Exhibit 10.5
Execution
Copy
MAJORITY STOCKHOLDER
CONSENT AGREEMENT
[Chen Xing
Hua]
This Stockholder Consent
Agreement (this “ Agreement ”)
is made and entered into as of May 19, 2008, by and among:
Heckmann
Corporation , a Delaware corporation (“
Parent ”), and Chen Xing Hua (the “
Consenting Stockholder ”).
Recitals
A. The Consenting Stockholder is a holder of
outstanding shares of common stock, par value $0.001 per share
(“ Company Common Stock ”) of China Water
and Drinks, Inc., a Nevada corporation (the “
Company ”), and is the record holder and has
sole voting power over such number of shares of Company Common
Stock as is set forth opposite the Consenting Stockholder’s
name on Schedule A (the “ Shares
”).
B. Parent, Heckman Acquisition II Corp., a Delaware
corporation and a wholly owned Subsidiary of Parent (“
Merger Sub ”) and the Company have entered into
an agreement and plan of merger and reorganization (the “
Merger Agreement ”), pursuant to which the
Company will be merged with and into Merger Sub (the “
Merger ”) with the Company ceasing to exist and
Merger Sub remaining as a wholly owned Subsidiary of Parent.
C. Pursuant to the Merger Agreement, each share of
Company Common Stock will be converted, upon the Merger, into the
right to receive (i) shares of common stock, par value $0.01
per share, of Parent (“ Parent Common Stock
”) at the Exchange Ratio, and/or (ii) at the election of
the holders thereof, an amount in cash equal to US$5.00 per share
of Company Common Stock.
D. Concurrently with the execution of this Agreement,
Parent, the Company and certain specified holders of Company Common
Stock are entering into an undertaking agreement (the “
Undertaking Agreement ”), pursuant to which
each such holder will (i) elect to receive in the Merger only
cash at US$5.00 for each share of Company Common Stock held by such
holder, and (ii) provide a general release of claims against the
Company, Parent and Merger Sub.
E. Concurrently with the execution of this Agreement,
Parent, the Company and holders of the Company’s 5% secured
convertible notes due January 29, 2011 (the “
Notes ”), which Notes are convertible into
shares of Company Common Stock, are entering into a conversion
agreement (the “ Conversion Agreement ”),
pursuant to which such holders, subject to the conditions therein,
will (i) convert their Notes into Company Common Stock,
(ii) elect to receive in the Merger only Parent Common Stock
at the Exchange Ratio, (iii) release the Company of certain
of its obligations under, and waive certain breaches, defaults and
potential defaults of the Company under the Note Purchase Documents
(as defined in the Conversion Agreement) on the terms set forth in
the Conversion Agreement, and (iv) as of the Effective Time,
release various liens and other rights under and terminate the Note
Purchase Documents, and in consideration for such waivers,
releases, suspensions, and relinquishment of rights as holders of
Notes, Parent will, if certain conditions are met, pay to such
holders the Contingent Payment (as defined in the Conversion
Agreement).
F. Concurrently with the execution of this Agreement,
Parent, the Company and certain specified holders of Company Common
Stock (the “ Releasors ”) are entering
into a release agreement (the “ Release
Agreement ”), pursuant to which each such holder,
subject to the conditions set forth therein, will (i) elect to
receive in the Merger only Parent Common Stock for each share of
Company Common Stock held by such holder, (ii) waive or
suspend certain defaults, potential defaults, and obligations of
the Company under the PIPE Transaction Documents (as defined in the
Release Agreement) on the terms set forth in the Release Agreement,
(iii) as of the Effective Time, terminate the PIPE Transaction
Documents, and release in full any and all rights of such holders
in any shares of Company Common Stock owned or controlled by Xu
Hong Bin that are subject to the Make Good Escrow Agreement (as
defined in the Release Agreement), and in consideration for such
waivers, releases and suspensions, Parent will, if certain
conditions are met, pay to such holders the Contingent Payment (as
defined in the Release Agreement).
G. In consideration of the execution and delivery of
the Merger Agreement and the other agreements referred to above by
Parent and Merger Sub, the Consenting Stockholder desires to (i)
vote, or execute a written consent with respect to, the Shares
consenting to the adoption of the Merger Agreement and the approval
of the Merger, and (ii) elect to receive cash for 100% of the
Consenting Stockholder’s Shares.
H. Certain capitalized terms used in this Agreement
are defined in Exhibit A and
other capitalized terms used in this Agreement are defined in the
Sections of this Agreement where they first appear.
Agreement
The Consenting
Stockholder, intending to be legally bound, agrees as
follows:
SECTION 1:
Written
Consent.
1.1
Execution of Written Consent . Concurrent with the execution
of this Agreement, the Consenting Stockholder is hereby delivering
to the Company a written consent, executed and delivered in
accordance with NRS §78.320, in the form attached as
Exhibit B (the
“ Stockholder Written Consent ”),
pursuant to which the Consenting Stockholder is irrevocably
consenting to the adoption of the Merger Agreement and the approval
of the Merger.
1.2
Effectiveness; Agreement Not to Revoke . The Consenting
Stockholder acknowledges and agrees that the Stockholder Written
Consent is effective upon the Consenting Stockholder’s
execution and delivery to the Company in accordance with NRS
§78.320 and Section 1.1 above and that the
corporate action consented to in such Stockholder Written Consent
may be taken at any time thereafter as provided in the NRS, subject
to the terms of the Merger Agreement, the applicable rules and
regulations of the SEC, and other applicable Legal Requirements.
The Consenting Stockholder further covenants and agrees that the
Consenting Stockholder will not revoke, seek to revoke, or take any
action, directly or indirectly, for the purpose of, or having the
effect of, revoking or seeking to revoke, the Stockholder Written
Consent. The Consenting Stockholder also covenants and agrees to
re-execute and re-deliver the Stockholder Written Consent as and
when requested by Parent in order that the corporate action
contemplated by the Stockholder Written Consent remains
continuously authorized by the Consenting Stockholder at all times
from the date hereof through the first to occur of (a) the
Effective Time, or (b) the termination of the Merger Agreement
in accordance with its terms (the “ Termination
”).
SECTION 2:
Election Pursuant to
Merger Agreement.
2.1
Cash Election . The Consenting Stockholder hereby elects
(the “ Cash Election ”), in the event the
Merger occurs, to receive in the Merger cash at $5.00 per share in
respect of 100% of the Shares held by the Consenting Stockholder.
The Consenting Stockholder agrees that, subject to consummation of
the Merger, the Cash Election is unconditional and irrevocable. The
Consenting Stockholder acknowledges that his Cash Election pursuant
to this Section 2.1 was made on a completely voluntary
basis. The Consenting Stockholder will execute such further
instruments and provide such further information relevant to the
Cash Election, including declarations related to Taxes, as Parent
shall reasonably request in connection with the foregoing.
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2.2
Effectiveness; Agreement Not to Revoke . The Consenting
Stockholder acknowledges and agrees that the Cash Election is
effective upon the execution and delivery thereof to Parent in
accordance with Section 2.1 above, and the Consenting
Stockholder will not revoke, seek to revoke, or take any action,
directly or indirectly, for the purpose of, or having the effect
of, revoking or seeking to revoke, the Cash Election. The
Consenting Stockholder also covenants and agrees to re-execute and
re-deliver the Cash Election as and when requested by Parent in
order that such Cash Election remains continuously in effect at all
times from the date hereof through the first to occur of
(a) the Effective Time, or (b) the Termination.
SECTION 3:
Representations and
Warranties of The Consenting Stockholder.
The Consenting
Stockholder represents and warrants to Parent as of the date hereof
and as of the Effective Time as follows:
3.1
Authority; No Conflict .
3.
1(a) The Consenting Stockholder has all necessary individual
power, capacity and authority to execute and deliver this
Agreement, to perform his obligations hereunder, and to consummate
the transactions contemplated hereby (collectively, the “
Contemplated Transactions ”). This Agreement
has been duly and validly executed and delivered by the Consenting
Stockholder and constitutes the legal, valid and binding obligation
of the Consenting Stockholder, enforceable against the Consenting
Stockholder in accordance with its terms.
3.
1(b) Neither the execution and delivery of this Agreement
nor the consummation of any of the Contemplated Transactions 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 Legal Requirements to which the Consenting
Stockholder, or any of the assets owned or used by the Consenting
Stockholder, is subject; or (ii) contravene, conflict with, or
result in a violation or breach of any provision of, or give any
Person the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any contract to which the Consenting
Stockholder is a party, except, in the case of clauses (i) and
(ii), for any such conflicts, violations, breaches, defaults or
other occurrences that would not prevent or delay consummation of
the Contemplated Transactions in any material respect or would
otherwise not prevent the Consenting Stockholder from performing
its obligations under this Agreement in any material respect.
3.
1(c) The execution and delivery of this Agreement by the
Consenting Stockholder does not, and the performance of this
Agreement and the consummation of the Contemplated Transactions by
the Consenting Stockholder will not, require any Consent of, or
filing with or notification to, any Governmental Body, except
(i) for applicable requirements, if any, of the Exchange Act,
the Securities Act and state securities or “blue sky”
laws (“ Blue Sky Laws ”), and
(ii) such other Consents, filings or notifications where
failure to obtain such Consents, or to make such filings or
notifications, would not prevent or delay the consummation of the
Contemplated Transactions, or otherwise prevent the Consenting
Stockholder from performing his obligations under this
Agreement.
3.2
Ownership; Voting . The Consenting Stockholder owns,
beneficially or of record, the number of Shares as set forth
opposite the Consenting Stockholder’s name on Schedule
A hereto, free and clear of any and all Liens or other
restrictions on transfer, other than those arising under the
Exchange Act, the Securities Act, Blue Sky Laws and other
securities laws, and has full power and authority to vote the
Consenting Stockholder’s Shares in favor of the Merger and
the other transactions contemplated by the Merger Agreement.
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3.3
Review of Merger, Conversion, Release and Undertaking
Agreements . The Consenting Stockholder has received execution
copies of the Merger Agreement, Conversion Agreement, Undertaking
Agreement and Release Agreement and has had an opportunity to
review them with assistance of counsel and other advisors of his
own choosing. The Consenting Stockholder acknowledges and agrees
that the terms of such agreements and this Agreement are fair and
reasonable.
3.4
Review of SEC Filings . The Consenting Stockholder has had
access to the Parent SEC Reports and the Company SEC Reports and
has had an opportunity to review the Parent SEC Reports and the
Company SEC Reports with assistance of counsel and other advisors
of its own choosing. The Consenting Stockholder and his advisors
have been afforded the opportunity to ask questions of and receive
answers from the Company and Parent regarding the Company, the
Company SEC Reports, Parent, the Parent SEC Reports and the
Contemplated Transactions.
3.5
Company Representations and Warranties . To the knowledge of
the Consenting Stockholder, the representations and warranties made
by the Company in the Merger Agreement are true and accurate in all
respects. With respect to the knowledge of the Consenting
Stockholder, the term “knowledge” shall mean the actual
knowledge of the Consenting Stockholder of such matter or what a
prudent individual could be expected to discover or otherwise
become aware of with respect to a matter after conducting a
reasonable inquiry of appropriate senior executives and responsible
key employees of the Company concerning the existence of such
matter.
3.6
No Continuing Interest in the Company . Such Selling
Stockholder understands and acknowledges that:
3.
6(a) upon consummation of the Contemplated Transactions,
such Selling Stockholders will have no continuing interest in the
Company or in Parent; and
3.
6(b) after consummation of the Contemplated Transactions,
the value of the Company and Parent and/or their respective
businesses and capital stock may appreciate, and may appreciate
significantly, and such Selling Stockholder will not benefit from
such appreciation.
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SECTION 4:
Representations and
Warranties of Parent.
Parent
represents and warrants to the Consenting Stockholder as of the
date hereof and as of the Effective Time as follows:
4.1
Organization and Good Standing . Parent is a corporation
duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation, with full corporate
power and authority to conduct its business as now being conducted,
to own or use its properties and assets that it purports to own or
use, and to perform all of its obligations under contracts to which
Parent is party or by which Parent or any of its assets are bound.
Parent is duly qualified to do business as a foreign corporation
and is in good standing (where such concept is applicable) under
the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified could
not reasonably be expected to, individually or in the aggregate,
result in a material adverse effect on Parent.
4.2
Authority; No Conflict . Except for the requirement that
Parent obtain the Required Stockholder Vote:
4.
2(a) Parent has all necessary corporate power and authority
to execute and deliver this Agreement and the Merger Agreement, and
to perform its obligations hereunder and to consummate the
Contemplated Transactions and the Merger. The execution and
delivery of this Agreement by Parent and the consummation by Parent
of the Contemplated Transactions and the Merger have been duly and
validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the Contemplated
Transactions and the Merger. This Agreement has been duly and
validly executed and delivered by Parent and, assuming the due
execution and delivery of this Agreement by the Consenting
Stockholder, constitutes the legal, valid and binding obligation of
Parent, enforceable against Parent 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 relating to rights of creditors generally and
(ii) rules of law and equity governing specific performance,
injunctive relief and other equitable remedies.
4.
2(b) Neither the execution and delivery of this Agreement
nor the consummation of any of the Contemplated Transactions or the
Merger 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 Parent, (ii) contravene, conflict with, or result
in a violation of, any Legal Requirement, except, in the case of
clause (ii), for any such conflicts, violations, breaches, defaults
or other occurrences that would not prevent or delay consummation
of the Contemplated Transactions or the Merger in any material
respect, or would otherwise not prevent Parent from performing its
obligations under this Agreement in any material respect.
4.
2(c) The execution and delivery of this Agreement by Parent
does not, and the performance of this Agreement and the
consummation of the Contemplated Transactions and the Merger by
Parent will not, require any Consent of, or filing with or
notification to, any Governmental Body, except (i) for
(A) applicable requirements, if any, of the Exchange Act, the
Securities Act, any national securities exchange on which the
Parent Common Stock is then listed, and Blue Sky Laws (B) the
filing of the Certificates of Merger as required by the DGCL and
NRS, (C) the filing of the Certificate of Incorporation
Amendment with the Secretary of State of the State of Delaware, and
(D) filings made in connection with applicable Antitrust Laws
and investment laws, and (ii) such other Consents, filings or
notifications where failure to obtain such Consents, or to make
such filings or notifications, would not prevent or delay the
consummation of the Contemplated Transactions in any material
respect, or would otherwise not prevent Parent from performing its
obligations under this Agreement in any material respect.
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4.3
Availability of Funds . Parent has uncommitted cash on hand
in an amount sufficient to consummate the transactions contemplated
hereby.
SECTION 5:
Additional
Agreements.
5.1
No Solicitation . The Consenting Stockholder covenants and
agrees as of the date hereof and as of the Effective Time as
follows:
5.
1(a) No Solicitation or Negotiation . From the
date of this Agreement until the earlier to occur of the
Termination and the Effective Time, the Consenting Stockholder will
not, directly or indirectly:
(i) solicit, initiate, or knowingly or intentionally
encourage or facilitate, any inquiries, offers or proposals that
constitute, or could reasonably be expected to lead to, any
Acquisition Proposal; or
(ii) enter into, continue or otherwise participate in
any discussions or negotiations regarding, furnish to any Person
any non-public information with respect to, assist or participate
in any effort or attempt by any Person with respect to, or
otherwise knowingly or intentionally cooperate in any way with, any
Acquisition Proposal (provided, however, that providing notice of
the restrictions set forth in this Section 5.1 to a
third party in response to any such inquiry, request or Acquisition
Proposal shall not, in and of itself, be deemed a breach of this
Section); or
(iii) otherwise sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option
to purchase, pledge or otherwise transfer or dispose of (other than
to donees who agree to be similarly bound) any securities of the
Company held by the Consenting Stockholder.
It is agreed
that any violation of the restrictions set forth in this
Section 5. 1(a) by any Representative of the
Consenting Stockholder, whether or not such Person is purporting to
act on behalf of the Consenting Stockholder or otherwise, shall be
deemed to be a breach of this Section 5. 1(a) by the
Consenting Stockholder. For purposes of this Agreement, the term
“ Acquisition Proposal ” shall mean
any proposal or offer, whether in one transaction or a series
of related transactions, for (i) a merger, consolidation,
dissolution, tender offer, exchange offer, recapitalization, share
exchange, business combination, stock purchase or other similar
transaction involving or affecting any of the Shares, or
(ii) any transaction which is similar in form, substance or
purpose to any of the foregoing transactions, in each case other
than the Contemplated Transactions.
5.
1(b) No Alternative Acquisition Agreement . Until the
earlier to occur of the Termination and the Effective Time, the
Consenting Stockholder will not enter into any letter of intent,
memorandum of understanding, agreement in principle, acquisition
agreement, merger agreement or similar agreement constituting or
relating to any Acquisition Proposal or any transactions described
in Section 5. 1(a)(iii) .
5.
1(c) Cessation of Ongoing Discussions . Until
the earlier to occur of the Termination and the Effective Time, the
Consenting Stockholder will cease immediately all discussions and
negotiations regarding any proposal that constitutes, or could
reasonably be expected to lead to, an Acquisition Proposal or
transactions described in Section 5. 1(a)(iii)
.
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5.2
Legal Conditions to the Contemplated Transactions .
Subject to the terms hereof, Parent and the Consenting Stockholder
shall use all commercially reasonable efforts to (i) take, or
cause to be taken, all actions, and do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective the
Merger and the Contemplated Transactions as promptly as reasonably
practicable, (ii) as promptly as practicable, obtain from any
Governmental Body or any other third party any Consents, licenses,
permits, waivers, approvals, authorizations, or orders required to
be obtained or made by the Consenting Stockholder in connection
with the authorization, execution and delivery of this Agreement
and the consummation of the Contemplated Transactions and the
Merger, (iii) as promptly as practicable, make all filings and
any other submissions such party is required to make, with respect
to this Agreement, the Contemplated Transactions and the Merger
under (A) the Securities Act, the Exchange Act and any other
applicable federal or state securities laws, and (B) any other
Legal Requirements, and (iv) execute or deliver any additional
instruments reasonably necessary to consummate the Contemplated
Transactions and the Merger, and to fully carry out the purposes of
this Agreement. Parent and the Consenting Stockholder shall use
commercially reasonable efforts to cooperate with each other in
connection with the making of all such filings other than any
filing required to be made by the Consenting Stockholder with the
SEC or any regulatory body (subject to Legal Requirements regarding
the sharing of information), including providing copies of all such
documents to the non-filing party and its advisors prior to filing
and, if requested, accepting all reasonable additions, deletions or
changes suggested in connection therewith. Notwithstanding the
foregoing, this Section 5.2 shall not be deemed to
impose greater or different obligations on Parent with respect to
the Merger than as provided in the Merger Agreement.
5.3
Public Disclosure . No party shall issue any press
release or otherwise make any public statement or other disclosure
with respect to the Contemplated Transactions, unless the other
party shall have approved such disclosure or such disclosure is
required by any Legal Requirement.
5.4
Notification of Certain Matters . The Consenting
Stockholder shall give prompt notice to Parent of the occurrence,
or failure to occur, of any event, which occurrence or failure to
occur causes, or would be reasonably likely to cause (a) any
representation or warranty of the Consenting Stockholder contained
in this Agreement to be untrue or inaccurate in any respect, or
(b) any covenant, condition or agreement not to be complied
with or satisfied by it under this Agreement. Notwithstanding the
above, the delivery of any notice pursuant to this Section will not
limit or otherwise affect the remedies available hereunder to
Parent or the conditions to such party’s obligation to
consummate the Contemplated Transactions.
5.5
General Release . Effective upon the Effective Time, and as
a condition to Parent’s executing this Agreement and the
Merger Agreement:
5.
5(a) The Consenting Stockholder, for himself and his heirs,
devisees, legal representatives, successors, and assigns (each, a
“ Releasing Party ”, and, collectively,
the “ Releasing Parties ”), does hereby
acknowledge complete satisfaction of and does hereby fully,
finally, and forever release and discharge each of the Company,
Parent, and Merger Sub, and each of the respective directors,
officers, employees, stockholders, representatives, predecessors,
successors, Affiliates, parents, Subsidiaries (direct and
indirect), beneficiaries, heirs, executors, or assigns of any of
them (collectively, the “ Released Parties
”) of and from any and all commitments, actions, debts,
claims, counterclaims, suits, causes of action, damages, demands,
liabilities, obligations, costs, expenses, and compensation of
every kind or nature whatsoever, past, present, or future, at law
or in equity, whether known or unknown, contingent or otherwise,
which such Releasing Parties, or any of them, had, has, or may have
had at any time in the past and through and including the Effective
Time, against the Released Parties, or any of them, including, but
not limited to, any claims which relate to or arise out of such
Releasing Party’s relationship with the Company or any of its
predecessors or Affiliates, or such Releasing Party’s rights
or status as a stockholder of the Company or any of its
predecessors or Affiliates, and further including, without
limitation, any claims of fraud or fraudulent inducement in
connection with the negotiation, execution, delivery, and
performance of this Agreement and the other documents and
agreements to which such Releasing Party is a party in connection
with the Contemplated Transactions (collectively, the “
Causes of Action ”); provided, however, that
nothing in this Section shall release, acquit, or discharge any
Causes of Action or preclude a lawsuit or claim in respect of any
Causes of Action that a Releasing Party may have or bring arising
under this Agreement or the other documents and agreements executed
and delivered pursuant to this Agreement.
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5.
5(b) Each Releasing Party acknowledges that (i) the
cash election price in the Merger is less, as of the date hereof,
than the stock election under which Parent Common Stock will be
issued, (ii) Parent Common Stock could trade at prices lower
or higher than the current price, and (iii) Parent may take
any number of actions that could have an effect on the price of its
stock, including the issuance of Parent Company Stock and mergers
or acquisitions. To the extent that Releasing Party is receiving
cash in the Merger, he will not participate in any appreciation of
Parent’s Common Stock. Any and all Causes of Action, without
limitation arising from or relating to such differences in value or
such other transactions or such increases or decreases in value are
encompassed within the scope of the release set forth herein.
5.
5(c) Each Releasing Party represents, warrants, covenants,
and agrees that such Releasing Party (a) has not and will not
assign any Causes of Action or possible Causes of Action against
any Released Party, (ii) fully intends to release all Causes
of Action against the Released Parties, including, without
limitation, unknown and contingent Causes of Action (other than
those specifically reserved above), and (iii) has consulted
with counsel with respect to the matters covered hereby and has
been fully apprised of the consequences hereof.
5.
5(
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