Exhibit 10.1
Execution
Copy
UNDERTAKING AGREEMENT
(Li-Related Holders)
This Undertaking Agreement
(“ Agreement ”) is made and entered into
as of May 19, 2008, by and among: Heckmann corporation , a
Delaware corporation (“ Parent ”),
China water and drinks,
inc. , a Nevada corporation (the “
Company ”) and the Persons and Entities listed
on Schedule A hereto (each a “
Selling Stockholder ,” and collectively, the
“ Selling Stockholders ”).
Recitals
A. The Selling Stockholders are holders of outstanding
shares of common stock, par value $0.001 per share (“
Company Common Stock ”) of the Company, and are
the respective record holders and have sole voting power over such
number of shares of Company Common Stock as set forth opposite
their names on Schedule A (the “
Shares ”).
B. Concurrently with the execution of this Agreement,
Parent, Heckman Acquisition II Corp., a Delaware corporation and a
wholly owned Subsidiary of Parent (“ Merger Sub
”) and the Company are entering 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
”). Upon consummation of the Merger, the Company will cease
to exist and Merger Sub will remain 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 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) waive or suspend certain
defaults, potential defaults and obligations 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 pay to
such holders the Contingent Payment (as defined in the Conversion
Agreement).
E. 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 therein, will (i) elect to receive
in the Merger only Parent Common Stock for each share of Company
Common Stock held by such holder as of the Effective Time,
(ii) waive or suspend certain defaults and potential defaults
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 pay to such holders the Contingent Payment (as defined in the
Release Agreement).
F. The Selling Stockholders desire to make certain
undertakings in respect of such transactions.
G. 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 parties to
this Agreement, intending to be legally bound, agree as
follows:
SECTION 1:
Election Pursuant to
Merger Agreement.
1.1
Cash Election . Subject to the conditions of this
Section 1 , each Selling Stockholder, severally and not
jointly, hereby elects (the “ Cash Election
”) to, in the event the Merger occurs, receive in the Merger
cash at US$5.00 per share for the Shares held as of the Effective
Time by such Selling Stockholder. Each Selling Stockholder agrees
that, subject to consummation of the Merger, the Cash Election is
unconditional and irrevocable. Each Selling Stockholder
acknowledges that his, her or its Cash Election pursuant to this
Section 1.1 was made on a completely voluntary basis.
Each Selling Stockholder will execute such further instruments and
provide such further information relevant to the Cash Election,
including tax declarations, as Parent shall reasonably request in
connection with the foregoing.
1.2
Effectiveness; Agreement Not to Revoke . Each Selling
Stockholder acknowledges and agrees that the Cash Election is
effective upon the execution and delivery of this Agreement by such
Selling Stockholder, and the Selling 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. Each Selling Stockholders also covenants and
agrees to re-execute and re-deliver the Cash Election as and when
reasonably 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 of the Merger (the “
Termination ”).
SECTION 2:
Representations and
Warranties of The Selling Stockholders.
Each Selling
Stockholder represents and warrants, severally and not jointly, to
Parent as of the date hereof and as of the Effective Time as
follows:
2.1
Organization and Good Standing . Such Selling Stockholder,
if an Entity, is duly organized, validly existing, and in good
standing (where such concept is applicable) 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 (where such concept is applicable) under the laws of each
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.
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2.2
Authority; No Conflict .
2.
2(a) Such Selling Stockholder has all necessary individual
or other Entity power and authority, as applicable, to execute and
deliver this Agreement, to perform its obligations hereunder, and
to consummate the transactions contemplated hereby (collectively,
the “ Contemplated Transactions ”). The
execution and delivery of this Agreement by such Selling
Stockholder and the consummation by such Selling Stockholder of the
Contemplated Transactions have been duly and validly authorized by
all necessary individual or other Entity action, as applicable, and
no other individual or other Entity proceedings on the part of such
Selling Stockholder are necessary to authorize this Agreement or to
consummate the Contemplated Transactions. This Agreement has been
duly and validly executed and delivered by such Selling Stockholder
and constitutes the legal, valid and binding obligation of such
Selling Stockholder, enforceable against such Selling Stockholder
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.
2.
2(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 provision of the Organizational Documents, if any,
of such Selling Stockholder, (ii) contravene, conflict with,
or result in a violation of, any Legal Requirements or any order to
which such Selling Stockholder, or any of the assets owned or used
by such Selling Stockholder, are subject, or (iii) 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 such
Selling Stockholder is a party, except, in the case of clauses
(ii) and (iii), 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 such Selling Stockholder
from performing its obligations under this Agreement in any
material respect.
2.
2(c) The execution and delivery of this Agreement by such
Selling Stockholder does not, and the performance of this Agreement
and the consummation of the Contemplated Transactions by such
Selling Stockholder will not, require any Consent of, or filing
with or notification to, any Governmental Body in the United
States, except (i) for applicable requirements, if any, of the
Exchange Act, the Securities Act and state securities 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 would otherwise not prevent such
Selling Stockholder from performing its obligations under this
Agreement.
2.3
Ownership; Voting . Such Selling Stockholder owns,
beneficially or of record, the number of issued and outstanding
shares of Company Common Stock as set forth opposite such Selling
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 or other securities laws. Upon consummation of the
Merger, Parent will own the Shares of such Selling Stockholder free
and clear of any and all Liens.
2.4
Review of Merger, Conversion and Release Agreements . Such
Selling Stockholder has received execution copies of the Merger
Agreement, Conversion Agreement and Release Agreement and has had
an opportunity to review them with assistance of counsel and other
advisors of its own choosing. Such Selling Stockholder acknowledges
and agrees that the terms of such agreements and this Agreement are
fair and reasonable.
2.5
Review of SEC Filings . Such Selling 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. Such Selling Stockholder and its advisors, if
any, 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.
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2.6
No Continuing Interest in the Company . Such Selling
Stockholder understands and acknowledges that:
2.
6(a) upon consummation of the Contemplated Transactions,
such Selling Stockholders will have no continuing interest in the
Company or in Parent; and
2.
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.
2.7
Accredited Investor . Such Selling Stockholder is an
“accredited investor” as defined by Rule 501(a)
promulgated under the Securities Act.
SECTION 3:
Representations and
Warranties of Parent.
Parent
represents and warrants to the Selling Stockholders as of the date
hereof and as of the Effective Time as follows:
3.1
Organization and Good Standing . Parent is a corporation
duly incorporated, 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.
3.2
Authority; No Conflict . Except for the requirement that
Parent obtain the Required Parent Stockholder Vote:
3.
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 (other than with respect to the Merger,
the filing of the Certificate of Incorporation Amendment and, as
required by the DGCL and NRS, the Certificates of 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 Selling Stockholders, 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.
3.
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, or ii) contravene, conflict with, or result in
a violation of any Legal Requirement to which Parent, or any of the
assets owned or used by Parent, may be subject; 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 otherwise prevent Parent from performing its
obligations under this Agreement in any material respect.
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3.
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 state securities 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 or the Merger in any
material respect, or otherwise prevent Parent from performing its
obligations under this Agreement in any material respect.
3.3
Availability of Funds . Parent has cash on hand in an amount
sufficient to consummate the Contemplated Transactions.
SECTION 4:
Additional
Agreements.
4.1
No Solicitation . Each Selling Stockholder, severally but
not jointly, covenants and agrees as of the date hereof and as of
the Effective Time as follows:
4.
1(a) No Solicitation or Negotiation . From the
date of this Agreement until the earlier to occur of the
Termination and the Effective Time, such Selling Stockholder will
not, and will cause its respective Representatives not to, 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;
(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 4.1 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) the Shares or any other
securities of the Company held by such Selling Stockholder.
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It is agreed
that any violation of the restrictions set forth in this
Section 4. 1(a) by any Representative of such
Selling Stockholder, whether or not such Person is purporting to
act on behalf of such Selling Stockholder or otherwise, shall be
deemed to be a breach of this Section 4. 1(a) by such
Selling 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 and the Merger.
4.
1(b) No Alternative Acquisition Agreement . From the
date of this Agreement until the earlier to occur of the
Termination and the Effective Time, such Selling 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 transactions described in Section 4.
1(a)(iii) .
4.
1(c) Cessation of Ongoing Discussions . From
the date of this Agreement until the earlier to occur of the
Termination and the Effective Time, such Selling Stockholder will,
and will cause its Representatives to, 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 4. 1(a)(iii) .
4.2
Enforcement . The Company shall, if requested by Parent,
take appropriate measures to enforce the provisions of this
Section 4.1 by placing a stop-transfer order against
transfer of the Shares.
4.3
Legal Conditions to the Contemplated Transactions .
Subject to the terms hereof, Parent, the Company and each Selling
Stockholder, severally but not jointly, shall each 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
Contemplated Transactions and the Merger 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 it 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
it is required to make, with respect to this Agreement and the
Contemplated Transactions and the Merger under (A) the
Securities Act, the Exchange Act and any other applicable federal
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