Exhibit 10.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is made effective as of March 1,
2006 (this "Agreement") (although the parties acknowledge that the actual
closing occurs on a later date), by and among General Environmental Management,
Inc., a Delaware corporation ("Purchaser"), K2M Mobile Treatment Services, Inc.,
a California corporation (the "Company"), and Xxxx Xxxxxxxx and Xxxxx Xxxxxxx
(each a "Seller" and collectively, the "Sellers").
RECITALS
A. Sellers with their respective spouses as community property each own fifty
percent (50%) of the issued and outstanding shares of the Company (collectively,
the "Shares");
B. Each Seller desires to sell such Seller's portion of the Shares to the
Purchaser and the Purchaser desires to purchase each Seller's portion of the
Shares for the Purchase Price; and
C. The parties have previously executed a letter of
intent dated February 8, 2006, which letter set
forth in pertinent part the factual basis for the Agreement.
NOW, THEREFORE, in consideration of the mutual promises set
forth herein, the parties hereto hereby agree as follows:
1. Definitions.
1.1 Defined Terms. For all purposes of this Agreement, the
following terms shall have the respective meanings set forth in this Section 1
(such definitions to be equally applicable to both the singular and plural forms
of the terms herein defined):
(a) "Code" means the Internal Revenue Code of 1986,
as amended or superseded through the date hereof.
(b) "Indebtedness" means, as of a specified date,
with respect to a Person (i) all indebtedness
created, assumed or incurred in any manner by such Person representing money
borrowed (including by the issuance of debt securities), (ii) all indebtedness
for the deferred purchase price of property or services (other than trade
accounts payable arising in the ordinary course of business), and (iii) all
obligations of such Person on or with respect to then outstanding letters of
credit, bankers' acceptances and other extensions of credit whether or not
representing obligations for borrowed money.
(c) "Letter of Intent" means that certain letter of
intent, including, without limitation, Exhibit A
attached thereto, executed by the Purchaser and acknowledged and agreed to by
the Company and each Seller on February 8, 2006.
(d) "Person" means any individual, corporation,
partnership, limited liability company, limited
liability partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental authority or other entity.
1.2 Other Terms. Each of the following terms shall have the
meaning ascribed to them in the Section of this Agreement set forth opposite it:
2005 Balance Sheet 4.6(a)(iii)
Action 4.14(b)
Affiliate 4.21
Agreement Preamble
Balance Sheet Date 4.6(a)
Benefit Plan 4.15(a)
Claim Notice 7.4(a)
Claims Period 7.1(b)
Closing 3.1
Closing Date Payment 2.1
Company Preamble
Contracts 4.19(a)
Damages 7.2(a)
Deductible Amount 7.3(a)
Deposit 2.3
due inquiry 4
Environmental Laws 4.23(b)
ERISA 4.15(a)
Excluded Claims 7.1(b)
Financial Statements 4.6(a)
GAAP 4.6(b)(i)
Governmental Entity 4.14(a)
Hazardous Material 4.23(c)
Indebtedness 1.1(b)
Indemnifiable Claim 7.4(a)
Indemnified Party 7.4(a)
Indemnifying Party 7.4(a)
Intellectual Property Rights 4.11
Interim Results of Operations 4.6(a)(iv)
Knowledge 4
Legal Requirement 4.4(b)
Lien 2.1
Material Adverse Effect 4.7(g)
Ordinary Course 4.6(c)
Organizational Documents 4.4(b)
Permits 4.16(a)(iii)
Policies 4.12
Post Closing Date Payments 2.2
Proprietary Information 4.11
Purchase Price 2.4
Purchaser Preamble
Purchaser Indemnitees 7.2(a)
Purchaser's Disclosure Schedule 5
Real Property 4.8
Release 4.23(d)
Securities Act 5.5
Seller and Sellers Preamble
Seller Employment Agreement 3.2(c)
Sellers' Disclosure Schedule 4
Shares Recital A
Special Claim 7.4(b)
Tax Returns 4.25(a)
Taxes 4.25(a)
Termination Date 7.1(b)
2. Purchase and Sale of Shares at the Closing.
2.1 Subject to the terms and the satisfaction of the
conditions set forth in Section 3.2 of this Agreement, at the Closing, (i)
Sellers shall sell and deliver to Purchaser, free and clear of any Liens, the
Shares; and (ii) Purchaser shall deliver to Sellers an amount in cash equal to
One Million Four Hundred Eighty-Five Thousand Dollars ($1,485,000) (the "Closing
Date Payment"), plus
2.2 Purchaser shall also pay an additional amount equal to the
net excess of Company's cash on hand plus Company's accounts receivable, less
Company's accounts payable and all outstanding Indebtedness that are not
otherwise listed on any schedule to this Agreement as of March 1, 2006, as
further described on Schedule 2.2 attached hereto (the "Post Closing Payment").
Purchaser agrees to provide Sellers with a full accounting and to pay Sellers
the Post Closing Payment in cash on June 10, 2006. The accounts receivable
portion of the Post Closing Payment shall be determined as follows: Through May
31, 2006 (in consultation with Sellers), Purchaser shall use all commercially
reasonable efforts to collect all of Company's accounts receivable as shown on
Schedule 2.2. If as of May 31, 2006 any of Company's accounts receivable remains
outstanding, Purchaser shall either assign and transfer without recourse the
outstanding receivables to Sellers or if Purchaser and Sellers mutually agree
upon a discounted price, Purchaser shall pay Sellers the discounted price on the
outstanding accounts receivable. The Post Closing Payment shall not bear
interest through May 31, 2006, and, thereafter, the Post Closing Payment shall
bear interest at the rate that is the greater of ten percent (10%) or the
highest rate allowed by law. If as of May 31, 2006 the net difference between
the Company's cash on hand plus accounts receivable, less accounts payable and
other unlisted Indebtedness is a negative amount, then Sellers shall promptly
remit the negative net difference to Purchaser.
2.3 Prior to the date hereof, Purchaser deposited with the
Company an amount equal to Fifteen Thousand Dollars ($15,000) (the "Deposit") to
secure certain rights pursuant to the terms of the Letter of Intent.
2.4 The Company and each Seller hereby acknowledge and agree
that the Closing Date Payment, the Post Closing Payment and the Deposit (as such
amounts may be adjusted pursuant to the terms of this Agreement, the "Purchase
Price") and the other consideration provided pursuant to the terms of this
Agreement shall constitute the full consideration for the Shares.
2.5 Confidential
3. Closing.
3.1 Closing Date. The purchase and sale of the Shares in
exchange for the Purchase Price shall be consummated at a closing (the
"Closing") to be held contemporaneously with the execution of this Agreement by
each party hereto on or before March 15, 2006; provided, however,
notwithstanding any other provision herein, the parties agree that the Closing
shall be deemed to be effective as of 12:01 AM (PST), March 1, 2006, and all
references herein to the "Closing Date" shall mean March 1, 2006, unless the
context requires otherwise.
3.2 Deliveries at Actual Closing. The Closing shall be
subject to the following Persons delivering or causing to be delivered the
following:
(a) Purchaser shall deliver to each Seller such
Seller's portion of the Closing Date Payment, as set
forth on Schedule 3.2(a) hereto;
(b) Each Seller shall deliver to Purchaser
certificates representing such Seller's Shares together
with appropriate stock powers;
(c) Each Seller shall execute and deliver to
Purchaser, and Purchaser shall execute and deliver to
each Seller, a countersigned offer of employment (each a "Seller Employment
Agreement") with the Company, in the form of Exhibit A-1 and Exhibit A-2
attached hereto.
(d) The Company shall have delivered to Purchaser
copies of all consents and approvals (including, but
not limited to, regulatory approvals, spousal consents and Board Resolutions)
required to be obtained by Sellers and the Company in connection with the
consummation of the transactions contemplated hereunder, which are listed in
Schedule 3.2(d).
(e) Purchaser shall have received certificates of
Good Standing with respect to the Company issued by
the office of the Secretary of State of the State of California of the Company,
dated as of a date no more than ten (10) days prior to the Closing Date.
(f) Purchaser shall have received a certificate dated
as of the Closing Date and signed on its behalf by the Secretary of the Company
to the effect that:
(i) (A) its Organizational Documents attached to the certificate are true and
complete, (B) its Organizational Documents have been in full force and effect in
the form attached from and after the date of the adoption of the resolutions
referred to in clause (C) below and no amendment to such Organizational
Documents has occurred from and after the date of the last amendment, if any,
annexed thereto, and (ii) the resolutions of the board of directors of the
Company attached to the certificate authorizing the actions taken in connection
with the transactions contemplated hereby were duly adopted at a duly convened
meeting thereof or by written consent, remain in full force and effect, and have
not been amended, rescinded or modified.
(g) The Sellers shall have received a certificate
dated as of the Closing Date and signed on its
behalf by the Secretary of Purchaser to the effect that the resolutions of the
board of directors of the Purchaser attached to the certificate authorizing the
actions taken in connection with the transactions contemplated hereby were duly
adopted at a duly convened meeting thereof or by written consent, remain in full
force and effect, and have not been amended, rescinded or modified.
(h) The Sellers shall have received copies of all
consents and approvals (including, but not limited
to, regulatory approvals) required to be obtained by Purchaser in connection
with the consummation of the transactions contemplated hereunder, which are
listed in Schedule 3.2(h).
(i) Sellers shall tender their respective
resignations as directors and officers of the Company,
effective as of the Closing Date. The parties intend that Xxxx Xxxxxxxx will be
invited following the Closing Date to serve as an officer of Purchaser, subject
to Purchaser providing Xxxx Xxxxxxxx with directors and officers' insurance
coverage.
4. Representations and Warranties of Sellers. As an inducement to
Purchaser to enter into this Agreement and to consummate the transactions
contemplated herein and except as set forth in the disclosure schedule delivered
by Sellers on the date hereof (the "Sellers' Disclosure Schedule"), each Seller
to his Knowledge (as defined below) hereby represents and warrants in all
material respects to Purchaser the following as set forth in this Section 4.
Nothing in the Sellers' Disclosure Schedule shall be deemed adequate to disclose
an exception to a representation or warranty made herein, unless the Sellers'
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. An exception in the Sellers'
Disclosure Schedule relating to one representation or warranty shall be deemed
to qualify or to serve as an exception to another representation or warranty to
the extent such exception expressly cross-references one or more applicable
representations set forth in another section of this Section 4. The Sellers'
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section 4. "Knowledge" when applied to
the Company or Sellers means, with respect to any matter in question, that
either Seller has actual knowledge of such matter or should, after due inquiry,
know of such matter. For this purpose, "due inquiry" means (i) reasonable review
of files and other information in the possession of each such person or of which
each such person is aware and (ii) reasonable inquiry of employees of the
Company who have primary responsibilities pertinent to such inquiry and access
to information in the possession of the Company and responsive thereto.
4.1 Title to Shares.
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(a) The authorized capital stock of the Company is as set
forth on Schedule 4.1(a). The issued and outstanding equity interests of the
Company are as set forth on Schedule 4.1(a) and all such issued and outstanding
equity interests are owned by Sellers in the amounts set forth on Schedule
4.1(a). All such outstanding equity interests were duly authorized, validly
issued and fully paid for and are nonassessable. There are no existing options,
warrants, rights, calls or commitments of any character relating to the equity
interests of the Company. There are no outstanding securities, obligations or
instruments convertible into or exchangeable for equity interests of the Company
and no commitments to issue such securities, obligations or instruments. No
Person has any right of first refusal, preemptive right, subscription right or
similar right with respect to any equity interests of the Company. Each Seller
represents and warrants that such Seller has good and marketable title to the
Shares as set forth on Schedule 4.1(a) (subject to restrictions on transfer
under applicable securities laws), and will convey to Purchaser at the Closing
good and marketable title to the Shares, free and clear of any and all Liens.
(b) The Company does not have any direct or indirect
subsidiaries. For purposes of this Agreement, a direct or indirect subsidiary of
the Company means any corporation, trust, general or limited partnership,
limited liability company, limited liability partnership, firm, company or other
business enterprise which is controlled by the Company through direct ownership
of the stock, equity or other interests of such business enterprise or
indirectly through the ownership of stock, equity or other interests in one (1)
or more other business enterprises which are connected with the Company by means
of one (1) or more chains of business enterprises that are connected by
ownership of stock or other proprietary interests.
4.2 Organization, Good Standing and Authority. The Company has
been duly organized and is validly existing as a corporation in good standing
under the laws of the State of California, with full corporate power and
authority to own, operate and lease its properties and to conduct its business
as currently conducted. The Company is not qualified as a foreign corporation in
any other jurisdiction. The Company has full corporate power and authority to do
and perform all acts and things to be done by it under this Agreement and the
documents, instruments and agreements executed in connection herewith by the
Company and the Seller and the performance of their obligations hereunder have
been, to the extent necessary, duly and properly authorized and no other action
or approval by the Company or Seller or any other Person, except as set forth or
described on Schedule 4.3, is necessary for the execution, delivery or
performance of this Agreement by the Company and the Seller.
4.3 Execution and Delivery. Except as set forth on Schedule
4.3, all consents, approvals, authorizations and orders necessary for the
execution, delivery and performance by the Company and Sellers of this Agreement
have been duly and lawfully obtained, and the Company and Sellers have full
right, power, authority and capacity to execute, deliver and perform this
Agreement. This Agreement has been duly executed and delivered by the Company
and Sellers and constitute legal, valid and binding agreements of the Company
and Sellers enforceable against the Company and Sellers in accordance with their
respective terms in all material respects, except that enforceability may be
limited by the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors.
4.4 No Conflicts. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby will
not (a) except as set forth on Schedule 4.4, conflict with or result in any
material breach or violation of any term or provision of, or constitute a
material default under (with or without notice or passage of time, or both), or
otherwise give any Person a basis for accelerated or increased rights or
termination or nonperformance under, any indenture, mortgage, deed of trust,
loan or credit agreement, lease, license or other agreement or instrument to
which the Company or any Seller is a party or by which such Person is bound or
affected or to which any of the property or assets of such Person is bound or
affected, (b) result in any material violation of the provisions of the
organizational documents (the "Organizational Documents") of the Company, or of
any applicable statute, law, ordinance, rule, regulation, permit, order, writ,
judgment, injunction, decree or award, whether foreign or domestic ("Legal
Requirement"), or (c) result in the creation or imposition of any Lien upon any
property or asset of the Company or any Seller. Except for this Agreement, none
of the Company or any Seller has any legal obligation, absolute or contingent,
to any other Person to sell any capital stock of the Company, the business of
the Company, or substantially all of the assets of the Company, or to effect any
merger, consolidation or other reorganization of such Person or to enter into
any agreement with respect thereto.
4.5 Corporate Records. The copies or originals of the Organizational
Documents of the Company, minute books and stock records of the Company
previously delivered to Purchaser are true, complete and correct in all material
respects. The Company has, in accordance with good business practices,
maintained substantially complete and accurate books and records, and
substantially correct records of all its material corporate proceedings.
4.6 Financial Statements; Undisclosed Liabilities.
(a) Schedule 4.6(a) contains a true and
correct copy of the following financial statements (collectively, the
"Financial Statements"): (i) the unaudited balance sheets of the Company as of
December 31, 2003 and December 31, 2004, (ii) the unaudited statements of income
and cash flows of the Company for the fiscal years ended December 31, 2003 and
December 31, 2004, (iii) the internally prepared, unaudited balance sheet of the
Company as of December 31, 2005 (the "2005 Balance Sheet"), and (iv) the
internally prepared, unaudited statement of income of the Company for the twelve
(12) months ended December 31, 2005 (the "Interim Results of Operations").
December 31, 2005 is referred to herein as the "Balance Sheet Date."
(b) The Company does not have any material
liabilities or obligations of any nature (whether absolute,
accrued, contingent, unmatured, unaccrued, unliquidated, unasserted, conditional
or otherwise), except for liabilities or obligations (i) reflected or reserved
against on the 2005 Balance Sheet or (ii) incurred in the Ordinary Course from
and after the date of the 2005 Balance Sheet, (iii) disclosed on the Sellers'
Disclosure Schedule or (iv) under customer contracts which are not in default.
As used herein, "Ordinary Course" shall mean matters occurring in the ordinary
course of business in a manner and scope consistent with the past operations of
the Company and which do not involve breaches of contract or violations of any
Legal Requirement.
4.7 Absence of Certain Changes. Since the Balance Sheet Date,
except as disclosed in Schedule 4.7, the Company has operated its business in
the Ordinary Course and has not:
(a) issued any capital stock or other equity
interests of the Company or options or rights to acquire
capital stock or other similar rights of the Company, redeemed or repurchased
any outstanding shares of capital stock or other equity interests of the
Company, declared, set aside or paid any dividend or distribution on any shares
of capital stock or other equity interests of the Company, merged with any other
entity or purchased or acquired capital stock or other interest in any other
entity, purchased or otherwise acquired all or substantially all of the business
or assets of any other Person, or transferred or sold a substantial portion of
the Company's business or assets to any Person;
(b) incurred any debts or liabilities (absolute,
accrued, contingent or otherwise), other than current
liabilities incurred in the Ordinary Course;
(c) been subjected to or permitted a Lien upon or
otherwise encumbered any of its assets, except any
Lien for taxes not yet due;
(d) sold, transferred, licensed or leased any of its
rights, assets or properties except in the
Ordinary Course;
(e) discharged or satisfied any Lien other than a
Lien securing, or paid any obligation or liability
other than, current liabilities shown on the 2005 Balance Sheet and current
liabilities incurred from and after the Balance Sheet Date, in each case in the
Ordinary Course;
(f) canceled or compromised any debt owed to or by or
claim of or against it, or waived or released
any right of material value other than in the Ordinary Course;
(g) made or suffered any change or effect, which
(individually or in the aggregate) has had, or may
reasonably be expected to have, a Material Adverse Effect ("Material Adverse
Effect" means any material adverse effect on or change with respect to the
business, financial condition, properties, profitability, or operations of the
Company.);
(h) made any change in its accounting methods,
principles or practices;
(i) paid, or agreed to pay, any increase in
compensation payable or to become payable (including any bonus or commission
formula) of any kind to any employee, officer, director or consultant;
(j) entered into any transaction with any Seller or
any Affiliate of any Seller;
(k) failed to renew or obtain an adequate replacement
of any insurance policies material to its
business;
(l) taken any action (covertly or overtly) which
would be reasonably expected to cause the termination
of any customer Contract; or
(m) entered into any agreement or otherwise obligated
itself to do any of the foregoing.
4.8 Property; Encumbrances. The Company has good, valid and
marketable title to all its tangible personal property free and clear of all
Liens except as set forth on Schedule 4.8(a), and Liens for taxes not yet due.
The Company does not own any real property and Schedule 4.8(b) contains a list
of all real property leased by the Company (the "Real Property"). Schedule
4.8(c) contains a list of all tangible personal property owned by the Company or
held by the Company pursuant to leases or licenses which, individually, have a
cost, replacement value or fair market value in excess of $5,000. The leases and
licenses listed on Schedules 4.8(b) and (c) are in full force and effect without
any material default, waiver or indulgence thereunder by the Company or, to the
Knowledge of the Company, by any other party thereto. True and complete copies
of all leases and licenses listed on Schedules 4.8(b) and (c) have been provided
to Purchaser.
4.9 Condition of Personal Property. All personal property
owned by the Company and all personal property held by the Company pursuant to
personal property leases or licenses are in good operating condition and not in
need of any significant repair or replacement, subject to ordinary wear and
tear, and have been operated, serviced and maintained in the Ordinary Course.
4.10 Condition of Real Property. No condemnation proceeding is
pending or, to the Knowledge of the Company, threatened, which would impair the
occupancy, use or value of any of the Real Property. The Company has the
exclusive right to use and occupy the Real Property pursuant to the terms of the
real property leases listed on Schedule 4.8(b), and all material permits
required to have been issued or appropriate to enable the Real Property to be
lawfully occupied and used for all of the purposes for which it is currently
occupied and used have been lawfully issued and are in full force and effect.
Except as set forth on Schedule 4.10, the Company has not subleased, assigned or
transferred any of their rights with respect to the Real Property, or the
Company has not entered into any agreement to do so. There are no outstanding
notices of any uncorrected written violations of applicable building, safety,
fire or housing ordinances with respect to the Real Property.
4.11 Intellectual Property and Proprietary Rights. Schedule
4.11(a) contains a true and complete list of all patents, patent applications,
trade names, trademarks, service marks, trademark and service xxxx registrations
and applications, copyright registrations and applications, software source code
and grants of a license or right to the Company with respect to any of the
foregoing, owned or claimed to be owned by the Company and used or proposed to
be used by the Company in the conduct of its business, whether registered or not
(collectively, the "Intellectual Property Rights"), except as to customary "off
the shelf" software used in the Ordinary Course, including, without limitation,
Microsoft Windows and Office programs, etc. The Company owns and has the
unrestricted right to use the Intellectual Property Rights and every trade
secret, know-how, process, discovery, development, design, technique, customer
and supplier list, marketing and purchasing strategy, invention, process,
confidential data and/or other information (collectively, "Proprietary
Information") used in its business, free and clear of any right, equity or claim
of others. The Company has not sold, transferred, assigned, licensed or
subjected to any Lien any Intellectual Property Right or Proprietary Information
or any interest therein. No Intellectual Property Right or Proprietary
Information conflicts with, infringes on or otherwise violates any rights of
others or is subject to any pending or, to the Knowledge of the Company,
threatened litigation or other adverse claim of infringement by any other
Person.
4.12 Insurance. Schedule 4.12 contains a true and complete
list (including the name of the insurer, policy number, coverage amount,
deductible amount, premium amount and expiration date) of all insurance policies
and bonds and self insurance arrangements currently in force that cover or
purport to cover risks or losses to or associated with the Company's business,
operations, premises, properties, assets, employees, agents and directors. The
insurance policies, bonds and arrangements described on Schedule 4.12 (the
"Policies") are in full force and effect. No facts or circumstances exist that
would cause the Company to be unable to renew their existing insurance coverage
as and when the same shall expire (and to continue to be able to obtain
additional bonding for new projects as required), in either case upon terms at
least as favorable as those currently in effect, other than possible increases
in premiums that do not result from any act or omission of the Company. The
Company is not in material breach of or in material default under any of the
Policies, has received any written notice of pending or threatened cancellation
of any Policy, and no claim or coverage under any Policy is currently being
disputed.
4.13 Indebtedness. The Company has no material liability or
obligation for Indebtedness other than as set forth on Schedule 4.13(a) and true
and complete copies of all material instruments and documents, if any,
evidencing, creating, securing or otherwise relating to such Indebtedness have
been delivered to Purchaser. No event has occurred and no condition has become
known to the Company or any Seller that constitutes or, with notice or passage
of time, or both, would constitute a material default or termination under any
instrument or document relating to or evidencing such Indebtedness.
4.14 Judgments; Litigation. Except as set forth on Schedule
4.14, there is no (a) material, outstanding judgment, order, decree, award,
stipulation or injunction of any local, state, federal or foreign court,
government or governmental department, commission, instrumentality, board,
agency or authority ("Governmental Entity") against the Company or its
properties, assets or business, (b) material action, suit, arbitration, hearing,
inquiry, proceeding, complaint, charge or investigation, whether civil, criminal
or administrative ("Action"), by or before any Governmental Entity or arbitrator
or any appeal from any of the foregoing pending or, to the Company's Knowledge,
threatened, against the Company or its properties, assets or business, or (c) to
the Company's Knowledge, fact or circumstance which is reasonably likely to lead
to the instigation of any Action by or against the Company.
4.15 Employee Benefit Plans.
(a) Schedule 4.15(a) contains a true and complete
list of each current material written current employment, bonus, deferred
compensation, incentive compensation, membership interest purchase, membership
interest option, membership interest appreciation right or other membership
interest-based incentive, severance, change-in-control, or termination pay,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, and each other employee benefit plan,
program, agreement or arrangement, sponsored, maintained or contributed to or
required to be contributed to for the employees of the Company by the Company
(the "Benefit Plans"). Schedule 4.15(a) identifies each of the Benefit Plans
that is an "employee welfare benefit plan," or "employee pension benefit plan"
as such terms are defined in Sections 3(1) and 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). The Sellers have delivered or
made available to the Purchaser true and complete copies of all material
documents in its possession in connection with each Benefit Plan.
(b) Each of the Benefit Plans has been operated and
administered in all material respects in accordance with its terms and with
applicable laws, rules and regulations, including but not limited to ERISA and
the Code (except for violations or failures which are not reasonably likely to
result in a Material Adverse Effect) and neither the Company nor any trade or
business, whether or not incorporated, that together with the Company would be
deemed a "single employer" under Section 414 of the Code is subject to any
material Liability, including additional contributions, fines, taxes, penalties,
or retroactive premiums or similar adjustments with respect to any Benefit Plan.
Each Benefit Plan intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified (or there is
additional time available to request such a determination). To the Knowledge of
the Company, no event or condition has occurred or is expected to occur that
would adversely affect the qualified status of any such Benefit Plan subsequent
to such determination.
4.16 Permits, Licenses, Etc.
(a) The Company possesses, and is in material
compliance with, all material franchises, licenses,
permits, certificates, authorizations, rights and other approvals of
Governmental Entities necessary to (i) occupy, maintain, operate and use the
Real Property as it is currently used and proposed to be used, (ii) conduct its
business as currently conducted and as proposed to be conducted, and (iii)
maintain and operate the Benefit Plans (collectively the "Permits"). Schedule
4.16(a) contains a true and complete list of all Permits. Each Permit has been
lawfully and validly issued and is in full force and effect, and no proceeding
is pending or, to the Company's Knowledge, threatened with respect to the
revocation, suspension or limitation of any Permit. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby will not result in the revocation, suspension,
limitation or adverse modification of any Permit and, except as set forth in
Schedule 4.16(a), no Permit will require the consent of its issuing authority
to, or as a result of the consummation of, the transactions contemplated hereby.
(b) The Company has not been notified or presently
has no reason to believe any of the Permits will
not be renewed in the Ordinary Course upon its expiration. The Company is not in
breach of, nor has it received any claim or assertion (in writing or otherwise)
that the Company has breached any of the terms or conditions of any Permit.
4.17 Regulatory Filings. The Company has made all material
required registrations and filings with and submissions to all applicable
Governmental Entities relating to the operations of the Company as currently
conducted and as proposed to be conducted. All such registrations, filings and
submissions were in compliance with all Legal Requirements and other
requirements when filed, no material deficiencies have been asserted by any such
applicable Governmental Entities with respect to such registrations, filings or
submissions and no facts or circumstances exist which would indicate that a
material deficiency may be asserted by any such authority with respect to any
such registration, filing or submission.
4.18 Consents. Schedule 4.18 sets forth all material consents,
authorizations and approvals of, and all filings, notices and registrations
with, any Person to, or as a result of the consummation of, the transactions
contemplated hereby that are necessary in connection with the operations and
business of the Company as currently conducted and as proposed to be conducted
or are required to be obtained or made by the Company. All such consents and
filings have been obtained or made or will be obtained or made by the Company
prior to the Closing.
4.19 Material Contracts; No Defaults.
(a) Schedule 4.19 contains a true and complete list
and description of all material contracts,
agreements, understandings, arrangements and commitments, written or oral, of
the Company (the "Contracts") by which they or their properties, rights or
assets are bound which:
(i) involve consideration with a value of
$50,000 in the aggregate or more over its term
(other than Ordinary Course customer contracts);
(ii) cannot be terminated by the Company on
less than 90 days' notice without penalty or
payment of damages exceeding $10,000 in each case.
(iii) evidence or provide for Indebtedness;
(iv) guarantee the performance, liabilities
or obligations of any other entity;
(v) restrict in any material respect the
ability of the Company to conduct any business
activities;
(vi) involve, as parties thereto, the Seller
or any Affiliate of the Seller;
(vii) relates to the employment of any
person at an annual rate of compensation greater than
$75,000;
(viii) are subject to termination or
modification by any third party as a result of the transactions contemplated by
this Agreement;
(ix) involve more than $10,000 and will
require the Company to purchase or provide goods or
services for a period of more than 90 days after the Closing Date (other than
Ordinary Course customer contracts); or
(x) are otherwise material to the Company's
business.
True and complete copies of such written Contracts and summaries of the
significant terms and conditions of such oral Contracts have been provided to
Purchaser.
(b) Each Contract is, and immediately after the
Closing will be (on identical terms), legal, valid,
binding, enforceable against the Company and in full force and effect in the
form delivered to Purchaser. The Company is not, and, to the Company's
Knowledge, no other party is in material breach of or default under any
Contract, and the Company has not received in writing or otherwise any claim or
assertion that the Company is in material breach of or default under any
Contract.
(c) No event has occurred or, based on facts
presently known to exist, is reasonably anticipated which
with notice or lapse of time or both would constitute a breach or default, or
permit termination, acceleration or modification, under any Contract.
4.20 Employment Laws. Except to the extent expressly
provided in Schedule 4.20:
(a) The Company is in compliance with all federal,
state or other applicable laws respecting
employment and employment practices, terms and conditions of employment, wages
and hours and occupational safety with respect to its business (except for
violations or failures to comply which are not reasonably likely to result in a
Material Adverse Effect), and has not received notice of, and, to the Knowledge
of the Company, is not engaged in, any unfair labor practice with respect to its
business.
(b) There is no labor strike, dispute, slowdown or
stoppage pending or, to Knowledge of the Company, threatened against or
affecting the Company. No employee of the Company is represented by a union.
(c) There are no claims, grievances or arbitration
proceedings, workers' compensation proceedings,
labor disputes (including charges of violations of any federal, state or local
laws or regulations relating to current or former employees (including
retirees)), governmental investigations or administrative proceedings of any
kind pending or, to the Knowledge of the Company, threatened against or relating
to the Company, its employees or employment practices, or operations as they
pertain to conditions of employment that could have a Material Adverse Effect;
nor is the Company subject to any order, judgment, decree, award or
administrative ruling arising from any such matter that could have a Material
Adverse Effect.
4.21 Principal Customers. Schedule 4.21 contains a true and
complete list of the names and addresses of the ten (10) largest customers, as
measured by the fees received from such customer during each of the twelve (12)
months ended December 31, 2003, December 31, 2004 and December 31, 2005. Except
as set forth on Schedule 4.21, in the last twelve (12) months, no such customer
(i) has cancelled, suspended or otherwise terminated its relationship with the
Company, or (ii) has advised the Company of its intention to cancel, suspend or
otherwise terminate its relationship with the Company, or to materially reduce
its business or adversely change the terms upon which it pays for goods or
services from the Company. Subject to the receipt of all applicable consents,
approvals, and authorizations described in Schedule 4.18 and to the Company's
Knowledge, the Company does not, except as disclosed on Schedule 4.21,
reasonably anticipate that any customer listed on Schedule 4.21 will cancel,
suspend or terminate its relationship with the Company, or materially reduce its
business or adversely change the terms upon which it pays for goods or services
from the Company as a result of the consummation of the transactions
contemplated by this Agreement. The Company has not taken any action that would
result in the cancellation, suspension or termination of its relationship with
any customer.
4.22 Compliance with Law. Except as set forth in Schedule
4.22, in all material respects, the Company (a) currently is not in violation
of, or conducting its business or operations in violation of, or using or
occupying its properties or assets in violation of, any Legal Requirement, (b)
in the past seven years, has not violated, conducted their business or
operations in violation of, or used or occupied their properties or assets in
violation of, any Legal Requirement, or (c) in the past seven years, has not
received any notice of any alleged violation of, or any citation for
noncompliance with, any Legal Requirement. To the Company's Knowledge, there are
no facts that are reasonably likely to give rise to any violation by the Company
of any Legal Requirement.
4.23 Environmental Laws.
(a) Except as disclosed on Schedule 4.23, (i) the
Company is in material compliance with all applicable Environmental Laws
(as defined below), (ii) the Company has not generated, processed, produced,
stored, treated, transported, Released or disposed of any Hazardous Materials
(as defined below) at, in, on, under, about or from the Real Property (including
facilities previously leased or owned by the Company or, to the Knowledge of
Company, any other business the stock or net assets of which have been acquired
by the Company) or at any other location except in material compliance with all
applicable Environmental Laws, and (iii) the Company has not received from any
Governmental Entity or any other Person, any material notice of violation,
notice to comply, compliance schedule, administrative or judicial complaint or
proceeding, information request, order, enforcement action or lien with respect
to alleged or alleging material potential violations of or liabilities under
Environmental Laws by or on behalf of the Company or relating to the Real
Property (including facilities previously leased by the Company). The Company
has provided Purchaser with copies of all material reports in their possession
of environmental compliance audits, environmental assessments, environmental
inspection reports, and correspondence with or submissions to Governmental
Entities under Environmental Laws, in each case in connection with the operation
of the Company's business or the Real Property.
(b) "Environmental Laws" shall mean all applicable
laws, statutes, regulations, rules, ordinances,
decrees, orders and agreements, which purport to regulate the generation,
processing, production, storage, treatment, transport or Release (as defined
below) of Hazardous Materials to the environment, or impose requirements,
conditions or restrictions relating to environmental protection, management,
planning, reporting or notice or public or employee health and safety.
(c) "Hazardous Material(s)" shall mean any substance
which is (i) defined as a hazardous substance,
hazardous material, hazardous waste, biohazardous materials, pollutant, toxic
substance, pesticide, contaminant or words of similar import under any
Environmental Law, (ii) a petroleum hydrocarbon, including crude oil or any
fraction thereof, (iii) hazardous, toxic, corrosive, flammable, explosive,
infectious, radioactive, carcinogenic or a reproductive toxicant, or (iv)
regulated pursuant to any Environmental Law.
(d) "Release" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing into the environment
(including the abandonment or discarding of barrels, containers and other
receptacles containing any Hazardous Material).
4.24 Brokers' Fees. Except as set forth on Schedule 4.24, no
broker, finder or similar agent has been employed by or on behalf of the Company
in connection with this Agreement or the transactions contemplated hereby, and
none of the Company or any Seller has entered into any agreement, arrangement or
understanding of any kind with any Person for the payment of any brokerage
commission, finder's fee or any similar compensation in connection with this
Agreement or the transactions contemplated hereby.
4.25 Taxes. Except as to any matters disclosed in
Schedule 4.25:
(a) The term "Taxes" means all material net income,
capital gains, gross income, gross receipts,
sales, use, escheat, transfer, ad valorem, franchise, profits, license, capital,
withholding, payroll, employment, excise, goods and services, severance, stamp,
occupation, premium, property, assessments, or other governmental charges of any
kind whatsoever, together with any interest, fines and any penalties, additions
to tax or other additional amounts incurred, accrued with respect thereto,
assessed, charged or imposed under applicable federal, state, local or foreign
tax law, provided that any interest, penalties, additions to tax or additional
amounts that relate to Taxes for any taxable period (including any portion of
any taxable period ending on or before the Closing Date) shall be deemed to be
Taxes for such period, regardless of when such items are incurred, accrued,
assessed or charged. References to the Company shall be deemed to include any
predecessor to such Person from which the Company incurs a liability for Taxes
as a result of transferee liability. The term "Tax Returns" means all material
tax returns, reports, statements or estimates that the Company was required to
file or will be required to file prior to the Closing Date.
(b) All Tax Returns required to be filed with respect
to the Company or its business have been timely
filed.
(c) All Taxes required to be shown on such Tax
Returns or otherwise due by or with respect to the
Company or its business have been timely paid.
(d) All such Tax Returns are true, correct and
complete in all material respects.
(e) No adjustment relating to such Tax Returns has
been proposed formally or informally by any tax authority and, to the Knowledge
of the Company, no basis exists for any such adjustment.
(f) The Company has withheld and paid all Taxes
required to have been withheld and paid in connection
with amounts owing with respect to its business to any employee, independent
contractor, creditor, member or other third party.
(g) There are no pending or threatened Actions for
the assessment or collection of Taxes against the
Company (insofar as either relates to the activities or income of the Company or
its Business).
(h) There are no Tax Liens on any properties or
assets of the Company, including its business.
4.26 FIRPTA. The Company is not nor has it ever been a "United
States real property holding company" within the meaning of Section 897(c)(2) of
the Code.
5. Representations and Warranties of Purchaser. As an inducement to
Sellers to enter into this Agreement and to consummate the transactions
contemplated herein and except as set forth in the disclosure schedule delivered
by Purchaser on the date hereof (the "Purchaser's Disclosure Schedule"),
Purchaser makes the representations and warranties to Sellers set forth in this
Section 5. Nothing in the Purchaser's Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein,
however, unless the Purchaser's Disclosure Schedule identifies the exception
with reasonable particularity and describes the relevant facts in reasonable
detail. An exception in the Purchaser's Disclosure Schedule relating to one
representation or warranty shall be deemed to qualify or to serve as an
exception to another representation or warranty to the extent such exception
expressly cross-references one or more applicable representations set forth in
another section of this Section 5. The Purchaser's Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 5.
5.1 Organization; Good Standing; Authority. Purchaser has been
duly organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware. Purchaser has full corporate power and
authority to do and perform all acts and things to be done by it under this
Agreement. The execution and delivery of this Agreement by Purchaser and the
performance of its obligations hereunder and thereunder have been, to the extent
necessary, duly and properly authorized and no other action or approval by
Purchaser or any other Person, except as otherwise provided in this Agreement,
is necessary for the execution, delivery or performance of this Agreement by
Purchaser.
5.2 Execution and Delivery. Except as set forth on Schedule
5.2, all consents, approvals, authorizations and orders necessary for the
execution, delivery and performance by Purchaser of this Agreement have been
duly and lawfully obtained, and Purchaser has full right, power, authority and
capacity to execute, deliver and perform this Agreement. This Agreement has been
duly executed and delivered by Purchaser and constitute legal, valid and binding
agreements of Purchaser enforceable against Purchaser in accordance with their
respective terms, except that enforceability may be limited by the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors.
5.3 No Conflicts. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby will
not (a) except as set forth on Schedule 5.3, conflict with or result in a breach
or violation of any term or provision of, or constitute a default under (with or
without notice or passage of time, or both), or otherwise give any Person a
basis for accelerated or increased rights or termination or nonperformance
under, any indenture, mortgage, deed of trust, loan or credit agreement, lease,
license or other agreement or instrument to which Purchaser is a party or by
which Purchaser is bound or affected or to which any of the property or assets
of Purchaser are bound or affected, (b) result in the violation of the
provisions of the Certificate of Incorporation or Bylaws of Purchaser or any
Legal Requirement, or (c) result in the creation or imposition of any Lien upon
any property or asset of Purchaser.
5.4 Brokers. Except as set forth on Schedule 5.4, no broker,
finder or similar agent has been employed by or on behalf of Purchaser or any
affiliate of Purchaser in connection with this Agreement or the transactions
contemplated hereby, and neither Purchaser nor any affiliate of Purchaser has
entered into any agreement, arrangement or understanding of any kind with any
Person for the payment of any brokerage commission, finder's fee or any similar
compensation in connection with this Agreement or the transactions contemplated
hereby.
5.5 Investment. Purchaser acknowledges that the Purchased
Shares and the Contributed Shares have not been registered under the Securities
Act of 1933 (the "Securities Act") or qualified under any state blue sky or
other securities laws, and may not be resold absent registration under the
Securities Act and qualification under applicable state blue sky or other
securities laws, or an applicable exemption from the registration and prospectus
delivery requirements of the Securities Act (and applicable blue sky or other
securities laws). Purchaser is acquiring the Purchased Shares and the
Contributed Shares for its own account, for investment purposes only and not
with a view towards the resale or distribution thereof in violation of the
Securities Act or any blue sky or other securities laws.
6. Other Agreements.
6.1 Further Assurances. If at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each party hereto shall take or cause to be taken all such necessary
or desirable action and execute, deliver and file, or cause to be executed,
delivered and filed, all necessary or desirable documentation.
6.2 Release of Personal Guarantees. Immediately following the
Closing, but no later than by May 31, 2006, Purchaser shall effect a full
release of every personal guarantee of Sellers with respect to any and all
liabilities of the Company, including, without limitation, those personal
guarantees identified on Schedule 6.2 attached hereto.
7. Indemnification.
7.1 Survival Provisions.
(a) The representations and warranties, covenants and
agreements of the parties hereto contained in
this Agreement shall survive the Closing and the consummation of the
transactions contemplated hereby (and any examination, or knowledge of, or
investigation by or on behalf of any party hereto).
(b) Claims for indemnification pursuant to Section
7.2(a) must be made by delivery of written notice
to the party against whom the indemnification claim is made, setting forth in
general terms the basis for the indemnification claim, no later than the third
anniversary of the date of this Agreement (the "Termination Date"); provided,
however, claims for indemnification for Damages (defined below) arising from any
material breach of the representations and warranties contained in Sections 4.1
(Title to Shares), 4.2 (Organization, Good Standing, Authority), 4.3 (Execution
and Delivery), 4.22 (Compliance with Law), 4.23 (Environmental Laws), 4.25
(Taxes) or claims for material internal misrepresentations (collectively,
"Excluded Claims") may be made at any time, subject to the applicable statute of
limitations. (The Termination Date or the applicable later date as described
above is referred to herein as the "Claims Period").
7.2 Indemnification.
(a) Subject to the limitations set forth in Section
7.3, the Sellers hereby covenant and agree,
severally (and not jointly) in accordance with their respective percentage
interests of the Shares prior to the Closing (as set forth on Schedule 4.1(a)
hereto), to defend, indemnify and hold harmless Purchaser and its respective
affiliates (collectively, the "Purchaser Indemnitees") from and against any and
all claims, actions, losses, obligations, costs, expenses, settlement payments,
awards, damages, judgments, fines, penalties and other liabilities of any kind
or nature whatsoever, including, without limitation, reasonable attorneys',
accountants' and experts' fees (collectively, "Damages") arising out of or
resulting from: (i) any material inaccuracy in or breach of any representation
or warranty made by any Seller or the Company in this Agreement or in any
certificate delivered pursuant to this Agreement; (ii) the failure of that
Seller to perform or observe any covenant, agreement or condition to be
performed or observed by that Seller pursuant to this Agreement.
(b) Purchaser hereby covenants and agrees to defend,
indemnify and hold harmless Sellers from and
against any and all Damages arising out of or resulting from: (i) any material
inaccuracy in or breach of any representation or warranty made by Purchaser in
this Agreement or in any certificate delivered pursuant to this Agreement and
(ii) the failure of Purchaser to perform or observe any covenant, agreement or
condition to be performed or observed by Purchaser pursuant to this Agreement.
7.3 Limitations on Indemnification.
(a) Notwithstanding any other provision of this
Section 7 to the contrary, no Seller shall be
obligated to defend, indemnify and hold harmless any Purchaser Indemnitee for
breaches of representations or warranties unless and until the aggregate amount
of Damages incurred by all Purchaser Indemnitees exceeds an amount equal to
$100,000 (the "Deductible Amount"), in which event the Seller shall be obligated
to defend, indemnify and hold harmless Purchaser Indemnitees from and against
all Damages incurred by Purchaser Indemnitees in excess of the Deductible
Amount; provided, however, that the Sellers shall not be entitled to the benefit
of the Deductible Amount with respect to Excluded Claims, including any breach
of a material, intentional representation or warranty involving fraud or willful
misconduct.
(b) None of Sellers shall be obligated to indemnify
Purchaser in excess of a maximum amount equal to
that portion of the Purchase Price received by that Seller for claims brought
pursuant to Section 7.2(a) (the "Cap Amount").
7.4 Third Party Claims.
(a) If any party entitled to be indemnified pursuant
to Section 7.2 (an "Indemnified Party") receives notice of the assertion by any
third party of any claim or of the commencement by any such third party of any
Action (any such claim or Action being referred to herein as an "Indemnifiable
Claim") with respect to which another party hereto (an "Indemnifying Party") is
or may be obligated to provide indemnification, the Indemnified Party shall
immediately notify the Indemnifying Party in writing (the "Claim Notice") of the
Indemnifiable Claim; provided, that the failure to provide such notice shall not
relieve or otherwise affect the obligation of the Indemnifying Party to provide
indemnification hereunder, except to the extent that any Damages or other
prejudice or expense to the Indemnifying Party directly resulted or were caused
by such failure.
(b) Except with respect to any "Special Claim," the
Indemnifying Party shall have thirty (30) days
after receipt of the Claim Notice (unless the claim or Action requires a
response before the expiration of such thirty-day period, in which case the
Indemnifying Party shall have until the date that is ten (10) days before the
required response date; provided, however, in every case, the Indemnifying Party
shall have at least ten (10) days in which to respond) to acknowledge
responsibility for the entire amount of the Indemnifiable Claim and undertake,
conduct and control, through counsel of its own choosing, and at its expense,
the settlement or defense thereof, and the Indemnified Party shall cooperate
with the Indemnifying Party in connection therewith; provided, that (i) the
Indemnifying Party shall permit the Indemnified Party to participate in such
settlement or defense through counsel chosen by the Indemnified Party, provided
that the fees and expenses of such counsel shall not be borne by the
Indemnifying Party, (ii) the Indemnifying Party shall not settle any
Indemnifiable Claim without the Indemnified Party's consent if the settlement
requires the Indemnified Party to admit wrongdoing, pay any fines or refrain
from any action and (iii) if, in the written opinion of independent counsel
selected by the Indemnifying Party and approved by the Indemnified Party, the
Indemnified Party has separate, material defenses from the Indemnifying Party or
that there is a material and significant conflict of interest between the
Indemnified and Indemnifying Parties, then the Indemnified Party shall be
permitted to retain special counsel of its own choosing (approved by the
Indemnifying Party); the reasonable expenses of such special counsel shall be
paid by the Indemnifying Party, provided that such special counsel's role shall
be limited to address only those issues where a conflict exists. So long as the
Indemnifying Party has taken responsibility for and continues to defend the
Indemnifiable Claim in good faith, the Indemnified Party shall not pay or settle
such claim without the Indemnifying Party's consent, which consent shall not be
unreasonably withheld or delayed. "Special Claim" shall mean any Indemnifiable
Claim involving any possibility of criminal liability, an action for injunctive
relief, or an action by any governmental authority.
(c) If the Indemnifying Party does not notify the
Indemnified Party within thirty (30) days after receipt of the Claim Notice (or
before an earlier date as specified above, if the claim or Action requires a
response before the expiration of such thirty (30) day period), that it
acknowledges responsibility for the entire amount of the Indemnifiable Claim and
elects to undertake the defense of the Indemnifiable Claim described therein, or
if the Indemnifiable Claim involves a Special Claim, the Indemnified Party shall
have the right to contest, settle or compromise, through counsel of its own
choosing, the Indemnifiable Claim in the exercise of its reasonable discretion
at the expense of the Indemnifying Party; provided,
that the Indemnified Party shall notify the Indemnifying Party of any compromise
or settlement of any such Indemnifiable Claim; and provided further, if the
Indemnifying Party subsequently acknowledges responsibility and takes over the
defense of the matter, the Indemnifying Party shall have the right to substitute
legal counsel of its own choosing with respect to the defense of the Indemnified
Party.
7.5 Indemnification Payments. (a) All payments from one party
to this Agreement to another party to this Agreement made under this Section 7
are in the nature of adjustments to the Purchase Price and each party agrees
that it will file its federal, state and local Tax returns in a manner
consistent with treating such payments as adjustments to the Purchase Price. Any
indemnity payments required to be made by a party to this Agreement under this
Section 7 shall be made promptly via wire transfer of immediately available
funds to such bank and accounts as are designated by the recipient(s) of such
indemnity payments.
(b) The amount of any Damages to which any party
shall be entitled shall be calculated net of (i) any
tax benefit actually received by the Indemnified Party in respect of losses
giving rise to such liabilities and (ii) any insurance proceeds actually
collected by the Indemnified Party in respect of such loss; provide, however,
that the amount of such insurance proceeds collected by the Indemnified Party
shall be adjusted to exclude from total proceeds the amount of any
self-insurance, retro premiums or other portion of such proceeds that are
ultimately borne by the Indemnified Party rather than the insurer.
8. General Provisions.
8.1 Notices. All notices and other communications under or in
connection with this Agreement shall be in writing and shall be deemed given (a)
if delivered personally, upon delivery, (b) if delivered by registered or
certified mail (return receipt requested), upon the earlier of actual delivery
or three days after being mailed, or (c) if given by telecopy, upon confirmation
of transmission by telecopy, in each case to the parties at the following
addresses:
(a) If to Purchaser, addressed to:
General Environmental Management, Inc.
0000 Xxxxxx Xxx, Xxx. 000
Xxxxxx, Xxxxxxxxxx 00000
Telephone No.: 000.000.0000
Facsimile No.: 909.444.9900
(b) If to Xxxx Xxxxxxxx, addressed to:
Xxxx Xxxxxxxx
Confidential
With copy to:
Xxxxxx X. Xxxxx
Confidential
(c) If to Xxxxx Xxxxxxx, addressed to:
Xxxxx Xxxxxxx
Confidential
With copy to:
Xxxxxx X. Xxxxx
Confidential
(d) If to the Company, addressed to:
K2M Mobile Treatment Services, Inc.
Confidential
8.2 Severability. If any term or provision of this Agreement
or the application thereof to any circumstance shall, in any jurisdiction and to
any extent, be invalid or unenforceable, such term or provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable such term or
provision in any other jurisdiction, the remaining terms and provisions of this
Agreement or the application of such terms and provisions to circumstances other
than those as to which it is held invalid or enforceable.
8.3 Third Party Rights. Except as provided in Section 7,
notwithstanding any other provision of this Agreement, this Agreement shall not
create benefits on behalf of any other Person not a party to this Agreement
(including, without limitation, any employee broker or finder), and this
Agreement shall be effective only as between the parties hereto, their
successors and permitted assigns.
8.4 Entire Agreement. This Agreement, including the exhibits
and schedules attached hereto and other documents referred to herein, contains
the entire understanding of the parties hereto with respect of its subject
matter and supersedes all prior and contemporaneous agreements and
understandings, oral and written, between the parties with respect to such
subject matter, including, without limitation, the Letter of Intent.
8.5 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement and the rights and obligations
hereunder shall not be assignable by any party, without the written consent of
the other parties and any such purported assignment by any party without such
consent shall be void.
8.6 Counterparts. This Agreement may be executed in one or
more counterparts, including by facsimile or similar means of electronic
communication, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same Agreement.
8.7 Recitals, Schedules and Annexes. The recitals, schedules,
exhibits and annexes to this Agreement are incorporated herein and made a part
hereof as if fully set forth at length herein.
8.8 Construction. The section and subsection headings used
herein are inserted for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement. As used in this Agreement, the
masculine, feminine or neuter gender, shall be deemed to include the others
whenever and wherever the context so requires.
8.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of California.
8.10 Waiver. Any term or provision of this Agreement may be
waived in writing at any time by the party or parties entitled to the benefits
thereof. Any waiver effected pursuant to this Section 8.10 shall be binding upon
all parties hereto. No failure to exercise nor any delay in exercising any
right, power or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege preclude the
exercise of any other right, power or privilege. No waiver of any breach of any
covenant or agreement hereunder shall be deemed a waiver of any preceding or
subsequent breach of the same or any other covenant or agreement. The rights and
remedies of each party under this Agreement are in addition to all other rights
and remedies, at law or in equity, that such party may have against the other
parties.
8.11 Amendment. No supplement, modification, amendment or
waiver of this Agreement shall be binding unless executed in writing by
Purchaser, on the one hand, and the Company and Sellers, on the other hand.
8.12 Publicity. The initial press release relating to the
execution and delivery of this Agreement shall be a joint press release, to be
agreed upon by the Purchaser and the Sellers.
8.13 Specific Performance. Each of the parties hereto
acknowledges and agrees that the other parties would be damaged irreparably in
the event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each of the parties agrees that the other parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in addition to any other remedy to which they may be entitled,
at law or in equity.
8.14 Cumulative Remedies. All rights and remedies of the
parties hereto are cumulative of each other and of every other right or remedy a
party may otherwise have at law or in equity, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.
8.15 Expenses. Each of the parties hereto shall bear their own
respective expenses incurred in connection with the preparation, execution and
performance of this Agreement and the transactions contemplated hereby,
including all fees and expenses of agents, representatives, counsel and
accountants.
8.16 Counsel for The Company and Sellers. The Company, Sellers
and Sellers' spouses acknowledge and agree that Xxxxxx X. Xxxxx, A Professional
Law Corporation (the "Law Firm") has served as corporate counsel for the Company
in a variety of matters, including representation of the Company in connection
with this Agreement and the related transactions. The Company has retained the
Law Firm to represent the collective interests of the Company and Sellers in
connection with this Agreement and the related transactions. The Company,
Sellers and Sellers' spouses acknowledge and agree that the Law Firm has been
retained solely to represent the collective and common interests of the Company
and Sellers and that the Law Firm has not been retained to represent the
individual Sellers or their respective spouses with regard to any issues that
arise out of or relate to this Agreement or any of the related transactions. No
Seller or any spouse of any Seller has communicated to the Law Firm regarding
any issues relating to any conflict or differences among the parties, other than
the pending marital dissolution between Xxxxx Xxxxxxx and Xxxxxx Xxxxxxx. Mr.
and Xxx. Xxxxxxx have been advised to obtain separate counsel, and each has
retained independent counsel to represent the interest of that party in
connection with this Agreement and the related transactions.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or has caused this Agreement to be executed on its behalf by a
representative duly authorized, all as of the date first above set forth.
"Sellers" "Purchaser"
By: ____________________________ GENERAL ENVIRONMENTAL
Xxxx Xxxxxxxx MANAGEMENT, INC
By: ___________________________ By:_____________________________
Xxxxx Xxxxxxx Its:____________________________
"Company"
K2M MOBILE TREATMENT
SERVICES, INC.
By:____________________________________
Xxxxx Xxxxxxx, President
By:____________________________________
Xxxx Xxxxxxxx, Chief Financial
Officer and Secretary
