ASSET PURCHASE AGREEMENT

Exhibit 2.8

 

ASSET PURCHASE AGREEMENT

among:

H ECKMANN C ORPORATION ,

a Delaware corporation;

H ECKMANN W ATER R ESOURCES C ORPORATION ,

a Texas corporation;

C HARIS P ARTNERS , LLC ,

a Texas limited liability company;

G REER E XPLORATION C ORPORATION ,

a Texas limited liability company;

S ILVERSWORD , L.P. , S ILVERSWORD II, L.P. , S ILVERSWORD III, L.P. ,

S ILVERSWORD IV, L.P. , S ILVERSWORD V, L.P. , and S ILVERSWORD VII, L.P. ,

each, a Texas limited partnership;

D AVID M ELTON , C HRIS C OOPER , C RAIG Z IPPS , M IKE D AVIS and K EVIN G REER ;

and

J ON H ILEMAN and J AMES G REER

 

Dated as of June 12, 2009

 

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

(continued)

 

 

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E XECUTION V ERSION

ASSET PURCHASE AGREEMENT

T HIS A SSET P URCHASE A GREEMENT (“ Agreement ”) is made and entered into as of June 12, 2009 by and among: H ECKMANN C ORPORATION , a Delaware corporation (“ Heckmann ”); Heckmann Water Resources Corporation, a Texas corporation (“ Buyer ”) and a wholly-owned subsidiary of Heckmann; C HARIS P ARTNERS , LLC , a Texas limited liability company (“ Charis ”); David Melton, Chris Cooper, Craig Zips, Mike Davis and Kevin Greer, the members of Charis (the “ Members ”); G REER E XPLORATION C ORPORATION , a Louisiana corporation (“ Greer ”); James Greer, the sole stockholder of Greer (the “ Stockholder ”); S ILVERSWORD L.P., S ILVERSWORD II, L.P. , S ILVERSWORD III, L.P. , S ILVERSWORD IV, L.P. , S ILVERSWORD V, L.P. , and S ILVERSWORD VII, L.P. , each a Texas limited partnership (collectively, “ Silversword ,” and together with Charis and Greer, the “ Sellers ” and individually, a “ Seller ”); Jon Hileman and James Greer, the direct or indirect owners of Silversword (the “ Partners ,” and, together with the Members and the Stockholder, the “ Owners ” and individually, an “ Owner ”). Certain capitalized terms used in this Agreement are defined in E XHIBIT  A and other capitalized terms used in this Agreement are defined in the Sections of this Agreement where they appear.

R ECITALS

A. Silversword is the owner of the Existing Wells, and related equipment and Land Use Rights.

B. Greer is the operator of the Existing Wells, the Existing Pipeline and related equipment, the owner of the Existing Pipeline, and holds certain Governmental Authorizations related to the operation and drilling of the Wells and Pipeline as well as related Land Use Rights, vehicles and equipment.

C. Charis holds certain rights and Governmental Authorizations related to the drilling of the Future Wells and the Future Pipeline (the construction of the Future Wells and the Future Pipeline is referred to herein as the “ Construction Project ”), and is party to agreements with oil and gas producers providing for the disposal of saltwater.

D. Together, the Sellers operate and are currently expanding a saltwater disposal business that transports and disposes of saltwater produced from oil and gas wells in eastern Texas and western Louisiana (the “ Business ”). Buyer desires to buy substantially all of Sellers’ assets used in the Business.

A GREEMENT

In consideration of the mutual covenants, agreements, representations and warranties contained herein, Buyer and Sellers agree as follows:

SECTION 1: P URCHASE AND S ALE OF A SSETS .

1.1 Purchase and Sale of Assets . At the Closing, Buyer shall purchase from Greer and Silversword, and Greer and Silversword shall sell, transfer, assign, convey and deliver to Buyer, free and clear of all Liens, all of the assets, properties and rights of every nature, kind and description, whether tangible or intangible (including goodwill), real, personal or mixed, accrued or contingent, or now existing or hereafter acquired, related to their respective Business, including without limitation, all of their right, title and interest in and to the following (the “ Purchased Assets ”):

1.1(a) all right, title and interest in and to the saltwater disposal wells described on Schedule 1.1(a) (the “ Existing Wells ”), together with any saltwater, frac fluid, oil, and skim oil contained therein.

1.1(b) all right, title and interest in and to the saltwater disposal wells to be drilled and constructed, or that are currently being drilled and constructed, as more particularly described on Schedule 1.1(b) (the “ Future Wells ,” and, together with the Existing Wells, the “ Wells ”).

1.1(c) all right, title and interest in approximately twelve miles of underground saltwater transmission pipeline, as more particularly described on Schedule 1.1(c) (the “ Existing Pipeline ”), together with any saltwater, frac fluid, oil and skim oil contained therein.

1.1(d) all right, title and interest in approximately thirty-two miles of underground saltwater transmission pipeline to be constructed, or that is currently being constructed, as more particularly described on Schedule 1.1(d) (the “ Future Pipeline ,” and, together with the Existing Pipeline, the “ Pipeline ”).

1.1(e) all right, title and interest, whether in fee simple, or pursuant to easements, rights-of-way, servitudes, rights-of-use, leases, subleases, licenses, appurtenants or surface or subsurface use agreements (“ Land Use Rights ”), related to the Wells and the Pipeline or otherwise used in the operation of the Business, including the Land Use Rights more particularly described on Schedule 1.1(e) .

1.1(f) all right, title and interest in a 12 acre tract of land, save and except the oil, gas, and other minerals in and under the land, as more fully described in Schedule 1.1(f) (the “ Land ”) and in any buildings, improvements or structures used in the operation of the Business, including the buildings, improvements or structures land listed on Schedule 1.1(f) .

1.1(g) all right, title and interest in any personal property, including all oil, skim oil, pipe, casing, storage tanks, pumps, filtration and other equipment, machinery, manufactured and purchased parts, tools, vehicles, inventories, materials, supplies, furniture and furnishings (the “ Personal Property ”), including the Personal Property that is listed on Schedule 1.1(g) .

1.1(h) to the extent assignable, all Governmental Authorizations, including the Governmental Authorizations more particularly described on Schedule 1.1(h) .

1.1(i) the specific customer, supplier, service, maintenance, utility, and other contracts, leases, agreements and obligations particularly described on Schedule 1.1(i) (the “ Contracts ”).

1.1(j) all books, records, files, maps, plats, studies, reports, plans and information, including, without limitation, customer and supplier lists, advertising and marketing materials, technical manuals, personnel records, financial and accounting records, title records, and all geological, geophysical, exploration, metallurgical, hydrolic, seismic, engineering and environmental data related to the Business.

1.1(k) all intangible rights and property, including going concern value, goodwill, telephone, telecopy and e-mail addresses and listings, and domain names and websites.

1.1(l) to the extent assignable, all insurance benefits, including rights and proceeds.

 

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1.1(m) all claims of Greer and Silversword against third parties, whether choate or inchoate, known or unknown, contingent or noncontingent.

1.2 Assets Not Being Acquired . Notwithstanding the foregoing, the following assets are expressly excluded from the assets to be purchased by Buyer from Greer and Silversword (the “ Excluded Assets ”):

1.2(a) Greer or Silversword’s certificate or articles of incorporation or organization, bylaws, operating agreement, partnership agreement and other organizational documents, as applicable, qualifications to do business as a foreign Entity, (collectively, the “ Organizational Documents ”), taxpayer and other identification numbers, seals, minute books, stock or other equity transfer books, blank stock or other equity certificates, and other documents relating to the organization, maintenance and existence of Greer and Silversword as Entities.

1.2(b) any cash or cash equivalents of Greer or Silversword.

1.2(c) any loans payable by Charis to Silversword V, L.P. (the “ Promissory Note ”).

1.2(d) any Governmental Authorizations of Greer unrelated to the Business.

1.2(e) any of Greer or Silverswords’ accounts receivable, including, without limitation, for water injected or accepted for injection into the Existing Wells, for the period prior to the Effective Time.

1.2(f) any other items specified on Schedule 1.2 and accepted (as Excluded Assets) by Buyer at or prior to the Effective Time.

1.3 Purchase and Sale of Membership Interests . At the Closing, Buyer shall purchase from the Members, and the Members shall sell, transfer, assign, convey and deliver to Buyer, free and clear of all Liens, 100% of the issued and outstanding limited liability company interests of Charis (the “ Charis Equity ”).

1.4 Purchase Price . The consideration for the Purchased Assets and the Charis Equity (the “ Purchase Price ”) will be:

1.4(a) at Closing, $17.0 million in cash less the Holdback (as defined in Section 1.12 , which shall be payable by wire transfer of immediately available funds (the “ Cash Consideration ”) as follows (i) $5.0 million of the Cash Consideration shall be payable to the Members (minus the Members’ proportionate share of the Holdback) in respect of the Charis Equity, and (ii) $12.0 million of the Cash Consideration shall be payable to Silversword (minus Silversword’s proportionate share of the Holdback) in respect of its Purchased Assets. The Cash Consideration payable to the Members and Silversword shall be allocated among the Members and the Silversword Entities, respectively, as set forth on Schedule 1.4 .

1.4(b) at Closing, $7.0 million in Heckmann Common Stock (the “ Stock Consideration ”). $5.0 million of the Stock Consideration shall be issued to the Members in respect of the Charis Equity and $2.0 million of the Stock Consideration shall be issued to Silversword V, L.P. in respect of its Purchased Assets. The Stock Consideration issuable to the Members shall be allocated among the Members as set forth on Schedule 1.4 . The number of shares of Heckmann Common Stock comprising the Stock Consideration shall be computed at a per share price of $4.44.

 

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1.4(c) $2.1 million in cash to Greer in respect of its Purchased Assets, of which $175,000 shall be payable by wire transfer of immediately available funds at Closing and on the first day of each fiscal quarter for the succeeding 11 quarters, subject to Section 8.7 .

1.4(d) in the event that Buyer achieves EBITDA equal to an amount set forth in column A on Schedule 1.4(d) during the fiscal year ending December 31, 2010 (the “ 2010 Performance Target ”), the additional amount in Heckmann Common Stock set forth in column B on Schedule 1.4(d) (the “ 2010 Earn-Out ”). 80% of the Heckmann Common Stock arising out of the 2010 Earn-Out shall be issued to the Members and 20% of the Heckmann Common Stock shall be issued to Silversword V, L.P. Any Heckmann Common Stock issuable to the Members that arises out of the 2010 Earn-Out shall be allocated among the Members as set forth on Schedule 1.4 . The number of shares of Heckmann Common Stock comprising the 2010 Earn-Out shall be computed at the average of the closing market price on the New York Stock Exchange, or such other national securities exchange on which Heckmann Common Stock may then be listed, for the last ten trading days of December 2010. Any Heckmann Common Stock arising out of the 2010 Earn-Out shall be issued by Heckmann on or before March 31, 2011, subject to Section 1.5(d) and Section 8.7 .

1.4(e) in the event that Buyer achieves EBITDA of $17.5 million for the fiscal year ending December 31, 2011 (the “ 2011 Performance Target ”), an additional $5.0 million in Heckmann Common Stock (the “ 2011 Earn-Out ”). 80% of the Heckmann Common Stock arising out of the 2011 Earn-Out shall be issued to the Members and 20% of the Heckmann Common Stock shall be issued to Silversword V, L.P. Any Heckmann Common Stock issuable to the Members that arises out of the 2011 Earn-Out shall be allocated among the Members as set forth on Schedule 1.4 . The number of shares of Heckmann Common Stock comprising the 2011 Earn-Out shall be computed at the average of the closing market price on the New York Stock Exchange, or such other national securities exchange on which Heckmann Common Stock may then be listed, for the last ten trading days of December 2011. Any Heckmann Common Stock arising out of the 2011 Earn-Out shall be issued by Heckmann on or before March 31, 2012, subject to Section 1.5(d) and Section 8.7 .

1.5 Calculation of EBITDA .

1.5(a) Buyer shall prepare and deliver to Greer, Silversword and the Members (the “ Recipients ”) , no later than 30 days prior to the dates on which the 2010 Earn-Out and 2011 Earn-Out are due, a schedule (in each case, the “ Buyer EBITDA Schedule ”) setting forth in reasonable detail Buyer’s calculation of the EBITDA for the applicable period (each, an “ EBITDA Calculation ”).

1.5(b) Recipients shall have 15 days after the receipt of the Buyer EBITDA Schedule (the “ Review Period ”) to review the Buyer EBITDA Schedule and the EBITDA Calculation set forth therein. Recipients may elect to accept or object to the EBITDA Calculation set forth in the Buyer EBITDA Schedule by delivering a written notice of such acceptance (an “ Acceptance Notice ”) or of such objection in reasonable detail (an “ Objection Notice ”) to the Buyer prior to the expiration of the Review Period. If Recipients timely deliver an Acceptance Notice, the Buyer EBITDA Schedule and the EBITDA Calculation set forth therein shall be binding and conclusive upon the parties on the date of delivery of such Acceptance Notice. If Recipients timely deliver an Objection Notice, Recipients and Buyer will follow the procedures for resolution of disputes set forth in Section 1.5(d) . If Recipients do not deliver an Acceptance Notice or Objection Notice prior to the expiration of the Review Period, the EBITDA Calculation as set forth on the Buyer EBITDA Schedule shall be binding and conclusive upon the parties as of the expiration of the Review Period.

1.5(c) During the Review Period, Recipients will have the right to communicate with Buyer, and, to the extent reasonably required by Recipients to complete their review of the EBITDA

 

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Calculation set forth in the Buyer EBITDA Schedule, review the work papers, books and records, schedules, memoranda and other documents Buyer prepared or reviewed in preparing the Buyer EBITDA Schedule and determining the EBITDA Calculation set forth therein.

1.5(d) If Recipients deliver an Objection Notice, then (i) for 20 days after the date Buyer receives the Objection Notice, Recipients and Buyer will use their best efforts to agree on the EBITDA Calculation, (ii) if the Buyers and Recipients are unable to agree on the EBITDA Calculation within such 20 day period, the matter will be referred to a mutually agreed upon independent national accounting firm (the “ Accounting Firm ”) for determination, and (iii) any Heckmann Common Stock arising out of the 2010 Earn-Out or 2011 Earn-Out, as applicable, will be issuable no later than the later to occur of (A) March 31, or (B) 5 days after the Objection Notice is resolved pursuant to this Section 1.5(d) . The Accounting Firm shall act as an arbitrator to determine, based solely upon the provisions of this Agreement and the submissions of Buyer and Recipients, and not by independent review, those issues in dispute. The Accounting Firm shall deliver a written report within 15 days of its appointment setting forth its determination of the EBITDA Calculation and, upon the issuance of such report, the Accounting Firm’s determination shall be binding and conclusive upon the parties. The fees and expenses of the Accounting Firm shall be shared equally by Buyer and Recipients.

1.6 Earn-Out Acceleration .

1.6(a) If, subsequent to the Effective Time and prior to March 31, 2011, (i) Buyer sells or transfers substantially all of the Purchased Assets to any Person that is not an Affiliate, (ii) Heckmann sells 51% or more of the capital stock of Buyer to any Person that is not an Affiliate, or (iii) Buyer consolidates with or merges into any other Person that is not an Affiliate and does not retain at least 51% of the capital stock of Buyer (each, an “ Earn-Out Acceleration Event ”), then Heckmann will issue and deliver $10.0 million in Heckmann Common Stock (the “ First Earn-Out Accelerated Amount ”) as follows: 80% of the Heckmann Common Stock arising out of the First Earn-Out Accelerated Amount shall be issued to the Members and 20% of such Heckmann Common Stock shall be issued to Silversword V, L.P. Any Heckmann Common Stock issuable to the Members that arises out of the First Earn-Out Accelerated Amount shall be allocated among the Members as set forth on Schedule 1.4 . The number of shares of Heckmann Common Stock comprising the First Earn-Out Accelerated Amount shall be computed at the average of the closing market price on the New York Stock Exchange, or such other national securities exchange on which Heckmann Common Stock may then be listed, for the last ten trading days immediately prior to the consummation of the Earn-Out Acceleration Event. Notwithstanding the foregoing, if the Earn-Out Acceleration Event giving rise to the obligation to deliver the First Earn-Out Accelerated Amount occurs subsequent to December 31, 2010 and (A) the 2010 Performance Target has not been achieved, or (B) Heckmann has issued the Heckmann Common Stock arising out of the 2010 Earn-Out, then the First Earn-Out Accelerated Amount shall be reduced by $5.0 million. Any Heckmann Common Stock arising out of the First Earn-Out Accelerated Amount shall be issued by Heckmann within two business days after the later of (y) the consummation of the Earn-Out Acceleration Event giving rise to the obligation to deliver the First Earn-Out Accelerated Amount, and (z) final resolution of the EBITDA Calculation for fiscal year 2010 pursuant to Section 1.5 , subject to Section 8.7 . In any event, if an Earn-Out Acceleration Event has not occurred prior to March 31, 2011, this Section 1.6(a) will terminate and be of no further effect.

1.6(b) If, subsequent to March 31, 2011 and prior to March 31, 2012, an Earn-Out Acceleration event occurs, then Heckmann will issue and deliver $5.0 million in Heckmann Common Stock (the “ Second Earn-Out Accelerated Amount ”) as follows: 80% of the Heckmann Common Stock arising out of the Second Earn-Out Accelerated Amount shall be issued to the Members and 20% of such Heckmann Common Stock shall be issued to Silversword V, L.P. Any Heckmann Common Stock issuable to the Members that arises out of the Second Earn-Out Accelerated Amount shall be allocated

 

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among the Members as set forth on Schedule 1.4 . The number of shares of Heckmann Common Stock comprising the Second Earn-Out Accelerated Amount shall be computed at the average of the closing market price on the New York Stock Exchange, or such other national securities exchange on which Heckmann Common Stock may then be listed, for the last ten trading days immediately prior to the consummation of the Earn-Out Acceleration Event. Notwithstanding the foregoing, if the Earn-Out Acceleration Event giving rise to the obligation to deliver the Second Earn-Out Accelerated Amount occurs subsequent to December 31, 2011 and (A) the 2011 Performance Target has not been achieved, or (B) Heckmann has issued the Heckmann Common Stock arising out of the 2011 Earn-Out, then Heckmann shall have no obligation to deliver the Second Earn-Out Accelerated Amount. Any Heckmann Common Stock arising out of the Second Earn-Out Accelerated Amount shall be issued by Heckmann within two business days after the later of (y) the consummation of the Earn-Out Acceleration Event giving rise to the obligation to deliver the Second Earn-Out Accelerated Amount, and (z) final resolution of the EBITDA Calculation for fiscal year 2011 pursuant to Section 1.5 , subject to Section 8.7 . In any event, if an Earn-Out Acceleration Event has not occurred prior to March 31, 2012, this Section 1.6(b) will terminate and be of no further effect.

1.7 Other Consideration . In addition to the foregoing, Buyer shall assume the Assumed Liabilities (as defined in Section 1.10 ), and shall reimburse Silversword at Closing for up to $300,000 of the amounts outstanding and advanced by it, if any, related to the Construction Project, including all amounts paid or incurred by Silversword for rights-of-way and construction materials, which amounts are set forth on Schedule 1.7 .

1.8 Stock Limitation . In no event, under any circumstances, shall the Heckmann Common Stock to be issued under this Agreement exceed 19.9% of the common stock outstanding as of the Closing.

1.9 Purchase Price Review and Adjustments . In the event that, prior to the Closing, Buyer discovers any breach of any representation, warranty or agreement of Sellers or Owners, including any defect in title to the Purchased Assets, environmental hazard, violation of Environmental Laws or Saltwater Disposal Laws, failure to maintain the Purchased Assets (including the Contracts and Land Use Rights), failure to pay contractors timely, or otherwise, then Buyer shall have the option to (a) reduce the Cash Consideration by the amount necessary to cure any breaches, defaults or defects, which amount shall be subject to the post-closing dispute procedures in Section 1.5(d) , or (b) terminate this Agreement under Section 9.1(f) . Nothing herein shall relieve Sellers or Owners from, or constitute a waiver by Buyer of, any of their representations, warranties or obligatons under this Agreement, except only to the extent paid for by Sellers as provided in Section 1.9(a). If the amount required to cure all breaches, defaults and defects is in excess of $250,000, and if a Seller does not want to adjust the Purchase Price, the Seller may terminate this Agreement. Notwithstanding the foregoing, there shall be no purchase price adjustment in any amount related to the condition of the Existing Wells and Existing Pipelines except as may be agreed by Silversword.

1.10 Limited Assumption of Liabilities . Upon the Closing, Buyer shall assume the obligations of Greer and Silversword arising after the Effective Time under those Contracts which are lawfully assigned to Buyer, and, subject to the representations, warranties and covenants of Sellers and Owners set forth herein (without regard to any materiality or Material Adverse Change qualifier), all obligations with respect to the ownership and operation of the Purchased Assets arising after the Effective Time, and all of the obligations and liabilities of Charis whether arising before or after the Effective Time (the “ Assumed Liabilities ”). Greer, Silversword and the Owners shall fully and timely discharge all liabilities, obligations and commitments which are not assumed by Buyer hereunder. Except as specifically set forth above, Buyer shall not assume any liability, obligation or commitment of Greer or Silversword, including without limitation:

 

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1.10(a) related to the Excluded Assets.

1.10(b) pertaining to the ownership, operation or conduct of the Business or Purchased Assets by Greer or Silversword to the extent arising from any acts, omissions, events, conditions or circumstances that occur and are attributable to Greer or Silversword prior to the Effective Time.

1.10(c) for any debt obligation for borrowed money, including guarantees of or agreements to acquire any such obligations of others.

1.10(d) any liability of Greer or Silversword for Taxes (except as prorated under Section 1.11 ).

1.10(e) any trade account payable for services or goods ordered or received prior to the Effective Time.

1.10(f) for breach arising before the Effective Time of the Contracts or any other lease or agreement to which Greer or Silversword is a party.

1.10(g) for violation of Environmental Laws and Saltwater Disposal Laws arising before the Effective Time.

1.10(h) to Greer’s or Silversword’s employees, whether under any employment agreement, collective bargaining agreement or union agreement, qualified or non-qualified deferred compensation, retirement, defined contribution, pension benefit, medical, health or life insurance or other employee pension benefit or welfare plan, pursuant to any related rule, regulation or other requirement.

1.10(i) to indemnify any Person (including the owners of the equity of Greer or Silversword) by reason of the fact that such Person was a director, manager, officer, employee or agent of Greer or Silversword or was serving at the request of Greer or Silversword as a partner, trustee, director, member, officer, employee or agent of another Entity (whether such indemnification is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or otherwise and whether such indemnification is pursuant to any statute, Organizational Document, agreement or otherwise).

1.10(j) under any agreement, contract, commitment or other requirement limiting Greer’s or Silversword’s’ ability to acquire any property or conduct its business in any area.

1.10(k) incurred in connection with this Agreement and the transactions contemplated hereby such as any legal fees and costs, fees payable to a broker, or other.

1.11 Proration . At the Closing, Buyer and Sellers, as applicable, shall obtain all necessary information related to and shall prorate and adjust the following items as of the Effective Time:

1.11(a) all income and expense associated with the ownership of the Purchased Assets and operation of the Business shall be prorated between Buyer on the one hand, and Greer, Silversword and Charis on the other hand, as of the Effective Time in accordance with generally accepted accounting principles, provided that Silversword shall be allocated all income for saltwater received for disposal prior to the Effective Time.

1.11(b) Taxes imposed upon the Purchased Assets shall be prorated as of the Effective Time based on the latest available information, provided that all sales, use, filing, recordation, registration and transaction privilege Taxes or other Taxes and fees that become due as a result of the Closing, if any,

 

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shall be the responsibility of Greer, Silversword and the Members, and such parties shall file all necessary documentation with respect to, and make payments of, such Taxes, fees and assessments on a timely basis.

1.11(c) all utilities shall be prorated as of the Effective Time using the latest available billings.

1.11(d) all recording and similar charges shall be paid by Buyer arising out of the transactions contemplated hereby.

1.12 Holdback . At the Closing, Buyer will retain $500,000 of the Cash Consideration (i.e. 29% to the Members, 71% to Silversword) (the “ Holdback ”) as security for the representations, warranties, indemnities and agreements of Sellers and Owners herein, including their obligation to pay for all debts, liabilities and expenses of the Business arising or accruing before the Effective Time, and to timely pay any obligations pertaining to the Purchased Assets, including the Contracts and the Land Use Rights, up through the Effective Time. The Holdback shall be retained and paid to the Members and Silversword in the same proportion as the Cash Consideration on the 6 month anniversary of Closing, subject to Section 8.5 and Section 8.7 .

SECTION 2: C LOSING AND E FFECTIVE T IME .

2.1 Closing . The closing (the “ Closing ”) shall take place at a place, and on a date and time as Buyer and Sellers may mutually determine, which shall not be later than July 1, 2009. The consummation of the transactions contemplated hereby shall be deemed effective as of 5:00 a.m. Pacific Standard Time on the day after the date of Closing (the “ Effective Time ”).

2.2 Execution and Delivery of Documents of Title . At the Closing, the Buyer, Greer, and Silversword shall execute and deliver (a) a bill of sale in the form attached hereto as E XHIBIT B (the “ Bill of Sale ”) and (b) such deeds, conveyances, certificates of title, assignments, assurances and other instruments and documents as Buyer may reasonably request in order to effect the sale, conveyance and transfer of the Purchased Assets from Greer and Silversword to Buyer. Such instruments and documents shall be sufficient to convey to Buyer title that is customary in the industry (“ Defensible Title ”) in all of the Purchased Assets, free and clear of any Liens. Greer, Silversword and the Members will, from time to time after the Effective Time, take such additional actions and execute and deliver such further documents as Buyer may reasonably request in order to more effectively sell, transfer and convey the Purchased Assets to Buyer and to place Buyer in position to operate and control all of the Purchased Assets and Business, provided such party shall not be required to incur any costs or expenses in doing so.

2.3 Closing Deliveries .

2.3(a) At the Closing, Sellers and/or the Members, as applicable, will deliver to Buyer:

(i) a certificate of non-foreign status executed by Sellers in compliance with United States Treasury Regulation Section 1.1445-2(b)(2).

(ii) certificates, dated as of the date on which the Closing occurs, executed by Sellers certifying the matters in Section 6.5 .

 

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(iii) duly executed copies of all consents and approvals required for the consummation of the transactions contemplated by this Agreement, including without limitation, the consents listed on Part 3.2(b) of the Disclosure Schedule.

(iv) certified resolutions of the board of directors, partners, managers, stockholders, members or other governing authority of Sellers authorizing the transactions contemplated by this Agreement.

(v) the documents contemplated by Section 2.2 , including the Assignment and Bill of Sale executed by Greer and Silversword.

(vi) a deed in the form attached as E XHIBIT C , conveying title to Land.

(vii) releases of Liens on the Purchased Assets.

(viii) a detail of all expenditures made by Silversword related to the Construction Project that are subject to reimbursement under Section 1.7 .

(ix) the Charis Equity, together with any instruments of assignment necessary in connection with the transfer thereof.

(x) such other documents as may be reasonably requested by Buyer.

2.3(b) At the Closing, Buyer will deliver to Greer, Silversword and the Members, as applicable:

(i) the Purchase Price in accordance with Section 1.4 .

(ii) a certificate, dated as of the date on which the Closing occurs, executed by Buyer and certifying the matters set forth in Section 7.3 .

(iii) certified copies of resolutions of the board of directors of Buyer and Heckmann authorizing the transactions contemplated by this Agreement.

(iv) such other documents as may be reasonably requested by Sellers.

2.3(c) In addition to the foregoing, at the Closing, Buyer and David Melton shall execute and deliver an employment agreement, substantially in the form attached hereto as E XHIBIT D-1 , and Buyer and Mike Davis and Kevin Greer shall execute a consulting agreement, substantially in the form attached hereto as E XHIBIT D-2 .

SECTION 3: R EPRESENTATIONS AND W ARRANTIES OF THE S ELLERS .

Except as set forth in the schedule delivered by Sellers and Owners to Buyer concurrently with the execution and delivery of this Agreement and incorporated by reference herein (the “ Disclosure Schedule ”), each Seller and Owner represents and warrants as to itself, the Members represent and warrant as to Charis (for purposes of this Section 3 , the term Charis shall refer to Charis together with its wholly-owned subsidiary, Charis ROW, LLC), the Stockholder represents and warrants as to Greer, and the Partners represent and warrant as to each Silversword entity, in each case as applicable, to Buyer as follows:

 

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3.1 Organization and Good Standing .

3.1(a) Seller is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation or organization, and is duly qualified to do business as a foreign Entity and is in good standing under the laws of those jurisdictions listed in Part 3.1(a) of the Disclosure Schedule, which, to such Seller’s Knowledge, constitute every jurisdiction in which either the ownership or use of the assets or properties owned or used by it, or the nature of the activities conducted by it, requires such qualification. Seller has the full power and authority to carry on its business as it is now being conducted and to own, lease and operate its properties and assets.

3.1(b) Part 3.1(b) of the Disclosure Schedule lists, as of the date hereof, as to Seller, its type of Entity, its jurisdiction of organization, and its stockholders, members, partners or other equity holders, as applicable. Part 3.1(b) of the Disclosure Schedule lists, and Seller has made available to Buyer copies of its Organizational Documents, as currently in effect.

3.1(c) Part 3.1(c) of the Disclosure Schedule lists, as of the date hereof, as to Owner, his state of residence.

3.2 Authority; No Conflict .

3.2(a) Seller and Owner have all necessary power and authority to execute and deliver this Agreement, to perform his, her or its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Seller and Owner and the consummation by Seller and Owner of the transactions contemplated hereby have been duly and validly authorized by all necessary action and no other proceedings on the part of Seller or Owner are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Seller and Owner and, assuming the due execution and delivery by all other parties hereto, constitutes the legal, valid and binding obligations of Seller and Owner, enforceable against such Person in accordance with its terms subject to the effect of (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relative to the rights of creditors generally and (ii) rules of law and equity governing specific performance, injunctive relief and other equitable remedies.

3.2(b) Neither the execution and delivery of this Agreement nor the consummation of any of the transactions contemplated hereby do or will, directly or indirectly (with or without notice or lapse of time or both), (i) contravene, conflict with, or result in a violation of any provision of the Organizational Documents of Seller; (ii) contravene, conflict with, or result in a violation of, any applicable Legal Requirements to which Seller or Owner, or any of the assets owned or used by Seller, is subject; (iii) contravene, conflict with, or result in a violation of any of the material terms or material requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or materially modify, any Governmental Authorization that is held by Seller, or that otherwise relates to the business of, or any of the assets owned or used by, Seller; (iv) contravene, conflict with, or result in a violation or breach of any provision of, or constitute a default under, or give any Person the right to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract or any other material lease or material agreement to which Seller is a party; (v) require a consent from any Person (including any Governmental Body), except for those consents set forth on Part 3.2(b) of the Disclosure Schedule; or (vi) result in the imposition or creation of any Liens upon or with respect to any of the Purchased Assets.

3.3 Capitalization; Ownership of Charis Equity . The Members own 100% of the Charis Equity. There are no options, warrants, calls, convertible or exchangeable securities or other rights,

 

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agreements, arrangements or commitments relating to the Charis Equity or obligating Charis to issue or sell any other equity interest in Charis. The Charis Equity constitutes all the issued and outstanding membership interests of Charis, are duly authorized and validly issued, and are owned of record and beneficially by the Members free and clear of all Liens, except as set forth on Part 3.3 of the Disclosure Schedule. The Charis Equity was not issued in violation of any preemptive, subscription or other right of any Person to acquire securities, ownership interests or membership rights in Charis. The Charis equity was issued in compliance with all applicable Legal Requirements. Except as set forth in the operating agreement of Charis, there are no voting trusts or other agreements, arrangements or understandings applicable to the exercise of voting rights, managerial control, rights to share in profits and losses, rights to receive distributions or the return of capital to which Charis or any Member is a party or by which Charis or any Member is bound. Except as set forth in the operating agreement of Charis, there are no restrictions affecting the transferability of the Charis Equity. The Members represent and warrant that upon delivery to Buyer of a duly executed assignment of membership interests of such Members and at the Effective Time, good and valid title to the Charis Equity will pass to Buyer, free and clear of any Liens. Charis owns 100% of the outstanding equity of Charis ROW, LLC, a Texas limited liability company. Charis does not have any subsidiaries other than Charis ROW, LLC.

3.4 Financial Statements . Seller has previously furnished to Buyer balance sheets of such Seller as of December 31, 2008 and March 31, 2009, and statements of income and cash flows for the periods then ended, which financial statements have been prepared and reviewed by, (a) in the case of Silversword, Jon Hileman and Kevin Benesh, CPA, (b) in the case of Greer, [ — ], and (c) in the case of Charis, Bailes & Co., P.C. Each such Seller’s balance sheets are complete and fairly present the assets, liabilities and financial condition of Seller as of the respective dates thereof, and the statements of income and cash flows are complete and fairly present the results of the operations and the cash flows for the periods referred to therein. All of Seller’s financial statements are consistent with the books and records of Seller, which books and records are correct and complete.

3.5 No Undisclosed Liabilities . To the Knowledge of Seller, Seller has no liabilities or obligations of any nature (whether absolute, accrued, contingent, determined, determinable, choate, inchoate or otherwise), except for (a) liabilities or obligations reflected or reserved against Seller’s March 31, 2009 balance sheet, (b) current liabilities incurred in the Ordinary Course of Business since the date of Seller’s March 31, 2009 balance sheet that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change, or (c) liabilities disclosed in Part 3.5 of the Disclosure Schedule.

3.6 Absence of Certain Changes . Since March 31, 2009, Seller has conducted its business only in the Ordinary Course of Business, and has not:

3.6(a) suffered any change in its properties, assets, reserves, business, financial condition or prospects, except for such changes that have not, or would not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Change, for example, normal deterioration or changes in well equipment which may at any time require the repair or replacement of portions of the well equipment;

3.6(b) suffered any loss, destruction, theft or other casualty affecting any of its properties, assets or business (whether or not covered by insurance), except for any losses, destruction, theft or other casualty that have not, or would not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Change;

3.6(c) cancelled, compromised, waived or released any right or claim (or series of related rights and claims) outside the Ordinary Course of Business;

 

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3.6(d) been subject to any other event or condition that has, or to the Knowledge of