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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS IS A STOCK PURCHASE AGREEMENT (the "Agreement") dated January 30,
1998 by and among The Xxxxx Group, Inc., an Ohio corporation ("Company");
Med/Waste, Inc., a Delaware corporation ("Seller"); MPK Holdings, Ltd., an Ohio
limited liability company ("Buyer"); and Xxxxxxx X. Xxxxx, an individual
("Xxxxx");
BACKGROUND
Seller owns all of the issued and outstanding capital stock of Company,
consisting of one hundred shares of common stock without a par value (the
"Stock"). Buyer desires to purchase a portion of the Stock from Seller for a
promissory note to be issued by Buyer and Company desires to redeem the
remaining portion of the Stock from Seller in exchange for cash and a promissory
note to be issued by Company. Seller desires to sell and/or exchange all of the
Stock.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter contained, the parties hereto do hereby agree as follows:
SECTION 1. STOCK TRANSACTIONS. Subject to the terms and conditions of
this Agreement, at the Closing, Seller will:
(a) Sell and assign to Company sixty-four and forty-five
one-hundredths (64.45) shares of the Stock and Company will purchase
the same from Seller in exchange for cash and a promissory note; and
(b) Sell and assign to Buyer thirty-five and fifty-five
one-hundredths (35.55) shares of the Stock, and Buyer will purchase the
same from Seller in exchange for a promissory note.
Company agrees that all Stock purchased by Company shall be retired effective as
of the Closing.
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SECTION 2. PURCHASE PRICE FOR STOCK. The purchase price to be paid to
Seller for the Stock shall be as follows:
(a) In the case of the Stock to be purchased by Company
pursuant to Section 1(a) above, One Million Seven Hundred Forty
Thousand Dollars ($1,740,000), of which One Million Two Hundred
Thousand Dollars ($1,200,000) shall be paid to Seller at Closing by
wire transfer to an account designated by Seller, and the remainder of
which shall be paid to Seller pursuant to the terms of a promissory
note issued by Company and dated as of the Closing in the principal
amount of Five Hundred Forty Thousand Dollars ($540,000) (the "Company
Promissory Note"); and
(b) In the case of the Stock to be purchased by Buyer pursuant
to Section 1(b) above, Nine Hundred Sixty Thousand Dollars ($960,000),
which shall be paid to Seller pursuant to the terms of a promissory
note issued by Buyer and dated as of the Closing in the principal
amount of Nine Hundred Sixty Thousand Dollars ($960,000) (the "Buyer
Promissory Note").
SECTION 3. CONDITIONS PRECEDENT.
3.1. CONDITIONS PRECEDENT TO BUYER'S AND COMPANY'S
OBLIGATIONS. Unless all of the following conditions are satisfied at the Closing
or have been waived by Buyer, neither Buyer nor Company shall be obligated to
purchase the Stock and neither shall otherwise be obligated to effect any of the
other transactions contemplated by this Agreement:
(a) Each of the representations and warranties of
Seller contained in this Agreement shall be true and correct in all
material respects on the date of this Agreement and as of the Closing
Date, as if each were again made at such time;
(b) Seller shall have performed or observed in all
material respects each of the agreements and covenants contained in
this Agreement to be performed or observed by it at or prior to the
Closing;
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(c) No claim, investigation, proceeding or
litigation, either administrative or judicial, shall be threatened or
pending against Seller, the Company or Buyer (1) for the purpose of
enjoining, delaying or preventing the consummation of the transactions
contemplated by this Agreement, (2) which alleges that this Agreement,
or the consummation of the transactions contemplated by this Agreement,
is improper or illegal, or (3) which, if decided adversely, would
materially affect the right of Buyer or Company to consummate the
transactions provided for in this Agreement;
(d) All governmental, judicial and administrative
action required for the consummation of the transactions contemplated
by this Agreement shall have been obtained; and
(e) Seller shall be prepared to make all of the
deliveries required to be made by it pursuant to Section 4 hereof.
3.2. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. Unless all of the
following conditions are satisfied at the Closing or have been waived by Seller,
Seller shall not be obligated to sell the Stock and Seller shall not otherwise
be obligated to effect any of the transactions contemplated by this Agreement:
(a) Each of the representations and warranties of
Buyer contained in this Agreement shall be true and correct in all
material respects on the date of this Agreement and as of the Closing
Date, as if each were again made at such time;
(b) Buyer shall have performed or observed in all
material respects each of the agreements and covenants contained in
this Agreement to be performed or observed by it at or prior to
Closing;
(c) None of the events described in Section 3.1(c)
shall have occurred;
(d) All governmental, judicial and administrative
action required for the consummation of the transactions contemplated
by this Agreement shall have been obtained; and
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(e) Buyer shall be prepared to make all of the
deliveries required to be made by it pursuant to Section 4 hereof.
3.3. SATISFYING CONDITIONS PRECEDENT. Seller and Buyer each agrees to
use reasonable efforts to cause each of the conditions precedent set forth in
this Section 3 to be satisfied as soon as possible.
SECTION 4. CLOSING.
4.1. LOCATION AND TIME. The "Closing" means the time of which the
events provided for in Section 4.2 occur. The Closing shall take place at the
offices of Porter, Wright, Xxxxxx & Xxxxxx, at 0000 Xxxxxxxxxx Xxxxxxxx, 925
Euclid Avenue, Cleveland, Ohio, or at such other place as the parties shall
agree in writing, at 10:00 a.m. local time on the Closing Date. The Closing Date
shall be January 30, 1998, or such other date as may be agreed upon by the
parties.
4.2. EVENTS AT CLOSING.
(a) At the Closing, and conditioned thereon, the following deliveries
shall be made:
(i) Seller shall surrender to Company stock
certificates for sixty-four and forty-five one-hundredths (64.45)
shares of the Stock, and in exchange therefor Company shall pay Seller
the sum of One Million Two Hundred Thousand Dollars ($1,200,000) and
shall issue and deliver to Seller the Company Promissory Note and
Company shall cause to be delivered to Seller the Buyer Guaranty (as
hereinafter defined); and
(ii) Seller shall surrender to Buyer stock
certificates for thirty-five and fifty-five one hundredths (35.55)
shares of the Stock, and in exchange therefor Buyer shall issue and
deliver to Seller the Buyer Promissory Note and Buyer Pledge Agreement
(as
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hereinafter defined) and Buyer shall cause to be delivered to Seller
the Xxxxx Guaranty and Xxxxx Pledge Agreement (each as hereinafter
defined).
Each such certificate for the Stock surrendered shall be properly issued in the
name of Seller, shall represent the legal and beneficial ownership of the number
of shares of Stock specified thereon, and shall have attached thereto stock
powers duly endorsed in blank in negotiable form.
(b) In addition to the deliveries described at Section 4.2(a) hereof,
the following events shall take place at the Closing:
(i) Seller shall deliver to Buyer certified copies of
the resolutions adopted by the board of directors and shareholders of
Company and by the board of directors of Seller authorizing on behalf
of Company and Seller the execution and delivery of this Agreement and
the consummation of all of the transactions contemplated by this
Agreement;
(ii) Seller shall deliver to Buyer certified copies
of the resolutions adopted by the shareholders of the Company
authorizing on behalf of Company the amendment of Company's Articles of
Incorporation required to be made pursuant to Section 8 hereof and
proof in such form as Buyer may request that the amendment to Company's
Articles of Incorporation required to be made pursuant to Section 8
hereof has been effected;
(iii) Seller shall deliver to Buyer and Company a
Certificate, dated as of the Closing Date and signed on behalf of
Seller by a duly authorized officer, to the effect that all of the
conditions set forth at Sections 3.1(a) and (b) hereof and, to the best
of Seller's knowledge and belief, the conditions set forth at Sections
3.1(c) and (d), hereof have been satisfied or waived;
(iv) Buyer shall deliver to Seller certified copies
of the resolutions adopted by the two members of Buyer authorizing on
behalf of Buyer the execution and delivery of this Agreement and the
consummation of all the transactions contemplated by this Agreement;
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(v) Buyer shall deliver to Seller a Certificate dated
as of the Closing Date and signed on behalf of Buyer by a member of
Buyer to the effect that all of the conditions set forth at Sections
3.2(a) and (b) hereof and, to the best of Buyer's knowledge and belief,
the conditions set forth at Sections 3.2(c) and (d) hereof, have been
satisfied or waived;
(vi) Seller shall deliver to Buyer evidence
satisfactory to Buyer that all of the security interests, liens and
other encumbrances on properties and assets of Company that were
granted to Capital Bank to secure indebtedness incurred by or on behalf
of Seller have been terminated in accordance with Section 11 hereof;
(vii) All proceeds of the Financing shall have been
received by Company;
(viii) Seller shall deliver to Buyer lists of all the
directors and officers of Company certified by the secretary or
assistant secretary thereof and resignations of all of said directors
and officers (as requested by Buyer) stated to take effect on the
Closing Date immediately subsequent to the Closing;
(ix) Seller shall deliver to Buyer the original
copies of the Articles of Incorporation, Code of Regulations, minute
books, stock record books and corporate seal of the Company, and all
such other documents and records of the Company as Buyer shall request;
and
(x) Each party shall deliver such other instruments,
documents or collateral agreements as are necessary to consummate the
transactions provided for herein and which may be reasonably required
by the parties' counsel.
(c) All transactions consummated at the Closing shall be
deemed to have been made simultaneously and no documents or funds shall be
deemed to have been delivered until all required documents and funds have been
delivered.
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SECTION 5. CONDUCT OF BUSINESS.
Except as consented to in writing by Buyer, from and after the date of
this Agreement and until the Closing, neither Seller nor Xxxxx shall (i) cause
the Company to conduct its business other than substantially as heretofore
conducted, (ii) cause the Company to sell, convey or encumber any portion of its
property or assets, enter into any transaction or commitment or otherwise do
anything, other than in the normal, usual and ordinary course of business, (iii)
take any action that would materially impair the value or utility of the
Company's assets, taken as a whole, (iv) take any action that would materially
impair the business organization of the Company or the ability of the Company to
keep available the services of its present officers and employees, or the
ability of the Company to retain the goodwill of its customers and suppliers, or
(v) cause the Company to commit any act or omission which will constitute a
breach of any material contract, commitment or obligation to which the Company
is a party or by which any of its properties or assets may be bound.
SECTION 6. WARRANTIES, REPRESENTATIONS AND INDEMNIFICATION.
6.1. WARRANTIES OF SELLER. Seller warrants, represents and covenants to
Buyer and Company that:
(a) ORGANIZATION STANDING. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Ohio and has the requisite corporate power and
authority to own, lease, use and/or operate its properties and to
transact its business as heretofore and presently conducted. The Seller
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate
power and authority to own, lease, use and/or operate its properties
and to transact its business as heretofore and presently conducted.
(b) SUBSIDIARIES. The Company has no subsidiary and
does not own any capital stock or other securities or interest in any
other firm, corporation or entity.
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(c) CHARTER. The Articles of Incorporation and Code
of Regulations of the Company, complete and current copies of which
have been delivered to Buyer, are in effect on the date of this
Agreement and no amendment or modification thereof will be made prior
to Closing, except for the amendment to the Articles of Incorporation
required to be made pursuant to Section 8 hereof.
(d) CAPITALIZATION OF THE COMPANY. Subject to the
transactions to take place hereunder at the Closing, the Company's
entire authorized capital stock consists solely of shares of Common
Stock, without par value, of which one hundred (100) shares are
presently issued and outstanding, and none of the shares of Company's
Common Stock is held in Treasury. Each of the shares of the Stock has
been validly authorized and issued, and is fully paid and
non-assessable.
(e) STOCK OWNERSHIP. At the Closing, Seller will have
good and marketable title to all of the Stock, free and clear of all
liens, pledges, claims, encumbrances and equities whatsoever (other
than pursuant to this Agreement), with full capacity, right and lawful
authority to transfer the Stock to Buyer and Company as provided in
this Agreement. Upon consummation of the Closing, Buyer and Company
shall have good and marketable title to all of the Stock, free and
clear of all liens, pledges, claims, encumbrances and equities
whatsoever, except for the pledge required to be made by Buyer pursuant
to the Buyer Pledge Agreement.
(f) OPTIONS. At the Closing, there will be no
outstanding debentures, options, warrants, privileges, agreements or
rights to subscribe for or to purchase, or which would require the
Company to issue, now or in the future, any shares of capital stock or
other securities of the Company. Except as specifically provided in
this Agreement, neither the Company nor Seller will issue, transfer,
sell, encumber, lease, assign, distribute, give or pledge, or make or
enter into any agreement or commitment to issue, transfer, sell,
encumber, lease, assign, distribute, give or
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pledge, by operation of law or otherwise, any of the Stock or
certificates evidencing any of the Stock or any other securities of the
Company.
(g) AUTHORIZATION. This Agreement and the
consummation of the transactions provided for in this Agreement have
been duly authorized on behalf of Seller and Company by all requisite
corporate action and no corporate action is required by the
shareholders of Seller, and Seller and Company have full power,
authority and legal right to enter into this Agreement and to carry out
all of their respective obligations under this Agreement.
(h) VALIDITY. When executed and delivered, this
Agreement shall constitute the legal, valid and binding obligation of
Seller and Company, and shall be enforceable against each of them in
accordance with its terms.
(i) ABSENCE OF CONFLICT; GOVERNMENTAL CONSENT.
Neither the execution and delivery of this Agreement by Seller or
Company, nor the performance by Seller or Company of any of their
respective obligations under this Agreement, nor any action taken or to
be taken by Seller or Company pursuant to this Agreement (1) conflicts
with, or will result in a breach or violation of, any articles or
certificate of incorporation, bylaws or code of regulations, judgment,
decree, order, law, injunction, statute, rule or regulation applicable
to Seller or the Company, or (2) conflicts with, will constitute a
default under, is in breach of, will result in the termination of, or
will cause the acceleration of performance required by, the terms of
any indenture, instrument or agreement to which Seller or the Company
is now a party or by which either is bound, except for any conflicts,
breaches or defaults which have been cured, or in respect of which all
requisite waivers and/or approvals have been received, prior to
Closing, or (3) except as expressly provided in this Agreement, results
or will result in the creation of any lien, charge or encumbrance on or
against the Stock, or any of the properties, assets or other securities
of the Company. No permit, consent, approval or authorization of, or
declaration to, or filing with, any governmental or
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regulatory authority is required in connection with the execution,
delivery and performance of this Agreement by Seller or Company or
consummation by Seller or Company of any other transaction contemplated
hereby.
(j) TRANSACTIONS WITH SELLER AND AFFILIATES. No
dividends, distributions or other payments in respect of the Stock, and
no payments of administrative or similar service fees, have been made
by or on behalf of Company to Seller or any affiliate of the Seller or
otherwise since June, 1994. Except for this Agreement, there are no
contracts or other arrangements between Company and Seller or any
affiliates of Seller. No expenditures have been made or liabilities
incurred (contingent or otherwise) by Company for loans, advances,
capital contributions or transfers of property to, or otherwise for the
benefit of, Seller or any affiliate of Seller. Except as described in
Section 11, there are no guarantees or similar instruments that have
been executed by Company or other liabilities (contingent or otherwise)
incurred by Company on behalf of, or otherwise for the benefit of,
Seller or any affiliate of Seller. Except as described in Section 11,
there are no mortgages, liens, charges, security interests or other
encumbrances on the properties or other assets of Company that secure
liabilities or other obligations of, or are otherwise for the benefit
of, Seller or any affiliate of Seller and at the Closing there will be
no mortgages, liens, charges, security interests or other encumbrances
on the properties or other assets of Company except for any of the same
in favor of the Financing Sources that secure the Financing.
6.2. WARRANTIES AND REPRESENTATIONS OF BUYER. Buyer warrants,
represents and covenants to Seller that:
(a) ORGANIZATION STANDING. The Buyer is a limited
liability company duly organized, validly existing and in good standing
under the laws of the State of Ohio and has the requisite power and
authority to own, lease, use and/or operate its properties and to
transact its business as heretofore and presently conducted.
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(b) AUTHORIZATION. This Agreement and the
consummation of all of the transactions provided for in this Agreement
have been duly authorized on behalf of Buyer by all requisite action
and Buyer has full power, authority and legal right to enter into this
Agreement and to carry out all of its obligations under this Agreement.
(c) VALIDITY. When executed and delivered, this
Agreement shall constitute the legal, valid and binding obligation of
Buyer, and shall be enforceable against Buyer in accordance with its
terms.
(d) ABSENCE OF CONFLICT; GOVERNMENTAL CONSENT.
Neither the execution and delivery of this Agreement by Buyer, nor the
performance by Buyer of any of its obligations under this Agreement,
nor any action taken or to be taken by Buyer pursuant to this Agreement
(1) conflicts with or will result in a breach or violation of any
articles or certificates of incorporation, bylaws or code of
regulations, judgement, decree, order, law, injunction, statute, rule
or regulation applicable to Buyer, or (2) conflicts with, will
constitute a default under, is in breach of, will result in the
termination of, or will cause the acceleration of performance required
by, the terms of any indenture, instrument or agreement to which Buyer
is a party or by which he is bound, or (3) except as expressly provided
in this Agreement, results or will result in the creation of any lien,
charge or encumbrance on or against any of the properties, assets or
securities of Buyer. No permit, consent, approval or authorization of,
or declaration to or filing with, any governmental or regulatory
authority is required in connection with the execution, delivery and
performance of this Agreement by Buyer or consummation by Buyer of any
other transaction contemplated hereby.
(e) OWNERSHIP. Xxxxx and his spouse, Xxxxxxx X.
Xxxxx, are the sole members of Buyer.
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6.3. INDEMNIFICATION BY SELLER. Subject to Section 6.4 hereof,
Seller agrees to defend, indemnify and hold harmless Buyer and its affiliates
(including the Company) and their respective directors, officers, employees,
successors and assigns, against any and all claims, suits, proceedings, losses,
damages, costs and expenses (including without limitation reasonable legal fees)
resulting from breach of any warranty or representation or non-performance of
any covenant or agreement made by Seller in this Agreement, or arising before or
after Closing in connection with Seller or the business or operations of Seller
(exclusive of the business or operations of Company) or of any of Seller's
affiliates (exclusive of the Company). Without limiting the generality of the
foregoing, the aforesaid obligations of Seller shall apply to claims, suits,
proceedings, losses, damages, costs and expenses (including without limitation,
reasonable legal fees) in respect of withdrawal or other liabilities to which
Company or Buyer or Buyer's affiliates may become subject as a result of (i) the
participation by Seller or any of its affiliates in, or the making of
contributions by Seller or any of its affiliates to, one or more "multiemployer
plans" as such term is defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the regulations
promulgated thereunder, or (ii) the establishment or maintenance of,
participation in or making of contributions to, any other "defined benefit
plan," as such term is defined in Section 3(35) of ERISA and the regulations
promulgated thereunder, by Seller or any of its affiliates. Subject to Section
6.4 hereof and to Seller's obligations under the preceding sentence of this
Section 6.3, Buyer agrees to defend, indemnify and hold harmless Seller and its
affiliates and their respective directors, officers, employees, successors and
assigns, against any and all claims, suits, proceedings, losses, damages, costs
and expenses (including without limitation reasonable legal fees) resulting from
breach of any warranty or representation or non-performance of any covenant or
agreement made by Buyer in this Agreement, or arising before or after Closing in
connection with the Company or business or operations of the Company or of Buyer
or of any of Buyer's affiliates.
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6.4. CLAIMS LIMITATION. Neither Seller nor Buyer may assert or
be heard to assert, directly or indirectly, any right, claim or cause of action
(a "Claim") against the other under or pursuant to this Agreement (other than a
Claim arising under Sections 10, 11, 12, 13, 14, 15 or 18.4 hereof or arising
under the Promissory Notes, Pledge Agreements or Guarantees) or otherwise in
connection with the transactions contemplated hereby unless the party asserting
or entitled to assert the Claim gives written notice thereof to the other party
(i) within sixty (60) days after the party asserting or entitled to assert the
Claim discovers or receives notice of same, and (ii) with respect to all Claims,
other than Claims arising under Sections 6.1(e), 10, 11, 12, 13, 14, 15 and 18.4
hereof and Claims arising under the Promissory Notes, Pledge Agreements and
Guarantees, not later than the end of the third anniversary of the Closing Date.
Each notice of a Claim shall describe the Claim with reasonable specificity
including, as applicable, the names of the parties involved, dates, places and
other material facts then known to the party giving the notice, and shall be
updated periodically as other material facts concerning the Claim become known
to the party giving the notice. Nothing contained in this Section 6.4 shall, or
shall be deemed to, extend, toll or effect a waiver or modification of any
statutory period of limitations applicable to any Claim and which may operate to
bar any Claim.
SECTION 7. FINANCING. Xxxxx shall use his best efforts to obtain on
behalf of Company financing to provide the Company with sufficient funds to make
all payments required to be made by Company hereunder at Closing, to pay
Company's expenses in connection with the transactions contemplated hereby, and
to provide working capital to the Company on an ongoing basis (the "Financing"),
in an amount of not less than One Million Four Hundred Thousand Dollars
($1,400,000) from such financing sources (the "Financing Sources") and on such
terms and conditions as may be acceptable to Xxxxx in his sole discretion, and
as may be acceptable to Company. Xxxxx shall use his best efforts to complete,
as soon as practicable, the negotiation of definitive financing agreements (the
"Definitive Financing Agreements") with the Financing Sources. Xxxxx shall use
his best efforts to
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complete, and Seller shall cause Company to use its best efforts to complete,
the preparation and execution of the Definitive Financing Agreements as soon as
practicable. Seller acknowledges that in conjunction with the foregoing, Company
may be required to execute, among other documents, credit agreements, security
agreements, promissory notes, grants of security interests, liens and other
encumbrances on its properties and other assets, and a variety of closing
documents and to approve the Definitive Financing Agreements and all
transactions contemplated thereby by all requisite corporate actions, and Seller
agrees to cause Company to effect all of such acts.
SECTION 8. AMENDMENT OF ARTICLES OF INCORPORATION. Prior to the
Closing, Seller shall cause Article Fourth of the Articles of Incorporation, as
amended, of Company to be amended to authorize the redemption of Stock by
Company provided for herein, by amending and restating said Article in its
entirety to provide as specified on Exhibit 8.1. Such amendment shall be
approved in the manner prescribed by law and the Company's Articles of
Incorporation by proper corporate action of the Company's shareholders, and,
prior to Closing, such amendment shall be filed with the Secretary of State of
Ohio, in such form and manner and together with such other certificates and
documents as may be required by law to effect such amendment.
SECTION 9. PROMISSORY NOTES, GUARANTEES AND PLEDGE AGREEMENTS. The
Buyer Promissory Note shall be in the form of Exhibit 9.1 hereto and the Company
Promissory Note shall be in the form of Exhibit 9.2 hereto (the Company
Promissory Note and Buyer Promissory Note are sometimes collectively referred to
as the "Promissory Notes"). Company's obligations under the Company Promissory
Note shall be secured by a Guaranty of Buyer dated the Closing Date ("Buyer
Guaranty") in the form of Exhibit 9.3 hereto and a portion of Buyer's
obligations under the Buyer Promissory Note shall be secured by a Guaranty of
Xxxxx and Xxxxxxx X. Xxxxx dated the Closing Date (the "Xxxxx Guaranty") in the
form of Exhibit 9.4 hereto (the Buyer Guaranty and Xxxxx Guaranty are sometimes
collectively referred to as the "Guarantees"). Buyer's obligations under the
Buyer Promissory Note and Company's
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obligations under the Company Promissory Note also shall be secured in part by a
pledge agreement of Buyer dated the Closing Date (the "Buyer Pledge Agreement")
in the form of Exhibit 9.5 hereto and a pledge agreement of Xxxxx and Xxxxxxx X.
Xxxxx dated the Closing Date (the "Xxxxx Pledge Agreement") in the form of
Exhibit 9.6 hereto (the Buyer Pledge Agreement and Xxxxx Pledge Agreement are
sometimes collectively referred to as the "Pledge Agreements").
SECTION 10. FORGIVENESS OF INDEBTEDNESS. Seller agrees that, effective
as of the Closing, all indebtedness due Seller by Company, including any accrued
and unpaid interest thereon, is forgiven and canceled.
SECTION 11. CAPITAL BANK LIENS AND DEBENTURES. Seller acknowledges that
Company previously granted security interests, liens and encumbrances in and on
certain of its properties and other assets to Capital Bank to secure certain
obligations thereto incurred by or on behalf of Seller. Seller will cause all
such security interests, liens and encumbrances to be terminated concurrently
with the Closing in a manner satisfactory to Buyer and the Financing Sources.
Seller represents, warrants and covenants that Seller has issued Three Million
Dollars ($3,000,000) in aggregate principal amount of 10% Convertible Redeemable
Debentures with a maturity date of July 1, 2000 ("Debentures") in respect of
which Company is co-obligor, that no more than One Million Five Hundred Twelve
Thousand Five Hundred Dollars ($1,512,500) in aggregate principal of the
Debentures remain outstanding, that the holders of at least One Million One
Hundred Thousand Dollars ($1,100,000) in aggregate principal amount of the
Debentures that remain outstanding have released Company as a co-obligor with
respect thereto, including but not limited to a release of all obligations of
Company to pay principal, interest and premium in respect of the Debentures and
that Seller will indemnify and hold harmless Company and Buyer from and against
any and all liabilities, obligations and expenses in respect of the Debentures
including but not limited to all obligations to pay principal, interest and
premium in respect of the Debentures. Seller acknowledges its understanding that
Company and Buyer are relying on the foregoing representations,
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warranties, and covenants and may be required to make the same or similar
representations, warranties and covenants to the Financing Sources in order to
obtain the Financing and Seller agrees to indemnify and hold harmless Buyer and
Company from and against any and all liabilities, damages, losses, costs and
expenses that may arise from the incorrectness or incompleteness of the
aforesaid representations, warranties and covenants of Seller or Seller's
failure to comply with its obligations with respect thereto, including but not
limited to any liabilities, damages, losses, costs and expenses that may result
from Company's inability to make borrowings under the revolving facility
provided in conjunction with the Financing or the acceleration of Company's
repayment obligations in respect of the Financing.
SECTION 12. NON-COMPETITION. Seller agrees for a period of three (3)
years beginning on the Closing Date not to engage in, or have any financial
interest in, either as a shareholder or partner or through affiliates or
otherwise, directly or indirectly, any business which performs janitorial and
related cleaning, maintenance and management services, franchising, sales or
contracting thereof, or any related business, in the Ohio counties of Cuyahoga,
Lorain, Summit, Geauga, Portage, Medina, Stark, Lake, Mahoning, Trumbull,
Ashtabula and Xxxxx or in the Florida counties of Dade, Broward, Palm Beach,
Xxxxxx, St. Lucie and Indian River; provided, however, that nothing contained
herein shall be construed to prohibit Seller's interest in the Promissory Notes
or to prohibit Seller from obtaining janitorial services from third parties to
service its normal business operations or to otherwise subcontract janitorial
services to medical waste customers. Seller agrees that the foregoing
non-competition restrictions may be modified by a court to the extent necessary
to make the non-competition restrictions valid and enforceable against Seller.
Sellers acknowledge that money damages would be an inadequate remedy for a
breach of this covenant and that in addition to such money damages Company shall
be entitled to injuctive relief for a breach hereof.
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SECTION 13. CERTAIN SECURITIES MATTERS.
13.1 REPRESENTATIONS, WARRANTIES, AND COVENANTS. Buyer warrants,
represents and covenants with respect to the Stock it is acquiring and Seller
warrants, represents and covenants with respect to the Promissory Notes it is
acquiring, as follows:
(a) That such securities or instruments are being acquired by
the acquiror solely for such acquiror's own account, for investment and
not with a view to any distribution thereof that would violate the
Securities Act of 1933, as amended (the "Securities Act"), or the
applicable securities laws of any state;
(b) That the securities or instruments have not been
registered under the Securities Act or the securities laws of any state
and must be held indefinitely unless subsequently registered under the
Securities Act and any applicable state securities law or unless an
exception from such registration becomes or is available;
(c) That such acquiror is financially able to hold such
securities or instruments and recognizes that there are substantial
risks involved in respect of the same.
13.2 LEGENDS AND RESTRICTIONS.
Buyer agrees that the certificate or certificates evidencing
the Stock and each new certificate therefor, and Seller agrees that the
Promissory Notes, shall bear conspicuously a legend in substantially the
following form:
"THE SECURITIES/INTERESTS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT COVERING
THE SECURITIES/INTERESTS OR AN OPINION OF COUNSEL, SATISFACTORY TO
COUNSEL FOR THE ISSUER
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HEREOF, THAT REGISTRATION IS NOT REQUIRED UNDER THE
CIRCUMSTANCES OF THE PROPOSED TRANSFER."
Buyer further agrees that it will not cause or permit the Company to remove the
above legend from the Stock unless the Company receives a letter from the staff
of the Securities and Exchange Commission (the "Commission") or an opinion of
counsel to the effect that such legend is not required for purposes of the
Securities Act. Buyer further agrees that it will not cause or permit the
Company to register on its stock transfer books any purported transfer of the
Stock except pursuant to (i) an effective registration statement under the
Securities Act covering the Stock, or (ii) a letter from the staff of the
Commission or an opinion of counsel stating that registration is not required
under the circumstances of the proposed transfer.
SECTION 14. MUTUAL COOPERATION.
14.1. ACCESS TO BOOKS AND RECORDS. Prior to the Closing, Seller and
Xxxxx will each cause the Company to provide the other with reasonable access
during normal business hours to all of the Company s properties, facilities,
books, records, contracts, commitments and personnel, and furnish the other with
such information covering the business and affairs of the Company as the other
may reasonably request. After the Closing and except as otherwise provided
herein, Seller and Buyer each shall retain the books, records, documents,
instruments, accounts, evidences of title and other papers relating to the
Company (the "Books and Records") for the period set forth in that party's
records retention policy on the date hereof or for such longer period as may be
required by any governmental authority or applicable court order. Seller and
Buyer or Xxxxx, as the case may be, each shall have access to the Books and
Records held by the other on reasonable notice during normal business hours for
any proper purpose. For so long as Seller continues to hold the Company
Promissory Note, Company will provide Seller with audited annual financial
statements for the Company within ninety (90) days after each fiscal year end of
Company, including copies of any "management letter" that may have been issued
by Company's auditors in conjunction therewith. Not in limitation of the
foregoing, subsequent to the Closing Company shall
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permit Seller, including Seller's auditors, to inspect, during normal business
hours and upon reasonable prior written notice, such of Company's books and
records as may be necessary in order to enable Seller (i) to prepare audited
financial statements for the Company for the fiscal year ending December 31,
1997, to the extent such audited financial statements are required by applicable
Securities and Exchange Commission ("SEC") requirements and to the extent the
audited financial statements provided by the Company to Seller pursuant to the
preceding sentence do not suffice, and (ii) to disclose in Seller's financial
statements such information regarding Seller's investment in the Company
Promissory Note as may be required to be disclosed pursuant to applicable SEC
requirements, to the extent the audited financial statements provided by the
Company pursuant to the preceding sentence do not suffice, and in conjunction
with any inspections made pursuant to (i) or (ii) above, Company shall cause its
management to cooperate with Seller in the conduct of any such inspection and,
to the extent required by applicable SEC requirements or applicable auditing
standards, Company shall cause its management to sign such management
representation letters as may be reasonably requested by Seller's auditors.
14.2. COOPERATION IN HANDLING DISPUTES. Each party agrees that after
the Closing it will upon request cooperate with the requesting party in the
prosecution or defense of any suits, actions, claims, proceedings or disputes of
any nature relating to the Company. The party requesting such cooperation shall
reimburse the requested party for any reasonable out-of-pocket expenses incurred
by the requested party in rendering its cooperation.
14.3. FURTHER ASSURANCES. From time to time after the Closing, Seller
shall promptly execute and deliver, or cause to be executed and delivered, to
Buyer such further deeds, bills of sale, conveyances, assignments, assurances or
other instruments of transfer as Buyer may reasonably request in order to vest
and confirm in Buyer ownership of the Company and of all of the securities,
assets and the business of the Company.
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14.4. CONFIDENTIALITY. Without the prior written consent of Company,
Seller will not at any time, whether prior to or after Closing, furnish or make
accessible to any person, firm, corporation or other business entity all or any
part of any trade secret, technical data, confidential or secret know-how or
other information concerning the confidential business practices, methods,
processes or other confidential or secret aspects of the business of Company or
all or any part of any information about Company, whether obtained pursuant to
Section 14 hereof or otherwise.
SECTION 15. CERTAIN ADDITIONAL POST CLOSING COVENANTS. Subsequent to
Closing and so long as any portion of the Promissory Notes is unpaid, Company or
Buyer, as the case may be, agree as follows:
(a) Company shall not issue any additional shares of any class
of its capital stock and Buyer shall not admit any new members;
(b) Except as contemplated hereby, Buyer and Company will not
enter into any consulting or other financial arrangements with each
other;
(c) Company shall not pay any dividends in respect of its
capital stock except that Company may pay dividends or make other
distributions to Buyer to the extent necessary to enable Buyer to:
(i) Pay the expenses and obligations of Buyer,
including without limitation, the reasonable expenses of Buyer
(including all reasonable professional fees and expenses) in
connection with complying with its reporting obligations and
obligations to prepare and distribute business records,
financial statements or other documents to any person having
business dealings with Buyer or as may be required by law,
Buyer's costs and related expenses in connection with the
computation and payment of federal, state, local or foreign
taxes and other governmental charges, indemnification
agreements, insurance
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premiums, surety bonds and insurance broker fees, and Buyer's
expenses, if any, for directors', officers' and employees'
fees and compensation;
(ii) Pay all or any portion of the unpaid principal
amount of the Buyer Promissory Note or interest thereon; and
(iii) Pay any other obligations of Buyer or other
sums to Buyer, provided that the aggregate amount of dividends
or other distributions pursuant to this clause (iii) shall not
exceed One Hundred Thousand Dollars ($100,000.00) during any
fiscal year of Buyer; and
(d) Company shall not sell, exchange, transfer or otherwise
dispose of all or substantially all of its assets or otherwise
liquidate its business unless it applies the net proceeds received from
the same that remain after satisfying all obligations of Company under
the Definitive Financing Agreements or any refinancings thereof in the
following order: FIRST, to the payment of accrued and unpaid interest
on the Buyer Promissory Note; SECOND, to the payment of unpaid
principal on the Buyer Promissory Note; THIRD, to the payment of
accrued and unpaid interest on the Company Promissory Note; and FOURTH,
to the payment of unpaid principal on the Company Promissory Note. (Any
surplus remaining after payment in full of the foregoing shall belong
to Company.); and
(e) NOL ELECTION: Buyer, Seller, the Company and Xxxxx agree
that any net operating losses of the Company for periods prior to
January 1, 1998 shall be retained by the Seller and utilized by Seller
on its consolidated tax returns. In connection therewith, the Company
and Seller shall sign a "loss attribution election" pursuant to U.S.
Treasury Regulation Section 1.1502.20(g)(i) to reattribute the losses
of the Company to Seller to the extent permitted by such Regulation.
The parties agree to file such election with their respective income
tax returns. Such election shall be irrevocable.
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SECTION 16. TERMINATION.
16.1. RIGHT TO TERMINATE. This Agreement may be terminated at any time
prior to the Closing by mutual written consent of all parties. This Agreement
may also be terminated by any party by written notice to the other parties if
the Closing does not occur within one (1) month after the date of this
Agreement.
16.2. EFFECT OF TERMINATION. If the Closing is not consummated whether
because of termination under Section 16.1 hereof or otherwise, no party shall
have any further obligation to perform any covenant or agreement remaining to be
performed except for the covenants and agreements contained in Sections 18.3 and
18.4 hereof.
SECTION 17. NOTICES. Any notice or other communication required or
permitted to be given under this Agreement shall be hand-delivered, delivered by
overnight courier, telecopied or mailed by certified mail, return receipt
requested, first-class postage prepaid, addressed as follows:
(a) If to Seller:
Med/Waste, Inc.
0000 X.X. 000 Xxxxxx
Xxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, President
with a copy to:
Xxxxx Xxxxxx, Esq.
Wallace, Bauman, Fodiman & Xxxxxxx, P.A.
0000 Xxxxx xx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
(b) If to Buyer:
MDK Holdings, Ltd.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
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with a copy to:
Xxxxx Xxxxx, Esq.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxx 00000
(c) If to Company:
The Xxxxx Group, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
Xxxxx Xxxxx, Esq.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxx 00000
(d) If to Xxxxx:
Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxx
Xxxxx Xxxxxxxx, Xxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
Xxxxxxxx Xxxx & Xxxxx LLP
0000 Xxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
or such other addresses as the parties may from time to time designate in
writing in the manner provided in this Section 17, and shall be effective when
actually received.
SECTION 18. MISCELLANEOUS.
18.1. ENTIRE AGREEMENT. When executed by all parties this Agreement and
its Exhibits, each of which is incorporated herein, embody all representations,
warranties, covenants, undertakings and agreements of the parties with respect
to the subject matter hereof, and supersede all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written.
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18.2. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the parties and their respective legal representatives,
successors and assigns.
18.3. EXPENSES. Except as otherwise specifically provided in this
Agreement, each party shall be responsible for all costs and expenses, including
without limitation legal and accounting fees and tax liabilities, incurred by it
or at its initiative, or to which it may be or become subject, in connection
with this Agreement or as a result of the consummation of the transactions
contemplated by this Agreement.
18.4. BROKERS. Seller and Buyer each agree to defend, indemnify and
hold the other harmless from and against any and all costs, liabilities,
damages, litigation and/or expenses, including without limitation reasonable
legal fees, which the other may sustain or incur as a result of any liability or
alleged liability to any broker, finder or advisor which arises out of the acts
or agreements of the indemnifying party or its officers, agents, employees or
representatives.
18.5. RIGHTS AND REMEDIES. Except as provided in Section 6.4 hereof, no
right or remedy conferred upon or reserved to any party by this Agreement shall
exclude any other right or remedy, but each such right or remedy shall be
cumulative and shall be in addition to every other right or remedy under this
Agreement or available at law or in equity. Neither party shall be deemed to
have waived any right or remedy unless such waiver is in writing, nor shall the
waiver of any right or remedy be deemed or construed to be a waiver of any other
right or remedy or as a waiver of the same right or remedy on a different
occasion. Nothing in this Agreement is intended or shall be construed to confer
upon or give any rights or remedies to any person, firm or corporation, other
than the parties and their respective legal representatives, successors and
assigns.
18.6. NATURE AND SURVIVAL OF REPRESENTATIONS. The representations,
warranties, covenants, undertakings and agreements of the parties contained in
this Agreement, and all statements contained in this Agreement or any exhibit or
schedule hereto or any certificate, report or other document
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delivered pursuant to this Agreement or in connection with the transactions
contemplated hereby, shall be deemed incorporated in this Agreement and shall
constitute representations, warranties, covenants, undertakings and agreements
of the respective party delivering the same. All such representations,
warranties, covenants, undertakings and agreements shall survive the Closing.
18.7. AMENDMENTS. This Agreement may not be amended or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the same is sought.
18.8. PUBLIC ANNOUNCEMENT. No public announcement of the execution of
this Agreement, or of the consummation of any of the transactions contemplated
by this Agreement, shall be made by either party prior to the Closing, unless
the time, place, content and manner of distribution thereof shall have been
first approved by Seller and Buyer, except that no such approval shall be
required with respect to any such disclosure which is required by law, court
order or administrative decree, or which is necessary or appropriate in order to
satisfy any condition precedent set forth in Section 4 hereof.
18.9. INTERPRETATION AND CONSTRUCTION. The captions in this Agreement
are for convenience only and shall not be considered part of this Agreement.
Except as otherwise provided by law, this Agreement has been and shall in all
respects be interpreted and construed in accordance with, and performance
hereunder shall be governed by, the laws of the State of Florida. Each party
hereto submits to the jurisdiction of the state and federal courts in the State
of Florida for purposes of any action or proceeding hereunder or in respect of
the transactions contemplated hereby and agrees that the venue of any such
action or proceeding may be laid in Dade County, Florida and waives any claim
that the same is an inconvenient forum. If any provision of this Agreement is
finally determined to be unlawful or invalid, such provision shall be deemed to
be severed from this Agreement, but every other provision hereof shall remain in
full force and effect.
18.10. COMPLIANCE WITH SECURITIES LAWS. Not in limitation of Section
13, Seller will not sell, offer for sale, pledge or otherwise dispose of any of
the Promissory Notes in violation of applicable
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federal and state securities laws and Buyer will not sell, offer for sale,
pledge or otherwise dispose of the Stock in violation of applicable federal and
state securities laws.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date set forth above, in any number of
counterpart copies, each of which when fully executed shall be deemed an
original for all purposes.
SELLER:
MED/WASTE, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------
Xxxxxx Xxxxxxx, President
BUYER:
MPK HOLDINGS, LTD.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx, Member
COMPANY:
THE XXXXX GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx, President
XXXXX:
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
-------------------------------
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