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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
By and Between
MED/WASTE, INC.
a Delaware corporation
XXXXXXX MOTORS, INC.
a Pennsylvania corporation
EAST COAST MEDICAL WASTE, INC.
a New Jersey corporation
BUCKS COUNTY RESOURCE AND RECOVERY, INC.
a Pennsylvania corporation
XXXXX XXXXXXX
AND
XXXX XX XXXXXXX
August 11, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I.- DEFINITIONS........................................................1
1.1 AVERAGE PRICE.................................................1
1.2 BUSINESS......................................................1
1.3 BUYER.........................................................1
1.4 CLOSING DATE..................................................1
1.5 CODE..........................................................1
1.6 COLLATERAL AGREEMENTS.........................................1
1.7 COMMON STOCK..................................................1
1.8 COMPANIES.....................................................1
1.9 CONTRACTS.....................................................2
1.10 DAMAGES.......................................................2
1.11 DEPOSIT.......................................................2
1.12 DEPOSIT ESCROW AGENT..........................................2
1.13 DISCLOSURE SCHEDULE...........................................2
1.14 EBT...........................................................2
1.15 EBT REPRESENTATIVE PERIOD.....................................2
1.16 ENVIRONMENTAL CLAIM...........................................2
1.17 ENVIRONMENTAL LAW.............................................2
1.18 ERISA.........................................................2
1.19 FINANCIAL STATEMENTS..........................................3
1.20 GAAP..........................................................3
1.21 GOVERNMENTAL AUTHORITY........................................3
1.22 HAZARDOUS MATERIALS...........................................3
1.23 HAZARDOUS MATERIAL ACTIVITY...................................3
1.24 INTANGIBLE RIGHTS.............................................3
1.25 LAST REPORTED SALE PRICE......................................3
1.26 MATERIAL ADVERSE EFFECT.......................................3
1.27 MEDICAL WASTE.................................................3
1.28 MWI COMMON STOCK..............................................3
1.29 ORDINARY COURSE OF BUSINESS...................................4
1.30 PERMITS.......................................................4
1.31 POST CLOSING ESCROW AGENT.....................................4
1.32 PURCHASE PRICE................................................4
1.33 RELEASE.......................................................4
1.34 SHAREHOLDERS..................................................4
1.35 TAX OR TAXES..................................................4
ARTICLE II. - SALE AND PURCHASE OF COMMON STOCK................................4
2.1 SALE AND PURCHASE OF COMMON STOCK.............................4
2.2 METHOD OF TRANSFER ...........................................4
2.3 NO LIENS......................................................4
2.4 NO LIABILITIES................................................4
ARTICLE III.- PURCHASE PRICE AND METHOD OF PAYMENT.............................5
3.1 PURCHASE PRICE................................................5
3.2 CONTINGENT VALUATION..........................................6
3.3 ADJUSTMENT TO PURCHASE PRICE..................................6
3.4 ESCROW ARRANGEMENT............................................6
3.5 ACCOUNTS RECEIVABLES..........................................6
3.6 RIGHT OF SET-OFF..............................................7
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3.7 INVESTMENT RESTRICTIONS.......................................7
ARTICLE IV. - CLOSING..........................................................7
4.1 CLOSING.......................................................7
4.2 DEPOSIT.......................................................7
4.3 SHAREHOLDERS AND COMPANIES PERFORMANCE AT CLOSING.............7
4.4 BUYER'S PERFORMANCE AT CLOSING................................9
4.5 TERMINATION IN ABSENCE OF CLOSING............................10
ARTICLE V. - REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND SHAREHOLDERS.......................................11
5.1 ORGANIZATION.................................................11
5.2 CAPITALIZATION...............................................11
5.3 CORPORATE DOCUMENTS..........................................11
5.4 SUBSIDIARIES.................................................11
5.5 AUTHORITY....................................................11
5.6 FINANCIAL STATEMENTS.........................................12
5.7 TITLE TO ASSETS..............................................12
5.8 LIABILITIES..................................................12
5.9 OBLIGATIONS TO AFFILIATES....................................12
5.10 REAL PROPERTY................................................12
5.11 PROPERTY.....................................................13
5.12 EMPLOYEE BENEFIT.............................................13
5.13 EMPLOYEE MATTERS ............................................14
5.14 EMPLOYMENT PRACTICES.........................................15
5.15 INSURANCE....................................................15
5.16 CONTRACTS AND COMMITMENTS....................................15
5.17 INSPECTION OF RECORDS........................................16
5.18 INVENTORIES..................................................16
5.19 EQUIPMENT AND OTHER TANGIBLE PROPERTY........................16
5.20 PERMITS......................................................16
5.21 INTANGIBLE RIGHTS............................................16
5.22 UNREGISTERED SECURITIES......................................16
5.23 LITIGATION...................................................17
5.24 COMPLIANCE WITH LAWS.........................................17
5.25 ABSENCE OF MATERIAL CHANGES..................................17
5.26 BANKING INFORMATION..........................................18
5.27 TAX RETURNS..................................................18
5.28 ACCOUNTS RECEIVABLE..........................................18
5.29 BROKERS' COMMISSIONS.........................................18
5.30 BOOKS AND RECORDS............................................18
5.31 ACCURACY OF INFORMATION......................................18
5.32 ENVIRONMENTAL MATTERS........................................19
ARTICLE VI.- REPRESENTATIONS AND WARRANTIES OF BUYER..........................19
6.1 ORGANIZATION OF BUYER........................................19
6.2 AUTHORITY....................................................19
6.3 FINANCIAL STATEMENTS.........................................20
6.4 ISSUANCE OF MWI COMMON STOCK.................................20
ARTICLE VII.- OBLIGATIONS PRIOR TO CLOSING....................................20
7.1 OPERATION OF BUSINESS........................................20
7.2 ACCESS TO BOOKS AND RECORDS..................................20
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7.3 NEGATIVE COVENANTS..........................................20
7.4 AFFIRMATIVE COVENANTS.......................................21
7.5 CONSUMMATION OF TRANSACTIONS................................22
7.6 NO NEGOTIATIONS.............................................22
7.7 DAMAGE OR DESTRUCTION OF ASSETS.............................22
7.8 DISCLOSURE SCHEDULE.........................................22
ARTICLE VIII. - CONDITIONS PRECEDENT TO THE CLOSING..........................23
8.1 CONDITIONS TO OBLIGATIONS OF BUYER .........................23
8.2 CONDITIONS TO OBLIGATIONS OF THE COMPANIES AND
THE SHAREHOLDERS............................................24
ARTICLE IX.- POST-CLOSING OBLIGATIONS........................................24
9.1 SURVIVAL OF THE CLOSING.....................................24
9.2 FURTHER ASSURANCES..........................................24
9.3 INDEMNIFICATION BY THE SHAREHOLDERS.........................25
9.4 NON-COMPETITION AGREEMENT...................................25
9.5 PUBLICITY...................................................26
9.6 EMPLOYMENT AGREEMENTS.......................................26
ARTICLE X. - MISCELLANEOUS...................................................26
10.1 COSTS AND EXPENSES..........................................26
10.2 REMEDIES....................................................26
10.3 DISCLOSURE SCHEDULE.........................................26
10.4 ATTORNEYS' FEES.............................................26
10.5 RISK OF LOSS................................................26
10.6 ASSIGNMENT AND AMENDMENT OF AGREEMENT.......................26
10.7 NOTICES.....................................................26
10.8 ENTIRE AGREEMENT............................................27
10.9 WAIVER......................................................27
10.10 GOVERNING LAW...............................................27
10.11 COUNTERPARTS................................................27
10.12 CAPTIONS....................................................27
10.13 SUCCESSORS AND ASSIGNS......................................27
10.14 INTERPRETATION..............................................28
10.15 SEVERABILITY................................................28
10.16 RIGHTS OF THIRD PARTIES.....................................28
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") entered into as
of the 11th day of August, 1998 by and between MED/WASTE, INC., a Delaware
corporation, XXXXXXX MOTORS, INC., a Pennsylvania corporation, EAST COAST
MEDICAL WASTE, INC., a New Jersey corporation, BUCKS COUNTY RESOURCE AND
RECOVERY, INC., a Pennsylvania corporation, XXXXX XXXXXXX and XXXX XX XXXXXXX.
R E C I T A L S
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A. The Companies provide medical waste management services
within the Delaware Valley regional market;
B. Buyer desires to purchase 100% of the outstanding capital
stock of the Companies from the Shareholders, upon the terms and subject to the
conditions set forth herein.
C. The Shareholders own 100% of the outstanding capital stock of
the Companies, and have agreed to sell such capital stock to Buyer subject to
the terms and conditions set forth herein;
D. Buyer, the Companies and the Shareholders desire to make
certain representations, warranties and agreements in connection with this
Agreement and the transaction contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived therefrom and of the respective mutual covenants and
agreements hereinafter set forth and such other good and valuable consideration,
the adequacy and receipt of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
ARTICLE I.- DEFINITIONS
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All capitalized terms used in this Agreement which are not
otherwise defined in this Agreement, are used as defined in this Article I or
elsewhere in this Agreement.
1.1 AVERAGE PRICE - shall mean the price of the MWI Common Stock
determined by dividing (a) the sum of the Last Reported Sales Price of the MWI
Common Stock for each of the thirty (30) trading days prior to the date of
determination, by (b) thirty (30).
1.2 BUSINESS - shall mean the provision of medical waste
management services as conducted by the Companies in the twelve (12) month
period preceding the execution of this Agreement and such additional sales
generated thereafter through the Closing Date.
1.3 BUYER - shall mean MED/WASTE, INC., a Delaware corporation.
1.4 CLOSING DATE - shall mean on or before October 1, 1998, or
such other date thereafter as may be agreed upon in writing by all parties
hereto.
1.5 CODE - shall mean the Internal Revenue Code of 1986, as
amended and the rules and regulations promulgated thereunder.
1.6 COLLATERAL AGREEMENTS - shall mean any and all agreements,
instruments, certificates or documents required or expressly provided for in
this Agreement or otherwise reasonably required by either party to be executed
and delivered in connection with the transaction contemplated by this Agreement.
1.7 COMMON STOCK - shall mean the common stock, $1.00 par value
of the Companies as described in the Companies' respective Articles of
Incorporations.
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1.8 COMPANIES - XXXXXXX MOTORS, INC., a Pennsylvania corporation,
EAST COAST MEDICAL WASTE, INC., a New Jersey corporation and BUCKS COUNTY
RESOURCE AND RECOVERY, INC., a Pennsylvania corporation.
1.9 CONTRACTS - shall mean any and all contracts, agreements,
understandings, arrangements, leases, licenses, registrations, authorizations,
easements, servitudes, rights of way, mortgages, bonds, notes, guaranties,
liens, indebtedness, approvals, or other instruments or undertakings to which
such person is a party or to which or by which such person or the property of
such person is subject or bound, excluding any Permits.
1.10 DAMAGES - shall mean any and all damages, liabilities,
obligations, penalties, fines, judgments, claims, deficiencies, losses, costs,
expenses and assessments, including all attorneys' fees and costs, and interest
accruing on such Damages.
1.11 DEPOSIT - shall mean the sum of $250,000 paid by Buyer and
to be held in escrow by the Deposit Escrow Agent in an interest bearing account,
subject to the terms of this Agreement, of which shall be applied to the
Purchase Price.
1.12 DEPOSIT ESCROW AGENT - shall mean Xxxxxx X. Xxxxxxx, P.C.
Trust Account.
1.13 DISCLOSURE SCHEDULE - shall mean the Disclosure Schedule
prepared by the Companies and the Shareholders containing the disclosures,
exhibits and schedules required pursuant to the terms of this Agreement.
1.14 EBT - shall mean the Company's net income before taxes
determined in accordance with GAAP, providing for normal accruals and normal
reserves for uncollected accounts and verified by the accounting firm of BDO
Xxxxxxx, LLP.
1.15 EBT REPRESENTATIVE PERIOD - shall mean the period from
January 1, 1998 to December 31, 1998.
1.16 ENVIRONMENTAL CLAIM - shall mean any investigation, notice,
violation, demand, allegation, action, suit, injunction, judgment, order,
consent, decree, penalty, fine, lien, proceeding, or claim (whether
administrative, judicial or private in nature) arising (a) pursuant to, or in
connection with, an actual or alleged violation of any Environmental Law, (b) in
connection with any Medical Waste, (c) in connection with any Hazardous Material
or actual or alleged Hazardous Material Activity, (d) from any abatement,
removal, remedial, corrective or other response action in connection with a
Hazardous Material, Environmental law or other order of a Governmental
Authority, or (e) from any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
1.17 ENVIRONMENTAL LAW - shall mean any current or future legal
requirement pertaining to (a) the protection of health, safety and the indoor or
outdoor environment, (b) the conservation, management or use of natural
resources and wildlife, (c) the protection or use of surface water and
groundwater, (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, Release, threatened
Release, abatement, removal, remediation or handling of, or exposure to, any
Hazardous Material or (e) pollution (including any Release to air, land, surface
water, and groundwater), and includes, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Section
9601, et seq., Solid Waste Disposal Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. Section 6901, et seq., Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Section 1251,
et seq., Clean Air Act of 1966, as amended, 42 U.S.C. Section 7401, et seq.,
Toxic Substance Control Act of 1976, 15 U.S.C. Section 2601, et seq., Hazardous
material Transportation Act, 49 U.S.C. App. Section 1801, et seq., Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651, et seq., Oil
Pollution act of 1990, 33 U.S.C. Section 2701, et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001, et seq., National
Environmental Policy Act of 1969, 42 U.S.C. Section 4321, et seq., Safe Drinking
Water Act of 1974, as amended, 42 U.S.C.
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Section 300(f), et seq., any similar, implementation or successor law, and any
amendment, rule, regulation, order or directive issued thereunder.
1.18 ERISA - shall mean the Employment Retirement Income Security
Act of 1974, as amended.
1.19 FINANCIAL STATEMENTS - shall mean the Companies's unaudited
Financial Statements, consisting of balance sheets as of December 31, 1996 and
1997 and statements of income, cash flow and stockholders' equity for the two
(2) years in the period ended December 31, 1997, the notes to the financial
statements thereto, and the unaudited financial statements as of June 30, 1998
and for the six (6) months ended June 30, 1997 and 1998, respectively, all as
attached to the Disclosure Schedule.
1.20 GAAP - shall mean generally accepted accounting principles
for corporate financial statements prepared in the United States.
1.21 GOVERNMENTAL AUTHORITY - shall mean any nation, country
(including, but not limited to the United States of America) commonwealth,
state, territory or possession thereof and any political subdivision of any of
the foregoing, including, but not limited to courts, departments, commissions,
boards, bureaus, agencies, ministries or other instrumentalities.
1.22 HAZARDOUS MATERIALS - shall mean any and all elements or
compounds which are contained in a list of hazardous substances by the United
States Environmental Protection Agency ("EPA") and the list of toxic pollutants
designated by the United States Congress or the EPA or defined by any other
Federal, state or local statute, law, ordinance, code rule, regulation order or
degree regulating, relating to or imposing liability or standards of conduct
concerning any hazardous, medical, toxic or dangerous waste, substance or
material as now or at any time in effect.
1.23 HAZARDOUS MATERIAL ACTIVITY - shall mean any activity, event
or occurrence involving a Hazardous Material, including, without limitation, the
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, Release, threatened Release, abatement, removal, remediation,
handling of or corrective or response action to any Hazardous Material or
Medical Waste.
1.24 INTANGIBLE RIGHTS - shall mean any and all information,
trade secrets, patents, copyrights, trademarks, trade names and other intangible
properties that are necessary or customarily used by the Companies in the
operation of its Business.
1.25 LAST REPORTED SALE PRICE - shall mean the last reported sale
price of MWI Common Stock as reported by such principal securities exchange on
which sales of MWI Common Stock are thereafter reported or if the common stock
is not then listed or admitted for trading on any stock exchange, the closing
sales price of the MWI Common Stock as quoted on the National Market System of
the National Association of Securities Dealers Automated Quotation System
("NMS/NASDAQ") II or if not traded on the NMS/NASDAQ, the closing sales price of
the MWI Common Stock as quoted on the Small Cap Market of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ/SCM"); or
if not then reported on the NASDAQ/SCM, the average last bid and asked price for
such MWI Common Stock in the over-the-counter market as reported on the
Electronic Bulletin Board of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or if the MWI Common Stock is not then
reported on NASDAQ, as furnished by the National Quotation Bureau or such other
firm engaged in such similar business on a given date.
1.26 MATERIAL ADVERSE EFFECT - shall mean an effect (or
circumstance involving a prospective effect) on the business, operations,
assets, liabilities, results of operations, cash flows, conditions (financial or
otherwise) or prospects of the Companies which is materially adverse to the
Business.
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1.27 MEDICAL WASTE - shall mean and include any waste which may
cause an infectious disease or can reasonably be suspected of harboring
pathogenic organisms, including predominately all materials that come in contact
with human and animal body fluids.
1.28 MWI COMMON STOCK - shall mean the common stock, $.001 par
value of the Buyer as described in the Buyer's Certificate of Incorporation, as
presently or thereafter amended.
1.29 ORDINARY COURSE OF BUSINESS - shall mean the conduct and
operation of the business of the Companies only in the manner in which it
conducted and operated such Business during the twelve (12) months preceding the
Closing Date, following its usual and ordinary accounting practices, making
ordinary accruals, incurring ordinary liabilities and expenditures, and making
ordinary commitments for merchandise, insurance, rentals, and other ordinary
Business purposes as reflected in the Financial Statements.
1.30 PERMITS - shall mean any and all permits, licenses,
agencies, orders or contracts granted by any Governmental Authority necessary or
used in the operation of the Business by the Companies as presently conducted.
1.31 POST CLOSING ESCROW AGENT - shall mean Wallace, Bauman,
Legon, Fodiman & Xxxxxxx, P.A. as provided in Section 3.4 herein.
1.32 PURCHASE PRICE - shall mean the cash, MWI Common Stock,
Warrants and other consideration payable to the Shareholders for the purchase of
the Common Stock, all as more fully set forth on Article III herein.
1.33 RELEASE - shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the indoor or outdoor environment, including, without
limitation, the abandonment or discarding of barrels, drums, containers, tanks
and other receptacles containing or previously containing any Hazardous
Material, or Medical Waste.
1.34 SHAREHOLDERS - shall mean Xxxxx Xxxxxxx and Xxxx Xx Xxxxxxx.
1.35 TAX OR TAXES - shall mean any federal, state, local or
foreign, income, gross receipt, license, payroll, employment, excise,
communications, severance, stamp, occupation, premium, windfall profits,
environmental, customs, duties, capital stock, franchise profits, withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transaction, transfer, registration, value added, alternative,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto.
1.36 WARRANTS - The Warrants issuable to the Shareholders
pursuant to the provisions of Section 3.1(c).
ARTICLE II. - SALE AND PURCHASE OF COMMON STOCK
-----------------------------------------------
2.1 SALE AND PURCHASE OF COMMON STOCK - On the terms and subject
to the conditions of this Agreement, on the Closing Date the Shareholders shall
sell, convey, assign, transfer, and deliver to Buyer, and Buyer shall purchase,
acquire, and accept delivery of, 100% of the Common Stock of the Companies. The
Common Stock to be transferred in accordance with this Agreement represents 100%
of the issued and outstanding Common Stock of the Companies and is owned and is
to be sold by the Shareholders.
2.2 METHOD OF TRANSFER - The sale, transfer, conveyance,
assignment, and delivery by the Shareholders of the Common Stock to the Buyer in
accordance with Section 2.1 hereof shall be effected through the delivery by the
Shareholders of the original certificates represented by the Common Stock, duly
endorsed for transfer in the name of Buyer.
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2.3 NO LIENS - The Shareholders shall transfer good and
marketable title to the Common Stock to Buyer free and clear of all liens,
charges, claims, security interests, adverse interests, and encumbrances of any
kind whatsoever owed to, owed by, accrued to, or in favor of any person or party
whatsoever.
2.4 NO LIABILITIES - Notwithstanding anything herein to the
contrary in this Agreement, Buyer shall not assume or be liable for any
liabilities of the Companies including, but not limited to the following
(collectively, the "Liabilities"):
(a) Any of the Shareholders' or the Companies'
liabilities under this Agreement or any Collateral Agreements;
(b) Accounts payable existing as of the Closing Date;
(c) Amounts owed by the Companies to the Shareholders or
any of their affiliates;
(d) Any indebtedness of the Companies;
(e) Payroll, payroll tax and other payroll deduction
obligations of the Companies incurred prior to the Closing Date;
(f) Any liability of the Companies in connection with any
employee benefit plan or program, including without limitation any liability
arising under ERISA;
(g) Any liability of the Companies, contingent or
otherwise, under any Environmental Law incurred prior to the Closing Date;
(h) Any breach of warranty, product liability or other
claims pertaining to services performed or products sold prior to the Closing
Date;
(i) Taxes of the Companies incurred prior to the Closing
Date; and
The Shareholders hereby acknowledges they are retaining the
Liabilities and shall have sole responsibility to pay, discharge and perform all
such Liabilities and obligations promptly when due. The Companies will have no
liabilities, contingent or otherwise, as of the Closing. To the extent that any
liabilities are not satisfied by the Closing, the Shareholders shall reimburse
the Buyer within thirty (30) days following the Closing for all liabilities
remaining at Closing. If such reimbursement is not made within such period, the
Post Closing Escrow Agent shall be authorized to deduct such sums from the
Escrow Fund, based upon the value of the Last Reported Sale price of the MWI
Common Stock as of the date of such reimbursement.
ARTICLE III.- PURCHASE PRICE AND METHOD OF PAYMENT
--------------------------------------------------
3.1 PURCHASE PRICE - As consideration for the Common Stock
purchased by the Buyer, and subject to compliance by the Shareholders and the
Companies with their warranties and undertakings contained in this Agreement,
Buyer shall, in proportion to the respective ownership percentages of the
Shareholders in the Companies (the "Purchase Price"):
(a) pay to the Shareholders aggregate cash in the amount
of $4,550,000 on the Closing Date; provided that the Deposit shall be applied to
the cash payment herein; and further provided that Buyer shall receive a credit
against the cash portion of the Purchase Price in the amount of $550,000 against
the Purchase Price for repair and maintenance of the equipment, trucks and
trailers owned by the Companies.
(b) issue to the Shareholders on the Closing Date an
aggregate of 500,000 shares of Buyer's unregistered and previously unissued MWI
Common Stock, all on the terms and the conditions described below.
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(c) issue to the Shareholders Warrants to purchase
100,000 shares of MWI Common Stock at an exercise price equal to the greater of
(a) $8.00 per share or (b) the per share Price to Public of Buyer's public
offering completed within six months of the Closing Date. The Warrants shall be
exercisable for a period of five (5) years following the Closing Date.
(d) issue to the Shareholders, in accordance with the
provisions of Section 3.5 herein, that number of shares of MWI Common Stock
which, based upon the Last Reported Sale Price on the date which is one hundred
twenty (120) days following the Closing Date, has a fair market value equal to
the accounts receivables of the Company in existence as of the Closing Date
which are collected by Buyer during the one hundred twenty (120) day period
following the Closing Date.
3.2 CONTINGENT VALUATION - If, as of the third anniversary
following the Closing Date, the MWI Common Stock does not then have a Last
Reported Sale Price of at least $14.00 per share, Buyer will pay to the
Shareholders, proportionately, the difference between the Last Reported Sale
Price per share and $14.00 for the MWI Common Stock issued to the Shareholders
and then owned as of such third anniversary of the Closing Date. The contingent
valuation provisions herein shall only be applicable to the shares of MWI Common
Stock issued as part of the Purchase Price and which are owned by the
Shareholders as of the third anniversary of the Closing Date. In the event that
Buyer is required to make any payment in accordance with the provisions hereof,
Buyer shall have the right to make such payment in (a) cash, (b) MWI Common
Stock, or (c) any combination of cash and MWI Common Stock in the sole
discretion of Buyer.
3.3 ADJUSTMENT TO PURCHASE PRICE - The Purchase Price payable in
accordance with Section 4.1 herein shall be adjusted in the event that EBT
during the EBT Representative Period does not exceed $700,000. No later than
March 31, 1999, BDO Xxxxxxx, LLP shall calculate EBT for the EBT Representative
Period. Such determination by BDO Xxxxxxx shall be conclusive and binding on all
parties. The Purchase Price shall be reduced by $10.00 for every $1.00
difference between actual EBT for the EBT Representative Period and $700,000.
Any adjustment to the purchase price will be made first to the MWI Common Stock
portion held in the Escrow Fund, which shall be valued at $14.00 per share. If
the MWI Common Stock held in the Escrow Fund is not sufficient to pay for the
adjustment to the Purchase Price, the Shareholders shall forthwith deliver to
the Buyer the balance of such reduction first by delivery to the Buyer of shares
of MWI Common Stock not held in the Escrow Fund (valued at $14.00 per share) and
then the remainder, if any, in cash.
3.4 ESCROW ARRANGEMENT - On the Closing Date, the Shareholders
shall deposit into escrow fifteen (15%) percent of the aggregate Purchase Price
paid to the Shareholders consisting solely of shares of MWI Common Stock (the
"Escrow Fund"). The Escrow Fund shall be held by the Post Closing Escrow Agent,
subject to, and in accordance with, the Escrow Agreement attached to the
Disclosure Schedule (the "Escrow Agreement"). The Escrow Fund shall be held for
a period of one year following the Closing Date (the "Escrow Period"); provided
however, if any claims are pending at the end of the initial one year period,
the Post Closing Escrow Agent shall calculate the aggregate amount of all
pending claims and retain that portion of the Escrow Fund to cover all claims
and the Escrow Period shall be extended as to such retained portion of the
Escrow Fund until all such pending claims are resolved. The MWI Common Stock in
the Escrow Fund shall be issued and registered in the name of the Shareholders,
but delivered to the Post Closing Escrow Agent, subject to the Escrow Agreement.
3.5 ACCOUNTS RECEIVABLES - At, or as soon as practicable
following the Closing, BDO Xxxxxxx, LLP shall determine the outstanding
receivables of the Companies as of the Closing Date (the "Closing Receivables").
Such determination by BDO Xxxxxxx, LLP shall be conclusive and binding on the
parties to this Agreement. All such Closing Receivables shall be collected by
Buyer following the Closing for the benefit of the Buyer. Within thirty (30)
days following the end of one hundred twenty (120) days following the Closing,
the Buyer shall prepare and deliver to the Shareholders a statement of the
collections of the Closing Receivables (the A/R Statement") reflecting all
collections of Closing Receivables ("Collected Receivables") during the one
hundred twenty (120) day period following the Closing Date and the outstanding
amounts that remain at the end of such one hundred twenty (120) day
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period. The Shareholders shall have fifteen (15) days following receipt of the
A/R Statement within which to object to the A/R Statement. If the Shareholders
do not object to the A/R Statement within such period, the A/R Statement shall
be deemed conclusive and binding on all parties; provided however, if thereafter
it is determined that Closing Receivables are shown as uncollected on the A/R
Statement and are thereafter determined to have been collected, the amounts of
such collected Closing Receivables which are not shown on the A/R Statement
shall be paid to the Shareholders by the Buyer in cash. If the Shareholders do
not object to the A/R Statement, the Buyer shall within ten (10) days thereafter
pay to the Shareholders the amount equal to collected Closing receivables on the
A/R Statement. Such payment shall be made in MWI Common Stock. The number of
shares of MWI Common Stock to be issued to the Shareholders shall be calculated
by dividing (a) the Collected Receivables by (b) the Last Reported Sale Price of
the MWI Common Stock on the last business day immediately preceding the end of
the one hundred twenty (120) day period above. If the Shareholders object to the
A/R Statement, BDO Xxxxxxx, LLP shall review the books and records of the
Company and issue a determination of the Collected Receivables either (i)
agreeing with the A/R Statement; or (ii) as to one or more adjustments necessary
to make such A/R Statement accurate. The determination of BDO Xxxxxxx, LLP shall
be conclusive and binding on the parties to this Agreement. If BDO Xxxxxxx, LLP
agrees with the A/R Statement or if any adjustment is made which lowers the
Collected Receivables, the Shareholders shall pay the fees and costs of BDO
Xxxxxxx, LLP. If BDO Xxxxxxx, LLP determines any adjustments to the A/R
Statement are required which increases the Collected Receivables than as shown
on the A/R Statement, the Buyer shall pay the fees and costs of BDO Xxxxxxx,
LLP. Within fifteen (15) days following BDO Xxxxxxx, LLP's determination, Buyer
shall issue to the Shareholders the number of shares MWI Common Stock in
accordance with the calculation above based on the final determination of
Collected Receivables. The Buyer shall thereafter assign to the Shareholders any
Closing Receivables which remain outstanding following such one hundred twenty
(120) period ("Remaining Receivables"). If Buyer thereafter receives payment on
any Remaining Receivables, Buyer shall within fifteen (15) days following the
month in which collected, pay to the Shareholders the amount of such Remaining
Receivables in cash.
3.6 RIGHT OF SET-OFF. The MWI Common Stock held in the Escrow
Fund by the Post Closing Escrow Agent will be subject to a right of set-off for
any adjustments required to be made to the Purchase Price or in the event the
Shareholders are required to provide indemnification pursuant to Section 9.3 of
this Agreement. The terms and conditions and the right of set off shall be more
particularly described in the Escrow Agreement.
3.7 INVESTMENT RESTRICTIONS - All MWI Common Stock and Warrants
to be acquired by the Shareholders shall be "Restricted Securities" as that term
is defined pursuant to the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "1933 Act"). The Shareholders hereby
represent that the MWI Common Stock and Warrants are being acquired for
investment purposes only and not with a view to the distribution thereof except
as may be permitted by the 1933 Act. Certificates representing MWI Common Stock
and Warrants when issued shall contain a restrictive legend to the effect that
the MWI Common Stock have not been registered pursuant to the 1933 Act or any
state having jurisdiction thereof and may not be sold, transferred or otherwise
disposed of except in compliance with the 1933 Act or unless Buyer receives an
opinion of counsel reasonably satisfactory to it that an exemption from
registration is available. A stop transfer order shall be placed on the MWI
Common Stock and Warrants with Buyer's transfer agent. The Shareholders agree
that for a one year period following the Closing Date, they will not transfer,
sell, hypothecate or pledge the MWI Common Stock received as part of the
Purchase Price without the prior written consent of Buyer.
ARTICLE IV. - CLOSING
---------------------
4.1 CLOSING - Subject to the terms and conditions of this
Agreement, the Closing shall take place at 9:30 a.m. on the Closing Date, or
such other date as is mutually agreed between the parties. The Closing shall
take place at the offices of Xxxxxx X. Xxxxxxx, P.C., 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000.
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4.2 DEPOSIT - Upon the execution of this Agreement, Buyer shall
transfer the Deposit to the Deposit Escrow Agent as a deposit on the cash
portion of the consideration payable in connection with the transaction
contemplated by this Agreement. The Deposit Escrow Agent shall place the Deposit
in an interest bearing money market account or similar investment, with interest
accruing in such account or investment for the benefit of Buyer as part of the
Deposit. The Deposit shall be disbursed in accordance with the terms of this
Agreement.
4.3 SHAREHOLDERS AND COMPANIES PERFORMANCE AT CLOSING - At or
prior to the Closing, the Shareholders and the Companies shall deliver to Buyer:
(a) duly executed and issued certificates representing
the Common Stock owned by the Shareholders, duly endorsed to Buyer;
(b) a certificate duly executed by the Shareholders and
the president of the Companies to the effect that:
(i) all of the representations and warranties
made by the Shareholders and the Companies in this Agreement are true and
correct in all material respects as of the Closing Date;
(ii) none of the covenants made by the
Shareholders or the Companies in this Agreement have been breached in any
material respect as of the Closing Date;
(iii) all conditions precedent set forth in
Section 8.1 have been satisfied as of the Closing Date;
(iv) nothing has occurred which has caused a
Material Adverse Effect on the condition of the Companies since the date of the
Financial Statements, whether financial or otherwise, through the Closing Date;
(v) all liabilities of the Companies have been
satisfied in full or o the extent not satisfied by the Closing, shall be
satisfied within thirty (30) days following the closing.
(c) all approvals and consents of all appropriate
Governmental Authorities, if any, including all consents to the transfer of
ownership of the Companies as it impacts the Companies's Permits;
(d) written evidence that this Agreement and the
transactions contemplated hereunder have been approved by the Companies' Board
of Directors and its Shareholders in accordance with appropriate law;
(e) a certificate of incumbency duly executed by the
Companies' secretary;
(f) investment letters in a form acceptable to counsel
for MWI and Buyer signed by the Shareholders pertaining to the MWI Common Stock;
(g) the Escrow Agreement executed by the Shareholders;
(h) employment agreements executed by Xxxxx Xxxxxxx and
Xxxx Xx Xxxxxxx as described in Section 9.6 herein;
(i) satisfactory evidence that Buyer's designees shall be
the only authorized signatories with respect to each of the Companies's bank
accounts and credit facilities, including such as are listed on the Disclosure
Schedule;
(j) such other certificates, documents, and instruments
as may be reasonably requested by Buyer in connection with the transactions
contemplated by this Agreement.
(k) an opinion of counsel in form and substance
satisfactory to Buyer and its counsel that:
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(i) the Companies have been duly organized and
are validly existing and in good standing under the laws of the State of
Pennsylvania and are duly qualified to do business and are in good standing in
each jurisdiction in which the character and location of the properties owned by
them or the nature of the Business transacted by them makes such qualification
necessary;
(ii) the Companies and the Shareholders have the
full power to conduct their business as presently conducted and to execute and
deliver this Agreement and to perform its obligations hereunder;
(iii) the execution and delivery of the
Agreement, performance by the Companies and the Shareholders of their
obligations under the Agreement and the exercise by the Companies or the
Shareholders of the rights created by the Agreement do not (a) violate the
Companies' respective Articles of Incorporation or By-laws; (b) to the best of
counsel's knowledge, constitute a breach of or a default under any indenture,
mortgage, lease or other agreement or instrument to which any of the Companies
or any Shareholder is a party or by which they or their assets are bound; (c) to
the best of counsel's knowledge, result in the creation of a mortgage, lien,
charges, resolutions, pledge, security interest, options, lease, claim, right of
any third party, easement, encroachment or other encumbrance upon the capital
stock or assets of the Companies; (d) to the best of counsel's knowledge,
violate any law, statute, regulation, ordinance, rule, consent decree,
settlement agreement or governmental requirement enacted, promulgated, entered
into, agreed or imposed by the Governmental Authority;
(iv) the Companies and the Shareholders have
authorized the execution, delivery and performance of the Agreement by all
necessary corporate and shareholder action and to the best of counsel's
knowledge, the Agreement is a valid and binding obligation of the Companies and
Shareholders enforceable against the Companies and the Shareholders in
accordance with applicable law;
(v) no notice, report or other filing or
registration with, and no consent, approval or authorization of, any Federal,
state or local Governmental Authority is required to be submitted, made or
obtained by the Companies in connection with the execution, delivery and
performance of the Agreement;
(vi) to the best of counsel's knowledge, neither
the Companies nor the Shareholders are parties to any contract or subject to any
other legal resolution which would prevent or restrict complete and full
performance of any of the terms and conditions of this Agreement or compliance
with any of their obligations hereunder;
(vii) except as set forth in the Disclosure
Schedule, to the best of counsel's knowledge, there are no pending or threatened
actions, claims, investigations or other proceedings against the Companies or
the Shareholders;
(viii) Except as set forth in the Disclosure
Schedule, the Companies have good and marketable title to all of their assets
free and clear of all liens, mortgages, pledges, conditional sales agreements,
security interests, restrictions, judgments, options, charges, claims or
encumbrances of any kind;
(ix) the Shareholders have good and marketable
title to the Common Stock, free and clear of all liens, mortgages, pledges,
conditional sales agreements, security interests, restrictions, judgments,
options, charges, claims or encumbrances of any kind;
(x) the instruments of conveyance and assignment
delivered by the Shareholders to Buyer in accordance with their terms have
vested in Buyer all right, title, and interest to 100% of the Common Stock of
the Companies, free and clear of all liens, mortgages, pledges, conditional
sales agreements, security interests, restrictions, judgments, options, charges,
claims or encumbrances of any kind;
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(xi) to the best of counsel's knowledge, all
Leases and Contracts are valid and subsisting and no default exists thereunder;
(xii) to the best of counsel's knowledge, the
Companies are in compliance with all federal, state and local laws and
regulations relating to it and its Business.
4.4 BUYER'S PERFORMANCE AT CLOSING - At or prior to Closing,
Buyer shall deliver or cause to be delivered to the Shareholders, the following:
(a) the cash to close as required in Section 3.1(a)
herein;
(b) the MWI Common Stock as required in Section 3.1(b);
(c) the Warrants as required in Section 3.1(c);
(d) a certificate executed by the duly authorized officer
of Buyer to the effect that all of the representations and warranties made by
Buyer in this Agreement are true and correct as of the Closing Date;
(e) written evidence that Buyer's board of directors
approved consummation of the transaction; and
(f) an opinion of counsel in form and substance
reasonably satisfactory to the Companies and the Shareholders that the
representations and warranties of Buyer contained in Article VI are correct as
of the Closing Date.
4.5 TERMINATION IN ABSENCE OF CLOSING -
(a) If by the close of business on the Closing Date, the
Closing has not occurred (except as may otherwise be extended), then any party
may thereafter terminate this Agreement by written notice to the other parties
hereto, without liability of or to any other party to this Agreement, unless the
reason for closing having not occurred is (i) such party's breach of any of its
obligations, representations, warranties or covenants or other provisions of
this Agreement; or (ii) the failure of such party to perform its obligations
hereunder; provided however, the defaulting party shall have twenty (20) days
following written notice of any default within which to cure such default. In
such event, the defaulting party shall be liable to all other parties for all
Damages incurred by the non-defaulting parties, including but not limited to all
expenses, costs and attorney fees incurred in due diligence, negotiation of this
Agreement, the drafting of this Agreement and all Collateral Agreements and
otherwise representing such non-defaulting parties.
(b) This Agreement and the transaction contemplated
herein may be terminated and abandoned at any time on or prior to the Closing
Date by Buyer, if:
(i) any representation or warranty made herein
for the benefit of Buyer or any certificate, schedule or document furnished to
Buyer pursuant to this Agreement is untrue; or
(ii) the Companies or Shareholders shall have
defaulted in any respect in the performance of any obligation under this
Agreement; or In the event that Buyer terminates this Agreement in accordance
with the provisions contained in this Section 4.4(b). The Buyer shall be
entitled to a refund of the Deposit. In addition, then the Shareholders shall be
liable to Buyer for all Damages incurred by Buyer including, but not limited to,
all expenses, costs and attorney's and accounting fees incurred in the due
diligence, negotiation and drafting of this Agreement in contemplation of the
transaction contained herein.
(c) This Agreement and the transaction contemplated
herein may be terminated and abandoned at any time on or prior to the Closing
Date by the Companies, if:
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(i) any representation or warranty made herein
for the benefit of the Companies or the Shareholders or any certificate,
schedule or document furnished to the Companies or the Shareholders pursuant to
this Agreement is untrue; or
(ii) the Buyer shall have defaulted in any
respect in the performance of any obligation under this Agreement; or
(iii) the Buyer's financial or business
condition has suffered a Material Adverse Effect in the reasonable judgement of
the Companies.
In the event that the Companies terminates this Agreement in accordance with the
provisions contained in this Section 4.4(c), then the Buyer shall be entitled to
the Deposit, plus their reasonable attorney's fees and expenses incurred in
connection with this Agreement.
ARTICLE V. - REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND SHAREHOLDERS
The Shareholders and the Companies represent and warrant to Buyer
that, except as set forth in the Disclosure Schedule (which Disclosure Schedule
is dated the date hereof and delivered by the Shareholders and the Companies to
Buyer and deemed a part hereof by this reference), that the representations and
warranties contained in Article V are true and correct as of the date hereof and
as of the Closing Date:
5.1 ORGANIZATION - SMI and Bucks are corporations duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania. East Coast is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. The Companies have
the corporate power to own, manage, lease and hold its assets and engage in its
businesses where such assets are located, are duly qualified to do business and
are in good standing in each jurisdiction in which the character and location of
the properties owned by them or the nature of the business transacted by them
makes such qualification necessary.
5.2 CAPITALIZATION - The Companies have two (2) Shareholders,
owing the shares of Common Stock set forth as follows:
SMI BUCKS EAST COAST
COMMON COMMON COMMON
NAME STOCK STOCK STOCK
-------------------- ------------- ----------- ------------
Xxxxx Xxxxxxx 1,000 -- 1,000
Xxxx Xx Xxxxxxx -- 1,000 --
------------- ----------- ------------
The Shareholders set forth above own 100% of the Common Stock of the Companies.
There are no other classes of capital stock authorized by the Companies. All
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and non-assessable. The Companies have not authorized and there is not
outstanding at the date hereof, any preferred stock, options, warrants or other
rights to purchase any capital stock of the Companies. There are no shareholder,
voting trust or any other agreements restricting the transfer of the Common
Stock. All of the shares of Common Stock are owned free and clear of any liens,
encumbrances, claims, security agreements, pledges or other restrictions. The
shares of Common Stock were not issued in violation of any preemptive rights or
any federal or state laws.
5.3 CORPORATE DOCUMENTS - The respective Articles of
Incorporation and Bylaws of the Companies attached to the Disclosure Schedule
are true and correct as of the Closing Date. The stock and minute books of the
Companies that have been made available to Buyer for review contain a complete
and accurate record of all shareholders of the Companies and all actions of the
shareholders and directors (and any committees thereof) of the Companies.
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5.4 SUBSIDIARIES - The Companies do not have any subsidiaries and
neither the Companies or any Shareholders have any interest, direct or indirect,
or have any commitment to purchase any interest in, any other corporation,
partnership, joint venture or other business enterprise or entity which in any
way consists of any part of the Business. The Business is conducted only through
the Companies.
5.5 AUTHORITY - The Companies and the Shareholders have full
power and authority to enter into this Agreement and to consummate the
transaction contemplated hereby. This Agreement and any Collateral Agreement
executed in connection with the Closing constitutes, or upon execution and
delivery will constitute, the legal, valid and binding obligations of such
parties enforceable in accordance with their terms. No consent of any Federal,
state, municipal or other Governmental Authority is required for the execution,
delivery or performance of this Agreement. Neither the execution and delivery of
this Agreement and/or any Collateral Agreement or other document or instrument
contemplated by this Agreement, nor the performance by the Companies or the
Shareholders of the terms and provisions hereof or thereof will (a) violate the
respective Articles of Incorporation or By-laws of the Companies; (b) result in
a breach or violation of any known provision of, or constitute a default under,
any indenture, mortgage, lease or other agreement or instrument to which the
Companies or the Shareholders are a party or by which any of the Companies'
assets are bound; (c) violate any law, statute, regulation, ordinance, rule,
order, decree, judgment, court decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed or imposed by any
Governmental Authority; or (d) result in the creation of any mortgage, lien,
charge, restriction, pledge, security interest, option, lease or sublease,
claim, right of any third party, easement, encroachment or encumbrance on the
Common Stock or any of the assets of the Companies.
5.6 FINANCIAL STATEMENTS - The Financial Statements are correct
and complete and present fairly the financial condition of the Companies as of
the date of such balance sheets and for the periods in the statements of
operations, cash flows and shareholders' equity. Such Financial Statements have
been prepared on a basis consistent with all prior periods in accordance with
GAAP. The Financial Statements are in accordance with the books and records of
the Companies, do not reflect any transactions which are not bona fide
transactions and do not contain any untrue statements of a material fact or omit
to state any material fact necessary to make the statements contained therein in
light of the circumstances in which they are made, not misleading. The Financial
Statements make full and adequate disclosure of, or provision for, all
obligations and liabilities of the Business. Since the date of the Financial
Statements, there has been no material adverse change in the assets,
liabilities, business, operations or condition, financial or otherwise, of the
Companies from that shown on the Financial Statements.
5.7 TITLE TO ASSETS - The Disclosure Schedule contains a list of
all tangible and intangible assets owned by the Companies. Except as provided in
the Disclosure Schedule, the Companies have good, marketable and insurable title
to their assets, free and clear of any and all liens, mortgages, pledges,
conditional sales assignments, security interests, judgments, options, adverse
claims, encumbrances or other restrictions or limitations whatsoever. Except as
set forth in the Disclosure Schedule, the assets listed on the Disclosure
Schedule represent all of the assets necessary to operate the Business in the
same manner as operated prior to the date hereof and for the balance of their
estimated useful lives will be suitable and sufficient for the conduct of the
Business in the same manner as presently conducted.
5.8 LIABILITIES - As of the date hereof, the Companies had no
liabilities, fixed or contingent, which are not fully shown or provided for in
the Financial Statements or as listed in the Disclosure Schedule. The Companies
shall have no liabilities as of the Closing Date. All liabilities of the
Companies were incurred in the Ordinary Course of Business.
5.9 OBLIGATIONS TO AFFILIATES - The Companies are not a party to
any agreement with, and do not owe any amount or have commitment to any of its
Shareholders, directors, officers, employees, consultants or affiliates, and
none of such persons owe any amounts to the Companies.
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5.10 REAL PROPERTY - The Companies will, as of the Closing Date,
own the real property described in the Disclosure Schedule (the "Real
Property"). Such Real Property is presently owned by the Shareholders and will
be transferred to SMI on or before the Closing Date. Buyer agrees to reimburse
the Shareholders for the cost of any transfer taxes incurred in such transfer,
upon the Closing of this transaction. The Companies will as of the Closing Date
have good record and marketable title in fee simple to the Real Property, free
and clear of all encumbrances other than (a) easements and restrictions of
record, (b) real and personal property taxes and assessments becoming due and
payable after the Closing, (c) building and zoning laws, ordinances and
regulations, and (e) as otherwise set forth in the Disclosure Schedules or in
the Financial Statements. All of the buildings, structures, improvements and
appurtenances situated on the Real Property are in good operating condition and
substantially in good state of repair, ordinary wear and tear excepted. None of
the Real Property owned by the Shareholders which is to be transferred to the
Companies is subject to any lease and the Companies are in exclusive possession
of all such Real Property. No asbestos, asbestos-containing material, PCB
compounds or other pollutants, contaminants or hazardous or toxic wastes are
located on any portion of the Real Property, Real Property comply in all
material respects with applicable building and zoning laws, ordinances, codes
and regulations, and all applicable restrictions or covenants thereby. There are
no claims by any governmental body pending or threatened against the
Shareholders, the Companies or the Real Property pending or threatened against
any third parties, alleging a violation of any law or any building, zoning, or
other ordinance, code, or regulation affecting the Real Property. There is not
pending or, threatened, any proceeding or government action to condemn or take
by the power of eminent domain or to classify as a landmark or to impose a
special assessment on any Real Property.
5.11 PROPERTY - The Disclosure Schedule identifies each lease
(the "Leases") devising to the Companies all leasehold interests in all property
(real and personal), entered into by the Companies (the "Leased Property"). Each
Lease so listed is valid, subsisting and fully enforceable in accordance with
its terms, and there exists no default thereunder. The Companies have not
received any notice of, and have no knowledge of, any defaults by the Companies
under any Lease. The Companies' interest in the Leased Property is free and
clear of any and all liens, mortgages or restrictions. No person other than the
Companies is in actual possession of any of such Leased Property. The Leased
Property is not subject to any pending or threatened special assessments,
threatened condemnation or eminent domain proceedings. All of the buildings,
structures, improvements and appurtenances situated on the Leased Property are
in substantially good operating condition and in substantially a good state of
repair, ordinary wear and tear excepted. No asbestos, asbestos-containing
material, PCB compounds or other pollutants, contaminants or hazardous or toxic
wastes are located on any portion of the Leased Property. The Leased Property
comply in all material respects with all applicable building and zoning laws,
ordinances, codes and regulations and all applicable restrictions or covenants
thereby. There are no claims by any Governmental Authority pending or threatened
against the Companies or the Leased Property or pending or threatened against
third parties, alleging a violation of any law or any building, zoning or other
ordinance, code or regulation affecting the Leased Property.
5.12 EMPLOYEE BENEFIT PLANS -
(a) The Disclosure Schedule contains a description of all
employee benefit plans sponsored, maintained or contributed to by the Companies
for the benefit of the Companies' employees or has been sponsored, maintained or
contributed to anytime during the Companies' existence:
(i) each employee benefit plan as such term is
defined in Section 3(3) of ERISA, including but not limited to employee benefit
plans which are not subject to the provisions of ERISA (collectively referred to
as "Plans");
(ii) each personnel policy, stock option plan,
collective bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation policy, severance pay policy or agreement, deferred
compensation agreement or arrangement and each other employee benefit plan,
agreement, arrangement, program, practice or understanding Benefit Programs are
true,
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correct and complete copies of each of the Plans, related trusts and Benefit
Programs including all amendments thereto, have been furnished to Parent.
(b) There has been furnished to Parent, with respect to
all Plans or Benefit Programs required to comply with ERISA, all reports and
summary plan descriptions. Except as otherwise set forth in the Disclosure
Schedule:
(i) the Companies do not contribute to or have
any obligation to contribute to, and has not at any time contributed to or had
an obligation to contribute to, a multi-employer plan within the meaning of
Section 3(37) of ERISA ("Multi-Employer Plan") or a multiple employer plan
within the meaning of Section 413(b) and (c) of the Code;
(ii) the Companies have performed all
obligations whether arising by operation of law or by contract required to be
performed by it in connection with the Plans and Benefit Programs and there have
been no defaults or violations by any other party to the Plans or Benefit
Programs.
(iii) all reports and disclosures relating to
the Plans required to be filed with or furnished to governmental agencies, Plan
participants or Plan beneficiaries have been filed or furnished in accordance
with applicable law in a timely manner and each Plan and each Benefit Program
has been administered in compliance with its governing documents;
(iv) each of the Plans intended to be qualified
under Section 401 of the Code satisfies the requirements of the Code and has
received a favorable determination letter from the Internal Revenue Service
regarding such status and has not, since receipt of the most recent favorable
determination letters, been amended or operated in a way which could adversely
affect such qualified status;
(v) there are no actions, suits, or claims
pending (other than routine claims for benefits) or threatened against or with
respect to, any of the Plans, Benefit Programs or their respective assets;
(vi) all contributions required to be made to
the Plans and Benefit Programs pursuant to their respective terms and provisions
and applicable law have been timely made;
(vii) as to any Plan subject to ERISA, no event
or condition which presents a risk of Plan termination or accumulated funding
deficiency within the meaning of Section 302 of ERISA or Section 412 of the Code
has occurred. No reportable event within the meaning of Section 4043 of ERISA
has occurred, no notice of intent to terminate the Plans has been given, no
proceeding to terminate the Plan has been instituted, there has been no
termination of the Plan and no liability to the Pension Benefit Guaranty
Corporation has been incurred;
(viii) none of the Plans or their trustees has
engaged in any prohibited transactions or party in intent transactions as such
terms are defined in Section 4975 of the Code and Section 406 of ERISA;
(ix) there is no matter pending with respect to
any Plan or Benefit Program before the Internal Revenue Service, the U.S.
Department of Labor, or the Pension Benefit Guaranty Corporation;
(x) except as otherwise disclosed on any
schedule attached to this Agreement, neither the execution or delivery of this
Agreement or the consummation of the transactions contemplated hereby will:
(1) entitle any current or former employee
of the Companies to severance pay, unemployment compensation or any similar
payment;
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(2) accelerate the time of payment or
vesting or cause any increase in the amount of any compensation due to any such
employee or former employee; or
(3) directly or indirectly result in any
payment made to or on behalf of any person to constitute a parachute payment
within the meaning of Section 280G of the Code.
5.13 EMPLOYEE MATTERS -
(a) Except as set forth on the Disclosure Schedule, the
Companies are not a party to any collective bargaining agreement pertaining to
its employees. The Companies are presently, and have at all times been, in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including
without limitation the following: The Fair Labor Standards Act ("FLSA"), the
Comprehensive Omnibus Budget Reconciliation Act ("COBRA"), the Immigration and
Control Act ("IRCA"), the Workers Adjustment and Retraining Notification Act
("WARN"), the Americans with Disabilities Act ("ADA") and such laws respecting
employment discrimination, equal opportunity, affirmative action, workers
compensation, occupational safety and health requirements and unemployment
insurance and related matters.
(b) The Companies do not have any (i) pending
controversies between them and their employees, (ii) unresolved labor liens,
grievances or organization efforts; or (iii) unfair labor practices or labor
arbitration proceedings, pending or threatened.
(c) The Companies are not a party to any agreement and
have not established any policy or practice requiring the Companies to make a
payment or provide any other form of compensation or benefit to any person
performing services for the Companies upon termination of such services.
(d) The Disclosure Schedule sets forth by number and
employment classification the number of employees of the Companies as of the
date hereof. The Companies have not at any time had, or been threatened with,
any work stoppages or other labor disputes or controversies with respect to its
employees.
5.14 EMPLOYMENT PRACTICES - The Companies have paid in full to
its employees all wages, salaries, commissions, bonuses and other direct
compensation for all services performed by them, other than amounts which have
not yet become payable in accordance with the Companies' customary practices.
5.15 INSURANCE - The Disclosure Schedule contains a list of all
policies of insurance owned by the Companies, and the amounts of such coverage
of each policy, all premiums on such policies or renewals thereof having been
paid. The Companies have previously delivered copies of all such insurance
policies and proof of payment of such premiums to the Buyer.
5.16 CONTRACTS AND COMMITMENTS - Except as set forth on the
Disclosure Schedule, the Companies are not, individually or collectively, a
party to, or bound or affected by any contract, lease, agreement, covenant,
license, instrument or commitment (whether written or oral) of any type,
including the following:
(a) contracts for the employment or compensation of any
officer or individual employee, not terminable without further liability at any
time:
(b) contracts with any labor union;
(c) continuing contracts for the future purchase of
materials, supplies or equipment, at a cost of $1,000 or more, or to be
delivered more than thirty (30) days after the date hereof;
(d) continuing contracts for the future provision of
their services;
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(e) distribution or agency contracts, franchise
contracts, or advertising commit ments, which cannot be terminated without
further liability to the Companies upon no more than thirty (30) days' notice;
(f) pension, profit sharing, deferred compensation,
retirement or stock option or stock purchase plans in effect with respect to
officers, employees or others;
(g) leases under which they are lessor or lessee;
(h) underwriting agreements or agreements with a broker
or finder;
(i) consulting agreements;
(j) contracts for the acquisition of a business, or
substantially all of the property, assets, or stock of a business under which
there are any continuing or unperformed obligations on the part of any of the
parties thereto; or
(k) Any other contract, agreement, or commitment
involving $1,000 or more or which is not terminable without further liability to
the Companies upon no more than thirty (30) days' notice.
There have been delivered to Buyer true and correct copies of each of the
Contracts listed in the Disclosure Schedule. All Contracts, are valid, binding
and in full force and effect and are enforceable in accordance with their terms
against all other parties to such Contracts. The Companies have performed all
obligations required to be performed by them to date and are not in default in
any material respect under any Contract to which they are a party. None of the
Contracts were arrived at, or otherwise reflect, less than arms length
negotiations or bargaining.
5.17 INSPECTION OF RECORDS - The Companies and Shareholders have
made, or will make, available for inspection by Buyer full and complete
information concerning the Companies' customers, suppliers, vendors and all
aspects of the Companies's Business, including complete copies of any customer,
vendor, or supplier contracts.
5.18 INVENTORIES - The inventory of the Companies now, and shall
be as of the Closing Date, in all material respects consists of items of a
quality, condition and quantity consistent with normal inventory levels of the
Companies and be useable and saleable in the Ordinary and Course of Business for
the purposes for which intended. Such inventory is carried on the Companies's
books of account in accordance with GAAP, consistently applied.
5.19 EQUIPMENT AND OTHER TANGIBLE PROPERTY - The Companies'
equipment, furniture, machinery, vehicles, structures, fixtures and other
tangible property included in the Financial Statements or as listed in the
Disclosure Schedule is and shall be as of the Closing Date, in all material
respects suitable for the purposes for which intended and in good operating
condition and repair consistent with normal industry standards, except for
reasonable and ordinary wear and tear.
5.20 PERMITS - The Companies have all material Permits necessary
to construct, own, operate, use and/or maintain their assets and the Business in
all locations where the Companies conduct such business. Such Permits are valid
and subsisting and all fees required to be paid thereon have been paid. No
proceeding is pending or threatened to modify, suspend, revoke, withdraw,
terminate or otherwise limit any Permit which could adversely affect the ability
of the Companies to own, operate, use or conduct the Business currently
operated. Following the Closing, the Companies shall continue to have the right
to utilize the Permits in the same manner and under the same conditions as prior
to the Closing Date.
5.21 INTANGIBLE RIGHTS - Listed on the Disclosure Schedule are
all of the Intangible Rights owned or used by the Companies in the Business. The
Companies are the legal and equitable owner or have the right to use all of the
Intangible Rights listed on the Disclosure Schedule. The conduct of the
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Business does not infringe or conflict with, and has not in the past infringed
or conflicted with, and the Companies are not in receipt of any notice or
complaint of conflict with or infringement of, the asserted rights of others in
any Intangible Rights of others.
5.22 UNREGISTERED SECURITIES - The Shareholders (a) understand
that the MWI Common Stock and Warrants which they will receive has not been, and
will not be registered under the 1933 Act, or under any state securities laws
and is being offered and sold in reliance upon federal and state exemptions for
transactions not involving a public offering; (b) they do not, and will not,
have any right to require Buyer to register the MWI Common Stock or Warrants,
either pursuant to or under the Act or any state securities laws; (c) are
acquiring the MWI Common Stock solely for their own account for investment
purposes and not with a view to the distribution thereof; (d) have received
certain information concerning Buyer, including without limitation, Buyer's (i)
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1997, and
(ii) Quarterly Report on Form 10-QSB for the quarter ended March 31, 1998; (e)
have had the opportunity to obtain additional information as desired to evaluate
the risks and merits inherent in owning and holding the MWI Common Stock; (f)
have sufficient knowledge and experience in financial business matters that they
are capable of evaluating the merits and risks of an investment in Buyer; and
(g) have the financial capacity to withstand loss of their entire investment in
the MWI Common Stock.
5.23 LITIGATION - Except as set forth on the Disclosure Schedule,
there are no actions, suits, proceedings or investigations, either
administrative or judicial (whether or not on behalf of the Companies) pending
or, threatened against or affecting the Companies, its properties or which
involve the possibility of any judgment or liability not fully covered by
insurance. The Companies are not in default with respect to any order, writ,
injunction or decree of any court or Governmental Authority. The Companies are
in compliance in all material respects with all laws, rules, regulations and
orders materially applicable to their Business.
5.24 COMPLIANCE WITH LAWS - The Companies are, and have been at
all times, in compliance in all respects with any and all laws, regulations,
ordinances, rules, orders or decrees applicable to the Companies. The Companies
have not received or entered into any citation, complaints, consent order,
compliance agreements or other similar enforcement order or received written
notice from any Governmental Authority that would indicate that the Companies
are not currently in compliance with all such laws, regulations, ordinances,
rules, orders or decrees.
5.25 ABSENCE OF MATERIAL CHANGES - From the date of the Financial
Statements to the date hereof, the Companies have not:
(a) issued any capital stock or other corporate
securities or granted any option to any person for the acquisition of any
capital stock or other corporate securities;
(b) incurred any obligations or liabilities (absolute or
contingent), except current liabilities incurred, and obligations under
Contracts entered into in the Ordinary Course of Business;
(c) discharged or satisfied any lien or encumbrance or
paid any obligation or liability (absolute or contingent) other than obligations
or liabilities referred to in (b) above;
(d) declared or made any payment or distribution to
Shareholders, or purchased or redeemed any shares of their capital stock;
(e) mortgaged, pledged, or subjected to any lien, charge,
or other encumbrance, any of their assets, tangible or intangible, other than
liens for taxes not yet due or which are being contested in good faith by
appropriate proceedings;
(f) sold or transferred any of their tangible assets or
canceled any debts or claims, except in each case in the Ordinary Course of
Business;
(g) sold, assigned, or transferred any Permits or
Intangible Rights;
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(h) suffered any material operating or extraordinary loss
or waived any right of substantial value;
(i) made any loan to, borrowed money from, or entered
into any contract or understanding with, any employee, officer, director or
shareholder of the Companies;
(j) made any payment or contracted for payment of any
bonus, gratuity, or other compensation to employees, other than wages and
salaries in effect as of the date of the Financial Statements, except wage and
salary adjustments made in the Ordinary Course of Business for employees who are
not officers or directors of the Companies;
(k) had any union or labor difficulties or work stoppage;
(l) entered into any transaction other than in the
Ordinary Course of Business (as herein defined in Article VII hereof);
(m) entered into any leases of real or personal property;
or
(n) received any notice of termination of any contract,
lease or other agreement;
(o) entered into any Contracts for which the Companies
expects to incur a loss from the provision of services.
5.26 BANKING INFORMATION - The Disclosure Schedule contains a
list of all bank accounts and credit facilities and authorized signatories on
bank accounts and credit facilities of the Companies. No other persons other
than as listed on the Disclosure Schedule are authorized to withdraw any funds
on the bank account or to draw down on such credit facilities.
5.27 TAX RETURNS - The Companies have duly filed, or duly
received extensions for the filing, of all Tax returns (including but not
limited to income, payroll, sales and use taxes), required to have been filed by
it and have paid the Tax shown to be due on any such returns filed and no
waivers or extension of the statutory period of limitation within which
assessments may be made have been granted with respect to any such tax return.
Federal income Tax returns of the Companies have never been examined by the
Internal Revenue Service. The Companies are not a party to any action or
proceeding by any governmental authority for assessment or collection of Taxes
nor have any claims for assessment and collection been asserted against the
Companies. The reserves made for Taxes, governmental charges and duties on the
Companies' balance sheet are sufficient in all material respects for the payment
of all unpaid Taxes, governmental charges and duties payable by the Companies,
attributable to all periods on or before the date of the Companies's balance
sheet and there is no basis or claim for any penalties or interest through the
Closing Date. The Companies shall (a) make adequate provision on its books for
all Taxes accruable and (b) timely remit all withholding, 1099's, 1120's,
employment, sales, ad valorem, personal property and estimated Taxes due and
payable to date and which becomes due prior to, or on, the Closing Date. The
Companies have made available copies of all the Companies' federal, state and
local Tax returns.
5.28 ACCOUNTS RECEIVABLE - The accounts receivable and other
receivables shown on the Financial Statements or thereafter acquired prior to
the Closing Date hereof, have been collected or are collectible, to the best of
the knowledge of the Companies and the Shareholders, in amounts not less in the
aggregate than the net book amount thereof. All such accounts receivable arose
from bona fide transactions in the Ordinary Course of Business and the goods and
services involved have been sold, delivered and performed for the Companies's
customers as covered by the account obligor. No further goods are required to be
provided and no services are required to be rendered in order to complete the
sales and to entitle the Companies to collect the account receivables. None of
the accounts receivable are subject to set-off or counterclaim. Since the date
of the Financial Statements, there has been no significant reduction in the
accounts receivable and other receivables of the Companies.
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5.29 BROKERS' COMMISSIONS - Neither the Companies or the
Shareholders have entered into any agreement or understanding with any person,
firm or entity or have become indirectly a party to any agreement for the
payment or any commission, finders or brokerage fee in connection with this
Agreement and the transaction contemplated hereby. The Companies and
Shareholders hereby agree to indemnify and hold harmless the Buyer from any
claims for a commission, finder's or broker's fee.
5.30 BOOKS AND RECORDS - The books of account and other records
of the Companies are materially complete and correct and in the aggregate
present and reflect all of the transactions entered into by them or to which
they are a party. The Companies have no knowledge of any condition whether
pending or threatened which would have a Material Adverse Effect upon the
Business of the Companies or prevent such Business from being carried on in
substantially the same manner in which it is presently carried on.
5.31 ACCURACY OF INFORMATION - All information provided to Buyer
by the Companies and Shareholders as an inducement to Buyer to enter into this
Agreement or in compliance with the provisions of this Agreement, including the
information contained in the Disclosure Schedule, are accurate and complete, to
the best of the knowledge of the Companies and the Shareholders, and do not
contain any untrue statement of a material fact or omit any material fact
necessary to make the information provided not misleading. All information
relating to the Companies or their Business which is known to, or would on
reasonable inquiry be known to the Shareholders and which may be material to an
intended purchaser for value, has been disclosed to Buyer.
5.32 ENVIRONMENTAL MATTERS - The Companies and the Real and
Leased Property have been, and presently are, in compliance with all applicable
Environmental Laws. The Companies and Shareholders have not, and have no
knowledge of any other person who has, caused any Release, threatened Release,
or disposal of any Hazardous Material at the Real and Leased Property; the Real
and Leased Property are not adversely affected by any Release, threatened
Release or disposal of a Hazardous Material originating or emanating from any
other property, except where any such Release has been remediated in compliance
with the Environmental Laws in all material respects. The Real and Leased
Properties do not contain any: (a) underground storage tank, (b) landfill or
dump, (c) a hazardous waste management facility as defined pursuant to RCRA or
any comparable state law, or (d) site on, or nominated for, the national
priority list promulgated pursuant to CERCLA or any state remedial priority list
promulgated or published pursuant to any comparable state law. The Companies,
has, with respect to the Business, no liability for response or corrective
action, natural resource damage or other harm pursuant to CERCLA, RCRA, or any
comparable federal or state law. The Companies are not subject to, have no
notice or knowledge of, and are not required to give any notice of, any
Environmental Claim involving the Business or the Real or Leased Property; there
are no conditions or occurrences at the Real or Leased Property which could form
the basis for an Environmental Claim against the Companies or any such Real or
Leased Property. The Real and Leased Property are not subject to any, and the
Companies and Shareholders have no knowledge of any imminent restriction on the
ownership, occupancy, use or transferability of the Real or Leased Property in
connection with any (a) Environmental Law, or (b) Release, threatened Release or
disposal of a Hazardous Material. There are no conditions or circumstances at
the Real or Leased Property which pose a substantial risk to the environmental
or the health or safety of persons. The Companies have provided or otherwise
made available to Buyer all material environmental records prepared during the
three years prior to the Closing and required by the Environmental Laws
concerning the Real and Leased Property which the Companies possesses or could
reasonably have attained. The Companies are in compliance with all orders,
directives, notices, approvals, certificates, licenses and permits which have
been issued to it and holds all approvals, certificates, licenses and permits or
other consents which they are required to hold pursuant to any Environmental
Law; correct and complete copies of all currently in effect orders, directives,
notices, approvals, certificates, licenses, permits and consents have been
delivered to Buyer. To the best of the Company's and Shareholders' knowledge,
the Business and the Companies are in compliance with all applicable federal,
state and local laws and regulations governing the public health and safety and
employee health and safety (including all provisions of the Occupational Safety
and Health Act) and no
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charge, complaint, action, suit, proceeding, hearing, investigation, claim,
demand or notice has been filed or commenced against the Companies alleging any
failure to comply with any such law or regulation.
ARTICLE VI.- REPRESENTATIONS AND WARRANTIES OF BUYER
----------------------------------------------------
Buyer represent and warrant to the Companies and Shareholders
that:
6.1 ORGANIZATION OF BUYER - Buyer is duly organized and validly
existing as a corporation in good standing under the laws of the State of
Delaware and has full corporate power to carry on its business as now conducted
and is entitled to own or lease its properties and to carry on its business as
now conducted in the places where such properties are now leased, owned or
operated or such business is now conducted.
6.2 AUTHORITY - Buyer have full power and authority to enter into
this Agreement and the consummation of the transaction contemplated by this
Agreement will not result in any breach of any of the terms, provisions, or
conditions of, or constitute a default under, or result in the creation of, any
lien, charge, or encumbrance of any property or assets of Buyer pursuant to its
Certificate of Incorporation, By-Laws or any indenture, agreement, instrument,
order, judgment, or decree to which it is a party or by which it is bound.
6.3 FINANCIAL STATEMENTS - The financial statements contained in
Buyer's Form 10-KSB for the fiscal year ended December 31, 1997 and Form 10-QSB
for the quarter ended March 31, 1998 as filed with the Securities and Exchange
Commission (the SEC") are correct and complete and present fairly the financial
condition of Buyer as of the dates of such balance sheets and the results of its
operations for the periods of such statements of operations and have been
prepared on a basis consistent with all prior periods and in accordance with
generally accepted accounting principles. Since March 31, 1998, there has been
no material adverse change in the assets, liabilities, business, operations or
financial condition of Buyer as shown on the financial statements contained in
the Form 10-KSB or Form 10-QSB.
6.4 ISSUANCE OF MWI COMMON STOCK - The Buyer has full authority
to issue the MWI Common Stock and Warrants in connection with the consummation
of the transaction herein in accordance with the Buyer's Certificate of
Incorporation and its Bylaws. Upon such issuance, the shares of MWI Common Stock
shall be duly authorized, validly issued, fully paid and non-assessable.
ARTICLE VII.- OBLIGATIONS PRIOR TO CLOSING
------------------------------------------
7.1 OPERATION OF BUSINESS - The Companies and Shareholders agree
that, from the date hereof to the Closing Date, the Companies shall conduct its
Business and affairs only in the Ordinary Course of Business, following its
usual and ordinary accounting practices, making ordinary accruals, incurring
ordinary liabilities and expenditures, and making ordinary commitments for
inventory, equipment, insurance, rentals and other ordinary Business purposes.
7.2 ACCESS TO BOOKS AND RECORDS - From and after the date hereof,
the Companies shall (a) afford to the officers, employees and representatives of
Buyer full and free access to its assets, personnel, properties, records and
books of account at all reasonable times during business hours, (b) to furnish
to such officers, employees and representatives such other information as Buyer
may reasonably request, and (c) to authorize its accountants and auditors to
permit Buyer's independent public accountants and representatives to examine
records pertaining to the Companies's Financial Statements and other books and
records of the Companies. Buyer agree to treat all such material as confidential
and not make use of such materials except for the purposes expressed in this
Agreement unless such use comes into the public domain.
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7.3 NEGATIVE COVENANTS - The Companies and Shareholders covenant
that from and after the date hereof and through the Closing Date, without the
prior written consent of Buyer, the Companies will not:
(a) enter into any written or oral contract, agreement,
or commitment of any type, without the express written consent of Buyer,
including the following:
(i) contracts for the employment or compensation
of any officer, director, or individual employee;
(ii) contracts with any labor union, except to
the extent that the Companies are compelled to negotiate with a labor union and
the Companies provide notice of such requirement;
(iii) continuing contracts for the future
purchase of inventory, materials, supplies, or equipment at a cost of $1,000 or
more;
(iv) continuing contracts for future medical
waste services in excess of $7,500 per month;
(v) distribution or agency contracts, franchise
contracts, or advertising commitments;
(vi) pension, profit sharing, deferred
compensation retirement, stock option, stock purchase plans, group health
insurance, or similar plans with respect to officers, directors, employees, or
others;
(vii) leases under which the Companies is a
lessor or lessee;
(viii) underwriting agreements or agreements
with a broker or finder;
(ix) consulting agreements;
(x) contracts for the acquisition of a business
or substantially all of the property, assets or capital stock of a business;
(xi) any other contract, agreement, or
commitment involving $1,000 or more.
(b) declare or pay any dividend, or make any distribution
of its properties or assets to the Shareholders, or allow the issuance of any of
its securities;
(c) discharge or satisfy any lien or encumbrance or pay
any obligation or liability, except in the Ordinary Course of Business;
(d) make any change in their Articles of Incorporation or
By-Laws;
(e) issue any capital stock or other corporate securities
or grant options, warrants or rights of any kind to purchase any of its capital
stock or corporate securities;
(f) mortgage, pledge or subject to any lien, charge or
other encumbrance any of their tangible or intangible assets;
(g) make any payment, or enter into any contract for
payment of any bonus, gratuity or other compensation, or increase the rate or
form of compensation payable to any agent or employee, except salary adjustments
in the Ordinary Course of Business for employees who are not officers, directors
or stockholders of the Companies;
(h) dispose of any of their properties or assets, except
in the Ordinary Course of Business;
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(i) incur any indebtedness, except for operating expenses
in the Ordinary Course of Business, nor allow a Material Adverse Effect to their
financial affairs, nor allow any Tax or other liability to be extended by waiver
of the statutes of limitation or otherwise;
(j) make any loan to, borrow any money from, or enter
into any contract or understanding with, any officer, director or Shareholder of
the Companies; or
(k) enter into any other transaction, other than in the
Ordinary Course of Business.
7.4 AFFIRMATIVE COVENANTS - The Companies and Shareholders
covenant that from and after the date hereof and through the Closing Date, the
Companies will:
(a) keep their properties and assets insured consistent
with their prior practices in respect thereto;
(b) perform in the Ordinary Course of Business all of
their obligations under Contracts, Leases and documents relating to or affecting
their assets, properties and Business;
(c) preserve intact the Business, organization, and
goodwill of the Companies, to the end that the Buyer shall continue to operate
the Companies as a going business as now constituted, after the consummation of
the transaction contemplated hereunder.
7.5 CONSUMMATION OF TRANSACTIONS - Upon the terms and subject to
the conditions of this Agreement, the parties hereto shall use their best
efforts to take, or cause to be taken, all such actions and to do, or cause to
be done, all other things necessary to carry out their obligations hereunder and
to consummate and make effective, as soon as reasonably practicable, the
transactions contemplated by this Agreement, including satisfying the conditions
to the obligations of the other parties and obtaining all waivers, permits,
consents and approvals and effecting all registrations, filings and notices with
or to third parties or governmental or public bodies or authorities which are
necessary in connection with the transactions contemplated by this Agreement;
provided that this Section 7.5 shall not require any party to waive any
condition for its benefit or any performance hereunder by the other parties or
to make any payment to any third party, whether private or governmental, or to
expend any funds or incur any economic burden in connection with obtaining the
consent of any third party, whether private or governmental; and provided
further that this Section 7.5 shall not require any party to take any action the
result of which would be to impose material limitations on its ability to
consummate and retain the full benefits of the transactions contemplated hereby.
7.6 NO NEGOTIATIONS - Except in the furtherance of the
transactions contemplated hereby, prior to the Closing Date the Companies and
the Shareholders agree that (a) neither they nor any of their affiliates shall,
and each of them shall direct and use their best efforts to cause their
respective directors, officers, employees, representatives or agents (including,
without limitation, any investment banker, attorney or accountant retained by
them or any of their affiliates) not to, directly or indirectly, initiate,
solicit or encourage any inquiries or the making or implementation of any
proposal or offer (including, without limitation, any proposal or offer to its
stockholders), with respect to any merger, acquisition, consolidation, share
exchange, business combination or other transaction involving, or which would
result in, (i) the acquisition of any outstanding capital stock in the
Companies, or (ii) the acquisition of any material part of the Assets of the
Companies (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal"), or engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
person or entity relating to an Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal; (b) they
shall immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing, and they shall take the necessary steps to inform any
such parties of the obligations undertaken in this Section 7.6; and (c) they
shall notify Buyer immediately if any such inquiries or proposals are received
by, any such
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information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, them.
7.7 DAMAGE OR DESTRUCTION OF ASSETS. In the event that any loss
or damage to or destruction of any of the assets of the Companies shall occur
prior to the Closing, Buyer shall be entitled to all insurance proceeds, awards,
or other compensation payable in respect of such loss, damage, or destruction;
provided, however, that if any material portion of the assets is lost, destroyed
or materially damaged prior to the Closing, Buyer shall have the option of
either (i) accepting such proceeds, awards, or compensation and proceeding with
the Closing, or (ii) terminating this Agreement, in which case neither Buyer nor
the Companies or any Shareholders shall have any further obligations or rights
hereunder.
7.8 DISCLOSURE SCHEDULE - The Company shall prepare a Disclosure
Schedule which shall provide the detailed description of the items referenced
elsewhere herein as being a part of the Disclosure Schedule and deliver same to
the Buyer no later than September 15, 1998. The Buyer shall have five (5) days
following receipt of the Disclosure Schedule to review of the information
included within the Disclosure Schedule. In the event that the Disclosure
Schedule contains any information which is materially different than as
represented by the Companies prior to the execution of this Agreement, the Buyer
shall have the right to terminate this Agreement and receive a refund of the
Deposit.
ARTICLE VIII. - CONDITIONS PRECEDENT TO THE CLOSING
8.1 CONDITIONS TO OBLIGATIONS OF BUYER - The obligations of Buyer
to consummate this Agreement shall be subject to, and be conditioned upon, each
of the following conditions:
(a) PROPERTIES INTACT - No properties or assets of the
Companies shall have suffered any destruction or damage by fire, accident or
other casualty or act of God not fully covered by insurance or affecting in a
material and adverse way the conduct of the Business of the Companies considered
as a whole.
(b) REPRESENTATIONS AND WARRANTIES - The representations
and warranties made by the Companies and Shareholders in Article V hereof shall
be correct in all respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date and none of the covenants of the Companies or Shareholders
contained in this Agreement shall have been breached in any respect as of the
Closing Date.
(c) NO ADVERSE CHANGES - That since the date of the
Financial Statements there has been no adverse change in the condition of the
Companies, financial or otherwise, from that set forth in the Financial
Statements.
(d) APPROVALS AND CONSENTS - All consents, approvals,
authorizations or orders of any individual, entity, court or Governmental
Authority or administrative body, if any, necessary in shall have been obtained
and in effect on the Closing Date, which are required for the consummation of
the transaction be contemplated by this Agreement.
(e) AUTHORIZATION OF AGREEMENT BY THE COMPANIES AND
SHAREHOLDERS - All actions of the Companies necessary to authorize the
execution, delivery and performance of this Agreement by the Companies and
Shareholders shall have been duly and validly taken.
(f) AUTHORIZATION OF AGREEMENT BY BOARD OF DIRECTORS -
The Board of Directors of Buyer shall have taken all actions necessary to
authorize the execution, delivery and performance of this Agreement.
(g) NO LITIGATION - No claim, proceeding, investigation,
or litigation, either administrative or judicial, shall be threatened or be
pending against the Buyer, the Companies or the Shareholders which, in the
opinion of counsel for Buyer, presents a reasonable probability that the
transaction contemplated by this Agreement would be enjoined or prevented or
that the right of Buyer to
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continue the operations of the property, assets and Business of the Companies
would be materially affected.
(h) DUE DILIGENCE - Buyer shall have completed its due
diligence investigation and the results thereof shall not have revealed that any
of the representations, warranties or covenants made by the Companies or the
Shareholders in this Agreement are untrue or incorrect in any material respect
or otherwise be unsatisfactory to Buyer.
(i) NO CHANGE IN LAW - There shall have not been proposed
or enacted (including without limitation, any threatened proposal or enactment
of) any statute, rule, regulation, policy, guideline, or official
interpretation, or any modification in or to any existing statute, rule,
regulation, policy or guideline, which prohibits or delays or threatens to
prohibit or delay, the performance of the transaction contemplated by this
Agreement or which changes, or threatens to change, in an adverse manner the
Business, financial condition, revenues, income, liabilities (whether absolute,
contingent or otherwise) reserves or prospects of the Companies from that
reflected in the Financial Statements.
(j) NO VIOLATIONS OF LAW - At the Closing Date, there
shall exist no violations of any Federal, state or local law, ordinance or
regulation affecting the assets, properties or Business of the Companies.
(k) PERFORMANCE BY SHAREHOLDERS AND THE COMPANIES - All
of the terms and conditions of this Agreement to be complied with and performed
by the Shareholders and the Companies on or before the Closing Date shall have
been complied with and performed.
(l) PROCEEDINGS AND INSTRUMENTS SATISFACTORY - All
proceedings, corporate or other to be taken in connection with the transaction
contemplated by the Agreement and all documents incident thereto, including any
Collateral Agreement, shall be satisfactory in form and substance to Buyer and
Buyer's counsel.
(m) EMPLOYMENT AGREEMENT - Xxxxx Xxxxxxx and Xxxx Xx
Xxxxxxx shall have entered into new employment agreements with the Companies, as
required in Section 9.6 hereof.
(n) FORM 8-K FINANCIAL STATEMENTS - The Buyer shall have
received the Companies' audited Financial Statements, consisting of balance
sheets as of December 31, 1996 and 1997 and statements of income, cash flow and
stockholders' equity for the two (2) years in the period ended December 31,
1997, the notes to the financial statements thereto, and the unaudited financial
statements as of June 30, 1998 and for the six (6) months ended June 30, 1997
and 1998, respectively and the reports of the Company's independent auditors
required to be filed with Buyer's current report on Form 8-K pursuant to the
Securities Exchange Act of 1934, as amended, in connection with the consummation
of the transaction contemplated hereby. All such Financial Statements shall
comply with the requirements of Regulation S-X as promulgated by the SEC. In the
event the transaction is consummated later than October 31, 1998, the Companies
shall deliver to Buyer, in addition to the Financial Statements, unaudited
financial statements as of September 30, 1998 and for the nine (9) months ended
September 30, 1997 and 1998,
8.2 CONDITIONS TO OBLIGATIONS OF THE COMPANIES AND THE
SHAREHOLDERS - The obligations of the Companies and the Shareholders to
consummate this Agreement are subject to and shall be conditioned upon each of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES - The representations
and warranties made by Buyer herein shall be correct in all material respects on
and as of the Closing Date with the same force and effect as though such
representations had been made on and as of the Closing Date and the covenants of
Buyer contained herein shall not have been breached in any material respects as
of the Closing Date.
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(b) PERFORMANCE BY BUYER - All of the terms, covenants
and conditions of this Agreement to be complied with and performed by Buyer on
or before the Closing Date shall have been complied with and performed.
(c) CONSENTS AND APPROVALS - No consent, approval,
authorization or order of any individual, entity, court or governmental agency
or administrative body not obtained and in effect on the Closing Date shall be
required for the consummation of the transaction contemplated by this Agreement.
ARTICLE IX.- POST-CLOSING OBLIGATIONS
-------------------------------------
9.1 SURVIVAL OF THE CLOSING - All covenants, agreements,
representations, and warranties made hereunder and in any certificates delivered
at the Closing pursuant hereto shall be deemed to have been relied upon by
Buyer, the Shareholders and the Companies, and shall survive the Closing for the
applicable statute of limitations.
9.2 FURTHER ASSURANCES - Following the Closing, each of the
Shareholders, the Companies and Buyer shall execute and deliver such documents,
and take such other action as shall be reasonably requested by any other party
hereto to carry out the transaction contemplated by this Agreement.
9.3 INDEMNIFICATION BY THE SHAREHOLDERS - The Shareholders, agree
to jointly and severally indemnify, reimburse and hold Buyer and the Companies
harmless against and from:
(a) All Damages suffered, incurred, or sustained by Buyer
as a result of (i) the existence on or before the Closing Date of any
liabilities, absolute or contingent, of the Companies; (ii) the material untruth
of any representation or the breach of any warranty by the Shareholders made in
this Agreement; (iii) the material untruth of any certificate required under
this Agreement to be delivered by the Shareholders or the Companies to Buyer on
the Closing Date; (iv) the material breach of this Agreement by the Companies or
the Shareholders.
(b) Buyer shall give the Shareholders prompt notice of
any claim to indem nification it may wish to assert pursuant to this Section 9.3
as soon as reasonably practicable. Before being required to make any payments
pursuant to this Section 9.3, the Shareholders may, in their discretion and at
their expense, take all necessary steps properly to contest any claim or
liability or action in respect thereof involving third parties, or to prosecute
such contest or action to conclusion or settlement satisfactory to Buyer and
themselves; provided however, no contest shall adversely affect the operation of
the Companies' Business. Buyer shall cooperate fully with the Shareholders in
the reasonable conduct of any such contest or action, legal proceedings,
negotiation, or settlement and will not compromise voluntarily or settle any
such contest, action, legal proceeding, claim or demand without prior notice to
the Shareholders.
(c) Upon the payment to Buyer by the Shareholders of any
amount which Buyer is entitled to receive by way of indemnification under this
Section 9.3, Buyer, shall forthwith assign to the Shareholders all of its right,
title, and interest in any item for which indemnification shall so be made,
including claims against third parties relating therewith.
(d) In the event that the Shareholders shall dispute the
right of Buyer to be indemnified under this Section 9.3, or any item with
respect to which Buyer shall so request indemnification, or if the Shareholders
shall dispute the amount which Buyer shall be entitled to receive with respect
to such item by way of indemnification, such dispute shall be submitted to
arbitration in the City of Miami, Florida in accordance with the rules then in
effect of the American Arbitration Association.
(e) Buyer shall have the right to set-off any amounts due
it pursuant to a claim for indemnification against the Escrow Fund.
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9.4 NON-COMPETITION AGREEMENT -
(a) Each of the Shareholders covenant and agree that for
a period of five (5) years from the Closing Date they will not be an employee
(except with Buyer or the Companies), agent, director, stockholder or owner
(except of not more than 1% of the securities of a publicly traded entity),
partner, consultant, financial backer, creditor or be otherwise directly or
indirectly connected with or participate in the management, operation or control
of any business, firm, proprietorship, corporation, partnership, association,
entity or venture engaged in a business similar to the Business within the
States of Delaware, Maryland, New Jersey, New York or Pennsylvania.
(b) The Shareholders covenant and agree that for a period
of five (5) years from the Closing Date except in connection with the Business
of Buyer, they will not contact, call upon, solicit business from, sell or
render services to any customer of the Companies or Buyer with respect to the
provision of any services or supplies similar to the Business or otherwise
directly or indirectly aid or assist any other person, firm or entity to do any
of the aforesaid acts.
(c) The Shareholders covenant and agree that for a period
of five (5) years from the Closing Date, they will not directly or indirectly as
principal, agent, owner, partner, stockholder, officer, director, employee
independent contractor or consultant or in any individual or representative
capacity for themselves or on behalf of any business firm, corporation,
partnership, association or proprietorship enter into any agreements with or
solicit, or directly or indirectly cause others to solicit, the employment of
any officer or other employee of the Companies, Buyer or any of their
subsidiaries and affiliates for the purpose of causing said officer or employee
to terminate employment with the Companies, Buyer, their subsidiaries and
affiliates.
(d) The Shareholders agree that they shall not at any
time, disclose, directly or indirectly to any person, firm or entity any
confidential information about the Companies, the Business, Buyer or any
information concerning their respective financial condition, customers and
methods of obtaining business or any other methods generally of doing and
operating the Business, except to the extent that such information is a matter
of public knowledge or is required to be disclosed by law through judicial or
administrative process.
(e) It is recognized and acknowledged by the parties
hereto that a breach or violation by any Shareholder of any of the covenants and
agreements contained in Section 9.4 may cause irreparable harm and Damage to
Buyer in a monetary amount which may be impossible to ascertain. Each
Shareholder agrees that Buyer shall be entitled to an injunction from any court
of competent jurisdiction enjoining or restraining any breach or violation of
any or all of the covenants and agreements contained in this Section 9.4 and
that such right to injunction shall be cumulative and in addition to whatever
other rights or remedies the Buyer may possess hereunder at law or in equity.
9.5 PUBLICITY - The Companies and Shareholders shall not issue or
make, or cause to have made, any public release or announcement concerning this
Agreement or the transaction contemplated hereby, without the advance written
approval of the form and substance by Buyer, which approval shall not be
unreasonably withheld.
9.6 EMPLOYMENT AGREEMENTS - Xxxxx Xxxxxxx and Xxxx Xx Xxxxxxx
shall each enter into three (3) year employment agreements with the Companies
substantially in the form attached to the Disclosure Schedule. Xxxxx Xxxxxxx and
Xxxx Xx Xxxxxxx will receive aggregate salary of $175,000 per year.
ARTICLE X. - MISCELLANEOUS
--------------------------
10.1 COSTS AND EXPENSES - Except as otherwise provided herein in
this Agreement, if this Agreement is terminated in accordance with Section 4.4,
each of the parties to this Agreement shall bear their own expenses incurred in
connection with the negotiation, preparation, execution and closing of this
Agreement and the transaction contemplated hereby, including but not limited to,
transfer taxes, legal fees and accounting fees.
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10.2 REMEDIES - The rights and remedies provided by this
Agreement are cumulative, and the use of any one right or remedy by any party
hereto shall not preclude or constitute a waiver of its right to use any and all
other remedies. Such rights and remedies are given in addition to any other
rights and remedies a party may have by law, statute or otherwise.
10.3 DISCLOSURE SCHEDULE - The Disclosure Schedule shall in each
instance, include the Schedules and the Exhibits referred to herein and therein.
The Disclosure Schedule shall be deemed an integral part hereof and is
incorporated herein by this reference.
10.4 ATTORNEYS' FEES - In the event of any litigation arising out
of this Agreement, the prevailing party shall be entitled to an award of its
attorneys' fees and costs (including any fees and costs incurred in Appellate
proceedings) against the losing party.
10.5 RISK OF LOSS - Prior to the Closing, the risk of loss,
damage to, or destruction of any assets of the Companies shall remain with the
Companies and Shareholders.
10.6 ASSIGNMENT AND AMENDMENT OF AGREEMENT - This Agreement shall
not be assignable by any of the parties hereto except with the written consent
of the other party. This Agreement may be amended by any written agreement of
the parties hereto.
10.7 NOTICES. Any notice or communication given pursuant hereto
by either party to the other party shall be in writing and delivered or mailed
by certified mail, return receipt requested, postage prepaid, as follows:
If to Buyer: MED/WASTE, INC.
0000 X.X. 000xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Copy to: Xxxxxxx Xxxxxx, Legon, Fodiman &
Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Companies Xxxxxxx Motors, Inc.
or the Shareholders: 0000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (215) ___-____
Facsimile: (000) 000-0000
Copy to: Xxxxxxx Xxxxxxx, Esq.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as hereafter shall be furnished in writing by any party
hereto to the other parties.
10.8 ENTIRE AGREEMENT - This Agreement, together with the
Disclosure Schedule, is the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written of the
parties. No other agreement not specifically referred to herein, oral or
otherwise, shall be deemed to exist or to bind any of the parties. No officer or
employee of any party has any authority to make any representation
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or promise not contained in this Agreement and each of the parties agrees that
it has not executed this agreement in reliance upon any such representation or
promise.
10.9 WAIVER - Any forbearance, failure or delay by any of the
parties hereto to exercise any right, power or remedy hereunder shall not be
deemed a waiver of such right, power or remedy and any single or partial
exercise of any such right, power or remedy hereunder shall not preclude the
further exercise thereof and every right, power or remedy of either party shall
continue in full force and effect unless waived specifically by an instrument in
writing executed by such party.
10.10 GOVERNING LAW - This Agreement shall be construed in
accordance with the laws of the State of Florida.
10.11 COUNTERPARTS - This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
10.12 CAPTIONS - The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
10.13 SUCCESSORS AND ASSIGNS - All of the terms of this Agreement
shall be binding upon and inure to the benefit of, and be enforceable by and
against the parties and their respective successors and assigns.
10.14 INTERPRETATION - Handwritten provisions inserted in this
Agreement, initialed in ink, shall control all typewritten provisions in
conflict therewith. This Agreement shall not be construed more strongly against
or in favor of any party, regardless of who is responsible for its preparation.
10.15 SEVERABILITY - In the event any provision of this Agreement
or the application of such provision to any part shall be held by a court of
competent jurisdiction to be contrary to any rule of law or public policy, the
remaining provisions of this Agreement shall remain in full force and effect.
10.16 RIGHTS OF THIRD PARTIES - Except as may otherwise be
specifically provided in this Agreement, nothing expressed or implied in this
Agreement is intended, or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
shareholders, any rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
MED/WASTE, INC., a Delaware corporation
By: /s/ XXXXXX X. XXXXXXX
-----------------------------------
XXXXXX X. XXXXXXX, President
XXXXXXX MOTORS, INC., a Pennsylvania
corporation
By:/s/ XXXXX XXXXXXX
-----------------------------------
XXXXX XXXXXXX, President
EAST COAST MEDICAL WASTE, INC., a
New Jersey corporation,
By:/s/ XXXXX XXXXXXX
------------------------------------
XXXXX XXXXXXX, President
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BUCKS COUNTY RESOURCE AND
RECOVERY, INC., a Pennsylvania corporation
By: /s/ XXXXX XXXXXXX
------------------------------------
XXXXX XXXXXXX, President
/S/ XXXXX XXXXXXX
------------------------------------
XXXXX XXXXXXX
/S/ XXXX XX XXXXXXX
------------------------------------
XXXX XX XXXXXXX
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