................................23
6.6 Taxable Event..................................................................................24
6.7 Accounts Receivable............................................................................24
6.8 Notice of Material Change......................................................................24
6.9 Exclusivity....................................................................................24
6.10 Retention of Records After the Closing.........................................................24
6.11 Confidentiality................................................................................25
6.12 Employee Matters...............................................................................25
6.13 SES Texas Right................................................................................27
6.14 Cooperation with Services Agreement............................................................27
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
7.1 Accuracy of Representations and Warranties.....................................................27
7.2 Compliance with Covenants......................................................................27
7.3 Actions or Proceedings.........................................................................27
7.4 Consents.......................................................................................27
7.5 Tangible Personal Property Leases..............................................................28
7.6 Intangible Personal Property...................................................................28
7.7 Ancillary Agreements...........................................................................28
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
8.1 Accuracy of Representations and Warranties.....................................................28
8.2 Compliance with Covenants......................................................................28
8.3 Actions or Proceedings.........................................................................28
8.4 Consents.......................................................................................28
8.5 Ancillary Agreements...........................................................................29
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1 Survival of Representations....................................................................29
9.2 General Indemnities............................................................................29
9.3 Conditions of Indemnification..................................................................30
9.4 Determination of Damages; Survival of Obligations..............................................33
9.5 Exclusivity of Remedies........................................................................33
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ARTICLE X
TERMINATION
10.1 Termination....................................................................................34
10.2 Effect of Termination..........................................................................34
10.3 Return of Disclosed Information................................................................34
ARTICLE XI
MISCELLANEOUS
11.1 Counterparts...................................................................................35
11.2 Notices........................................................................................35
11.3 Risk of Loss...................................................................................36
11.4 Waivers........................................................................................36
11.5 Amendments.....................................................................................36
11.6 Applicable Law.................................................................................36
11.7 Assignability..................................................................................36
11.8 Binding Effect.................................................................................36
11.9 Severability...................................................................................37
11.10 Knowledge......................................................................................37
11.11 Entire Agreement...............................................................................37
Exhibits:
Exhibit A - Services Agreements
Exhibit B - Preferred Hauler Agreement
Exhibit C - Corporate Services Agreement
v
Annex I
Assets
Annex II
Seller's Disclosure Schedule
Annex III
Purchaser's Disclosure Schedule
vi
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of September 6, 2000, (this
"Agreement"), is by and between Probex Corp., a Colorado corporation
("Purchaser"), and Pennzoil-Quaker State Company, a Delaware corporation
("Seller").
WITNESSETH:
WHEREAS, Specialty Environmental Services, an operating unit and
division of Seller, is currently engaged in the business of, among other things,
the collection of waste oil and related waste products, and the sale of certain
related services and equipment (the "Business");
WHEREAS, in consideration of certain payments to be made to Seller by
Purchaser and other good and valuable consideration, Seller desires to sell to
Purchaser, and Purchaser desires to purchase from Seller, upon the terms and
subject to the conditions hereinafter set forth, assets used in connection with
the Business;
WHEREAS, in connection with the transactions contemplated herein,
Purchaser and Seller desire to enter into certain agreements with respect to (a)
Purchaser's access to and use of certain assets which shall remain located on
Seller's (or Seller's assignee's) properties after Closing; (b) Purchaser's
disposal of used oil, oil filters and anti-freeze at oil service centers owned
or operated by Seller and its Affiliates; and (c) certain information technology
and environmental services support which Seller shall provide to Purchaser;
WHEREAS, the Parties hereto will derive certain benefits from the
transactions contemplated by this Agreement and in connection therewith, are
willing to make certain representations, warranties, covenants, obligations,
indemnities, and agreements, as set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Purchaser and Seller, on the basis of, and in reliance upon, the respective
representations, warranties, covenants, obligations, indemnities and agreements
set forth in this Agreement, and upon the terms and subject to the conditions
contained herein, hereby agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Defined Terms. In this Agreement, the following terms have the
corresponding meanings:
"Acquired Accounts Receivable" shall have the meaning assigned to such
term in Section 2.1(i).
"Assumed Accounts Payable" shall have the meaning assigned to such term
in Section 2.2 hereof.
"Affiliate" shall mean any Person that directly or indirectly through
one or more intermediaries controls, is controlled by, or is under
common control with such person.
"Agreement" shall mean this Asset Purchase Agreement, dated as of
September 6, 2000, by and between Purchaser and Seller.
"Ancillary Agreements" shall mean (a) the Services Agreements; (b) the
Preferred Hauler Agreement; and (c) the Corporate Services Agreement.
"Assets" shall mean all of the assets of the Business to be purchased
by Purchaser as described in Section 2.1, including the Assets listed
on Annex I.
"Assumed Accounts Payable" shall have the meaning assigned to such term
in Section 2.2 hereof.
"Assumed Contracts" shall have the meaning assigned to such term in
Section 2.1(f).
"Assumed Liabilities" shall have the meaning assigned to such term in
Section 2.2.
"Bankruptcy and Equity Exceptions" shall mean the limitations on the
enforceability of any agreement or obligation due to (a) the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium, or
other similar laws affecting creditors' rights generally, and (b) the
application of general principles of equity.
"Business" shall have the meaning assigned to such term in the first
recital to this Agreement.
"Business Day" shall mean Monday through Friday, excluding any such day
on which banks are designated to be closed in New York.
"Business Property Rights" shall mean, with respect to the Business,
all Seller's right in or to (a) patents, trademarks and trade names,
trademark and trade name registrations, service marks and service ▇▇▇▇
registrations, and copyright registrations, and pending applications
for patents, trademarks, trade names, servicemarks, or copyright
registrations, under the laws of the United States or any similar
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rights under the laws of any foreign jurisdiction, as well as any
reissues or extensions thereof ("Intellectual Property Rights"), which
in each case are used or held for use primarily in connection with the
Business, and (b) all licenses and sublicenses and all other agreements
which relate, in whole or in part, to any items of the categories
mentioned in the preceding clause (a) except for Intangible Personal
Property.
"Cash" shall mean cash and cash equivalents (including marketable
securities and short-term investments) determined in accordance with
GAAP.
"Closing" shall mean the consummation of the transactions contemplated
by this Agreement pursuant to Section 3.4 hereof.
"Closing Date" shall mean the date on which the Closing occurs.
"COBRA" shall have the meaning assigned to such term in Section 6.12(e)
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor law or code.
"Corporate Services Agreement" shall have the meaning assigned to such
term in Section 2.8 hereof.
"Damages" shall mean demands, claims, actions or causes of action,
obligations, assessments, losses, damages, liabilities, costs, and
expenses, including interest, penalties, and reasonable attorneys' fees
and expenses, and including, without limitation, Environmental
Liability and Environmental Claims.
"Disclosed Information" shall have the meaning assigned to such term in
Section 6.11 hereof.
"Effective Time" shall mean 12:01 a.m., Dallas Texas time, on October
1, 2000.
"Environmental Claim" shall mean any and all claims,
liabilities,(including, without limitation, contractual liability and
strict liability), demands, rights, obligations, causes of action,
suits, contribution and indemnity actions, and other proceedings of any
kind or character, however denominated, of or by any Person whether at
law or at equity, known or unknown, potential, asserted or unasserted,
accrued or unaccrued, direct, indirect, contingent, third party, or
subrogated, or derivative of any of the above (including, without
limitation, any claims asserted by, or obligations imposed by, any
Governmental Body with actual or alleged jurisdiction over the Assets
or the Business) relating to or arising out of Environmental Liability.
For purposes of this Agreement and the Ancillary Agreements, an
Environmental Claim "accrues" when the event or condition giving rise
to the Environmental Claim first occurs and not when the event is first
discovered or first becomes subject to correction, abatement,
regulatory enforcement, or response action.
"Environmental Cleanup" shall mean all actions or measures required or
necessary under Environmental Laws to contain, remove, remedy, clean
up, treat, close, maintain after closure, or ▇▇▇▇▇ any deposit,
3
emission, discharge, release or threatened release of a Regulated
Substance from or on any of the Assets or Business operations,
including, without limitation, (a) investigation, study, assessment,
legal representation and defense, cost recovery by governmental
agencies, or environmental monitoring in connection therewith; (b)
actions or measures necessary to implement, effectuate, or maintain any
such containment, removal, Remediation, cleanup, closure, post-closure,
treatment or abatement; and (c) all actions or measures necessary to
comply with any Environmental Law in the use and operation of the
Business or Assets.
"Environmental Law" and/or "Environmental Laws" shall mean any and all
federal, state, local and foreign laws (including, without limitation,
common law) or rules, regulations, orders, decrees, or judgments and
Environmental Permits in effect and enforceable as of the Closing Date
relating to (a) the environment and/or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances, toxic or hazardous
wastes, petroleum and its fractions, used oil, or waste oil into the
environment including ambient air, surface water, ground water, land,
or otherwise, including all such laws relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of pollutants; and all such laws relating to any Regulated
Substance; (b) noise or odors, (c) wetlands protection, and (d) worker
safety and health.
"Environmental Liability" shall mean any Damages or other liability of
any kind relating to or arising out of (a) noise or odors; (b) actual
pollution or contamination of the ecology, air, groundwater, surface
water, land, soils or subsurface strata; (c) solid, gaseous, or liquid
waste generation, handling, treatment, storage, disposal, or
transportation; (d) any release of, or exposure to, any Regulated
Substances or related conditions; (e) the manufacture, processing,
distribution in commerce, use, or storage of chemical substances,
petroleum or petroleum products, used oil, or waste oil; (f) working
conditions and safety or health of employees; (g) violations of, or
requirements under, Environmental Laws; (h) the off-site
transportation, treatment, storage or disposal from any of the Assets
or Business activities or operation of any Regulated Substance; (i)
Environmental Cleanup; or (j) wetlands or ecological protection.
"Environmental Permit" or "Environmental Permits" shall mean any
licenses, permits, approvals, variances, rights, waivers, consents,
certificates (including certificates of need), orders, approvals or
authorizations of, or the registrations and filings with, any
Governmental Body (including any with regulatory authority in respect
of the Business) that are required or necessary under the Environmental
Laws to conduct the Business.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Excluded Assets" shall mean those assets excluded from the Assets
pursuant to Section 2.4.
"GAAP" shall mean generally accepted accounting principles established
by the accounting profession through the American Institute of
Certified Public Accountants.
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"Governmental Body" or "Governmental Bodies" shall mean any federal,
state, local, or foreign government or quasi-governmental,
administrative, or regulatory authority, agency, body, or entity,
including any court or other tribunal.
"HIPPA" shall have the meaning assigned to such term in Section 6.12(e)
hereof.
"Identifiable Event" shall mean any "release", as defined by the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. 9601 et. seq., of one or more Regulated Substances, which
release results from the use of, or activities conducted on or from,
any real property occupied or used by Purchaser in connection with the
Business subsequent to the Closing, including the use by Purchaser of
underground storage tanks thereunder, provided further that it shall
not include any release that Seller cannot prove, by a preponderance of
the evidence, was caused solely by the Purchaser in connection with the
Business subsequent to the Closing.
"Intangible Personal Property" shall mean, with respect to the
Business, all licenses or similar agreements or arrangements to which
the Seller is a party, as licensee or licensor, for any item of
computer software or any other licensed product.
"IRS" shall mean the Internal Revenue Service.
"Letter of Intent" shall mean that certain letter dated April 24, 2000,
from Purchaser to Seller, discussing the potential purchase of the
Business.
"Liability" shall mean, except to Assumed Accounts Payable and other
Assumed Liabilities, any debt, obligation, or liability of any kind or
nature, whether known or unknown, asserted or unasserted, accrued or
unaccrued, or absolute, contingent, or potential, including any
liability for Taxes and any Environmental Liability.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, claim, or charge of any kind or nature; any lease in the nature
thereof; or any conditional sale or title-retention agreement.
"Material Adverse Effect" shall mean any change in any of the Assets,
or any change in the manner of conducting the Business that would have
any effect, or series of effects, that is materially adverse to the
Assets or the conduct of the Business, when taken as a whole.
"Ordinary Course of Business" shall mean the ordinary course of
business of the Business consistent with past practice (including with
respect to quantity and frequency) to the extent not involving any
breach of contract, violation of law, breach of warranty, tort, or
infringement.
"Parties" shall mean Purchaser and Seller, and "Party" shall mean
either of the Parties.
"Permit" or "Permits" shall mean the licenses, permits, approvals,
variances, rights, waivers, consents, certificates (including
certificates of need), orders, approvals or authorizations of, or the
5
registrations and filings with, any Governmental Body (including any
with regulatory authority in respect of the Business) that are required
as of the Closing Date to be obtained by the Seller to conduct the
Business, excluding the Environmental Permits.
"Person" shall mean an individual; a corporation, partnership, trust,
association, or entity of any kind or nature; and any Governmental
Body.
"Plan" shall mean a present or past pension, profit-sharing, stock
option, deferred-compensation, bonus, severance, fringe-benefit,
health, group insurance, welfare-benefit, retirement, or other similar
plan, agreement, policy, or understanding, including an employee
benefit plan within the meaning of Section 3(3) of ERISA, whether
formal or informal, under which (a) Seller has any current or future
obligation or liability related to the Business, or (b) any present or
former employee, or any dependent or beneficiary of a present or former
employee, of Seller has any current or future right to benefits with
respect to the Business.
"Preferred Hauler Agreement" shall have the meaning assigned to such
term in Section 2.7 hereof.
"Purchase Consideration" shall have the meaning assigned to such term
in Section 3.2 hereof.
"Purchaser" shall mean Probex Corp., a Colorado corporation.
"Purchaser's Disclosure Schedule" shall meant the disclosure schedule
attached hereto as Annex III on which Purchaser lists any exceptions,
designated by article and section.
"Regulated Substance" shall mean any substances regulated as of the
Closing Date under any Environmental Law, whether as pollutants,
contaminants, or chemicals, or as industrial, toxic or hazardous
substances or wastes, or otherwise, including, but not limited to,
petroleum and its fractions, used oil, waste oil, or constituents
thereof.
"Remediation" shall have the meaning assigned to such term in Section
9.3 (h).
"Seller" shall mean Pennzoil-Quaker State Company, a Delaware
corporation.
"Seller's Disclosure Schedule" shall mean the disclosure schedule
attached hereto as Annex II on which Seller lists any exceptions,
designated by article and section.
"Services Agreements" shall have the meaning assigned to such term in
2.6 hereof.
"SES Texas" shall mean SES of Texas, Inc., a Texas corporation and an
Affiliate of Seller.
"Tax" (and, with correlative meanings, "Taxes" and "Taxable") shall
mean any (a) income, alternative or add-on minimum, gains, gross
receipts, estimated, sales, use, ad valorem, value added, transfer,
capital stock, franchise, profits, license, withholding on amounts paid
or received, payroll, employment, social security, unemployment,
6
disability, excise, severance, stamp, occupation, premium, property,
environmental, or windfall profit tax, custom or import duty or other
tax, governmental fee, or other like assessment or charge of any kind
or nature, together with any interest or penalty, addition to tax, or
additional amount imposed by any Taxing Authority; (b) liability for
the payment of any amount of the type described in the preceding clause
(a) as a result of being a member of an affiliated, consolidated,
combined, or unitary group or being a party to any agreement or
arrangement whereby liability for payment of such amount was determined
or taken into account with reference to the liability of any other
Person for any period before the Effective Time; and (c) liability for
the payment of any amount described in the preceding clause (a) as a
result of any express or implied obligation to indemnify any other
Person.
"Tax Return" shall mean any federal, state, local, or foreign return,
report, declaration, estimate, or information or other statement or
return relating to Taxes, including any schedule thereto or amendment
thereof.
"Taxing Authority" shall mean any Governmental Body, including the IRS,
responsible for the imposition or collection of Taxes.
1.2 Interpretative Matters. In the interpretation of this Agreement,
except where the context otherwise requires:
(a) "including" does not denote or imply any limitation;
(b) "hereof," "herein," and similar terms refer to this Agreement as a
whole, and not to any particular provision of this Agreement;
(c) "or" has the inclusive meaning "and/or";
(d) the singular includes the plural, and vice versa, and each gender
includes each of the others;
(e) captions or headings are for reference only, and are not to be
considered in interpreting this Agreement; and
(f) "Article" and "Section" refer to the Articles and Sections of, and
"Annex" refers to the Annexes to this Agreement, unless otherwise expressed
herein.
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ARTICLE II
PURCHASE AND SALE OF ASSETS AND
RELATED AGREEMENTS OF THE PARTIES
2.1 Assets to be Purchased. On the terms and subject to the conditions
set forth herein, at the Closing (but effective as of the Effective Time),
Purchaser shall purchase, accept and acquire from Seller, and Seller shall sell,
transfer, and assign to Purchaser, all of Seller's right, title to and interest
in the Assets (as defined below). The "Assets" include the Assets listed on
Annex I, and, excluding the Excluded Assets, all of the following:
(a) Tangible Personal Property. All equipment, inventories,
vehicles, machinery, storage tanks, shop equipment, tools, spare parts,
operating supplies, raw materials, work-in-process, office equipment,
furniture, computers and all computer hardware and software (to the
extent assignable), communications equipment, building materials, and
other tangible personal property listed on Schedule 2.1(a) of Annex I;
(b) Books, Records and Written Materials. All books of
account, records, files, invoices, customer lists, supplier lists,
promotional and advertising materials, plans, designs and other
drawings, catalogs, brochures, manuals, handbooks, written operating
procedures, environmental assessments, studies or reports, and other
written materials of any kind, original computer codes, records and
files, and any other storage media used primarily in connection with
the Business or any Asset, but excluding employee and personnel files
and records to the extent not permitted by applicable laws and
regulations to be assigned or otherwise transferred;
(c) Third Party Warranties. All transferable rights and
benefits to or existing under any and all manufacturer's, merchant's,
repairmen's and other third party warranties, guaranties and service or
replacement programs relating primarily to the Business or any Asset,
including, without limitation, those third party warranties listed on
Schedule 2.1(c) of Annex I;
(d) Real Property Leases. All right, title and interest in and
to all leasehold interests in real properties leased by Seller and
described on Schedule 2.1(d) of Annex I;
(e) Personal Property Leases. All right, title to and interest
in and to personal property leases with respect to equipment, machinery
and vehicles described on Schedule 2.1(e) of Annex I;
(f) Assumed Contracts. All rights and benefits of Seller in,
to or under all written agreements, contracts, sales commitments,
purchase orders, customer commitments, security agreements or instru-
ments listed on Schedule 2.1(f) of Annex I (collectively, the "Assumed
Contracts");
(g) Permits and Approvals. All of the Permits and Environment-
al Permits (to the extent transferable) listed on Schedule 2.1(g) of
Annex I;
8
(h) Business Property Rights. All Business Property Rights
listed on Schedule 2.1(h) of Annex I;
(i) Accounts Receivable. All outstanding accounts receivable
and notes receivable which relate primarily to the Business and are
outstanding as of the Closing (collectively, the "Acquired Accounts
Receivable"); and
(j) Telephone and Facsimile Numbers. All rights of Seller to
the telephone number "▇▇▇-▇▇▇-▇▇▇▇".
2.2 Assumed Liabilities. In partial consideration of the transfer by
Seller to Purchaser of the Assets, Purchaser will assume at Closing and
thereafter pay, fulfill, perform and otherwise discharge when due, all of the
following obligations of Seller relating or attributable to the Assets (these
obligations, and only these obligations, being the "Assumed Liabilities"):
(a) the accounts payable of the Business, but only to the
extent of an aggregate of $50,000 (the "Assumed Accounts Payable");
(b) all obligations under the Assumed Contracts which are
assigned to Purchaser hereunder, but excluding payment obligations for
products delivered or work or services performed on or prior to the
Closing; and
(c) all obligations accruing after Closing under the Permits
listed on Schedule 2.1(g) of Annex I or otherwise assumed by Purchaser
on or following the Closing.
2.3 Liens and Liabilities Not Assumed. Subject to Section 2.2 hereof
and except as otherwise expressly provided in this Agreement, Purchaser will not
assume or become liable for or otherwise obligated to pay, perform, or discharge
any Liens or Liabilities of the Seller related to the Business prior to the
Closing, and Seller agrees to pay, perform, and discharge all such Liens and
Liabilities of the Business prior to the Closing, including, without limitation,
all such Liabilities related to the Business arising (a) under any Plan; (b)
under ERISA; or (c) as a result of an Environmental Claim that accrues prior to
Closing, including, without limitation, any such claim arising out of off-site
transport, storage, disposal, or treatment of materials or substances generated
or contaminated prior to the Closing, for which Seller shall retain sole
responsibility.
9
2.4 Excluded Assets. The Assets exclude the following assets:
(a) right, title and interest in and to all real property
owned by Seller in connection with the Business, or on which any of the
Assets is located, including, without limitation, all improvements
thereto;
(b) all Business Property Rights or other intellectual
property not listed on Schedule 2.1(h);
(c) all Cash of the Business; and
(d) all rights to refunds, rebates or credits of any Taxes for
all periods prior to the Closing.
2.5 Allocation. The Purchase Consideration, as adjusted under Section
3.6(b), will be allocated among the Assets based on their relative fair market
values determined in accordance with the allocation requirements of Section 1060
of the Code and the regulations promulgated by the Code. Purchaser will deliver
to Seller a schedule reflecting the allocation within one hundred twenty (120)
days after the Closing Date. Seller must accept or object to the Purchase
Consideration allocation within thirty (30) days after receipt. Purchaser and
Seller will use commercially reasonable efforts, for up to thirty (30) days
after Purchaser's receipt of Seller's notice of objection, to resolve any
differences. If Purchaser and Seller cannot resolve their differences, both
Purchaser and Seller shall be entitled to report their respective determination
of Purchase Consideration allocation to any Taxing Authority, regardless of the
differences in their respective determinations of Purchase Consideration
allocation.
2.6 Services Agreements. At the Closing, Seller (or its assignee) and
Purchaser shall enter into one or more Services Agreements which shall provide
for Purchaser's access to and use of those Assets of the Business located on
Seller's (or Seller's assignee's) property which shall remain on Seller's (or
Seller's assignee's) property after Closing, or alternative arrangements
satisfactory to Purchaser. The Services Agreements shall be in substantially the
forms attached hereto as Exhibit A.
2.7 Preferred Hauler Agreement. At the Closing, Seller and Purchaser
shall enter into a Preferred Hauler Agreement regarding Purchaser's disposal of
used oil, oil filters and anti-freeze at oil service centers owned or operated
by Seller and its Affiliates. The Preferred Hauler Agreement shall be in
substantially the form attached hereto as Exhibit B.
2.8 Corporate Services Agreement. At the Closing, Seller and Purchaser
shall enter into a Corporate Services Agreement regarding certain information
technology and environmental services support which Seller shall provide to
Purchaser. The Corporate Services Agreement shall be in substantially the form
attached hereto as Exhibit C.
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ARTICLE III
CLOSING; CONSIDERATION
3.1 Execution and Delivery of Closing Documents. At the Closing, the
Parties shall execute and deliver all documents necessary to (a) satisfy the
conditions to the Parties' obligations set forth in Articles VII and VIII,
respectively; (b) effect the transfers of the Assets and the assumption of the
Assumed Liabilities; and (c) consummate all other transactions contemplated by
this Agreement which are to be performed at or prior to the Closing. Those
documents to be executed and delivered at the Closing shall include the
Ancillary Agreements and such other agreements and certificates as the Parties
may mutually agree are necessary or advisable to effectuate the transactions
contemplated by this Agreement or any of the Ancillary Agreements.
3.2 Delivery of Purchase Consideration. At the Closing, Purchaser shall
deliver to Seller by wire transfer of immediately available funds to the account
designated by Seller by written instruction prior to the Closing, an amount
equal to Five Million Five Hundred Fifty Thousand U.S. Dollars and NO/100
($5,550,000.00) (the "Purchase Consideration").
3.3 Acquired Accounts Receivable. Seller shall reimburse Purchaser for
the full amount of any Acquired Accounts Receivable which have not been
collected by Purchaser within one hundred eighty (180) days after the Closing
Date. Purchaser agrees to attempt in good faith to collect all Acquired Accounts
Receivable during the one hundred eighty (180) day period after Closing in a
manner consistent with its collection of accounts receivable for other business
operations of Purchaser and in any event in a manner that is commercial
reasonable. Notwithstanding the foregoing, Purchaser shall not be expected to
use any methods of collection that could reasonably be expected to adversely
affect Purchaser's business relationships. All payments received by Purchaser
with respect to an account debtor to which any of the Acquired Accounts
Receivable relate by Purchaser shall be applied to the oldest dated outstanding
invoice. At the expiration of the one hundred eighty (180) day period, Purchaser
shall provide accounting records and other documentation reasonably requested by
Seller of that portion of the Acquired Accounts Receivable that Purchaser was
unable to collect, if any. Within ninety (90) days after its receipt of
Purchaser's records reflecting the uncollected Acquired Accounts Receivable,
Seller shall pay Purchaser the full amount of such unpaid Acquired Accounts
Receivable in cash. Seller shall not be entitled to offset any amount paid to
Purchaser hereunder and the indemnity provisions of Article IX shall not apply
to any payment made by Seller to Purchaser pursuant to this Section 3.3.
3.4 Closing. The Closing shall take place at such place, date (which
must be a Business Day), and time as the Parties may mutually agree upon. The
Closing Date shall be targeted for September 30, 2000. If the Closing has not
occurred on or before September 30, 2000, then this Agreement shall be
terminated pursuant to the terms of Article X.
3.5 Further Assurances. After the Closing, the Parties shall execute
and deliver such additional documents and take such additional actions as either
Party may reasonably deem to be necessary or appropriate to more fully
consummate the transactions contemplated by, and to effect the purposes of, this
Agreement. All such additional documents and actions shall be deemed to have
been executed and delivered at the Closing, and to be effective at the Effective
Time, unless specifically provided otherwise therein or in connection therewith.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that, except as set forth
in the Seller's Disclosure Schedule, attached hereto as Annex II, the following
statements are correct as of the date hereof:
4.1 Organization and Good Standing. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of Delaware;
and the Business is an operating unit of the Seller which comprises a portion of
Seller. Seller is authorized to conduct its business and is in good standing
under the laws of each jurisdiction where such qualification is required, except
where the failure to be so qualified would not have a Material Adverse Effect.
Seller has the corporate power and authority necessary to own, lease and operate
the Assets and carry on the Business.
4.2 Authority and Validity of Agreements. Seller has the corporate
power and authority to execute, deliver, and perform its obligations under this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby, and such execution, delivery, performance, and
consummation have been duly authorized by all requisite corporate action on the
part of Seller. This Agreement has been validly executed and delivered by Seller
and constitutes its legal, valid, and binding obligation, enforceable against it
in accordance with its terms, subject to the Bankruptcy and Equity Exceptions.
As of the Closing, the Ancillary Agreements will be validly executed and
delivered by Seller and will constitute the legal, valid, and binding
obligations of Seller, enforceable against it in accordance with their
respective terms, subject to the Bankruptcy and Equity Exceptions.
4.3 Ownership of the Business. Seller is the sole lawful record and
beneficial owner of the Business and the Assets, and the Assets are free and
clear of any and all Liens, other than Liens listed on Schedule 4.3 of Seller's
Disclosure Schedule. Seller has good and indefeasible title to, or a valid
leasehold or license interest in, all Assets used in connection with the
Business or necessary to operate the Business as operated immediately before the
Closing (subject to the Permits), free and clear of any and all Liens, other
than Liens listed on Schedule 4.3 of Seller's Disclosure Schedule. Excluding any
Permits or Environmental Permits that Purchaser will need to obtain to operate
the Assets, the Assets, together with the services to be provided to Purchaser
by Seller pursuant to the respective Service Agreements, are sufficient to
enable Purchaser to conduct the Business as it has been conducted by Seller
during the six-month period immediately prior to the date of this Agreement.
4.4 Outstanding Rights. Except as set forth on Schedule 4.4 of Seller's
Disclosure Schedule, there are no outstanding rights, convertible, contingent or
otherwise, to acquire, or any plans, contracts, or commitments or other rights
providing for the right to acquire, any of the Assets or the Business, or any
portion thereof. There are no securities convertible into or exchangeable into
any right to own any of the Assets or the Business, or any portion thereof.
There are no voting trusts, proxies, agreements, or other arrangements relating
to or affecting the Assets or the Business.
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4.5 No Violation. Neither the execution and delivery of, the consum-
mation of the transactions contemplated by, nor the performance of the
obligations under this Agreement or the Ancillary Agreements, in any case by
Seller, will:
(a) violate the Certificate of Incorporation or the Bylaws of
Seller;
(b) violate or constitute or result in a breach of or default
under any material agreement or obligation by which the Seller or the
Business is bound or to which any of the Assets is subject, or give any
other party to any such agreement or obligation the right to terminate
or refuse to perform it;
(c) result in the creation or imposition of any Lien upon any
of the Assets;
(d) violate any Permit or any law, rule, regulation, or licen-
sing requirement applicable to, or any judgment, order, or decree of
any Governmental Body addressed to and binding on the Business; or
(e) violate or constitute a breach or default under any
agreement to which Seller is a party which relates to an Affiliate of
Seller and involves the Business.
4.6 Consents. Except for those already obtained or made, no consent,
approval, or authorization of, or filing with, any Governmental Body or other
Person is required to authorize, or in connection with, the execution, delivery,
or performance of, or the consummation of the transactions contemplated by, this
Agreement or the Ancillary Agreements by Seller.
4.7 Accounts Receivable. The Acquired Accounts Receivable arose, and
all accounts receivable arising on or before the Closing Date will arise, only
from bona fide transactions in the Ordinary Course of Business. There is no
dispute as to the validity or collectability of such Acquired Accounts
Receivable, and none of the Acquired Accounts Receivable has been assigned or
pledged to any other Person or is subject to any right of set-off in respect to
any Liabilities of the Seller related to the Business.
4.8 Absence of Certain Changes or Events. Since June 30, 2000, except
as contemplated by this Agreement, the Seller has not, with respect to the
Business:
(a) subjected any of the Assets to any Lien, other than any
Lien released prior to the Closing;
(b) transferred, leased, or otherwise disposed of any of the
Assets other than in the Ordinary Course of Business;
(c) transferred or granted any right under any concession,
lease, license or Business Property Right related to the Business,
other than in the Ordinary Course of Business;
(d) except in the Ordinary Course of Business, made or granted
any wage, salary, or benefit increase, entered into or amended the
terms of any employment contract with, granted any severance benefits
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to, or entered into or amended the terms of any transaction or
agreement of any other kind or nature with, any director, officer,
employee, or agent of the Seller related to the Business, other than
with respect to certain severance benefits to be paid to certain
employees of the Business, pursuant to Section 6.12(c) hereof;
(e) delayed or postponed the payment of accounts payable or
other Liabilities, other than in the Ordinary Course of Business;
(f) suffered any casualty loss or damage to the Assets or the
Business (whether or not covered by insurance) or received any claim or
claims in excess of insurable limits, or canceled any insurance
coverage, in whole or in part;
(g) surrendered or revoked, or had revoked or terminated, any
Permit or Environmental Permit used in connection with the Business;
(h) entered into, adopted, or amended any Plan;
(i) incurred, assumed, or guaranteed any indebtedness for bor-
rowed money or capitalized lease obligation;
(j) suffered any material adverse change in the financial
condition of the Assets or the Business, or experienced any change that
is reasonably expected to have a Material Adverse Effect;
(k) engaged in any transaction outside the Ordinary Course of
Business, other than entering into this Agreement and consummating the
transactions contemplated hereby; or
(l) except as contemplated hereby, entered into any agreement
or made any commitment to take any action described in this Section
4.8.
4.9 Properties; Leases; Other Data. Seller has provided or made avail-
able to Purchaser true and complete copies of or access to all documents, and
accurate descriptions of all oral understandings, with respect to the following:
(a) all parcels of real property owned in fee simple by the
Seller which are used in connection with the Business, or on which any
of the Assets is located, including copies of all records and files
relating to the acquisition, operation, and maintenance of such parcels
(including copies of any effective title insurance policies issued to
the Seller with respect to such parcels) and current "as-built" surveys
with respect to such parcels prepared by a licensed land surveyor or
engineer reasonably acceptable to Purchaser;
(b) all leases of real or personal property to which the
Seller is a party, either as lessee or lessor, which are used in the
Business, or on which any of the Assets are located, including a brief
description of the property to which each such lease relates and the
material lease terms (including rents, termination dates, and renewal
conditions);
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(c) all other contracts, understandings, and commitments
(including powers of attorney, mortgages, indentures, loan agreements,
promissory notes, and guarantees), whether oral or written, to which
the Seller is a party in connection with the Business, or to which the
Business or any of its Assets is subject, other than license agreements
for software having a value of less than One Thousand Dollars
($1,000.00) per user license;
(d) documentary evidence of all of the Business Property
Rights being transferred under this Agreement;
(e) the names and current annual compensation rates of all
employees of and consultants to the Business and all employment agree-
ments related primarily to the Business or its employees; and
(f) all vehicles owned or leased by Seller and used primarily
in the Business, together with a list of all Business-related equipment
contained in such vehicles.
Each contract, understanding, and commitment referred to in this Section 4.9 is
valid and enforceable, subject to the Bankruptcy and Equity Exceptions, and
there are no existing circumstances known to Seller which could reasonably be
expected to result in any such contract, understanding, or commitment becoming
invalid or unenforceable. There does not exist under any such contract,
understanding, or commitment any default on the part of Seller, or to the
knowledge of Seller, any other party thereto, or event which with notice or
lapse of time or both would constitute a default on the part of Seller, or to
the knowledge of Seller, any other party thereto, or permit any party thereto to
terminate or refuse to perform.
4.10 Properties; Contracts; Other Data. Seller has provided true
and complete copies of or access to all documents, and accurate descriptions of
all oral understandings, with respect to the following:
(a) maps of all real property upon which any of the Assets are
located, marked with the location of any oil storage tanks or other
fixtures or improvements which comprise a portion of the Assets; and
(b) a schedule of all storage tanks which comprise a portion
of the Assets, including the size of each such storage tank, its
location, and the dates of and maintenance which has been performed on
each such storage tank.
4.11 Litigation. To the knowledge of Seller, there is no claim, suit,
action, investigation, or proceeding pending or threatened against or adversely
affecting the Business or any of the Assets by or before any Governmental Body
or arbitrator. For purposes of this Section 4.11, "knowledge" shall mean that
Seller has been served with service of process or other written notice of any
such claim, suit, action, investigation, or proceeding. There is no order,
judgment, injunction, ruling, or decree or any Governmental Body addressed to
and binding on the Business or any of its Assets.
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4.12 Employees; Labor Relations.
(a) There are no labor or collective bargaining agreements
pertaining to any employees of the Business. There are no
representation proceedings or petitions seeking a representation
proceeding pending or, to the knowledge of Seller, threatened to be
brought with the National Labor Relations Board or other labor
relations tribunal. There is no organizing activity involving the
Business pending or, to the knowledge of the Seller, threatened by any
labor organization or employees of the Business.
(b) Seller has provided to Purchaser a list of the names of
each person employed by Seller primarily in the Business and their
respective dates of hire, current position, salary grades, and salary.
Seller also has provided Purchaser with all employment contracts,
confidentiality agreements, and non-compete agreements to which the
Seller is a party on behalf of the Business or which are related to the
Business, or which obligate the Business in any manner.
(c) There are no pending or, to the knowledge of the Seller,
threatened (i) strikes, work stoppages, slowdowns, lockouts, or
arbitrations, (ii) material grievances or other material labor
disputes, (iii) unfair labor practice charges, grievances, or other
similar complaints, or, (iv) discrimination, workers' compensation, or
other employment-related complaints, charges, or claims against the
Business or against Seller which relate to the Business.
4.13 Employee Benefit Plans.
(a) Seller has provided Purchaser with a list of each Plan.
Seller has complied and is in compliance, as to form and operation,
with the applicable provisions of ERISA and the Code with respect to
each Plan of the Business.
(b) The Business (or Seller on behalf of the Business) has
never maintained, contributed to or been required to contribute to, nor
do any of its employees participate in, a "multi-employer plan" (as
defined in Section 3(37) of ERISA).
(c) The consummation of the transactions contemplated by this
Agreement will not accelerate the time of payment or vesting, or
increase the amount, of compensation due any such employee or officer.
(d) Subject to Section 6.12, Seller shall retain all
obligations and Liabilities under the Plans with respect to any
employee or former employee of the Business (including any beneficiary
thereof). Except as expressly set forth herein, Seller shall retain all
liabilities and obligations under the Plans in respect to benefits
accrued as of Closing for the employees of the Business and neither
Purchaser nor any of its Affiliates shall have any liability thereto.
4.14 Business Property Rights. The Seller (a) has the Business Property
Rights necessary to conduct the Business as presently conducted, and (b) owns or
has valid rights to use all Business Property Rights without conflict with the
16
rights of others. No Person has made to Seller or, to the knowledge of the
Seller, threatened to make any claim that the operations of the Business are in
violation of or infringe on any Intellectual Property Rights of any Person.
4.15 Licenses of Intangible Personal Property. Section 4.15 of the
Seller's Disclosure Schedule lists all of the Intangible Personal Property
having a value pre license or contract of more than $1,000.00 entered into by
the Seller on behalf of the Business or used in connection with the Business. No
person has made to Seller or, to the knowledge of the Seller, threatened to make
or initiate claims, demands, or proceedings restricting the right of the
Business to use, charging the Business with infringement of, or making any other
adverse claim with respect to any of such Intangible Personal Property or any
license thereof. The Business is in compliance, and has complied in all material
respects, with its contractual obligations relating to the protection of the
Intangible Personal Property used by the Business.
4.16 Use of Real Property. Excluding matters covered by the provisions
of Section 4.20 of this Agreement, the owned or leased real properties used in
the Business are used and operated in compliance, in all material respects, with
all applicable leases, contracts, commitments, licenses, and Permits. Excluding
matters covered by the provisions of Section 4.20 of this Agreement, Seller has
not received any notice of any violation of any applicable zoning or building
regulation, ordinance, or other law, order, regulation, or requirement relating
to any of the owned or leased real properties or the conduct of the operations
of the Business, or with respect to the Assets of the Business on, in, or at
such owned or leased real properties, and, to the knowledge of the Seller, there
is no such violation, and no condition or law precludes or restricts, or would
reasonably be expected to preclude or restrict, continuation of the present use
of such owned or leased real properties.
4.17 CONDITION OF TANGIBLE ASSETS. SELLER EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE MAINTENANCE, REPAIR,
CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, AND
FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR
SAMPLES OF MATERIALS OR ANY EQUIPMENT IT BEING EXPRESSLY UNDERSTOOD AND AGREED
BY THE PARTIES THAT PURCHASER SHALL BE DEEMED TO BE OBTAINING EQUIPMENT IN ITS
PRESENT STATUS, CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE IS" WITH ALL
FAULTS AND THAT SELLER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS
PURCHASER DEEMS APPROPRIATE.
4.18 Compliance with Law. Excluding matters covered by the provisions
of Section 4.20 of this Agreement and except as could not be reasonably expected
to have a Material Adverse Effect, the Business is not in violation of any
federal, state, local, or foreign statutes, ordinances, rules, regulations,
orders, or other laws relating to the operation of the Business.
4.19 Customers. Section 4.19 of the Seller's Disclosure Schedule sets
forth an accurate and complete list of the customers of the Business as of June
30, 2000, that constituted five percent (5%) or more of the gross income of the
Business for the year ended June 30, 2000. Since January 1, 2000, the Business
has not lost or been notified that it will lose any such customer; and to the
17
knowledge of Seller, the Business will not lose any customer (or any group of
related customers) that accounted for more than five percent (5%) of the
aggregate revenues of the Business during the year ended June 30, 2000, in the
event of the consummation of the transactions contemplated by this Agreement.
4.20 Environmental Matters.
(a) Section 4.20(a) of the Seller's Disclosure Schedule sets
forth a true and complete list of all Environmental Permits held by
Seller, including the issuing Governmental Body and, if known to
Seller, the expiration date for each such Environmental Permit. The
Business has obtained all Environmental Permits and Seller is in
compliance with the terms and conditions of such Environmental Permits.
Such Environmental Permits have been validly issued or filed by the
appropriate Governmental Body in compliance with applicable
Environmental Laws. No change in the facts or circumstances reported or
assumed in the application for or granting of such Environmental
Permits exists, and such Environmental Permits are in full force and
effect and shall remain in full force and effect notwithstanding the
consummation of the transactions contemplated by this Agreement. No
proceeding is pending, or, to the knowledge of Seller, threatened, to
revoke or limit any Environmental Permit.
(b) Neither Seller nor, to the knowledge of Seller, any prior
owner or occupant of the real properties owned or leased by Seller and
used in the Business or otherwise on which any of the Assets are
located has within the five (5) years immediately preceding the
execution of this Agreement, received any written notice or other
written communication concerning any (i) violation of any Environmental
Law on the real properties owned or leased by Seller and used by the
Business, or (ii) Liability or alleged Liability for Damages pursuant
to any Environmental Law in connection with the Business or the
ownership, use, maintenance, or operation of the real properties owned
or leased by Seller and used in the Business or the Assets located on
such real properties. There exists no writ, injunction, decree, order
or judgment, nor any lawsuit, claim, proceeding, citation, directive,
summons, or investigation pending or, to the knowledge of Seller,
threatened, relating to the Business or the ownership, use,
maintenance, or operation of those real properties or any Assets
located on such real properties by any Person based upon any alleged
violation of any Environmental Law, or from the alleged presence of a
Regulated Substance thereon, nor, to the knowledge of Seller, does
there exist any basis for such lawsuit, claim, proceeding, citation,
directive, summons, or investigation.
(c) The uses and activities of the real properties owned or
leased by Seller and used by the Business or otherwise on which any of
the Assets are located, including the use, maintenance, and operation
of the Business, the existing and, to the knowledge of Seller, the
prior uses and activities thereon, comply with all Environmental Laws.
(d) No real property now owned or leased or to the knowledge
of Seller, formerly owned or leased by Seller and used by the Business,
nor any Asset located or, to the knowledge of Seller, formerly located
on such property, is encumbered by any Lien under any Environmental
18
Law, ordinance, regulation, rule, or requirement, is listed or, to the
knowledge of Seller, has been listed on any federal, state or local
contaminated site list or is the subject of any restriction or notice
filed or recorded under any Environmental Laws, and, to the knowledge
of Seller, no Governmental Body is considering listing or filing any
such Lien.
(e) Seller has no knowledge that any unreported release of any
Regulated Substance has occurred resulting from the operation of the
Business or any of the Assets on, or in the vicinity of, on any real
property now or formerly owned or leased by Seller and used by the
Business, prior to the sale of any such real property or the
termination of any such lease (i) in any quantity that requires any
report or other notice to any Governmental Body pursuant to any
Environmental Law or (ii) that has resulted or that threatens to result
in the presence of any Regulated Substance in the environment in a
quantity, concentration, state, or other condition that exceeds any
applicable standard for the protection of human health or the
environment under any Environmental Law.
(f) No real property now or, to the knowledge of Seller,
formerly owned or leased by the Seller and used by the Business, or on
which any Asset is or, to the knowledge of Seller, was formerly
located, prior to the sale of any such real property or the termination
of any such lease, has been used for the storage, treatment or disposal
of any Regulated Substance in violation of any Environmental Law.
(g) Seller has not received any notice from any Governmental
Body of any Liability for any removal, remediation, or other response
cost under any Environmental Law, ordinance, regulation, rule, or
requirement as the result of the release or threatened release of any
Regulated Substance in connection with the operation of the Business or
any Asset. Seller has not disposed of any Regulated Substance or
arranged for the transportation, treatment, or disposal of any
Regulated Substance in connection with the operation of the Business or
any Asset (i) in violation of any Environmental Law or (ii) at a
facility that is listed, or, to the knowledge of Seller has been
listed, on any federal, state, or local contaminated site list.
(h) To Seller's knowledge, no real property now or formerly
owned or leased by the Seller and used by the Business, or on which any
of the Assets are or formerly were located, prior to the sale of any
such real property or the termination of any such lease contain any
Polychlorinated biphenyls or asbestos.
4.21 Permits. Seller has obtained all Permits, and a true and complete
list of those Permits (including the issuing Governmental Body and the
expiration date for each such Permit) is set forth in Section 4.21 of Seller's
Disclosure Schedule. Such Permits have been validly issued by the appropriate
Governmental Body in compliance with all applicable laws. Seller is in
compliance, and has complied in all material respects, with all terms and
conditions of such Permits. All such Permits are in full force and effect, and
no proceeding is pending or, to the knowledge of Seller, threatened, to revoke
or limit any Permit.
4.22 Absence of Certain Business Practices. To the knowledge of Seller,
no officer, director, employee, agent, or representative of Seller, has, in
connection with the Business, (a) received, directly or indirectly, any
inappropriate or illegal rebate, payment, kickback, gift, remuneration or other
economic benefit, regardless of the nature or type, from any customer, supplier,
government official or employee, or other Person, or (b) directly or indirectly,
given or agreed to give any such inappropriate or illegal rebate, payment,
19
kickback, gift, remuneration or other economic benefit to any customer,
supplier, governmental official or employee or other Person to obtain favorable
treatment for the Business or assist the Business in connection with any actual
or proposed transaction.
4.23 Broker's or Finder's Fees. Purchaser will not directly or
indirectly have any Liability or expense as a result of undertakings on
agreements of Seller, for brokerage fees, finder's fees or similar forms of
compensation in connection with this Agreement, any of the Ancillary Agreements
or any agreement or transaction contemplated hereby or thereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that, except as set forth
in the Purchaser's Disclosure Schedule, attached hereto as Annex IV, the
following statements are true and correct as of the date hereof:
5.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of its state of
incorporation. Purchaser is authorized to conduct its business and is in good
standing under the laws of each jurisdiction where such qualification is
required; and has the corporate power and authority necessary to own, lease and
operate its properties and carry on its business.
5.2 Authority and Validity of Agreements. Purchaser has the corporate
power and authority to execute, deliver, and perform its obligations under this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby, and such execution, delivery, performance, and
consummation have been duly authorized by all requisite corporate action on the
part of Purchaser. This Agreement has been validly executed and delivered by
Purchaser and constitutes its legal, valid, and binding obligation, enforceable
against it in accordance with its terms, subject to the Bankruptcy and Equity
Exceptions. As of the Closing, the Ancillary Agreements will be validly executed
and delivered by Purchaser and will constitute the legal, valid, and binding
obligations of Purchaser, enforceable against it in accordance with their
respective terms, subject to the Bankruptcy and Equity Exceptions.
5.3 No Violation. Neither the execution and delivery of, the consum-
mation of the transactions contemplated by, nor the performance of the
obligations under this Agreement or the Ancillary Agreements, in any case by
Purchaser, will
(a) violate the Articles of Incorporation or the Bylaws of
Purchaser;
(b) violate or constitute or result in a breach of or default
under any material agreement or obligation by which Purchaser is bound
or to which any of its material assets is subject, or give any other
party to any such agreement or obligation the right to terminate or
refuse to perform it; or
(c) violate any law, rule, regulation, or licensing
requirement applicable to, or any judgment, order, or decree of any
Governmental Body addressed to and binding on Purchaser.
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5.4 Consents. Except for those already obtained or made, no consent,
approval, or authorization of, or filing with, any Governmental Body or other
Person is required to authorize, or in connection with, the execution, delivery,
or performance of, or the consummation of the transactions contemplated by, this
Agreement or the Ancillary Agreements by Purchaser.
5.5 Broker's or Finder's Fees. Seller will not, directly or indirectly,
have any liability or expense as a result of undertakings or agreements of
Purchaser, for brokerage fees, finder's fees, agent's commissions or similar
forms of compensation in connection with this Agreement, the Ancillary
Agreements, or any agreement or transaction contemplated hereby or thereby.
5.6 Financial Ability. As of the Closing Date, Purchaser will have
sufficient cash or other source of immediately available funds, or available
borrowings to purchase the Assets on the terms and conditions contained in this
Agreement. As of the Closing Date, Purchaser can make the required financial
responsibility demonstrations for used oil handling required by Environmental
Laws.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Operations; Other Pre-Closing Matters.
(a) Operation of the Business. Seller agrees that, until (and
including) the Closing, unless Purchaser otherwise agrees in writing,
Seller shall:
(i) operate the Business only in the Ordinary Course
of Business; and
(ii) use commercially reasonable efforts to preserve
the current organization of the Business intact, and preserve
the present relationships of the Business with employees,
customers, and all other Persons having business dealings with
the Business.
(b) Access. From the date hereof until the earlier of (i) the
Closing Date or (ii) the termination of this Agreement, Seller shall
furnish to Purchaser and its representatives all information relating
to the Assets and Business reasonably requested by Purchaser and
provide access to any Asset that Purchaser may reasonably request at
such times as shall mutually be agreed on by the Parties. Any
confidential information furnished to Purchaser or made available for
visual inspection shall be subject to the confidentiality provisions of
Section 6.11 hereof, which shall survive any termination of this
Agreement.
(c) Permits and Consents. Until (and including) the Closing,
and after the Closing (to the extent necessary), the Parties shall,
jointly and severally, use commercially reasonable efforts to obtain
all Environmental Permits and Permits, consents, approvals, and
authorizations from, and make all filings with, all Governmental Bodies
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and other Persons as may be required for them to consummate the
transactions contemplated by this Agreement; provided, however, that
Seller shall not be required to incur out of pocket expenses in
assisting Purchaser in obtaining the Environmental Permits and Permits.
(d) Tangible Personal Property Leases. Until (and including)
the Closing, the Parties shall promptly apply for and use commercially
reasonable efforts to obtain assignments of all tangible personal
property leases on the Assets, from all Persons as may be required for
them to consummate the transactions contemplated by this Agreement,
including, without limitation, assignments of all vehicle and equipment
leases to which the Seller is a party on behalf of the Business or
which are used in connection with the Business.
(e) Intangible Personal Property. Until (and including) the
Closing, the Parties shall, jointly and severally, use commercially
reasonable efforts to obtain assignments of all Intangible Personal
Property and third party licenses to which Seller, on behalf of the
Business, is a party, or used in connection with the Business, from all
Persons as may be required for them to consummate the transactions
contemplated by this Agreement.
(f) Conditions of Closing. Until (and including) the Closing,
Seller and Purchaser shall use their best efforts to satisfy, or cause
to be satisfied, all of the conditions to such Party's obligations to
consummate the transactions contemplated by this Agreement set forth in
Articles VII and VIII, respectively.
6.2 Environmental Report. Before the Closing, Purchaser may cause to be
prepared at its expense a Environmental Report on the real properties owned or
leased by the Seller, or used in the Business, which shall be prepared by a firm
selected by Purchaser with the consent of Seller (which consent shall not be
unreasonably withheld). The Environmental Report shall contain such information
as Purchaser deems necessary or advisable and shall be satisfactory to Purchaser
in form and substance; however, the information obtained pursuant to this
Section 6.2 shall not include soil and ground water sampling unless such
sampling is approved in advance by Seller. Seller agrees (to the extent
reasonable and not financially burdensome to Seller) to cooperate in the
preparation of any such Environmental Report.
6.3 Identifiable Event. Purchaser shall use its best efforts to prevent
the occurrence of an Identifiable Event, including, without limitation,
diligently maintaining and inspecting all tanks, pipelines, and containment
structures according to the standards identified in (i) the current facility
Spill Prevention, Control and Countermeasure ("SPCC") plan, and (ii) in the case
of the Shreveport, Louisiana and San Antonio, Texas facilities, the applicable
Facility Response Plan. In the event of the occurrence of an Identifiable Event,
Purchaser shall (a) timely comply with all requirements of Environmental Laws
applicable to notification of and cooperation with Governmental Bodies in
connection with the release; (b) promptly notify Seller of the release after any
person in charge of Purchaser's facility becomes aware of the release, unless
Seller becomes aware of any such release prior to Purchaser's awareness; (c)
cooperate fully with Seller and Seller's contractors, agents, and other
representatives in their conduct of the response to the release pursuant to the
applicable Services Agreement, attached hereto as Exhibit A, for the facility at
or from which the release took place; and (d) timely pay all invoices due and
satisfy all other obligations under the applicable Services Agreement in
connection with the release.
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6.4 Approval. Before the Closing, Seller and Purchaser agree to approve
and adopt this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby, in accordance with their respective Certificate
of Incorporation or Articles of Incorporation and Bylaws.
6.5 Expenses; Taxes.
(a) Whether or not the transactions contemplated by this
Agreement are consummated, each of the Parties shall be responsible for
all of the costs and expenses incurred by such Party, including
brokerage, accounting and legal expenses, in connection with this
Agreement and the transactions contemplated hereby; provided, however,
that costs and expenses associated with the Audit shall be apportioned
equally pursuant to Section 3.10 hereof.
(b) Notwithstanding Section 6.5(a), if the transactions
contemplated by this Agreement are consummated:
(i) Seller and Purchaser, respectively, shall each
bear and be liable for one-half of the amount of any sales,
use, or other transfer Tax that is imposed or incurred in
connection with this Agreement and the transactions
contemplated hereby. To the extent allowed by governing law,
Seller and Purchaser, respectively, shall each pay directly to
the relevant jurisdiction imposing such Tax its share of any
such Tax liability. If applicable law requires Seller (or
Purchaser, as the case may be) to make payment for the full
amount of such Tax liability directly to the jurisdiction
imposing such Tax , then Purchaser (or Seller) shall make
payment of its allocable share of such Tax liability to Seller
(or Purchaser) and then Purchaser (or Seller) shall make
payment of the full amount of such Tax liability to such
jurisdiction.
(ii) To the extent allowed by applicable law, Seller
shall have sole responsibility for preparing and filing all
sales, use, and other transfer Tax Returns required in
connection with the transactions contemplated by this
Agreement. Purchaser agrees to cooperate and provide
information reasonably requested by Seller necessary to
preparing and filing such Tax Returns. If required by
applicable law, Purchaser shall join in the filing and
execution of such Tax Returns and/or shall file such Tax
Returns.
(iii) Except for the Taxes and Tax Returns described
in Sections 6.5(b)(i) or (ii), Seller shall (A) be liable for
Taxes (if any) related to the Assets for all Tax periods
ending on or prior to the Closing Date and (B) have sole
responsibility for preparing and filing all Tax Returns (if
any) required to be filed in connection with Taxes (if any)
related to the Assets for all Tax periods ending on or prior
to the Closing Date. Except for the Taxes and Tax Returns
described in Sections 6.5(b)(i) or (ii), Seller shall (A) be
liable for Taxes related to the Assets for all Tax periods
beginning on or after the Closing Date and (B) have sole
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responsibility for preparing and filing all Tax Returns
required to be filed in connection with Taxes related to the
Assets for all Tax periods beginning on or after the Closing
Date. The parties agree to cooperate and provide to the other
information reasonably requested necessary to preparing and
filing Tax Returns described in this Section 6.5(b)(iii).
6.6 Taxable Event. Seller and Purchaser agree to treat the transactions
consummated pursuant to this Agreement as a purchase of the Assets subject to
applicable Taxes, provided, however, to the extent a provision of applicable law
exempts such purchase from Tax or reduces the amount of Tax liability that would
otherwise be payable on such purchase, Seller and Purchaser agree to treat the
transactions in the manner necessary to take advantage of such exemption or
reduction in Tax liability.
6.7 Accounts Receivable. Any Acquired Accounts Receivable collected by
Seller after Closing shall be remitted to Purchaser within ten (10) Business
Days following such collection. In the event that Seller receives any payment of
accounts receivable, a portion of which is attributable to the Business, Seller
shall apportion such part of its accounts receivable which relate to the
Business and forward such amount to Purchaser pursuant to this Section 6.7.
6.8 Notice of Material Change. Prior to the Closing, Seller shall
inform Purchaser, and Purchaser shall inform Seller, promptly in writing, of any
change of which either of them become aware which could cause that Party's
representations and warranties herein to become false in any material respect.
Notwithstanding the foregoing sentence, any such notice shall not prevent or
cure any breach of the Parties' respective representations and warranties
contained in this Agreement, nor shall any such notice amend Seller's Disclosure
Schedule or Purchaser's Disclosure Schedule.
6.9 Exclusivity. Unless and until this Agreement is terminated in
accordance with its terms without any breach by Seller, Seller may not, and will
not permit the Business to, directly or indirectly seek, solicit, encourage, or
consider indications of interest, or offers from, or negotiate or enter into any
agreements or arrangement with, any Person with respect to any sale or transfer
of any of the Assets or the Business, or any merger, consolidation or
acquisition that is in any case inconsistent with this Agreement or the
transactions contemplated hereby. Seller will not, and will not permit the
Business to, approve any such inconsistent transaction. Seller will promptly
notify Purchaser of any proposal, offer, inquiry, or contact by any Person with
respect to any such inconsistent transaction.
6.10 Retention of Records After the Closing. Seller shall retain copies
of all books and records relating to the Assets and the Business up to the
Closing Date for the period required by applicable law or regulatory authority,
and shall permit Purchaser and its authorized representatives to have reasonable
access to such copies of books and records to the extent reasonably requested by
Purchaser, for the purpose of (i) preparing, filing, or amending any Tax
Returns, (ii) investigating or defending any claim made against any of the
Assets, or (iii) responding to any inquiry, audit, or review by any Governmental
Body of any of the Assets before the Closing.
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6.11 Confidentiality.
(a) Disclosed Information. Seller and Purchaser agree that any
information concerning Seller, Purchaser, the Business, or the
respective businesses or operations of Seller or Purchaser or their
respective Affiliates which is disclosed to the other Party or its
legal counsel, accountants, representatives or financial institutions
in connection with the investigation of the transactions contemplated
by this Agreement and the Ancillary Agreements shall be deemed
confidential, (collectively, the "Disclosed Information"), unless such
information is of public record or knowledge or becomes available to
the Party on a non-confidential basis from a source other than the
disclosing Party or its representatives.
(b) Use of Disclosed Information. Seller and Purchaser agree
that they shall not use any Disclosed Information for any purpose other
than for evaluating the transactions contemplated by this Agreement and
the Ancillary Agreements and shall hold in confidence and will not use,
duplicate, reproduce, distribute, disclose or otherwise disseminate any
Disclosed Information. If either Party determines that it is required
by law to disclose any Disclosed Information, such Party will not make
any such disclosure unless (and then only to the extent that) it has
been advised by independent legal counsel that such disclosure is
required by law and then only after at least ten (10) Business Days
prior written notice is given to the Party with respect to which the
information is to be disclosed that such disclosure has been requested
and is required by law. Following the Closing, nothing herein is
intended to restrict the use or disclosure of Disclosed Information
that has been or would be disclosed to third parties in the Ordinary
Course of Business.
(c) Press Release and Announcement. No press release related
to this Agreement or the transactions contemplated hereby, or other
general announcement will be issued without the joint written approval
of Purchaser and Seller, except any public disclosure which either
Party in good faith believes is required by applicable securities and
other laws, or by the rules of any national market or stock exchange
having jurisdiction over the disclosing Party or its Affiliates (in
which case the Party desiring to make the disclosure will, to the
extent reasonably practicable, consult with the other Party prior to
making such disclosure).
6.12 Employee Matters.
(a) Potential Employment of Employees. Seller agrees to
cooperate with Purchaser and give Purchaser reasonably requested access
to employees for interviewing, completing applications and forms and
assistance with employee communications in connection with Purchaser's
potential employment of employees of the Business whom Purchaser, in
its sole discretion, desires to consider for potential employment with
Purchaser. Seller will make available to Purchaser reasonably requested
personnel reports, including a list of current employees and their
dates of hire, current position, salary grades, salary and training
records.
(b) No Requirement to Hire. Purchaser shall be under no
obligation to (i) hire any employees of the Business; (ii) maintain any
employee which Purchaser does hire at the same position, title, or
25
level or responsibility that such employee had with Seller or the
Business; (iii) grant seniority or service credit to any such hired
employee; or (iv) pay any specified level of compensation or benefits
to any such hired employee. Purchaser shall, as soon as practicable,
identify the employees it desires to hire, and the employees Purchaser
does not desire to hire. Purchaser shall inform Seller in writing of
its decision with respect to each employee of the Business, including
their proposed job title, salary and benefits.
(c) Termination and Severance. Prior to the Closing Date,
Seller may, with Purchaser's approval, terminate the services of any
employee whom Purchaser has informed Seller in writing that it decided
not to offer employment. Purchaser and Seller shall agree as to share
any severance payments associated with the termination of the employees
whom Purchaser decides not to hire on an equal basis, provided,
however, that Purchaser's contribution to such severance payments shall
not exceed $400,000.00. In the event Purchaser offers employment to an
employee of Seller and such offer is accepted so that the employee
becomes an employee of the Purchaser, and thereafter the Purchaser
terminates such former employee of Seller for any reason other than for
cause during the period of twelve (12) months after Purchaser hires
such former employee of Seller, then Purchaser agrees to provide Seller
with records and reports relating to the termination of such former
employee within the twelve (12) months so that Seller may determine
eligibility of the former employee for severance benefits, if any.
(d) Employment Liabilities. Purchaser does not assume, and
Seller hereby retains, any and all employment related costs,
obligations, and liabilities of Seller and the Business, or related to
the Business, incurred on or prior to Closing or which relate to
events, occurrences, conditions, actions, or inactions which took place
or were in effect on or prior to Closing (whether or not reported,
filed, billed, or paid for on or prior to Closing), including, without
limitation, except as otherwise provided in this Section 6.12, costs,
obligations and liabilities relating to severance rights of employees
of Seller or the Business, employment discrimination, unfair labor
practices, wage and hour laws, health and safety, workers compensation,
wrongful discharge, fringe benefits, insurance, employee benefit plans,
pensions, retiree medical, vacations, torts, accidents, disabilities,
injuries, breach of oral or written employment contracts or collective
bargaining agreements, or breach of law, statute, judgment, decree,
injunction, order, writ, rule or regulation of any Governmental
Authority. The entire liability for continuing acts or conditions (such
as exposure to harmful conditions or continuing discrimination) shall
be assumed by Seller if any material portion of the act or condition
occurred on or prior to Closing.
(e) COBRA and HIPPA. Seller shall be solely responsible for
any and all liabilities relating to health care continuation coverage
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") and the portability requirements under the Health
Insurance Portability and Accountability Act ("HIPPA") with respect to
employees of the Business whose coverage under Seller's group health
plan terminates as a result of or in connection with this transaction
or the events contemplated by this Agreement. Purchaser shall be
responsible for administering compliance under COBRA and HIPPA for
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those employees of the Business who terminate subsequent to their
becoming eligible to participate in the group health plans of
Purchaser.
6.13 SES Texas Right. Each of Seller and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ owns 50% of
the outstanding capital stock of SES Texas. Until September 30, 2001, Seller
agrees to use commercially reasonable efforts (not involving the expenditure of
any sum of money) to obtain the consent of ▇▇. ▇▇▇▇▇▇▇▇▇ to the conveyance to
Purchaser of Seller's entire stock ownership in SES Texas. If and when Seller
obtains such consent of ▇▇. ▇▇▇▇▇▇▇▇▇, Seller agrees to provide Purchaser with a
30-day option to acquire Seller's entire stock ownership in SES Texas for total
consideration of $1.00. During such 30-day period, Seller shall use commercially
reasonable efforts to cause SES Texas to provide Purchaser with reasonable
access to information and employees of SES Texas necessary for Purchaser to
understand the business and operations of SES Texas, subject to Purchaser
providing SES Texas with commercially reasonable written assurance that
Purchaser will hold in confidence all confidential and proprietary information
of SES Texas that Purchaser obtains.
6.14 Cooperation with Services Agreement. Seller will use commercially
reasonable efforts to assist Purchaser in securing a services agreement with the
current operator of the West Memphis, Tennessee facility formerly operated by
the Business.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement are subject, at its
option, to the satisfaction at or prior to the Closing of each of the following
conditions:
7.1 Accuracy of Representations and Warranties. The representations and
warranties of Seller contained in this Agreement, the Ancillary Agreements or in
any certificate or documents delivered to Purchaser pursuant hereto shall be
correct in all material respects at and as of the Closing Date (except that any
representation or warranty expressed with a materiality qualification must be
correct as written), and Seller shall have delivered to Purchaser a certificate
to that effect. In addition, there shall have been no material adverse change in
the Business from that represented to Purchaser since the date of this
Agreement.
7.2 Compliance with Covenants. Seller shall have performed and complied
in all material respects with all terms, agreements, covenants, and conditions
of this Agreement and the Ancillary Agreements to be performed and complied with
by it at or prior to the Closing, and Seller shall have delivered to Purchaser a
certificate to that effect.
7.3 Actions or Proceedings. No action, suit, or proceeding shall be
pending or threatened that seeks to restrain, prohibit, invalidate, or otherwise
adversely affect the consummation of the transactions contemplated by this
Agreement or any of the Ancillary Agreements.
7.4 Consents. Seller shall have obtained all the material consents,
approvals, and authorizations and made all the filings that are required to be
obtained or made by Seller to consummate the transactions contemplated by this
Agreement. Purchaser shall have been furnished with or obtained the written
27
Permits, consents, approvals, and authorizations received from any and all
Persons, including Governmental Bodies, required to be obtained by Purchaser
prior to the consummation of the transactions contemplated hereby, which
Permits, consents approvals and authorizations Purchaser shall have tried to
obtain in good faith.
7.5 Tangible Personal Property Leases. Seller shall have obtained
assignments of all material tangible personal property leases on the Assets.
Purchaser shall have been furnished with the written assignments, including,
without limitation, assignments of all vehicle and equipment leases which are
used in connection with the Business, and copies of any guaranty for the payment
by Seller of any amounts due to third parties under such leases, obtained by
Seller prior to the consummation of the transactions contemplated hereby.
7.6 Intangible Personal Property. Seller shall have obtained
assignments of all material Intangible Personal Property and other Third Party
licenses to which Seller, on behalf of the Business, is a Party, or used in
connection with the Business, that are required as a condition to Seller's
consummation of the transactions contemplated by this Agreement. Purchaser shall
have been furnished with the written assignments, and copies of any guaranty for
the payment by Seller of any amounts due to third parties under such licenses,
obtained by Seller prior to the consummation of the transactions contemplated
hereby.
7.7 Ancillary Agreements. The Ancillary Agreements to be entered
into by Seller or its Affiliates shall have been executed and delivered by
Seller.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject, at the
option of Seller, to the satisfaction at or prior to the Closing of each of the
following conditions:
8.1 Accuracy of Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement or in any certificate or
document delivered to Seller pursuant hereto shall be correct in all material
respects at and as of the Closing Date (without giving effect to any materiality
qualification of a particular representation or warranty, and other than
representations and warranties that refer to a specified date which need only be
correct in all material respects on and as of such specified date), and
Purchaser shall have delivered to Seller a certificate to such effect.
8.2 Compliance with Covenants. Purchaser shall have performed and
complied in all material respects with all terms, agreements, covenants, and
conditions of this Agreement to be performed or complied with by it at or prior
to the Closing, and Purchaser shall have delivered to Seller a certificate to
that effect.
8.3 Actions or Proceedings. No action, suit, or proceeding shall be
pending or threatened that seeks to restrain, prohibit, invalidate, or otherwise
adversely affect the consummation of the transactions contemplated hereby.
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8.4 Consents. Seller shall have been furnished with all the material
written consents, approvals, and authorizations, and all the filings, required
as a condition to their consummation of the transactions contemplated by this
Agreement.
8.5 Ancillary Agreements. The Ancillary Agreements to be entered into
by Purchaser shall be executed and delivered by Purchaser.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1 Survival of Representations. All representations and warranties
made by any Party in or pursuant to this Agreement shall survive for a period of
18 months after the Closing Date, except that (a) the representations and
warranties in Section 4.20 (Environmental Matters) shall survive for a period of
three years and (b) the representation and warranties in the first and second
sentences of Section 4.3 (Ownership of the Business) shall survive after the
Closing Date without limitation (to the extent permitted by law). Purchaser may
rely on the representations and warranties of Seller, and vice versa,
notwithstanding any investigation or audit by the relying Party before, at, or
after the Closing or the decision of the relying Party to effect the Closing.
9.2 General Indemnities.
(a) Subject to the terms and conditions of this Article IX,
Seller shall indemnify, defend, and hold harmless Purchaser, and any of
its officers and directors, from and against all Damages that may be
asserted against, resulting to, imposed upon, or incurred by any such
Person by reason of, relating to, or resulting from: (i) a breach of
any representation, warranty, covenant, or agreement of Seller made in
or pursuant to this Agreement; (ii) any Environmental Claim with
respect to the Assets or the operations of the Business that accrued
prior to the Closing; (iii) the inability of Purchaser to obtain any
necessary certificate of occupancy with respect to the real property
upon which any of the Assets are located; (iv) the violation by Seller
prior to the Closing of any applicable zoning or building regulation,
ordinance or other law, order, regulation, or requirement relating to
the real property upon which any of the Assets are located; or (v) the
failure of Seller to pay any Tax for which it bears liability under
Section 6.5.
(b) Subject to the terms and conditions of this Article IX,
Purchaser shall indemnify, defend, and hold harmless Seller and any of
its officers and directors, from and against all Damages that may be
asserted against, resulting to, imposed upon, or incurred by any such
Person by reason of, relating to, or resulting from (i) a breach of any
representation, warranty, covenant, or agreement of Purchaser made in
or pursuant to this Agreement; (ii) the violation of any of the
Environmental Laws by Purchaser subsequent to the Closing in connection
with the Business, including but not limited to Damages resulting from
violations of any such law by Purchaser with respect to the use of, or
activities conducted on or from, any such real property by Purchaser,
including the use by Purchaser of underground storage tanks thereunder,
subsequent to the Closing, but, in cases where such violations are
caused by a release of a Regulated Substance, or a release itself is a
violation, only to the extent such Damages are attributable to an
29
Identifiable Event, (iii) an Identifiable Event; or (iv) the failure of
Purchaser to pay any Tax for which it bears liability under Section
6.5.
(c) The indemnity provided for in this Section 9.2 shall in no
event exceed the aggregate amount of the Purchase Consideration.
(d) Neither Party shall be liable for indemnification claims
under this Section 9.2 until the aggregate amount of indemnification
claims hereunder exceeds Seventy Five Thousand Dollars ($75,000.00),
but upon reaching such amount, the indemnifying Party shall be liable
for all indemnification claims in excess of such amount; provided,
however, that the provisions of this Section 9.2(d) shall not apply to
(i) Seller's indemnities under Section 9.2(a)(v), and (ii) the breach
of any covenant or agreement contained in this Agreement.
9.3 Conditions of Indemnification. The obligations of Seller or
Purchaser, as the case may be (the "indemnifying Party") to other Persons (the
"Party to be indemnified") with respect to any claim or demand for
indemnification shall be subject to the following terms and conditions:
(a) The Party to be indemnified shall promptly give notice to
the indemnifying Party of any claim, whether between the Parties or
brought by a third party, specifying both the basis for and the amount
of such claim, to the extent specified or otherwise known. If the claim
or demand for indemnification relates to a claim, action, suit, or
proceeding asserted or filed by a Third Party against the Party to be
indemnified (a "Third-Party Claim"), then such notice shall be given by
the Party to be indemnified within twenty (20) days of receipt thereof
(or such earlier time as might be required to avoid prejudicing the
indemnifying Party's position). The failure of the Party to be
indemnified to give such notice shall not relieve the indemnifying
Party of its obligations hereunder, except to the extent the
indemnifying Party is actually prejudiced thereby.
(b) Following receipt of notice from the Party to be
indemnified of a claim or demand for indemnification, the indemnifying
Party shall have twenty (20) days to make such investigation of the
claim or demand as the indemnifying Party deems necessary or desirable.
For the purposes of such investigation, the Party to be indemnified
agrees to make available to the indemnifying Party (or its authorized
representatives) the information relied upon by the Party to be
indemnified to substantiate the claim or demand. If the Party to be
indemnified and the indemnifying Party agree at or before the
expiration of such twenty (20) day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim or demand,
then the indemnifying Party shall immediately pay to the Party to be
indemnified the full amount of the claim or demand to the extent that
such Party to be indemnified is entitled to indemnification pursuant to
this Section 9.3. If the Party to be indemnified and the indemnifying
Party do not agree within such period (or any mutually agreed upon
extension thereof), then the Party to be indemnified may pursue or
exercise any remedies or rights available to it.
(c) After receipt of notice of commencement of any Third-Party
Claim evidenced by service of process or other legal pleading, or with
reasonable promptness after any other assertion in writing of any
Third-Party Claim, the Party to be indemnified shall give the
30
indemnifying Party written notice thereof together with a copy of such
claim, process, or other legal pleading within the period set forth in
the second sentence of Section 9.3 (a). The failure of a Party to be
indemnified to give the indemnifying Party such notice shall not
relieve the indemnifying Party of its obligations under Section 9.3
except to the extent the indemnifying Party is actually prejudiced
thereby. The indemnifying Party shall have the right to undertake the
defense, compromise, or settlement of the Third-Party Claim, by
representatives of its own choosing and at its own expense so long as
the indemnifying Party agrees to assume and conduct, and diligently
conducts, such defense (or, if applicable, compromise or settlement).
In such event the Party to be indemnified may participate in the
defense, compromise, or settlement with counsel of its own choice and
at its own expense.
(d) If the indemnifying Party, by the thirtieth (30th) day
after receipt of notice of any such claim (or, if earlier, by the tenth
(10th) day preceding the day on which an answer or other pleading must
be served in order to prevent judgment by default in favor of the
plaintiff), does not elect to defend such Third-Party Claim, then the
Party to be indemnified shall have the right (upon further notice to
the indemnifying Party) to retain counsel and undertake the defense,
compromise, or settlement of such Third-Party Claim on behalf of, and
for the account and risk of, the indemnifying Party and at the
indemnifying Party's expense, subject to the right of the indemnifying
Party to participate, with its own counsel and at its own expense, in
the defense, settlement, or compromise. If the Party to be indemnified
and the indemnifying Party agree at or before the expiration of the
period set forth in this Section 9.3(d) (or any mutually agreed upon
extension thereof) to the validity and amount of such Third-Party
Claim, then the indemnifying Party shall immediately pay to the Party
to be indemnified the amount so agreed.
(e) If there is a conflict of interests which renders it
inappropriate for the same counsel to represent both the indemnifying
Party and the Party to be indemnified in defending, compromising, or
settling a Third-Party Claim, the indemnifying Party shall be
responsible for paying for separate counsel for the Party to be
indemnified. In such event, however, if there is more than one Party to
be indemnified, the indemnifying Party shall not be responsible for
paying for more than one separate counsel (which may be a firm of
attorneys) to represent the Parties to be indemnified, regardless of
the number of Parties to be indemnified.
(f) The indemnifying Party may compromise, settle, or resolve
any Third-Party Claim without the consent of the Party to be
indemnified if such compromise, settlement, or resolution involves only
the payment of money by the indemnifying Party (whether on its own
behalf or on behalf of the Party to be indemnified) and the claimant
provides to the Party to be indemnified a release from all Liability in
respect of such claim. Otherwise, the indemnifying Party may not
compromise, settle, or resolve the claim without the prior written
consent of the Party to be indemnified, which consent may not be
unreasonably withheld.
(g) The Party to be indemnified and the indemnifying Party
must cooperate with all reasonable requests of the other in the defense
of any Third-Party Claim.
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(h) Notwithstanding anything to the contrary in this Section
9.3, with respect to an obligation of Seller to indemnify Purchaser
pursuant to Section 9.2(a) above with respect to any Environmental
Claim that requires any removal, remediation, response, clean up or
other corrective action ("Remediation"), Seller may elect to implement
and complete such Remediation. If Seller elects to conduct the
Remediation:
(i) Seller, in good faith, will coordinate the schedule of
the Remediation with Purchaser so that disruptions of
Purchaser's operations will be minimized;
(ii) Seller will obtain the prior written approval of
Purchaser, which approval will not be unreasonably
withheld, for any consultant or contractor retained by
Seller to investigate, design or implement the
Remediation;
(iii)Seller will conduct the Remediation in compliance with
all applicable federal, state and local laws and
regulations and as directed by the appropriate
Governmental Body; and
(iv) Seller will not agree to or select any Remediation that
imposes any material obligation on Purchaser,
including, without limitation, the obligation to sign
manifests or obtain permits, without the prior written
consent of the Purchaser, which consent shall not be
reasonably withheld.
(v) During the period in which Seller is conduction a
Remediation pursuant to this Section 9.3(c), Purchaser
shall provide Seller and its consultants and
contractors reasonable access to the affected property
for the purpose of conducting activities related to the
Remediation, including where necessary the use of heavy
equipment. Any such access shall be subject to
reasonable restrictions imposed by Purchaser,
including, without limitation, restrictions related to
worker safety. Seller shall expeditiously remove from
the property all drill cuttings, soil, debris or
liquids generated from or in connection with the
Remediation and shall restore the property and any
existing structures or equipment removed or damaged in
the course of the Remediation to a condition
substantially the same as the condition that existed
immediately prior to the Remediation. Seller or their
consultants and contractors shall provide Purchaser at
least five (5) business days' notice of the activities
to be conducted on the property, which notice may be in
the form of a schedule of activities.
(vi) Seller and Purchaser agree that any Remediation shall
meet all requirements of the Governmental Body or
Bodies directing the Remediation and shall not
materially impede or increase the cost of Purchaser's
business operations on the affected property. Purchaser
acknowledges that the Remediation may be a "risk-based"
Remediation pursuant to, and consistent with applicable
federal, state and local laws and regulations, which
may require the establishment of certain restrictions
or conditions affecting the property on which the
Remediation is being conducted. Purchaser agrees not to
32
object to any such "risk-based" Remediation unless
Purchaser's agreement will, in the good faith judgment
of Purchaser, expose Purchaser to liability to third
parties.
(vii)Seller shall not take any action or make any
communication which has a material effect on the
resolution or outcome of any Environmental Claim which
could lead to the filing of an Environmental Claim
against Purchaser, without providing at least five (5)
business days advance notice (unless otherwise required
by law) to Purchaser. Any material breach of this
obligation shall relieve Purchaser of Liabilities under
this Agreement with respect to the applicable
Environmental Claim to the extent Purchaser has been
prejudiced by the lack of timely and adequate notice.
This notification requirement shall not apply to
communications which are part of or relate to a
judicial or administrative proceeding in which the
Parties are litigating claims against each other.
9.4 Determination of Damages; Survival of Obligations.
(a) In no event shall the acceptance by the Party to be
indemnified of any money or other tangible properties
as partial compensation or indemnification from any
source for the amount of its Damages prevent the Party
to be indemnified from seeking compensation or
indemnification from any source for the rest of the
entire amount of its or his Damages.
(b) An indemnifying Party's indemnification obligations
shall continue as to any claim or demand therefor made
within any applicable survival period even though
Damages are not imposed or incurred until after the
survival period.
(c) The indemnifying Party's indemnification obligations
shall survive indefinitely, to the extent permitted by
applicable law, with respect to the following matters:
(i) a breach of any covenant or agreement made in
Sections 6.1(c), 6.2 or 6.3 of this Agreement; (ii) the
matters indemnified in Sections 9.2(a)(v) and
9.2(b)(iv) of this Agreement; (iii) with respect to
Seller, the matters indemnified in Section 9.2(a)(ii)
of this Agreement; and (iv) with respect to Purchaser,
the matters indemnified in Section 9.2(b)(ii) and (iii)
of this Agreement.
9.5 Exclusivity of Remedies. The remedies provided in this Article IX
are exclusive of any other rights or remedies available to a Party or other
Person; provided, however, that with respect to a breach of any covenant or
agreement contained in this Agreement, the remedies provided in this Article IX
are in addition to, and not exclusive of, any other rights or remedies available
to a Party or other Person and, provided further, that a Party shall be
permitted to join the other Party as a party to any action initiated by a third
party, if the subject matter of such action is subject to indemnification by
such other Party under this Agreement.
33
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by Seller, if the conditions set forth in Article VIII
shall not have been complied with or performed in any material respect
and such noncompliance or nonperformance shall not have been waived by
Seller, or cured or eliminated (or by its nature cannot be cured or
eliminated) by Purchaser, on or before September 30, 2000;
(b) by Purchaser, if the conditions set forth in Article VII
shall not have been complied with or performed in any material respect
and such noncompliance or nonperformance shall not have been waived by
Purchaser, or cured or eliminated (or by its nature cannot be cured or
eliminated) by Seller, on or before September 30, 2000;
(c) by Seller, if there has been a material breach by
Purchaser of any of its covenants or agreements made in this Agreement,
or if Purchaser has made any material misrepresentation in this
Agreement (unless such event has been caused by the breach of this
Agreement by the Party seeking such termination);
(d) by Purchaser, if there has been a material breach by
Seller of any of its covenants or agreements made in this Agreement, or
if Seller has made any material misrepresentation in this Agreement
(unless such event has been caused by the breach of this Agreement by
the Party seeking such termination); or
(e) by the written agreement of the Parties.
10.2 Effect of Termination. Upon the termination of this Agreement,
this Agreement shall become void and of no further effect, and no Party hereto
shall have any Liability to the other Party or its directors or officers in
respect thereof, except that (i) nothing herein shall relieve either Party from
Liability for any breach hereof, and each Party shall be entitled to any
remedies in this Agreement, at law or in equity, or otherwise for such breach,
and (ii) this Section 10.2 and Sections 6.5, 6.11, 9.2 through 9.5 and Article
XI, and any other Section necessary for a Party to avail itself of its remedies
upon another Party's breach, shall remain in full force and effect and survive
any termination of this Agreement.
10.3 Return of Disclosed Information. In the event that this Agreement
is terminated for any reason, each Party shall promptly redeliver to the other
Party all Disclosed Information (including all documents and copies made
thereof) received from or relating to the disclosing Party in connection with
the transactions contemplated by this Agreement, and no Party shall retain any
copies, extracts or other reproductions, in whole or in part, of such Disclosed
Information; provided, however, that with respect to any analyses, studies,
34
reports, or internal documents created by or prepared by a Party or its legal
counsel, accountants, representatives or financial institutions which contain
Disclosed Information, the Party which created such analyses, studies, reports,
or internal documents, as applicable, shall have the right to destroy such
documents, as long as such Party provides a written certification attesting to
compliance with the terms of this Section 10.3.
ARTICLE XI
MISCELLANEOUS
11.1 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.2 Notices. All notices, claims, demands, and other communications
required or permitted to be given under this Agreement shall be in writing and
(a) delivered personally or by courier, (b) transmitted by confirmed facsimile,
(c) or sent by registered or certified mail, postage prepaid, as follows:
If to Seller:
Pennzoil-Quaker State Company
Pennzoil Place, ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: 713/546-6314
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
3000 One Shell Plaza
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: 713/229-7858
If to Purchaser:
Probex Corp.
One Galleria Tower, Suite 1200
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Chief Financial Officer
Facsimile: 972/466-1556
35
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: 214/922-4193
or such other address or addresses as either Party shall have designated by
notice to the other Party in accordance with this Section 11.2. All such
notices, claims, demands, and other communications shall be deemed given,
effective, and received on the date of such delivery or transmission or on the
earlier of receipt and the third Business Day after any such mailing.
11.3 Risk of Loss. The risk of loss with respect to the Assets shall be
Seller's until the Closing and Purchaser's after the Closing. The risk of loss
with respect to the Excluded Assets shall remain with Seller.
11.4 Waivers. Seller and Purchaser may, by written notice to the other,
(a) extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (b) waive any inaccuracies in the
representations or warranties of any other Person contained in this Agreement or
in any document delivered pursuant to this Agreement; (c) waive compliance with
any of the conditions to be complied with by the other contained in this
Agreement; or (d) waive performance of any of the obligations of any other
Person under this Agreement. Except as provided in the preceding sentence, no
action taken pursuant to this Agreement, including any investigation by or on
behalf of Seller or Purchaser, shall be deemed to constitute a waiver by the
Party taking such action of compliance with any representations, warranties,
covenants, or agreements contained in this Agreement. The waiver by Seller or
Purchaser of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
11.5 Amendments. This Agreement may be amended or supplemented by such
additional agreements, schedules, or documents as may be determined by all the
Parties to be necessary or desirable. Any such amendment or supplement must be
in writing and signed by all the Parties.
11.6 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of Texas, without regard to any conflict-of-law
rules that would apply any other law.
11.7 Assignability. Neither this Agreement nor either of the Party's
respective rights or obligations hereunder may be assigned by either Party
without the prior written consent of the other Party, and any purported
assignment without consent shall be void.
11.8 Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the Parties and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any Person other than the Parties or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement.
36
11.9 Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision, there shall be added as part of this Agreement, a provision as
similar in its terms to such illegal, invalid, or unenforceable provision as may
be possible and be legal, valid, and enforceable.
11.10 Knowledge. For purposes of this Agreement (other than Section
4.11):
(a) a Person shall be deemed to have "knowledge" of a parti-
cular fact or other matter if such Person is actually aware of such
fact or other matter;
(b) a Person that is a corporation shall be deemed to have
"knowledge" of a particular fact or matter if any of its officers or
directors has "knowledge" thereof under Section 11.10(a); and
(c) Seller shall be deemed to have "knowledge" of a particular
fact or matter if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇ has
"knowledge" thereof under Section 11.10(a).
11.11 Entire Agreement. This Agreement and its Annexes and Schedules,
including the Ancillary Agreements and the documents executed at the Closing in
connection herewith, constitute the entire agreement, and supersede all prior
agreements and understandings (oral and written), between or among the Parties
with respect to the subject matter hereof. No representation, warranty, promise,
inducement, or statement of intention has been made by either Party which is not
expressed in this Agreement or such other documents, and neither Seller nor
Purchaser shall be bound by, or be liable for, any alleged representation,
warranty, promise, inducement, or statement of intention not expressed herein or
therein.
37
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the Parties as of the date first above written.
PURCHASER: PROBEX CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and CEO
SELLER: PENNZOIL-QUAKER STATE COMPANY
By:_______________________________________
Printed Name:__________________________
Title:_________________________________
38
ANNEX I
ASSETS
[Intentionally Omitted]
ANNEX II
SELLER'S DISCLOSURE SCHEDULE
[Intentionally Omitted]
ANNEX III
PURCHASER'S DISCLOSURE SCHEDULE
[Intentionally Omitted]