Exhibit 2.1
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ASSET PURCHASE AGREEMENT
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BY AND BETWEEN
MEDSOLUTIONS, INC.,
A TEXAS CORPORATION,
AND
POSITIVE IMPACT WASTE SOLUTIONS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
DATED EFFECTIVE AS OF NOVEMBER 30, 2005
ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement (this "Agreement"), executed to be
effective as of November 30, 2005 (the "Effective Date"), is made and entered
into by and between MedSolutions, Inc., a Texas corporation (the "Buyer"), and
Positive Impact Waste Solutions, LLC, a Delaware limited liability company (the
"Seller").
WITNESSETH:
WHEREAS, the Seller is currently engaged in the business of regulated
medical waste treatment and disposal; and
WHEREAS, the Seller desires to sell and convey, and the Buyer desires
to purchase and assume, substantially all of the assets and liabilities of the
Seller relating to the Seller's processing division (the "Processing Division"),
as more particularly described herein, in exchange for the consideration as more
particularly described herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual undertakings and covenants set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties to this Agreement hereby agree as follows:
ARTICLE I
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PURCHASE OF ASSETS; PURCHASE PRICE
1.01 Assets to be Purchased; Purchase Price. On the Closing Date (as
defined below), and subject to the terms and conditions of this Agreement, the
Seller shall sell, assign, convey, and transfer, and the Buyer shall purchase,
acquire, accept, and assume, the Assets (as defined below), in exchange for, due
or payable at the Closing (as defined below), the following consideration (the
"Purchase Price"):
(a) $700,000 in the form of a certified or cashiers' check,
money order, or wire-transfer of immediately available funds (the
"Cash").
(b) A promissory note in the form attached hereto as Exhibit A
(the "$300,000 Note") in the principal amount of $300,000.00, without
interest, and payable in three equal installments of principal in the
amount of $100,000.00 each (or such other adjusted amount calculated as
set forth below), and with the first such installment due on the 120th
day after the Closing Date, the second such installment due on the
240th day after the Closing Date, and the third such installment due on
the one-year anniversary of the Closing Date; provided, however, that
beginning with the first day of the first full calendar month for which
the Seller's customers as of the date hereof (the "Existing Customers")
are billed by the Buyer and for three months thereafter (the
"Three-Month Post-Closing Period"), in the event that the amount of the
Buyer's average monthly accrual basis sales to such Existing Customers
(exclusive of any fees, price increases or surcharges implemented by
the Buyer) during the Three-Month Post-Closing Period (the "Three-Month
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Post-Closing Average Monthly Sales Amount") is less than $99,545.00,
the difference between the Three-Month Post-Closing Average Monthly
Sales Amount and $99,545.00 shall be multiplied by 12 to obtain an
adjustment amount (the "Revenues Adjustment Amount"), and such Revenues
Adjustment Amount shall be deducted from the Purchase Price as follows:
33% of such Revenues Adjustment Amount shall be deducted from the
principal amount of the $300,000 Note; 33% of such Revenues Adjustment
Amount shall be deducted from the principal amount of the $550,000 Note
(as defined below); and 34% of such Revenues Adjustment Amount shall be
deducted from the Shares (as defined below) by redemption and
cancellation of Shares at the Share Value (as defined below) for no
consideration; provided, however, that in the event that the principal
amount of the $300,000 Note, the principal amount of the $550,000 Note,
or the value of the Shares is insufficient to permit the full deduction
allocated thereto as set forth in the immediately preceding clause, any
such deficiency shall be reallocated first to the principal amount of
the $300,000 Note, next to the principal amount of the $550,000 Note,
and last to the Shares. Any such deduction to the $300,000 Note or the
$550,000 Note pursuant to this Section 1.01(b) or Sections 1.01(e) or
5.09 shall be applied to the first payment due thereunder and then to
subsequent payments due thereunder in chronological order. No later
than 30 days after the end of the Three-Month Post-Closing Period, the
Buyer shall provide the Seller with a true, correct and complete copy
of its invoice register for such Three-Month Post-Closing Period with
respect to the Existing Customers.
(c) A promissory note in the form attached hereto as Exhibit I
(the "$550,000 Note") in the principal amount of $550,000.00, secured
by the Purchased Units (as defined below) with serial numbers 1, 4 and
5 pursuant to a Security Agreement in the form attached hereto as
Exhibit M (the "Security Agreement"), with simple interest at the
annual rate of 8% accruing from the Closing Date and payable in six
equal installments of interest only in the amount of $3,666.66 each due
monthly beginning on the 30th day after the Closing Date, and 54 equal
installments of principal and interest in the amount of $12,161.83 each
due monthly thereafter. To the extent that any interest is paid on the
$550,000 Note and the principal amount of such note is subsequently
reduced in accordance with the terms of this Agreement, any interest
previously paid by the Buyer that is in excess of an 8% annual rate on
such newly-reduced principal amount will be credited against the
principal amount of the $550,000 Note such that the amount of interest
paid on such newly-reduced principal amount, if any, will not exceed 8%
annually.
(d) 360,000 restricted shares (the "Shares") of the Buyer's
common stock, $.001 par value per share (the "Common Stock"), valued at
$1.25 per share for the purposes of this Agreement (the "Share Value").
(e) If the Buyer shall have to pay, directly or indirectly,
during the first 90 days after the Closing Date, any amount, including
without limitation by way of reimbursement, rebate, credit or invoice
adjustment, to any Existing Customer relating to any customer
complaints or grievances based on any action or failure to act by the
Seller prior to the Closing Date, such payment shall be deducted from
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the Purchase Price as follows: 33% of such amount shall be deducted
from the principal amount of the $300,000 Note; 33% of such amount
shall be deducted from the principal amount of the $550,000 Note; and
34% of such amount shall be deducted from the Shares by redemption and
cancellation of Shares at the Share Value for no consideration;
provided, however, that in the event that the principal amount of the
$300,000 Note, the principal amount of the $550,000 Note, or the value
of the Shares is insufficient to permit the full deduction allocated
thereto as set forth in the immediately preceding clause, any such
deficiency shall be reallocated first to the principal amount of the
$300,000 Note, next to the principal amount of the $550,000 Note, and
last to the Shares. Notwithstanding any provision of this subsection
(e) to the contrary, the Buyer shall first provide notice of any such
customer complaint or grievance to the Seller, and the Seller shall
have 48 hours from the receipt of such notice to respond to the Buyer
regarding such customer complaint or grievance, before the Buyer shall
make any such payment to any Existing Customer.
1.02 Allocation of the Purchase Price. The Purchase Price shall be
allocated among the Assets in accordance with Schedule 1.02 (the "Allocation").
The Seller and the Buyer shall make consistent use of the Allocation following
the Closing Date, and the Seller and the Buyer hereby agree not to file any tax
return or otherwise take a position with any federal, state or local tax
authority which is inconsistent with the Allocation.
1.03 Definition of Assets. The term "Assets" shall mean all right,
title, and interest that the Seller now has, or may have in the future, in and
to the properties (both real and personal) and assets (both tangible and
intangible) as set forth and described on Schedule 1.03, including without
limitation 100% of the issued and outstanding equity securities of Positive
Impact Waste Servicing, Inc., a Texas corporation and a wholly-owned subsidiary
of the Seller (the "Seller Subsidiary"). All properties and assets not set forth
and fully described on Schedule 1.03 are expressly excluded from the term
"Assets" for the purposes of this Agreement.
1.04 Assets Unencumbered. Schedule 1.04 sets forth and fully describes
each and every liability, lien, mortgage, encumbrance, and imperfection of title
to which the Assets are subject or may be subject in the future due to actions
or omissions of the Seller (the "Disclosed Encumbrances"). Except for the
Disclosed Encumbrances, the Seller shall convey to the Buyer marketable title to
the Assets free and clear of any liabilities, liens, mortgages, encumbrances,
and imperfections of title.
ARTICLE II
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CLOSING AND CLOSING DATE
2.01 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held on (i) the Effective Date or (ii) such
other date as the parties hereto may agree, at such time and place as the
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parties hereto may agree. The date on which the Closing occurs is referred to
herein as the "Closing Date". At the Closing, the parties hereto shall deliver
or cause to be delivered the following:
(a) the Seller shall deliver or cause to be delivered to the
Buyer:
(i) title to and possession of the Assets by
means of an executed copy of the Xxxx of
Sale and Assignment and Assumption Agreement
attached hereto as Exhibit B and any other
instruments of conveyance or other documents
or instruments necessary to transfer and
assign title and beneficial ownership of the
Assets to the Buyer as determined by the
Buyer in its sole discretion;
(ii) the Officer's Certificate in substantially
the form of Exhibit C attached hereto;
(iii) the Secretary's Certificate in substantially
the form of Exhibit D hereto;
(iv) the consents as set forth on Schedule
2.01(a)(iv), dated prior to the Closing
Date, required to be obtained by the Seller
from third parties in order to transfer
certain of the Assets to the Buyer in
accordance with this Agreement;
(v) a shareholder lock-up agreement with respect
to the Shares between the Buyer and the
Seller in the form attached hereto as
Exhibit E;
(vi) non-competition and non-solicitation
agreements between the Buyer and each of Xxx
Xxxxxxx, Xxx Xxxx, and Xxx Xxxxx, in the
form attached hereto as Exhibit H;
(vii) a Territory Agreement in the form attached
hereto as Exhibit J;
(viii) a Customer Service Agreement in the form
attached hereto as Exhibit K;
(ix) an Equipment Purchase Agreement for
additional mobile treatment units ("Mobile
Treatment Units") and other equipment
manufactured by the Seller in the form
attached hereto as Exhibit L; and
(x) the Security Agreement.
(b) The Buyer shall deliver to the Seller:
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(i) The Cash, the $300,000 Note, the $550,000
Note and a stock certificate for the Shares.
(ii) the Officer's Certificate in substantially
the form of Exhibit F attached hereto;
(iii) the Secretary's Certificate in substantially
the form of Exhibit G hereto.
(iv) non-competition and non-solicitation
agreements between the Buyer and each of Xxx
Xxxxxxx, Xxx Xxxx, and Xxx Xxxxx, in the
form attached hereto as Exhibit H;
(v) an executed copy of the Xxxx of Sale and
Assignment and Assumption Agreement attached
hereto as Exhibit B;
(vi) a Territory Agreement in the form attached
hereto as Exhibit J;
(vii) a Customer Service Agreement in the form
attached hereto as Exhibit K;
(viii) an Equipment Purchase Agreement for
additional Mobile Treatment Units and other
equipment in the form attached hereto as
Exhibit L; and
(ix) the Security Agreement.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF THE SELLER
To induce the Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, the Seller hereby represents and warrants to
the Buyer, as of the Closing Date, the following:
3.01 Organization and Good Standing. The Seller is a limited liability
company duly organized, validly existing, and in good standing under the laws of
the State of Delaware. Schedule 3.01 includes (i) a true and complete copy of
the Seller's Certificate of Formation and all amendments thereto, certified by
the Delaware Secretary of State; (ii) a true and complete copy of the limited
liability company agreement of the Seller presently in effect, certified as true
and correct by the Seller's Secretary; and (iii) true and complete copies of
certificates of existence, qualification and account status, certified by the
Secretary of State of Delaware, the Secretary of State of Texas and the Texas
Comptroller of Public Accounts, respectively, as of the Closing Date.
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3.02 Authority. The Seller has all requisite limited liability company
power and authority to own its property (including, without limitation, the
Assets), to conduct its business, and to execute and deliver this Agreement and
any instruments and agreements contemplated herein that are required to be
executed and delivered by the Seller pursuant to its obligations under this
Agreement, and to perform its obligations hereunder and thereunder. This
Agreement has been approved by the Seller's Board of Managers and members and
has been duly authorized, executed, and delivered by the Seller. No other
limited liability company act or proceeding on the part of the Seller is
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement represents a valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws affecting the enforcement of creditors' rights generally and the
application of general principles of equity and judicial discretion. The Seller
has delivered to the Buyer a copy of the resolutions of the Seller's Board of
Managers and members, certified as true and correct by the Seller's Secretary,
approving this Agreement and authorizing the execution hereof by the Seller's
President.
3.03 No Violation. Neither the execution and delivery by the Seller of
this Agreement nor the consummation by the Seller of the transactions
contemplated hereby will (i) violate any provision of the Delaware Limited
Liability Company Act or the limited liability company agreement of the Seller;
(ii) except as set forth on Schedule 3.12, violate, or be in conflict with, or
constitute a default (or an event or condition that, with notice or lapse of
time, or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or cause the acceleration of the
maturity of any of the Seller's liabilities, or result in the creation or
imposition of any security interest, lien, charge, or other encumbrance upon any
of the Assets under, any note, bond, mortgage, indenture, deed of trust,
license, lease, contract, commitment, understanding, arrangement, agreement, or
restriction of any kind or character to which the Seller is a party or by which
the Seller may be bound or affected or to which any of the Assets is subject; or
(iii) violate any statute or law or any judgment, decree, order, writ,
injunction, regulation, or rule of any court or Governmental Authority (as
defined in Article VIII of this Agreement).
3.04 Brokers. The Seller has not employed any broker, agent, or finder
in connection with any transaction contemplated by this Agreement for which the
Buyer may be liable or responsible to pay.
3.05 No Undisclosed Liabilities. Except for the Disclosed Encumbrances
and express liabilities arising under the contracts set forth on Schedule 3.18,
there are no liabilities or obligations of the Seller, whether accrued,
absolute, contingent, or otherwise, that have affected or could affect in any
way the Assets, or any of them. There is no basis for the assertion against the
Seller of any liability or obligation of any nature whatsoever that could result
in the creation or imposition of any security interest, lien, charge, or
encumbrance upon the Assets.
3.06 Title to the Assets; Encumbrances. Except for the Disclosed
Encumbrances, the Seller has good and marketable title to the Assets free and
clear of all liens, mortgages, claims, easements, pledges, security interests,
or other imperfections of title.
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3.07 Environmental Compliance.
(a) With respect to the Assets and any other Property (as
defined in Article VIII of this Agreement) owned or operated by the
Seller, the Seller is in compliance with all applicable Environmental
Laws (as defined in Article VIII of this Agreement) and has obtained
and is in compliance with all permits, licenses, and other
authorizations required under any Environmental Law. There is no past
or present event, condition or circumstance that is likely to interfere
with the utilization of the Assets constituting a violation of
Environmental Laws or resulting from any failure to comply therewith;
(b) The Seller does not now and has not leased, operated,
owned, or exercised managerial functions at any facilities or real
property with respect to which such facility or real property is
subject to any Proceeding (as defined in Article VIII of this
Agreement) under any Environmental Law, and the Seller is not aware of
any facts or circumstances that could give rise to such a Proceeding;
(c) There are no actions or Proceedings pending or, to the
Seller's Knowledge (as defined in Article VIII of this Agreement),
threatened against the Seller under any Environmental Law, and the
Seller has not received any notice (whether from any regulatory body or
private person) of any violation, or potential or threatened violation,
of any Environmental Law;
(d) There are no actions or Proceedings pending or, to the
Seller's Knowledge, threatened under any Environmental Law involving
the release or threat of release of any Polluting Substances (as
defined in Article VIII of this Agreement) at or on (i) any Property
currently or in the past owned, operated or leased by the Seller or
over which the Seller exercised managerial functions, or (ii) at any
Property where Polluting Substances generated by the Seller have been
disposed;
(e) There is no Property for which the Seller is or was
required to obtain any permit under an Environmental Law to construct,
demolish, renovate, occupy, operate, or use such Property or any
portion of it;
(f) The Seller has not generated any Polluting Substances;
(g) There has been no release of Polluting Substances by the
Seller in violation of any Environmental Law that would require any
report or notification to any governmental or regulatory authority in
or on any Property;
(h) The Seller is not under investigation or subject to
pending or, to the Seller's Knowledge, threatened litigation by
federal, state, or local officials or a private litigant as a result of
any previous on-site management, treatment, storage, release, or
disposal of Polluting Substances or exposure to any Polluting
Substances;
(i) There are no underground or above ground storage tanks on
or under any Property that are not in conformity with any Environmental
Law, and any Property previously containing such tanks has been
remediated in compliance with all Environmental Laws; and
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(j) There is no asbestos-containing material on any Property
of the Seller.
3.08 Financial Statements; No Financial Change. Attached as Schedule
3.08 are true, correct, and complete copies of the following financial
statements for the Seller's Processing Division: unaudited balance sheets,
statements of income, and statements of cash flows as of and for the year ended
December 31, 2004, and an unaudited balance sheet, statement of income, and
statement of cash flows as of and for the nine months ended September 30, 2005
(collectively, the "Seller Financial Statements"). The Seller Financial
Statements have been prepared consistently during the periods indicated, are
correct and complete in all respects, accurately present the financial condition
and results of operations of the Seller as of the dates set forth, and have been
prepared in accordance with generally accepted accounting principles,
consistently applied. Since the date of the Seller Financial Statements, there
has not been any change in the business, operations, prospects, assets, results
of operations or condition (financial or other) of the Seller, and no event has
occurred or circumstance exists that may result in such a change.
3.09 Taxes.
(a) The Seller has (i) timely filed all returns required to be
filed by it with respect to all federal, state, local, and foreign
income, payroll, withholding, unemployment, excise, added value, social
security, sales and use, real and personal property, use and occupancy,
business and occupation, mercantile, real estate, capital stock, and
franchise or other tax (including interest and penalties thereon and
including estimated taxes thereof) (hereinafter referred to
collectively as "Taxes"); (ii) paid all Taxes shown to have become due
pursuant to such returns; and (iii) paid all other Taxes for which a
notice of assessment or demand for payment has been received;
(b) All returns for Taxes filed by or on behalf of the Seller
have been prepared in accordance with all applicable laws and
requirements and accurately reflect the taxable income (or other
measure of Tax) of the entity filing the return; and
(c) There are no Tax liens upon any of the Assets, and the
Seller is not aware of any audit or other proceeding or investigation,
or of any position taken on a Tax return of the Seller, that could give
rise to a Tax lien upon any of the Assets. The Seller has previously
provided the Buyer with complete, true, and correct copies of all of
the Seller's federal income tax returns.
3.10 Intangible Assets. The Seller owns and possesses all necessary
certificates, permits, authorizations, licenses (collectively, "Licenses") that
may be associated with any of the Assets, and, except as set forth on Schedule
3.12, all of such Licenses are being transferred, conveyed, and assigned to the
Buyer pursuant to this Agreement. The Seller owns and possesses all necessary
patents, trademarks, trademark licenses, trade names, mastheads, brand names,
slogans, copyrights, reprint rights, franchises, inventions, processes,
know-how, formulas, trade secrets, and other intangible assets, including all
pending applications, continuations-in-part, and extensions for any of the
above, that may be associated with any of the Assets.
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3.11 Litigation. Except as set forth on Schedule 3.11, there are no
Proceedings (as defined in Article VIII of this Agreement) in progress, pending,
or, to the Seller's Knowledge, threatened against or affecting the Seller, the
Assets, or the transactions contemplated hereby in any court or before any
arbitration panel of any kind or before or by any Governmental Authority (as
defined in Article VIII of this Agreement), nor is there any valid basis for any
such arbitration, claim, action, proceeding, inquiry or investigation.
3.12 Consents. Except as set forth on Schedule 3.12 and the consents of
the Board of Managers and members of the Seller, no consent, approval, license,
permit, authorization, or order of any Person is required in connection with the
execution and delivery of this Agreement by the Seller or the consummation of
the transactions contemplated hereby by the Seller.
3.13 Permits, Licenses, Etc. The Seller has received no written
notification of any threatened suspension or cancellation of any permit,
license, franchise, order, certificate, consent, authorization, or approval of
any Governmental Authority or administrative authority required to permit the
Seller to conduct its business as conducted on the Closing Date.
3.14 Absence of Unethical Business Practices. Neither the Seller nor
any officer, employee or agent thereof has directly or indirectly given or
agreed to give any gift or similar benefit to any customer, contractor,
Governmental Authority, or any employee, agent, broker or affiliate of such
Person or Governmental Authority who was or is in a possible position to help or
hinder the Seller, which gift or benefit (a) would subject the Seller to any
damages or penalties in any civil or criminal proceeding, or (b) would have a
Material Adverse Effect on the Assets if discontinued.
3.15 Securities Act Compliance. None of the outstanding equity
securities of the Seller was issued in violation of the Securities Act of 1933,
as amended (the "Securities Act") or any other legal requirement.
3.16 Books and Records. The books of account and other financial
records of the Seller, all of which have been made available to the Buyer, are
complete and correct and represent actual, bona fide transactions, and have been
maintained in accordance with sound business practices and the requirements of
Sections 13(b)(2)(A) and (B) of the Securities Exchange Act of 1934, as amended
(regardless of whether the Seller is subject to such Sections or not), including
the maintenance of an adequate system of internal controls. The minute books of
the Seller, all of which have been made available to the Buyer, contain accurate
and complete records of all meetings held of, and limited liability company
action taken by the Board of Managers, committees of the Board of Managers and
the members of the Seller, and no meeting of any such Board of Managers,
committees or members has been held for which minutes have not been prepared or
are not contained in such minute books.
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3.17 Condition of Assets; Inventory.
(a) Each of the Assets, including without limitation the four
Model PIWS-3000 mobile treatment units, serial numbers 4, 5, 6 & 7, is
in good repair and good operating condition, is suitable for immediate
use, and is free from latent and patent defects. No Asset is in need of
repair or replacement. All Assets used in the Seller's business are in
the possession of the Seller. Subject to the Seller's obligations set
forth in Section 5.07 of this Agreement, and notwithstanding any
provision of this subsection (a) to the contrary, the Seller is
conveying the Model PIWS-3000 mobile treatment units, serial numbers 1
and 3, to the Buyer "as is."
(b) Each of the six Model PIWS-3000 mobile treatment units,
serial numbers 1, 3, 4, 5, 6 & 7 (collectively, the "Purchased Units"),
if operated and maintained by the Buyer in accordance with the
operating manual(s) and any other written operating procedures provided
therefor by the Seller to the Buyer, will (i) process not less than
1,500 pounds of waste per hour and (ii) meet or exceed the regulatory
compliance processing requirements of each jurisdiction in which such
Purchased Unit is approved for use.
(c) The fair market value of the Purchased Units as of the
Closing Date, as would be determined by an independent appraisal, is
not less than $500,000.
3.18 Contracts; No Defaults. Schedule 3.18 contains an accurate and
complete list, and the Seller has delivered to the Buyer accurate and complete
copies, of each contract to which the Seller Subsidiary is a party, and each
amendment, supplement and modification (whether oral or written) in respect
thereof (collectively, the "Assigned Contracts"). The Assigned Contracts
represent 100% of the Seller's contracts relating to its regulated medical waste
treatment and disposal business. Except as otherwise set forth on Schedule 3.18,
and except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting the enforcement of creditors' rights
generally and the application of general principles of equity and judicial
discretion, to the Seller's Knowledge, each Assigned Contract is in full force
and effect and is valid and enforceable in accordance with its terms, is not in
default nor has any event occurred which with the passage of time would result
in a default, and does not require the consent or approval of any party thereto
with respect to the transfer of ownership of the Seller Subsidiary from the
Seller to the Buyer.
3.19 Solvency. The Seller is not now insolvent and will not be rendered
insolvent by any of the transactions contemplated by this Agreement. As used in
this section, "insolvent" means: (i) that the sum of the debts and other
probable liabilities of the Seller exceed the present fair saleable value of the
Seller's assets; (ii) any event in which the Seller is required to make an
assignment for the benefit of creditors; (iii) any event in which the Seller its
unable to pay its debts as they become due; (iv) any event in which the Seller
shall be required to file a voluntary petition in bankruptcy, or shall be
adjudicated a bankrupt or insolvent, or shall be required to file any petition
or answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, or shall be required to file any answer
admitting or not contesting the material allegations of a petition filed against
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it in any such proceeding; or (v) any event in which the Seller shall be
required to seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of it or of all or any substantial part of its
properties.
3.20 Full Disclosure. No representation or warranty regarding the
Seller or the Assets made in this Agreement, the Exhibits and Disclosure
Schedules hereto, or the documents to be delivered by the Seller at the Closing
pursuant to Section 2.01(a), contains any untrue statement of a material fact
that affects the Assets or the Seller's title to the Assets, or omits to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading. Each of the Exhibits and Disclosure Schedules attached
hereto is a true and complete list or description, as appropriate, of the items
purported to be listed or described thereon.
3.21. Representations Regarding the Acquisition of the Shares.
(a) Purchase Entirely for Own Account. This Agreement is made
with the Seller in reliance upon the Seller's representation to the
Buyer, which by the Seller's execution of this Agreement the Seller
hereby confirms, that the Shares to be received by the Seller will be
acquired for investment for the Seller's own account, not as a nominee
or agent, and not with a view to the resale or distribution of any part
thereof, and that the Seller has no present intention of selling or
granting any participation in or otherwise distributing the same. The
Seller further represents that the Seller does not have any contract,
undertaking, agreement or arrangement with any Person to sell, transfer
or grant participations to such Person or to any third Person with
respect to the Shares.
(b) Sophistication; Accredited Investor Status. The Seller is
a Person who either alone or with its purchaser representative(s) has
sufficient knowledge and experience in financial and business matters
to be capable of evaluating the merits and risks of an investment in
the Buyer.
(c) Speculative Investment. The Seller understands the
speculative nature and risks of investments associated with the Buyer
and confirms that it is able to bear the risk of the investment, and
that there may not be any public market for the Shares received herein.
(d) No Coercion or Solicitation. The Seller has freely entered
this Agreement and has been subject to neither pressure to make a xxxxx
or uninformed decision to enter into this Agreement nor solicitation to
receive the Shares.
(e) Transfer Restrictions. The Seller hereby acknowledges that
the Buyer is not under any obligation to register or seek an exemption
under any federal and/or state securities laws for any sale or transfer
of the Shares by the Seller, and the Seller hereby further acknowledges
that the Shares constitute restricted securities as that term is
defined in Rule 144 under the Securities Act and that the Shares may
not be sold, transferred, assigned or hypothecated unless there is an
11
effective registration statement under the Securities Act covering the
Shares, the sale is made in accordance with Rule 144 under the
Securities Act, or the Buyer receives an opinion of counsel of the
Seller reasonably satisfactory to the Buyer, stating that such sale,
transfer, assignment or hypothecation is exempt from the registration
and prospectus delivery requirements of the Securities Act.
(f) Disclosure of Information. The Seller has received all the
information it considers necessary or appropriate for deciding whether
to purchase the Shares. The Seller further represents that it has had
the opportunity to ask questions of the Buyer and receive answers from
the Buyer, to the extent that the Buyer possessed such information or
could acquire it without unreasonable effort or expense, necessary to
evaluate the merits and risks of any investment in the Buyer. Further,
the Seller has been given an opportunity to question the appropriate
executive officers of the Buyer.
(g) Lock-up Agreement. The Seller hereby acknowledges that the
shareholder lock-up agreement with respect to the Shares between the
Buyer and the Seller in the form attached hereto as Exhibit E shall
follow the Shares upon the sale, transfer, assignment or hypothecation
of any or all of the Shares to any transferee of the Seller.
(h) Legends. It is understood that the certificates evidencing
the Shares will bear the legend set forth below:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS."
The legend set forth above shall be removed by the Buyer from any
certificate evidencing Shares upon delivery to the Buyer of an opinion
by counsel, reasonably satisfactory to the Buyer, that a registration
statement under the Securities Act is at that time in effect with
respect to the legended security or that such security can be freely
transferred in a public sale without such a registration statement
being in effect and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which the Buyer
issued the Shares.
12
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF THE BUYER
To induce the Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, the Buyer hereby represents and warrants to
the Seller, as of the Closing Date, the following:
4.01 Organization and Good Standing. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Texas. Exhibits 3.1 through 3.6, inclusive, to the Buyer's Form 10-QSB for the
quarterly period ended September 30, 2005 (the "Buyer's Form 10-QSB") are true
and complete copies of the Buyer's Articles of Incorporation and all amendments
thereto. Exhibit 3.7 to the Buyer's Form 10-QSB is a true and complete copy of
the bylaws of the Buyer as presently in effect. Schedule 4.01 includes true and
complete copies of certificates of existence and account status of Buyer,
certified by the Secretary of State of Texas and the Texas Comptroller of Public
Accounts, respectively, as of the Closing Date.
4.02 Authority. The Buyer has all requisite corporate power and
authority to execute and deliver this Agreement and the Note (collectively, the
"Transaction Documents") and to consummate the transactions contemplated hereby
and thereby. The Transaction Documents have been approved by the Buyer's Board
of Directors and have been duly authorized, executed, and delivered by the
Buyer. No other corporate act or proceeding on the part of the Buyer is
necessary to authorize the Transaction Documents or the transactions
contemplated thereby. The Transaction Documents have been duly authorized,
executed, and delivered by the Buyer and constitute a valid and binding
obligation of the Buyer enforceable against the Buyer in accordance with their
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting the enforcement of creditors' rights
generally and the application of general principles of equity and judicial
discretion. The Buyer has delivered to the Seller a copy of the resolutions of
the Buyer's Board of Directors, certified as true and correct by the Buyer's
secretary, approving this Agreement, the issuance of the Shares and the Note,
and authorizing the execution hereof and thereof by the Buyer's President.
4.03 No Violation. Neither the execution and delivery by the Buyer of
the Transaction Documents nor the consummation by the Buyer of the transactions
contemplated thereby will (i) violate any provision of the Texas Business
Corporation Act, the Articles of Incorporation of the Buyer, or the Bylaws of
the Buyer; (ii) violate, or be in conflict with, or constitute a default (or an
event or condition that, with notice or lapse of time, or both, would constitute
a default) under, or result in the termination of, or accelerate the performance
required by, or cause the acceleration of the maturity of any agreement to which
the Buyer is subject, or result in the creation or imposition of any security
interest, lien, charge, or other encumbrance upon any of the Buyer's assets
under, any note, bond, mortgage, indenture, deed of trust, license, lease,
contract, commitment, understanding, arrangement, agreement, or restriction of
any kind or character to which the Buyer is a party or by which the Buyer may be
13
bound or affected or to which any the Buyer's assets is subject; or (iii)
violate any statute or law or any judgment, decree, order, writ, injunction,
regulation, or rule of any court or Governmental Authority (as defined in
Article VIII of this Agreement).
4.04 Brokers. The Buyer has not employed any broker, agent, or finder
in connection with any transaction contemplated by this Agreement for which the
Seller may be liable or responsible to pay.
4.05 Litigation. Except as disclosed in Buyer's Form 10-QSB, there are
no suits, arbitrations, claims, actions, Proceedings, investigations, or
inquiries in progress, pending, or, to Buyer's Knowledge, threatened against or
affecting the Buyer, the Buyer's assets, or the transactions contemplated hereby
in any court or before any arbitration panel of any kind or before or by any
Governmental Authority, except such Proceedings which would not have a Material
Adverse Effect.
4.06 Full Disclosure. To the Buyer's Knowledge, no representation or
warranty of the Buyer made in this Agreement contains any untrue statement of a
material fact that affects the ability of the Buyer to consummate the
transactions contemplated by this Agreement or omits to state a material fact
necessary to make the statements or facts contained herein not misleading.
4.07 Consents. No consent, approval, license, permit, authorization, or
order of any person is required in connection with the execution and delivery of
Transaction Documents or the consummation of the transactions contemplated
hereby.
4.08 Capitalization. The capitalization of the Buyer immediately prior
to the Closing is as set forth on Schedule 4.08.
4.09 Exemption. The issuance of the Shares hereunder to the Seller is
exempt from the registration requirements under the Securities Act of 1933, as
amended, and all applicable state securities laws.
4.10 Issuance of Common Stock. The Shares being sold hereunder, when
issued in accordance with this Agreement, will have been validly issued, fully
paid and non-assessable and will be free and clear of any lien, charge or other
encumbrance (other than as set forth in this Agreement) and will not be subject
to any preemptive or similar rights. As of the Closing Date, no previously
existing shareholders of the Buyer have any rights superior to the Seller,
including rights upon liquidation, to dividends, or for registration of shares
with the Securities and Exchange Commission. The shareholder lock-up agreement
with respect to the Shares between the Buyer and the Seller in the form attached
hereto as Exhibit E is the Buyer's standard form lock-up agreement to which no
less than 65% of the Buyer's outstanding Common Stock is subject as of the
Closing Date and does not contain any more severe restrictions than those
applied to other shareholders of the Buyer that have signed lock-up agreements.
14
ARTICLE V
---------
COVENANTS OF THE SELLER
5.01 Payment of Liabilities and Taxes; Bulk Transfer Laws. The Seller
shall pay in full or otherwise satisfy all liabilities of the Seller. The Buyer
and the Seller hereby waive compliance with the bulk transfer provisions of the
UCC or any similar bulk sales laws in connection with the transactions
contemplated by this Agreement.
5.02 Non-competition.
(a) The Seller and the Buyer acknowledge that (i) the Buyer is
engaged in or intends to be engaged in business throughout the United
States and that the marketplace for the Buyer's products and services
is nationwide, (ii) the Seller is engaged in business throughout the
United States and internationally for the manufacture and sale of
medical waste processing units, (iii) the agreements and covenants in
this Section 5.02 are essential to protect the legitimate business
interests of the Buyer and the Seller, and (iv) neither the Buyer nor
the Seller would enter into this Agreement but for the covenants and
agreements contained in this Section 5.02. Accordingly, the Seller
covenants and agrees that commencing on the Closing Date and continuing
for a period of two years thereafter, the Seller will not, and will
cause its Affiliates not, in the States of Texas, Kansas and any
additional states in which the Buyer is granted any exclusive rights
with respect to Mobile Treatment Units by the Seller, to, own, manage,
operate, join, control or participate in, directly or indirectly, or be
a partner or shareholder of (except for the ownership of the Shares),
any business engaged in the (A) regulated medical waste transportation
business, (B) document destruction or shredding business, including
without limitation the transportation of destroyed or shredded
documents business, (C) sharps management business, and (D) compliance
with the Occupational Safety and Health Act ("OSHA") or the Health
Insurance Portability and Accountability Act of 1996 ("HIPAA") business
(collectively, the "Buyer Businesses"), and neither the Seller nor any
Affiliate of the Seller shall render assistance or advice to any Person
which is so engaged; provided however, that the passive ownership of
less than 2% of the equity securities of a publicly-traded company that
is involved in any of the foregoing businesses shall be permissible
under this Section 5.02.
(b) If any covenant in this Section 5.02 is held to be
unreasonable, arbitrary, or against public policy, such covenant will
be considered to be divisible with respect to scope, time, and
geographic area, and such lesser scope, time, or geographic area, or
all of them, as an arbitrator or a court of competent jurisdiction may
determine to be reasonable, not arbitrary, and not against public
policy, will be effective, binding, and enforceable against the Seller
and the Buyer.
5.03 Audit. The Seller shall take all actions necessary and proper such
that the Buyer's audit of the Seller's accounts and records is completed at the
Buyer's expense within 45 days after the Closing Date.
5.04 Consents. The Seller shall use its reasonable best efforts to
obtain all consents from third parties necessary in order to transfer the Assets
(other than the consents already delivered pursuant to Section 2.01(a)(iv)) as
soon as practicable, but in no event later than within 30 days after the Closing
Date.
15
5.05 Payment of Taxes. The Seller shall promptly pay all Taxes due from
the Seller as of the Closing Date, and all other Taxes for which a notice of
assessment or demand for payment has been received as of the Closing Date.
5.06 Training and Operations Transition Support. The Seller shall
provide to the Buyer's personnel, during the 75-day period commencing on the
Closing Date, (i) operating and maintenance training for the equipment purchased
by the Buyer from the Seller as part of the Assets (the "Equipment"), and (ii)
operations transition support with respect to the Assets. The Buyer shall
reimburse the Seller for the actual and reasonable travel and lodging expenses
of the Seller's personnel involved in such training and operations transition
support, and the Seller shall be responsible for all other costs and expenses
associated with the individuals providing such training and operations
transition support.
5.07 Units and Equipment. The Seller hereby grants the Buyer a full
90-day warranty from the Closing Date for all non-consumable equipment and parts
contained within the Purchased Units with serial numbers 4, 5, 6 and 7. The
Seller further agrees to clean, paint, and inspect all six Purchased Units, and
to repair and replace all defective and/or worn non-operating parts for all six
Purchased Units, in each such case within 120 days after the Closing Date and to
the Buyer's reasonable satisfaction. The Seller shall upgrade, at no charge to
the Buyer, the Purchased Units with serial numbers 4, 5 and 6 with breakaway
assemblies, and the Purchased Units with serial numbers 5 and 6 with floor
mounted hoppers, in each such case within 150 days after the Closing Date. The
Seller shall provide the Buyer, at no charge to the Buyer, with the first set of
replacement teeth (both shaft and tube) for any of the Purchased Units with
teeth that were installed before October 1, 2005.
5.08 Exclusive Territory. The Seller hereby covenants and agrees that
it will not sell any Mobile Treatment Units to any Person without obtaining the
written agreement of such Person not to service customers located within the
States of Texas and Kansas.
5.09 Assignment of Customer Contracts. The Seller shall assign to the
Seller Subsidiary executed contracts from existing customers in a form
acceptable to the Buyer ("Contracts") representing at least 90% of its average
monthly revenues from such customers (excluding Xxxxxx Methodist Ft. Worth) for
the six calendar months immediately preceding the month in which the Closing
Date occurs, within 90 days of the Closing; provided, however, that in the event
that the Seller shall have delivered and assigned Contracts representing at
least 75% but less than 90% of such revenues within 90 days of the Closing, the
Seller shall have an additional 90 days to deliver and assign the remaining
Contracts due pursuant to this Section 5.09; provided further, however, that
each of the Seller's contracts with existing customers that expires pursuant to
its terms within 18 months of the Closing Date, a complete list of which
contracts is attached hereto as Schedule 5.09, shall not be deemed in a form
acceptable to the Buyer for the purposes of this Section 5.09 unless it is
replaced with a new contract with a term expiring not less than 36 months after
the Closing Date. In the event that the Seller does not deliver and assign
Contracts representing at least 90% of such revenues as set forth in this
16
Section 5.09, then the Purchase Price will be adjusted on the basis of
determining the average monthly revenue for each customer whose Contract has not
been assigned (each, an "Unassigned Customer") for the six-month period (or such
lesser period that such Unassigned Customer has been a customer of the Seller,
as the case may be) preceding the Closing Date (the "Unassigned Customer Monthly
Average Revenue"), and multiplying such Unassigned Customer Monthly Average
Revenue by 12 to determine an offset amount to the Purchase Price, and such
offset amount shall be deducted from the Purchase Price as follows: 33% of such
amount shall be deducted from the principal amount of the $300,000 Note; 33% of
such amount shall be deducted from the principal amount of the $550,000 Note;
and 34% of such amount shall be deducted from the Shares by redemption and
cancellation of Shares at the Share Value for no consideration; provided,
however, that in the event that the principal amount of the $300,000 Note, the
principal amount of the $550,000 Note, or the value of the Shares is
insufficient to permit the full deduction allocated thereto as set forth in the
immediately preceding clause, any such deficiency shall be reallocated first to
the principal amount of the $300,000 Note, next to the principal amount of the
$550,000 Note, and last to the Shares.
5.10 Regulatory Assistance. After the Closing Date, the Seller shall
provide the Buyer with reasonable assistance in obtaining any required federal,
state and local regulatory approvals necessary to operate the Mobile Treatment
Units purchased by MedSolutions in the Territory and any Expansion Territories
from time to time.
5.11 Title to Vehicles. The Seller shall obtain for and on the Buyer's
behalf, at the Seller's sole expense, and shall deliver to the Buyer, as soon as
practicable, but in no event later than the 30th day after the Closing Date,
Texas Motor Vehicle Transfer Notifications with regards to any motor vehicles
that constitute a portion of the Assets and are located in the State of Texas.
ARTICLE VI
----------
ADDITIONAL AGREEMENTS
6.01 License of the Seller's Name. The Seller hereby grants to the
Buyer a nonexclusive license (the "License") consisting of a nonexclusive right
to use the name "Positive Impact Waste Solutions", including without limitation
the right to open a bank account in the name of and cash checks made to
"Positive Impact Waste Solutions". The term of the License shall commence on the
Closing Date and end 360 days thereafter (the "License Term").
6.02 Contingent License of Seller Technology. After the Closing Date,
in the event of (i) the commencement of voluntary or involuntary dissolution
proceedings relating to the Seller; (ii) any bankruptcy, insolvency or
receivership proceedings, or an assignment for the benefit of creditors, shall
be commenced by the Seller under any federal or state law; (iii) any order for
relief under any present or future federal bankruptcy act or similar state or
federal law shall be entered against the Seller, or if a petition or answer
requesting or proposing the entry of such order for relief or the adjudication
of the Seller as a debtor or a bankrupt or its reorganization under any present
or future state or federal bankruptcy act or any similar federal or state law
shall be filed in any court and such petition or answer shall not be discharged
or denied within 60 days after the filing thereof; (iv) the Seller shall become
17
the subject of any out-of-court settlement with substantially all of its
creditors; (v) the Seller is unable or admits in writing its inability to pay
its debts as they mature; (vi) the consummation of a reorganization, merger or
consolidation with an entity, or any other event (or series of related events),
in which the persons who hold a majority of the outstanding equity securities of
the Seller before such transaction (or series of transactions) do not own at
least a majority of the equity securities entitled to vote to elect directors
(or persons serving in a similar capacity) of the entity surviving such
transaction; (vii) a disposition of all or substantially all of the assets of
the Seller; or (viii) the occurrence of any event similar in nature to any event
enumerated in this Section 6.02, the Seller shall be deemed to have granted to
the Buyer and its Affiliates as of the date of such event a non-exclusive,
perpetual, worldwide, royalty-free license to any and all rights Seller holds in
the technology, parts and supplies necessary or convenient to operate the
Equipment; provided, however, that the Buyer shall not be permitted to
manufacture or have manufactured on its behalf products for sale to third
parties outside of the ordinary course of the Buyer's services to customers
using any of such rights in the event that such rights are granted to the Buyer
as a result of any event set forth in subclauses (vi) or (vii) of this Section
6.02. The consummation by the Buyer of a reorganization, merger or consolidation
with an entity, or any other event (or series of related events), in which the
persons who hold a majority of the outstanding capital stock of the Buyer before
such transaction (or series of related transactions) own less than a majority of
the equity securities entitled to vote to elect directors (or persons serving in
a similar capacity) of the entity surviving such transaction, or a disposition
of all or substantially all of the assets of the Buyer, shall not be deemed a
sale of products by the Buyer as restricted in the immediately preceding
sentence.
6.03 Marketing Assistance. The Buyer shall provide the Seller, upon
reasonable prior notice, during the Buyer's customary business hours and in a
manner not disruptive to the Buyer's business, with reasonable access to at
least one of the Purchased Units for marketing and demonstration purposes and,
to a limited extent, the Odessa fixed site location that is included in the
Assets for testing new equipment or improvements developed by the Seller.
6.04 Access to Odessa Facility. From time to time at the Buyer's
election, the Seller shall (i) sublet to Buyer the approximately 2.5 acres of
unimproved property separately fenced behind 000 Xxxxx Xxxxxxxx, Xxxxxx, Xxxxx
(the "Unimproved Property"), and (ii) permit the Buyer to use one of the bays
located at the Seller's facility at such address, in exchange for $500 per month
for each month that the Buyer uses such property and/or facility. The Buyer's
rights as set forth in the immediately preceding sentence shall expire on
November 30, 2015. In the event that the Seller purchases the Unimproved
Property, the Buyer shall have 90 days from the date of such purchase to
purchase the Unimproved Property from the Seller for $62,500. In the event that
the Buyer does not elect to purchase the Unimproved Property within such 90-day
period, the Buyer shall be permitted to lease the Unimproved Property directly
from the Seller pursuant to the terms set forth in the first sentence of this
Section 6.04.
6.05 Prorations. On the Closing Date, or as promptly as practicable
following the Closing Date, certain periodic charges or expenses relating to the
Assets for periods in which the Closing Date falls, and certain accounts
receivables relating to the Processing Division for periods in which the Closing
18
Date falls, shall be prorated between Buyer and Seller as of the Closing Date,
Seller being charged and/or credited for all of same up to the Closing Date and
Buyer being charged and/or credited for all of same on and after the Closing
Date, and a cash settlement shall be made between Seller and Buyer within 30
days of the Closing Date.
ARTICLE VII
-----------
INDEMNIFICATION
7.01. Indemnification of the Buyer. The Seller hereby agrees to
indemnify, defend, and hold harmless the Buyer, its successors in interest, and
their respective officers, directors, employees, agents, attorneys, and
stockholders (each a "Buyer Indemnitee") from and against all demands, claims,
actions, or causes of action, assessments, losses, taxes, damages, liabilities,
costs, and expenses, including, without limitation, interest, penalties, and
reasonable attorneys' fees and expenses (collectively "Damages"), asserted
against, assessed upon, resulting to, imposed upon, or incurred by a Buyer
Indemnitee by reason of or resulting from (a) a breach of any representation,
warranty, or a breach or threatened breach of any covenant, obligation, or
agreement of the Seller contained in or made pursuant to this Agreement,
including the Disclosure Schedules and Exhibits hereto, or any facts or
circumstances constituting such a breach; or (b) the operation of the businesses
of the Seller, including, but not limited to, any products sold or services
rendered, on or prior to the Closing Date. In addition, the Seller agrees to
indemnify any Buyer Indemnitee for Damages as they are incurred by the Buyer
Indemnitee irrespective of any ongoing or continuing legal proceedings and the
relative timeframes and issues associated with such proceedings, or the relative
success or nonsuccess the Buyer Indemnitee may experience in such proceedings.
7.02. Indemnification of the Seller. The Buyer hereby agrees to
indemnify, defend, and hold harmless the Seller, its successors in interest, and
their respective officers, directors, employees, agents, attorneys and
shareholders (each a "Seller Indemnitee") from and against all Damages asserted
against, assessed upon, resulting to, imposed upon, or incurred by the Seller by
reason of or resulting from (a) any default on any Assumed Liability occurring
after the Closing Date, (b) a breach of any representation or warranty of the
Buyer contained in or made pursuant to this Agreement and the other Transaction
Documents, including the Exhibits and Disclosure Schedules thereto, or (c) the
operation of the businesses of the Buyer directly related to the Assets,
including, but not limited to, any products sold or services rendered, after the
Closing Date. In addition, the Buyer agrees to indemnify any Seller Indemnitee
for Damages as they are incurred by the Seller Indemnitee irrespective of any
ongoing or continuing legal proceedings and the relative timeframes and issues
associated with such proceedings, or the relative success or nonsuccess the
Seller Indemnitee may experience in such proceedings.
7.03. Indemnification Claims Procedure. All claims subject to
indemnification under Section 7.01 or 7.02 above shall be asserted and resolved
in accordance with the following provisions. Promptly after receipt by a Buyer
Indemnitee or a Seller Indemnitee (either is referred to as an "Indemnitee" in
this Section 7.03) of notice of the commencement of any action (including any
governmental action), such Indemnitee will, if a claim in respect thereof is to
be made against any indemnifying party (the "Indemnifying Party") under this
Article VII, deliver to the Indemnifying Party a written notice of the
19
commencement thereof and the Indemnifying Party shall have the right to
participate in, and, to the extent the Indemnifying Party so desires, jointly
with any other Indemnifying Party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an Indemnitee (together with all other Indemnitees that may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential conflicts
of interest between such Indemnified Party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
Indemnifying Party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such Indemnifying Party of any liability to the Indemnitee under this
Article VII to the extent of the prejudice caused by such failure.
7.04. Expiration of Indemnification Obligations. All obligations to
provide indemnification pursuant to this Article VII shall terminate on the
fourth anniversary of the Closing Date, other than claims arising from
environmental, employee benefit or tax issues, which shall not terminate until
the applicable statutes of limitations for such claims have expired.
ARTICLE VIII
------------
DEFINITIONS
The following terms as used in this Agreement shall have the meanings
set forth below:
"Affiliate" shall mean, as to any Person, any Person controlled by,
controlling, or under common control with such Person, and, in the case of a
Person who is an individual, a member of the family of such individual
consisting of a spouse, sibling, in-law, lineal descendant, or ancestor
(including by adoption), and the spouses of any such individuals. For purposes
of this definition, "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, directly
or indirectly, alone or in concert with others, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of securities, by contract, or otherwise, and no Person shall be
deemed in control of another solely by virtue of being a director, officer, or
holder of voting securities of any entity. A Person shall be presumed to control
any partnership of which such Person is a general partner.
"Business Day" shall mean any day other than a Saturday, Sunday, or any
day on which banks located in Dallas, Texas are authorized to be closed by
applicable law.
"Code" shall mean the Internal Revenue Code of 1986, as amended. All
references herein to sections of the Code shall include any corresponding
provision or provisions of succeeding law.
"Environmental Laws" shall mean laws, including, without limitation,
federal, state, or local laws, ordinances, rules, regulations, interpretations,
and orders of courts or administrative agencies or authorities relating to
pollution, environmental protection, health and safety, or similar laws
(including, without limitation, ambient air, surface water, ground water, land
surface, and subsurface strata), including, without limitation, the
20
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Federal Clean Water Act ("CWA"), the Safe Drinking Water
Act ("SDWA"), the Resource Conservation and Recovery Act of 1976, as amended
("RCRA"), the Clean Air Act ("CAA"), the Emergency Planning and Community Right
to Know Act ("EPCRA"), OSHA, the Medical Waste Tracking Act of 1988 ("MWTA"),
the Hazardous Materials Transportation Authorization Act of 1994 ("HMTAA"), any
regulations issued by the Texas Department of Health (the "TDH"), the Texas
Natural Resource Conservation Commission (the "TNRCC"), or the Texas Commission
on Environmental Quality (the "TCEQ"), and other laws relating to pollution or
protection of the environment, or to the manufacturing, processing,
distribution, use, treatment, handling, storage, disposal, or transportation of
Polluting Substances.
"Governmental Authority" means any nation or government, any state,
regional, local, or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government.
"Knowledge" - An individual shall be deemed to have "knowledge" of a
particular fact or other matter if (i) such individual is actually aware of such
fact or other matter, or (ii) a person serving in the same capacity as such
individual would be expected to discover or otherwise become aware, after due
inquiry, of such fact or other matter in the course of performing the official
duties of such individual. A corporation or limited liability company shall be
deemed to have "knowledge" of a particular fact or other matter if the executive
officers of the corporation have Knowledge (as set forth above) of such fact or
other matter.
"Material Adverse Effect" means any effect(s), individually or in the
aggregate, that would be materially adverse to: (i) a party's assets (which in
the case of the Seller shall be the Assets) in an amount of $10,000 or more; or
(ii) the ability of a party to timely consummate the transactions contemplated
hereby.
"Person" shall have the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended, as modified and used in Sections
13(d)(3) and 14(d)(2) of such act.
"Polluting Substances" shall be construed broadly to include (a)
asbestos, (b) petroleum products or wastes, (c) biomedical or biological wastes,
and (d) all pollutants, contaminants, chemicals, or industrial, toxic, or
hazardous substances or wastes and shall include, without limitation, any
flammable explosives, radioactive materials, oil, hazardous materials, hazardous
or solid wastes, hazardous or toxic substances or regulated materials defined in
CERCLA, CWA, SDWA, RCRA, EPCRA, CAA, OSHA, MWTA, and HMTAA, and/or any other
Environmental Laws, as amended, and in the regulations adopted and publications
promulgated thereto, including without limitation those issued by the TDH, the
TNRCC and the TCEQ; provided, to the extent that the laws of the State of Texas
establish a meaning for "hazardous substance," "hazardous waste," "hazardous
materials," "solid waste," or "toxic substance," which is broader than that
specified in any of CERCLA, CWA, SDWA, RCRA, EPCRA, CAA, OSHA, MWTA, HMTAA or
other Environmental Laws such broader meaning shall apply.
21
"Proceeding" shall mean any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
judicial, or investigative, whether formal or informal, whether public or
private) commenced, brought, conducted, or heard by or before, or otherwise
involving any Governmental Authority or arbitrator.
"Property" includes any property (whether real or personal) that the
Seller currently or in the past has leased, operated, owned, or managed in any
manner, including, without limitation, any property acquired by foreclosure or
deed in lieu thereof and property held as security for a loan or other
indebtedness on the Closing Date.
ARTICLE IX
----------
MISCELLANEOUS
9.01 Reformation and Severability. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof:
(a) in lieu of such illegal, invalid, or unenforceable
provision, there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and
enforceable; and
(b) the legality, validity, and enforceability of the
remaining provisions hereof shall not in any way be affected or
impaired thereby.
9.02 Further Assurances. Each party hereto shall, from time to time
after the Closing Date, at the request of any other party hereto and without
further consideration, execute and deliver such other instruments of conveyance,
assignments, transfer, and assumption, and take such other actions, as such
other party may reasonably request to more effectively consummate the
transactions contemplated by this Agreement.
9.03 Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be sent by first class U.S.
mail (certified mail - return receipt requested), or by facsimile transmission
(if facsimile transmission is also sent by regular U.S. mail the same day), or
delivered by hand or by overnight or similar delivery service, fees prepaid, to
the party to whom it is to be given at the address of such party set forth below
or to such other address for notice as such party shall provide in accordance
with the terms of this section. Except as otherwise specifically provided in
this Agreement, notice so given shall, in the case of notice given by certified
mail (or by such comparable method) be deemed to be given and received three
Business Days after the time of certification thereof (or comparable act), in
the case of notice so given by overnight delivery service, on the date of actual
delivery, and, in the case of notice so given by facsimile transmission or
personal delivery, on the date of actual transmission or, as the case may be,
personal delivery.
22
If to the Buyer: MedSolutions, Inc.
00000 Xxxxx Xxxxx
Xxxx Xxxxxxx VIII
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, President & CEO
Fax: (000) 000-0000
Email: xxxxxxxx@xxxxxxxxxxxx.xxx
With a copy to (delivery of which shall not be deemed as notice to
Buyer):
Fish & Xxxxxxxxxx P.C.
5000 Bank One Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Block
Fax (000) 000-0000
Email: xxxxx@xx.xxx
If to the Seller: Positive Impact Waste Solutions, LLC
X.X. Xxx 00000
Xxxxxx, Xxxxx 00000
000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxx Xxxxxxx, President
Fax:
Email:
9.04 Headings. The headings of sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
9.05 Waiver. The failure of any party to insist, in any one or more
instances, upon performance of any of the terms, covenants, or conditions of
this Agreement shall not be construed as a waiver or a relinquishment of any
right or claim granted or arising hereunder or of the future performance of any
such term, covenant, or condition, and such failure shall in no way affect the
validity of this Agreement or the rights and obligations of the parties hereto.
No waiver of any provision or condition of this Agreement shall be valid unless
executed in writing and signed by the party to be bound thereby, and then only
to the extent specified in such waiver. No waiver of any provision or condition
of this Agreement shall be construed as a waiver of any other provision or
condition of this Agreement, and no present waiver of any provision or condition
of this Agreement shall be construed as a future waiver of such provision or
condition.
9.06 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
23
enforce specifically breaches of this Agreement and to enforce specifically the
terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
9.07 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF OR OF ANY
STATE TO THE EXTENT THAT SUCH CHOICE OF LAW RULES PROVIDE FOR THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN TEXAS. THE PARTIES TO THIS AGREEMENT
HEREBY MUTUALLY AGREE THAT VENUE FOR ANY ACTION BROUGHT WITH RESPECT TO THIS
AGREEMENT SHALL BE PROPER EXCLUSIVELY IN DALLAS COUNTY, TEXAS.
9.08 Court Costs and Attorneys' Fees. If any action at law or in
equity, including an action for declaratory relief, is brought to enforce or
interpret the provisions of this Agreement, the prevailing party shall be
entitled to recover costs of court and reasonable attorneys' fees from the other
party or parties to such action, which fees may be set by the court in the trial
of such action or may be enforced in a separate action brought for that purpose,
and which fees shall be in addition to any other relief that may be awarded.
9.09 Assignability and Binding Effect. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors, heirs, and permitted assigns. This Agreement and the rights and
obligations hereunder shall not be assignable without the express written
consent of all parties hereto.
9.10 Amendments. This Agreement may not be modified, amended, or
supplemented except by an agreement in writing signed by all of the parties
hereto.
9.11 Expenses, Taxes, Etc. Except as otherwise provided herein, the
Seller shall pay all fees, taxes, and expenses incurred by it in connection with
this Agreement, and the Buyer shall pay all fees and expenses incurred by it in
connection with the transactions contemplated by this Agreement.
9.12 Third Parties. Except with respect to indemnification under
Section 7.01 or Section 7.02 herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person other than
the parties hereto and their successors, heirs or permitted assigns, any rights
or remedies under or by reason of this Agreement.
9.13 Number and Gender of Words. When the context so requires in this
Agreement, words of gender shall include either or both genders and the singular
number shall include the plural.
9.14 Entire Agreement. This Agreement and the executed documents, the
forms of which are attached hereto as Exhibits, together with the Disclosure
Schedules and Exhibits attached hereto and thereto, shall constitute the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and shall supersede all prior or contemporaneous
24
negotiations, understandings and agreements. There are no representations,
agreements, arrangements, or understandings, oral or written, between or among
the parties hereto relating to the subject matter of this Agreement that are not
fully expressed herein.
9.15 Survival of Representations and Warranties. All representations,
warranties, covenants, and obligations of the parties hereto shall survive the
Closing for a period of three years thereafter.
9.16 Multiple Counterparts. This Agreement may be executed in multiple
counterparts, including by facsimile signature, each of which shall be deemed to
be an original but all of which together shall constitute one and the same
instrument.
9.17 Disclosure on Disclosure Schedules. Disclosure of a specific item
in any one Schedule hereto shall be deemed a disclosure as to all other
applicable Disclosure Schedules if there is an explicit cross-reference to
another Schedule.
[Remainder of page intentionally left blank.]
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
THE SELLER:
POSITIVE IMPACT WASTE SOLUTIONS, LLC
By: /s/ Xxx Xxxxxxx
---------------
Name: Xxx Xxxxxxx
Title: President
THE BUYER:
MEDSOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
26
EXHIBIT A
---------
FORM OF $300,000 NOTE
PROMISSORY NOTE
---------------
$300,000.00 Dallas, Texas November 30, 2005
FOR VALUE RECEIVED, the undersigned, MedSolutions, Inc., a Texas
corporation (the "Maker"), hereby unconditionally promises to pay to the order
of Positive Impact Waste Solutions, LLC, a Delaware limited liability company
(the "Payee"), at such place as designated by the Payee, or at such other place
or to such other party or parties as may be designated by the Payee from time to
time, in lawful money of the United States of America, the principal amount (the
"Principal Amount") of $300,000.00, subject to adjustment in accordance with
Sections 1.01(b), 1.01(e) and 5.09 of that certain Asset Purchase Agreement (the
"Asset Purchase Agreement") executed between the Maker and the Payee as of the
date hereof, secured by certain of the assets of the Maker as described in the
Security Agreement entered into by Maker and Payee and dated as of November 30,
2005, without interest. All capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Asset Purchase Agreement.
1. This Promissory Note (the "Note") shall be due and payable in three
equal installments of principal in the amount of $100,000.00 each (or such other
adjusted amount calculated in accordance with Sections 1.01(b), 1.01(e) and 5.09
of the Asset Purchase Agreement), with the first such installment due on March
30, 2006, the second such installment due on July 28, 2006, and the third such
installment due on November 30, 2006 (the "Maturity Date"). Each date on which a
payment is due, including the Maturity Date, shall be referred to herein as a
"Payment Date"; provided, however, that if a Payment Date should fall on a
Saturday, Sunday, or bank holiday, then the Payment Date shall be the next
business day. The Maker may prepay any portion or this entire Note without
penalty at any time. Any prepayment will be applied against the outstanding
principal balance. At the request of the Payee, the Maker may make any payments
due under the Note directly to the creditors of the Payee. The Payee hereby
acknowledges that this Note and the Principal Amount are subject to certain
offset rights by the Maker pursuant to the Asset Purchase Agreement.
2. If the Maker fails to pay the full amount then due on any Payment
Date and such failure remains uncured for a period of three calendar days
following written notice of such default by the Payee, then, at the election of
the Payee, this Note shall immediately become due and payable in full, interest
on such principal amount and unpaid interest shall thereafter accrue at the
lesser of 12% or the highest lawful rate permissible under applicable law (the
"Default Rate"), and the Payee shall be entitled to pursue any remedy to which
it is entitled under applicable law.
3. The makers, signers, sureties, guarantors, and endorsers of this
Note severally waive valuation and appraisal, demand, presentment, notice of
dishonor, notice of intent to demand or accelerate payment hereof, notice of
demand, notice of acceleration, diligence in collecting, grace, notice, and
protest. If this Note is not paid when due, the Maker agrees to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees and all
expenses incurred by the holder hereof on account of any such collection,
whether or not suit is filed hereon.
4. Except as expressly set forth in Section 1 hereof, the Maker shall
have no right of setoff, counterclaim, recoupment or other deduction with
respect to the payment required hereunder, and such payment constitutes the
absolute and unconditional obligation of the Maker.
A-1
5. Each right and remedy available to the holder hereof shall be
cumulative of and in addition to each other such right and remedy. No delay on
the part of the holder hereof in the exercise of any right or remedy available
to the holder hereof shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude other or further exercise thereof or exercise
of any other such right or remedy.
6. Regardless of any provision contained in this Note, Payee shall
never be entitled to receive, collect or apply, as interest on this Note, any
amount in excess of the maximum lawful rate permitted by applicable law and, in
the event Payee ever receives, collects or applies as interest any such excess,
such amount that would be excessive interest shall be deemed a partial
prepayment of principal and treated under this Note as such by Maker. In
determining whether or not the interest paid or payable on this Note exceeds
such maximum lawful rate, Maker and Payee shall, to the maximum extent permitted
under applicable law, (a) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest, (b) exclude voluntary prepayments and
the effects thereof, and (c) amortize, prorate, allocate and spread, in equal
parts, the total amount of interest throughout the entire contemplated term of
this Note so that the interest rate does not exceed the maximum lawful rate at
any time during the entire term of this Note. However, if this Note is paid in
full or all or a portion of the principal is set off under the Asset Purchase
Agreement prior to the scheduled maturity hereof, and if the interest received
for the actual period of existence thereof exceeds such maximum lawful rate,
Payee shall refund the amount of such excess and shall not be subject to any
applicable penalties provided by any laws for contracting for, charging, taking,
reserving or receiving interest in excess of such maximum lawful rate.
7. This Note is one of the promissory notes referred to and is entitled
to the benefits of and security afforded by that certain Security Agreement
dated as of November 30, 2005, executed by Maker in favor of Payee and covering
the collateral described therein.
8. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF.
EXECUTED effective as of the date first set forth above.
MAKER:
MedSolutions, Inc.
By: _________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
A-2
EXHIBIT B
---------
FORM OF XXXX OF SALE AND
ASSIGNMENT AND ASSUMPTION AGREEMENT
XXXX OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT
----------------------------------------------------
THE STATE OF TEXAS )
) KNOWN BY ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS )
THIS XXXX OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT (this
"Agreement") is effective as of November 30, 2005 (the "Closing Date"), by and
between Positive Impact Waste Solutions, LLC, a Delaware limited liability
company ("Assignor"), and MedSolutions, Inc., a Texas corporation ("Assignee").
Assignee is a party to that certain Asset Purchase Agreement dated as
of November 30, 2005 by and between Assignee and Assignor (the "Purchase
Agreement"). The Purchase Agreement contemplates the making and delivery of this
Agreement. Capitalized terms used in this Agreement but not otherwise defined
herein shall have the meanings given to such terms in the Purchase Agreement.
NOW, THEREFORE, as contemplated by the Purchase Agreement, and for good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Effective as of the Closing Date, Assignor hereby sells, conveys,
assigns, transfers, and delivers to Assignee, its successors and assigns,
forever, and Assignee hereby accepts, all of Assignor's right, title, and
interest in and to all of the properties and assets listed on Exhibit A attached
hereto (the "Assigned Assets"), free and clear of all liens, charges, security
interests, encumbrances, and restrictions of whatever nature, except as
otherwise set forth on Exhibit B attached hereto, and the Assignor does hereby
bind itself and its successors and assigns to WARRANT and FOREVER DEFEND, all
and singular, title to the Assigned Assets unto the Assignee, its successors and
assigns, against every person whomsoever lawfully claiming or to claim the same,
or any part thereof. Except as otherwise set forth pursuant to the Purchase
Agreement, it is agreed that the Assignee shall not be responsible for the
discharge and performance of any duties or obligations required to be performed
and/or discharged in connection with the Assigned Assets on or prior to the
Closing Date, and Assignor agrees to indemnify, as set forth in Article VII of
the Purchase Agreement, save, and hold harmless the Assignee from and against
any and all losses, costs, damages, liabilities, expenses (including reasonable
attorneys' fees) actions, claims, or causes of action existing in favor of or
asserted by any party arising from or related to any failure by the Assignor to
perform or discharge its obligation as the owner of the Assigned Assets on and
prior to the Closing Date.
2. Effective as of the Closing Date, Assignee hereby assumes and agrees
to pay, discharge, and perform when due certain of Assignor's debts,
liabilities, and obligations (whether accrued, absolute, contingent or
otherwise, whether known or unknown, whether due or to become due, and
regardless of when or by whom asserted) (the "Assumed Liabilities") listed on
B-1
Exhibit C attached hereto. Assignee hereby indemnifies, as set forth in Article
VII of the Purchase Agreement, and holds harmless Assignor from and against any
and all liabilities, costs, losses, and expenses arising from or relating to the
Assumed Liabilities.
3. The Assignor hereby constitutes and appoints the Assignee as the
Assignor's true and lawful attorney, with full power of substitution, for it and
in its name, place, and stead, or otherwise, but on behalf of and for the
benefit of the Assignee, to demand and receive from time to time any and all
Assigned Assets and Assumed Liabilities, hereby sold, assigned, and conveyed, or
intended so to be, and to get receipts and release for and in respect of the
same or any part thereof, and from time to time to institute and prosecute in
the name of the Assignor or otherwise, but at the expense and for the benefit of
the Assignee, any and all proceedings at law, inequity or otherwise, that the
Assignee may deem proper in order to collect, assert, or enforce any claim,
right, or title, of any kind, in and to the Assigned Assets and Assumed
Liabilities hereby assigned and conveyed, or intended so to be, and to defend
and compromise any and all actions, suits, or proceedings relating to any of the
said Assigned Assets and Assumed Liabilities, and generally to do all and any
such acts and things in relation thereto as the Assignee shall deem advisable.
4. Notwithstanding any other provision in this Agreement to the
contrary, in the event that any Assigned Asset is not legally or equitably
assignable (whether pursuant to its express terms or otherwise) at the Closing
Date, or if the purported assignment of such Assigned Asset pursuant to this
Agreement would adversely affect, or diminish the value to Assignee of, such
Assigned Asset, then in any such case (a) such Assigned Asset shall not be
deemed assigned to Assignee hereunder, (b) Assignor shall, until such time as
such Assigned Asset is so assignable without any such adverse effect or
diminution in value, hold such Assigned Asset in trust for the benefit of
Assignee, and act as agent of Assignee in order to obtain for Assignee the
economic and other benefits of such Assigned Asset as though such Assigned Asset
had been assigned to Assignee hereunder, (c) Assignor shall transfer or deliver
to Assignee any and all sums, proceeds and other consideration received or
collected by Assignor in respect of such Assigned Asset or as a result of any
liquidation or other capitalization thereof, and (d) if and when such Assigned
Asset thereafter becomes so assignable without any such adverse effect or
diminution in value, then Assignor shall promptly, at Assignee's reasonable
request and without further consideration, execute and deliver such instruments
of conveyance and transfer and take such action to effect, consummate, confirm
and evidence the transfer to Assignee of such Assigned Asset.
5. Each party hereby covenants that, from and after the Closing Date,
upon the other party's reasonable request and without further consideration,
such party shall execute and deliver such further instruments of conveyance and
transfer and take such additional action to effect, consummate, confirm and
evidence the transfer to Assignee of the Assigned Assets and the assumption by
Assignee of the Assumed Liabilities.
6. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same Agreement.
B-2
7. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF.
8. This instrument shall insure to the benefit of, and be binding upon,
the parties hereto and their respective successors and assigns.
[The remainder of page is intentionally left blank.]
B-3
IN WITNESS WHEREOF, Assignor and Assignee have caused this Agreement to
be executed and delivered as of the date first written above.
ASSIGNOR:
POSITIVE IMPACT WASTE SOLUTIONS, LLC
By:_________________________________
Xxx Xxxxxxx, President
ASSIGNEE:
MEDSOLUTIONS, INC.
By:_________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
B-4
ACKNOWLEDGMENT
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 30th day of
November 2005, Xxx Xxxxxxx, President of Positive Impact Waste Solutions, LLC,
on behalf of said corporation.
___________________________________________
Notary Public for and in the State of Texas
[SEAL]
_______________________________
My commission expires
X-0
XXXXXXXXXXXXXX
XXX XXXXX XX XXXXX )
)
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me this 30th day of
November 2005, by Xxxxxxx Xxxxxxx, President and CEO of MedSolutions, Inc., on
behalf of said corporation.
___________________________________________
Notary Public for and in the State of Texas
[SEAL]
_______________________________
My commission expires
B-6
EXHIBIT A
---------
--------------------------------------------------------------------------------
Assigned Assets
(a) Tangible Assets:
Model PIWS-3000 mobile treatment units, serial numbers 1, 3, 4, 5, 6 & 7
See schedule attached hereto.
(b) Other Assets:
All transferable regulatory permits related to the Assignor's equipment and/or
treatment facilities that are being conveyed to Assignee.
100% of the issued and outstanding equity securities of Positive Impact Waste
Servicing, Inc., a Texas corporation.
B-7
EXHIBIT B
---------
--------------------------------------------------------------------------------
Disclosed Encumbrances
None.
B-8
EXHIBIT C
---------
--------------------------------------------------------------------------------
Assumed Liabilities
None.
B-9
EXHIBIT C
---------
POSITIVE IMPACT WASTE SOLUTIONS, LLC
OFFICER'S CERTIFICATE
---------------------
I, Xxx Xxxxxxx, President of Positive Impact Waste Solutions, LLC, a
Delaware limited liability company (the "Seller"), hereby certify the following
pursuant to Section 2.01(a)(ii) of the Asset Purchase Agreement (the
"Agreement"), dated as of November 30, 2005, between MedSolutions, Inc., a Texas
corporation, and the Seller. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings ascribed to them in the
Agreement.
1. All representations and warranties of the Seller set forth in the
Agreement are true and correct as of the date hereof, except to the extent such
representations and warranties are specifically made as of an earlier date (in
which case such representations and warranties are true and correct as of such
earlier date).
2. The Seller has performed or complied with in all respects its
agreements and covenants required to be performed or complied with under the
Agreement as of or prior to the date hereof.
IN WITNESS WHEREOF, I have executed this Certificate as of November 30,
2005.
POSITIVE IMPACT WASTE
SOLUTIONS, LLC, a Delaware
limited liability company
By: ____________________
Name: Xxx Xxxxxxx
Title: President
C-1
EXHIBIT D
---------
POSITIVE IMPACT WASTE SOLUTIONS, LLC
CERTIFICATE OF SECRETARY
------------------------
This Certificate of Secretary is made and attested to this 30th day of
November, 2005, pursuant to the Asset Purchase Agreement dated November 30, 2005
(the "Agreement"), by and between MedSolutions, Inc., a Texas corporation (the
"Buyer"), and Positive Impact Waste Solutions, LLC, a Delaware limited liability
company (the "Seller").
1. The Seller has provided the Buyer with the Certificate of Formation
of the Seller, including all amendments thereto as of this date, and the limited
liability company agreement of the Seller, including all amendments thereto as
of this date, and I hereby certify and attest that such documents are true,
complete, and presently in effect.
2. The Seller has provided the Buyer with a copy of the Action by
Unanimous Written Consent of the Board of Managers and the Members of the
Seller, which approves the Agreement and the execution thereof by the President
of the Seller, and I hereby certify and attest that such Action by Unanimous
Written Consent is true and complete and has not been rescinded.
IN WITNESS WHEREOF, I have set my hand hereto as of the date first
written above.
____________________________________
___________, Secretary
D-1
EXHIBIT E
---------
FORM OF SHAREHOLDER LOCK-UP AGREEMENT
LOCK-UP AGREEMENT
MedSolutions, Inc.
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Dear Sirs:
The undersigned, a shareholder of MedSolutions, Inc., (the "Company"),
understands that the Company has filed with the Securities and Exchange
Commission ("SEC") a Form 10-SB (the "Form 10-SB") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as a result thereof
the Company has become a fully reporting Company under the Exchange Act, thus
creating the statutory foundation for the development of a public market for the
Company's common stock, par value $.001 per share (the "Common Stock"). The
Company's management believes that the Company soon will be in a position to
have the trading of the Common Stock quoted on the OTC Bulletin Board(R), after
certain steps are completed, including the execution of this Lock-Up Agreement
by a sufficient number of the Company's shareholders. In recognition of the
benefit that the quotation of the trading of the Common Stock would confer upon
the undersigned as a shareholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with the Company that, except for the "Allowable
Transactions" defined herein, during the period of twelve (12) months following
the date on which the Common Stock is initially quoted on the OTC Bulletin
Board(R) or other national exchange (the "Effective Date"), the undersigned will
not, without the prior written consent of the Company, directly or indirectly,
with regard to shares of Common Stock held by the undersigned on the Effective
Date but not shares of Common Stock acquired thereafter, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of hypothecate, or transfer any shares of Common Stock or
any securities convertible into or exchangeable or exercisable for Common Stock,
or request that the Company file any registration statement under the Securities
Act of 1933, as amended, with respect to any of the foregoing or (ii) enter into
any swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise (collectively the
"Lock-Up Provisions").
The Company's consent, however, is not required for the following
transfers (the "Allowable Transactions"): (a) after the expiration of one year
from the Effective Date, 20% of the shares of Common Stock owned by the
undersigned will no longer be subject to the Lock-Up Provisions; (b) after the
expiration of 90 days following the completion of one year from the Effective
Date, 40% of the shares of Common Stock owned by the undersigned will no longer
be subject to the Lock-Up Provisions; (c) after the expiration of 180 days
following the completion of one year from the Effective Date, 60% of the shares
of Common Stock owned by the undersigned will no longer be subject to the
Lock-Up Provisions; (d) after expiration of 270 days following the completion of
one year from the Effective Date, 80% of the shares of Common Stock owned by the
undersigned will no longer be subject to the Lock-Up Provisions; (e) after
expiration of two years from the Effective Date, 100% of the shares of Common
Stock owned by the undersigned will no longer be subject to the Lock-Up
Provisions; (f) a bona fide gift or gifts made by the undersigned, provided that
the donee of such shares of Common Stock or securities convertible into or
exchangeable or exercisable for any shares of Common Stock agree in writing to
be bound by the terms of this letter agreement prior to such gift; (g) a
distribution to partners or stockholders of the undersigned (and to any direct
or indirect partner or stockholder thereof), provided that the ultimate
distributees of such shares of Common Stock or securities convertible into or
E-1
exchangeable or exercisable for any shares of Common Stock agree in writing to
be bound by the terms of this letter agreement prior to such distribution; or
(h) transfers, without consideration, of shares of Common Stock or securities
convertible into or exchangeable or exercisable for any shares of Common Stock
to family members or to one or more trusts established for the benefit of one or
more family members, provided that the transferee of such shares of Common Stock
or securities convertible into or exchangeable or exercisable for any shares of
Common Stock agree in writing to be bound by the terms of this letter agreement
prior to such transfer. The undersigned further agrees for the Company to place
a restrictive legend on any share certificates representing shares of Common
Stock that are subject to the Lock-Up Provisions, and to place stop-transfer
orders with the Company's transfer agent in order to prevent the transfer of
shares of Common Stock in contravention of the Lock-Up Provisions. This letter
agreement, once executed by the undersigned shareholder of the Company, shall
supersede and replace in its entirety any prior lock-up arrangement the
shareholder may have entered into with the Company.
Very truly yours,
POSITIVE IMPACT WASTE SOLUTIONS, LLC
By:________________________________
Xxx Xxxxxxx, President
MEDSOLUTIONS, INC.
By:_________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
E-2
EXHIBIT F
---------
MEDSOLUTIONS, INC.
OFFICER'S CERTIFICATE
---------------------
I, Xxxxxxx X. Xxxxxxx, President of MedSolutions, Inc., a Texas
corporation (the "Buyer"), hereby certify the following pursuant to Section
2.01(b)(ii) of the Asset Purchase Agreement (the "Agreement"), dated as of
November 30, 2005, between the Buyer and Positive Impact Waste Solutions, LLC, a
Delaware limited liability company. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Agreement.
1. All representations and warranties of the Buyer set forth in the Agreement
are true and correct as of the date hereof, except to the extent such
representations and warranties are specifically made as of an earlier date (in
which case such representations and warranties are true and correct as of such
earlier date).
2. The Buyer has performed or complied with in all respects its agreements and
covenants required to be performed or complied with under the Agreement as of or
prior to the date hereof.
IN WITNESS WHEREOF, I have executed this Certificate as of November 30, 2005.
MEDSOLUTIONS, INC.,
a Texas corporation
By:________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
F-1
EXHIBIT G
---------
MEDSOLUTIONS, INC.
CERTIFICATE OF SECRETARY
------------------------
This Certificate of Secretary is made and attested to this 30th day of
November 2005, pursuant to the Asset Purchase Agreement dated November 30, 2005
(the "Agreement"), by and between MedSolutions, Inc., a Texas corporation (the
"Buyer"), and Positive Impact Waste Solutions, LLC, a Delaware limited liability
company (the "Seller").
The Buyer has provided the Seller with a copy of the Action by
Unanimous Written Consent of the Board of Directors of the Buyer, which approves
the Agreement and the execution thereof by the President of the Buyer, and I
hereby certify and attest that such Action by Unanimous Written Consent is true
and complete and has not been rescinded.
IN WITNESS WHEREOF, I have set my hand hereto as of the date first
written above.
____________________________________
Xxxxxxx Xxxxxxx, Secretary
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EXHIBIT H
---------
FORM OF NON-COMPETITION AND NON-SOLICITATION AGREEMENT
CONFIDENTIALITY AND
NON-COMPETITION AGREEMENT
This Confidentiality and Non-competition Agreement (the "Agreement") is
made and entered into as of November 30, 2005, by and between ____________, an
individual (the "Seller Representative"), and MedSolutions, Inc., a Texas
corporation (the "Company").
RECITALS:
A. The Company is purchasing certain assets (the "Assets") of Positive
Impact Waste Solutions, LLC (the "Seller"), of which the Seller Representative
is an officer, director, shareholder and/or employee, as set forth in that
certain Asset Purchase Agreement, dated November 30, 2005, (the "Purchase
Agreement") between the Company and the Seller. This Agreement is ancillary to
and part of such Purchase Agreement.
B. The Company's business and success are based on the use of
proprietary and confidential information and trade secrets that are valuable and
unique assets of the Company. In connection with the Purchase Agreement between
the Company and the Seller, the Seller Representative will receive and have
access to and knowledge of proprietary and confidential information and trade
secrets of the Company, its suppliers and its customers.
C. The Seller Representative is intimately familiar with confidential
information and trade secrets of the Seller. The Seller Representative is also
in a position to affect the goodwill associated with the Seller's business and
the Assets. Further, the Seller Representative acknowledges that the Company is
purchasing such confidential information, trade secrets, and goodwill of the
Seller in the Purchase Agreement.
D. The Seller Representative's access to and knowledge of proprietary
and confidential information, trade secrets, and goodwill of the Seller and the
Company will present the Seller Representative with the opportunity to benefit
himself and others wrongly at the expense of the Company, its customers, and the
Seller, if the Seller Representative does not abide by the terms of this
Agreement. If the Seller Representative were to compete with the Company, it
would be highly unlikely that the Seller Representative could do so without
misappropriating for himself or for any competing employer information obtained
through his employment with the Company or the Seller, thereby causing
irreparable harm to the business of the Company and also frustrating and
defeating the entire purpose of the Company's Purchase Agreement with the
Seller.
E. The Seller Representative will receive financial consideration from
the Seller as a result of the Purchase Agreement, given the Seller
Representative's position as an officer, director, shareholder and/or employee
of the Seller.
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F. In addition to this Agreement, the Seller Representative may be
entering into an employment or consulting agreement with the Company as part of
the Purchase Agreement. If so, this Agreement is ancillary to such employment or
consulting agreement.
G. For purposes of this Agreement, the term "Company" shall mean and
include the Company and its affiliates, and all of their direct and indirect
subsidiaries.
AGREEMENTS:
THEREFORE, in exchange for the consideration contained herein, as well
as the consideration contained in the Purchase Agreement inuring to the Seller
Representative's benefit as a result of such agreement, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Seller Representative agrees with the Company as follows:
ARTICLE I
CONFIDENTIALITY OF COMPANY INFORMATION
Confidentiality Agreement. The Seller Representative acknowledges that,
during the negotiation of the Purchase Agreement, during the course of his
employment with, management of or ownership of the Seller, and during the course
of his employment or consulting relationship with the Company, if any, the
Seller Representative has or will become privy to certain Confidential
Information (hereinafter defined) of the Company and/or the Assets and the
Seller Representative agrees that he shall not, without the prior written
consent of the Company, at any time, whether before, during, or after the term
of his employment with the Company, if applicable, except as required to perform
his duties of employment with the Company, use, disseminate, disclose, or
communicate any Confidential Information to any person or entity inside or
outside the United States. As used herein, the term "Confidential Information"
means: (i) all information about the Company disclosed or made known to the
Seller Representative as a direct or indirect consequence of or through the
Purchase Agreement, (ii) all information about the Assets disclosed or made
known to the Seller Representative during the course of his employment with,
management of or ownership of the Seller, and (iii) all information about the
Company disclosed or made known to the Seller Representative during the course
of his employment or consulting with the Company, that is not generally known in
the industries in which the Company or any of its affiliates or subsidiaries is
or may become engaged, including, but not limited to, information about: (A)
financial position, product line, customers, suppliers, and market; (B) profit
margins, pricing techniques, or pricing information as to both purchase prices
from suppliers and sale prices to customers; (C) past, present, or future plans
with respect to the business of the Company; (D) bids, negotiations, or
techniques in bidding or negotiating, pursuant to supplier, wholesaler, customer
or other contracts; (E) current or future Company advertising or promotion plans
or programs; (F) any Company system, procedure, or administrative operations;
(G) Company's structure, employees, or processes; and (H) present or future
plans for the extension of the present business or commencement of a new
business by the Company or any subsidiary or division of the Company.
H-2
Confidential information shall exclude information that: (w) is already known by
the receiving party prior to disclosure by the other party from a source other
than the disclosing party and not under a duty of confidentiality to the
Company, (x) is in the public domain, (y) ceases to be confidential through no
fault of the receiving party, or (z) is independently developed by the receiving
party.
ARTICLE II
NON-COMPETITION COVENANTS
2.01 Term of Non-Competition. The "Term of Non-Competition" means the
period beginning on the date hereof and continuing for a period of two years
following the closing date of the Purchase Agreement (as defined therein).
2.02 No Business Competition. During the Term of Non-Competition, the
Seller Representative will not, in the states of Texas, Kansas and any
additional states in which the Company is granted any exclusive rights relating
to the Seller's mobile treatment units by the Seller, own, manage, operate,
join, control or participate in, directly or indirectly, or be a partner or
shareholder of (except for shares in the Company), any business engaged in the
(A) regulated medical waste transportation business, (B) document destruction or
shredding business, including without limitation the transportation of destroyed
or shredded documents business, (C) sharps management business, and (D)
compliance with the Occupational Safety and Health Act or the Health Insurance
Portability and Accountability Act of 1996 business (collectively, the
"Competing Businesses"), and the Seller Representative shall not render
assistance or advice to any person which is so engaged; provided however, that
the passive ownership of less than 2% of the equity securities of a
publicly-traded company that is involved in any of the foregoing businesses
shall be permissible under this Section 2.02.
2.03 No Solicitation of Company's Customers. During the Term of
Non-Competition, the Seller Representative shall not induce, request, advise,
attempt to influence, or solicit, directly or indirectly, any person or entity
that is an actual or prospective customer of the Company at any time during the
Term of Non-Competition to buy products or services from a competing business.
It is understood that this Section 2.03 shall be in addition to and not
construed as a limitation upon any other covenant in Article II hereof.
2.04 No Solicitation of Employees. During the Term of Non-Competition,
the Seller Representative hereby agrees not to induce, directly or indirectly,
any person who is an employee of the Company to leave the employment of the
Company.
2.05 Tolling of Term. If, during any calendar month within the Term of
Non-Competition, the Seller Representative is not in compliance with the terms
of this Article II, the Company shall be entitled to, among other remedies,
compliance by the Seller Representative with the terms of this Article II for an
additional number of calendar months that equals the number of calendar months
during which such noncompliance occurred. The term "Term of Non-Competition"
shall also include this additional period.
2.06 Reasonableness of Restrictions. The Seller Representative
acknowledges that the geographic boundaries, scope of prohibited activities, and
time duration of the provisions of this Article II are reasonable and are no
broader than are necessary to maintain the confidentiality of the Confidential
H-3
Information and the goodwill associated with the Company's goods and services,
and to protect the other legitimate business interests of the Company, including
its goodwill and the intent of the Purchase Agreement.
ARTICLE III
MISCELLANEOUS
3.01 Continuing Obligation. If the Seller Representative also has an
employment or consulting agreement with the Company, the Seller Representative's
obligations under this Agreement shall continue whether or not the Seller
Representative's employment or consulting with the Company shall be terminated
voluntarily or involuntarily, with or without cause, and whether or not the
Seller Representative or the Company breaches the employment or consulting
agreement between the Seller Representative and the Company, if any.
3.02 Parties Bound. This Agreement shall be binding upon the Seller
Representative, the Seller Representative's heirs, executors, administrators,
and assigns and shall inure to the benefit of the Company, its successors, and
assigns.
3.03 Counterparts. This Agreement may be executed in multiple
counterparts, including by facsimile signature, each of which shall be deemed to
be an original but all of which together shall constitute one and the same
instrument.
3.04 Waiver. The Company may waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of the
Company to any such waiver shall be valid only if set forth in an instrument in
writing signed by the Company.
3.05 Entirety and Amendments. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof,
supersedes all prior agreements or understandings relating to the subject matter
hereof, and may be modified or amended only by an instrument in writing executed
by the parties hereto.
3.06 Headings. The heading contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
3.07 Governing Law. THE LAW OF THE STATE OF TEXAS WILL GOVERN THE
INTERPRETATION, VALIDITY AND EFFECT OF THIS AGREEMENT WITHOUT REGARD TO THE
PLACE OF EXECUTION OR THE PLACE OF PERFORMANCE THEREOF.
3.08 Invalid Provisions and Request for Reformation. If any provision
of this Agreement (including, without limitation, any provision relating to the
activities covered by, or time period of, the non-competition covenants of
Article II) is held to be illegal, invalid, or unenforceable under present or
future laws effective during the term hereof, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
H-4
invalid, or unenforceable provision had never comprised a part hereof; and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible that is legal, valid, and enforceable, and the
Company hereby requests the court or any arbitrator to whom disputes relating to
this Agreement are submitted to reform the otherwise unenforceable covenant in
accordance with the preceding provision.
[The remainder of this page is left intentionally blank.]
H-5
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
MEDSOLUTIONS, INC.
By: _________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
SELLER REPRESENTATIVE
By: _________________________________
[Printed name]
H-6
EXHIBIT I
---------
FORM OF $550,000 NOTE
PROMISSORY NOTE
---------------
$550,000.00 Dallas, Texas November 30, 2005
FOR VALUE RECEIVED, the undersigned, MedSolutions, Inc., a Texas
corporation (the "Maker"), hereby unconditionally promises to pay to the order
of Positive Impact Waste Solutions, LLC, a Delaware limited liability company
(the "Payee"), at such place as designated by the Payee, or at such other place
or to such other party or parties as may be designated by the Payee from time to
time, in lawful money of the United States of America, the principal amount (the
"Principal Amount") of $550,000.00, subject to adjustment as set forth herein in
accordance with Sections 1.01(b), 1.01(e) and 5.09 of that certain Asset
Purchase Agreement executed between the Maker and the Payee as of the date
hereof (the "Asset Purchase Agreement"), secured by certain of the assets of the
Maker as described in the Security Agreement entered into by Maker and Payee and
dated as of November 30, 2005, with simple interest at an annual rate of 8.0%.
All capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Asset Purchase Agreement.
1. This Promissory Note (the "Note") shall be due and payable in six
equal installments of interest only in the amount of $3,666.66 each due monthly
beginning on December 30, 2005, and 54 equal installments of principal and
interest in the amount of $12,161.83 due each Payment Date (as defined below)
thereafter, with the final such installment due on November 30, 2010 (the
"Maturity Date"). Each date on which a payment is due, including the Maturity
Date, shall be referred to herein as a "Payment Date"; provided, however, that
if a Payment Date should fall on a Saturday, Sunday, or bank holiday, then the
Payment Date shall be the next business day. The Maker may prepay any portion or
this entire Note without penalty at any time. Any prepayment will be applied
first against accrued but unpaid interest and then against the outstanding
principal balance. At the request of the Payee, the Maker may make any payments
due under the Note directly to the creditors of the Payee. The Payee hereby
acknowledges that this Note and the Principal Amount are subject to certain
offset rights by the Maker pursuant to the Asset Purchase Agreement. To the
extent that any interest is paid on the Note and the Principal Amount is
subsequently reduced in accordance with the terms of the Asset Purchase
Agreement, any interest previously paid in excess of an 8% annual rate of return
on the adjusted Principal Amount will be credited, in the sole discretion of the
Maker, against the future interest payment(s) and/or the Principal Amount such
that the amount of interest paid on the Principal Amount does not exceed 8.0%.
2. If the Maker fails to pay the full amount then due on any Payment
Date and such failure remains uncured for a period of three calendar days
following written notice of such default by the Payee, then, at the election of
the Payee, this Note shall immediately become due and payable in full, interest
on such principal amount and unpaid interest shall thereafter accrue at the
lesser of 12% or the highest lawful rate permissible under applicable law (the
"Default Rate"), and the Payee shall be entitled to pursue any remedy to which
it is entitled under applicable law.
3. The makers, signers, sureties, guarantors, and endorsers of this
Note severally waive valuation and appraisal, demand, presentment, notice of
dishonor, notice of intent to demand or accelerate payment hereof, notice of
demand, notice of acceleration, diligence in collecting, grace, notice, and
protest. If this Note is not paid when due, the Maker agrees to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees and all
expenses incurred by the holder hereof on account of any such collection,
whether or not suit is filed hereon.
4. Except as expressly set forth in Section 1 hereof, the Maker shall
have no right of setoff, counterclaim, recoupment or other deduction with
respect to the payment required hereunder, and such payment constitutes the
absolute and unconditional obligation of the Maker.
I-1
5. Each right and remedy available to the holder hereof shall be
cumulative of and in addition to each other such right and remedy. No delay on
the part of the holder hereof in the exercise of any right or remedy available
to the holder hereof shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude other or further exercise thereof or exercise
of any other such right or remedy.
6. Regardless of any provision contained in this Note, Payee shall
never be entitled to receive, collect or apply, as interest on this Note, any
amount in excess of the maximum lawful rate permitted by applicable law and, in
the event Payee ever receives, collects or applies as interest any such excess,
such amount that would be excessive interest shall be deemed a partial
prepayment of principal and treated under this Note as such by Maker. In
determining whether or not the interest paid or payable on this Note exceeds
such maximum lawful rate, Maker and Payee shall, to the maximum extent permitted
under applicable law, (a) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest, (b) exclude voluntary prepayments and
the effects thereof, and (c) amortize, prorate, allocate and spread, in equal
parts, the total amount of interest throughout the entire contemplated term of
this Note so that the interest rate does not exceed the maximum lawful rate at
any time during the entire term of this Note. However, if this Note is paid in
full or all or a portion of the principal is set off under the Asset Purchase
Agreement prior to the scheduled maturity hereof, and if the interest received
for the actual period of existence thereof exceeds such maximum lawful rate,
Payee shall refund the amount of such excess and shall not be subject to any
applicable penalties provided by any laws for contracting for, charging, taking,
reserving or receiving interest in excess of such maximum lawful rate.
7. This Note is one of the promissory notes referred to in and is
entitled to the benefits of and security afforded by that certain Security
Agreement dated as of November 30, 2005, executed by Maker in favor of Payee and
covering the collateral described therein.
8. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF.
EXECUTED effective as of the date first set forth above.
MAKER:
MedSolutions, Inc.
By:_________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
I-2
EXHIBIT J
TERRITORY AGREEMENT
I-3
EXHIBIT K
---------
CUSTOMER SERVICE AGREEMENT
Territory Agreement
Between
Positive Impact Waste Solutions, Inc. and MedSolutions, Inc.
This TERRITORY AGREEMENT ("Agreement"), dated _______________, is made and
entered into by and between Positive Impact Waste Solutions, LLC., a Delaware
limited liability company ("PIWS"), and, MedSolutions, Inc. a Texas corporation
("Purchaser"). PIWS is the owner of all patents, copyrights, trade secrets, and
rights to the PIWS-3000 regulated medical waste treatment system and the
disinfectant Cold-Ster(R). Pursuant to the terms of the Asset Purchase Agreement
dated November 30, 2005, between PIWS and Purchaser, Purchaser was granted
certain rights in the States of Texas and Kansas (collectively, the "Territory")
by PIWS for use of the PIWS-3000 (or successor model) system and Cold-Ster(R)
for processing regulated medical waste in the Territory.
A. Expansion States. The Purchaser desires a right of first refusal with respect
to exclusive rights for the use of the PIWS-3000 (or successor model) system and
Cold-Ster(R) in states other than the Territory (each, an "Expansion State," and
collectively, the "Expansion States"). With this Agreement and the Equipment
Purchase Agreement of even date between PIWS and Purchaser, the Purchaser has
agreed to purchase, under certain circumstances, one or more PIWS-3000 (or
successor model) waste processing units in mobile and/or fixed configurations
(collectively, "Units") as mutually agreeable between PIWS and Purchaser. In
consideration of the agreement to consider purchasing one or more additional
Units, PIWS, subject to the terms set forth herein, grants to Purchaser, the
right of first refusal with respect to each Expansion State as set forth herein.
In the event that PIWS receives an offer (an "Offer") from any person (an
"Offeror") to purchase a Unit to service customers located within an Expansion
State in which Purchaser is, at the date of the Offer, servicing customers, PIWS
shall provide written notice (a "Notice") of the terms of the Offer to
Purchaser, and Purchaser shall have thirty (30) days from its receipt of a
Notice to elect to purchase the exclusive right to service customers located
within such Expansion State with one or more Units as follows: (1) if the
Expansion State is either Oklahoma, Louisiana, Arkansas, or Missouri, then
Purchaser may elect to purchase such exclusive right by purchasing one Unit for
use servicing customers located within such Expansion State on the terms and
conditions set forth below; and (2) if the Expansion State is any state other
than Oklahoma, Louisiana, Arkansas, or Missouri, then Purchaser may elect to
purchase such exclusive right pursuant to the same terms and conditions as set
forth in the Offer. In the event Purchaser fails to notify PIWS in writing
within such 30-day period of its election to exercise such rights with respect
to any such Expansion State, this right of first refusal shall expire only with
respect to such Expansion State and PIWS shall be free to offer such Expansion
State to the Offeror on the same terms and conditions as set forth in the Offer.
In the event Purchaser exercises its right with respect to any of the Expansion
States of Oklahoma, Louisiana, Arkansas, or Missouri, it shall purchase one Unit
from PIWS for use servicing customers located within such Expansion State as
follows:
.. (i) A 15% deposit must be placed for the purchase of a Unit in
conjunction with the purchase of the Expansion State.
.. (ii) A signed Purchase Order and Sales Agreement (the standard format
of which are provided in Attachment B) and an activation deposit of 20% must be
placed with PIWS for the purchase of such Unit within 180 days from the
effective date of the purchase of the Expansion State.
.. (iii) The Purchaser can purchase replacement parts for Units and
Cold-Ster(R) under a Service Agreement which is provided in Attachment B. The
Purchaser understands that it forfeits any warranties for a Unit without an
executed Service Agreement.
In the event that PIWS receives an Offer from any person to purchase a Unit to
services customers located within an Expansion State in which Purchaser is not
servicing customers as of the date of the Offer, PIWS shall provide 5 days'
prior written notice of the terms of the Offer to Purchaser. PIWS hereby
covenants and agrees that it will not enter into any agreement that would
prohibit Purchaser from servicing customers located within any Expansion State
with one or more Units.
B. Purchaser's Obligations: The Purchaser agrees to undertake the steps
necessary to begin regulated medical waste processing operations within any
purchased Expansion State. These steps include but are not limited to seeking
state regulatory approval and licensing for the Unit purchased for such
Expansion State, marketing to potential customers, hiring employees to market
and/or service the operations in the Expansion State and securing any sites
necessary for its operations. The Purchaser will maintain rights to the
Expansion State as long as a Unit is purchased for such Expansion State in
accordance with the terms set forth above. If such Unit is not being operated in
the Expansion State for which it was purchased, such exclusive rights to such
Expansion State are forfeited and PIWS has the right, but not the obligation, to
seek another Purchaser for the Expansion State, subject to Purchaser's right to
operate in such Expansion State.
C. PIWS' Obligation: PIWS agrees to provide the Purchaser with limited
assistance with establishing its regulated medical waste processing operations
including the following:
.. Regulatory assistance will be provided through PIWS' personnel
consulting with the Purchaser's regulatory personnel. The Purchaser will be
provided with access to PIWS' efficacy testing data, prior state approvals,
Federal registration information and other pertinent regulatory data. On-site
assistance to the Purchaser is available upon request and payment of PIWS'
personnel and out-of-pocket expenses.
.. Training is available to the Purchaser's operating personnel with
each unit purchased. Such training is included in the price of the unit and
Purchaser will be responsible for only its own personnel costs and out-of-pocket
expenses. Each unit will receive a training manual, operator's manual and
PIWS-3000 system manual. Additional information on the training available will
be provided separately.
PIWS also agrees to maintain all regulatory approvals required for Federal
purposes. PIWS also agrees to continue to maintain all patents, copyrights,
trade secrets, and rights to the PIWS-3000 regulated medical waste treatment
system and the disinfectant Cold-Ster(R).
D. Representations: PIWS and Purchaser represent to each other that they are
merchants with respect to the subject goods. No representations were made or
relied upon with respect to the XXXX-0000, Xxxx-Xxxx(X) or the terms of this
Agreement. No agent, employee, or representative of PIWS made, or has any
authority to bind PIWS by, any warranty, representation, or affirmation
concerning the PIWS-3000 or Cold-Ster(R) other than the warranty expressly
granted by PIWS. Purchaser acknowledges that no such affirmation, warranty, or
representation has been made, none has been relied upon, and none forms the
basis of this Agreement other than the warranty expressly granted by PIWS.
E. Assignment: This Agreement is not assignable, nor the performance of
Purchaser's or PIWS' duties delegable, without the Purchaser's and PIWS' prior
written consent, provided, however, no such consent is required upon the sale by
Purchaser of a majority of its stock or other ownership interests, the merger of
Purchaser with another entity, or the sale of all or substantially all of
Purchaser's assets.
F. Interpretation: This Agreement is intended by the parties to be a final,
exclusive, and complete expression of their agreement and its terms with regard
to the subject matter herein. No course of prior dealings between the parties
and no usage of the trade shall be relevant to supplement or explain any term
used herein. Acceptance of, or acquiescence in, a course of performance rendered
under this Agreement shall not be relevant to determine the meaning of this
Agreement even though the accepting or acquiescing party has knowledge of the
nature of the performance and an opportunity to object.
G Amendment: This Agreement may be amended only by an instrument signed by the
parties or their respective agents.
H. Time for bringing action: Any action for a breach of this Agreement must be
commenced within six (6) months after the cause of action has accrued.
I. Notices, Etc: All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by first-class mail, postage
prepaid, or delivered by hand, messenger or reputable overnight courier, and
shall be deemed given when received at the addresses of the parties set forth
below, or at such other address furnished in writing to the other parties
hereto.
If to PIWS: Xxxxxxx X. Xxxxxxx, President
Positive Impact Waste Solutions, Inc.
Xxxxxx, Xxxxx 00000-0000
If to Purchaser: MedSolutions, Inc.
00000 Xxxxx Xxxxx, Xxxx Xxxxxxx XXXX, Xxxxx 000
Dallas, Texas 75251
J. Governing Law. This Agreement shall be interpreted and the rights of the
parties determined in accordance with the laws of the United States applicable
thereto and the laws of the State of Texas. Venue of all matter pertaining to
this Agreement shall be in the District Courts of Ector County, Texas.
Accepted and agreed to by: Accepted and agreed to by:
____________________________________ Positive Impact Waste Solutions, LLC
____________________________________ ____________________________________
Signature Signature
____________________________________ ____________________________________
Title Title
EXHIBIT L
---------
EQUIPMENT PURCHASE AGREEMENT
EQUIPMENT PURCHASE AGREEMENT
----------------------------
This Equipment Purchase Agreement ("Agreement") made between Positive
Impact Waste Solutions, L.L.C., a Texas limited liability company, with its
principal place of business at 000 X. Xxxxxxxx, Xxxxxx, Xxxxx 00000 (the
"Seller"), and MedSolutions, Inc. ("Buyer"), a Texas corporation, with its
principal place of business located at 00000 Xxxxx Xxxxx, Xxxx Xxxxxxx XXXX,
Xxxxx 000, Xxxxxx, Xxxxx 00000.
WHEREAS, the Seller and Buyer desire to provide for the terms and conditions of
future purchase by Buyer of PIWS-3000 (or successor model) medical waste
treating equipment manufactured by Seller.
NOW THEREFORE, the Parties agree as follows:
1. Description. Seller manufactures and sells medical waste treating
equipment known as the PIWS-3000 ("Equipment") which Buyer desires to purchase
such Equipment in the quantities and on the terms and conditions described in
Attachment A.
2. Price. The price of the Equipment shall be $600,000.00 per mobile
unit, with standard specifications, subject to increase from time to time for
actual increases in material and labor costs incurred by Seller after the first
one hundred eighty (180) days subsequent to the date of this Agreement. Seller
shall give Purchaser ninety (90) days notice of any price increase.
3. Inspection. Buyer shall have the right to inspect the Equipment
prior to shipping. Buyer will be notified when the Equipment is complete and
ready for inspection and shipping. If Buyer fails to inspect the Equipment
within a one week period after receipt of notification, it will be deemed to
have waived inspection and to have unequivocally accepted the Equipment. Once
Buyer has inspected the Equipment or waives inspection, Buyer shall not be able
to revoke acceptance or later reject the Equipment.
4. Representations. Buyer and Seller represent to each other that they
are merchants with respect to the subject goods. No representations were made or
relied upon with respect to the Equipment or the terms of this Agreement. No
agent, employee, or representative of Seller made, or has any authority to bind
Seller by, any warranty, representation, or affirmation concerning this
Equipment. Buyer acknowledges that no such affirmation, warranty, or
representation has been made, none has been relied upon, and none forms the
basis of this bargain. This Agreement and attachments are intended by the
parties to be a final, exclusive and complete expression of their agreement and
its terms, with respect to the subject matter herein.
5. Right of First Refusal.
(a) Right of First Refusal. The Buyer shall not sell, assign, transfer,
pledge or otherwise dispose of any of the Equipment, or any right or interest
therein, either voluntarily or involuntarily, to any person other than an
affiliate of Buyer without first receiving a bona fide written offer from an
independent prospective buyer and delivering a written notice (the "Transfer
Notice") to the Seller, which shall have the option to purchase the Equipment as
provided herein (the "Right of First Refusal"). The Transfer Notice must include
and specify, among other things, (i) a copy of the written offer to purchase
from a bona fide third party; (ii) the name and address of the proposed
transferee; (iii) the price or amount to be paid for the proposed transfer
(including the amount of any debt to be paid, canceled or forgiven upon
foreclosure of a security interest in the Equipment or upon any other transfer
to the Buyer's creditors); and (iv) all other material terms and conditions of
the proposed transfer.
(b) Election to Purchase Units. Within thirty (30) days after receipt
of the Transfer Notice, the Seller or its designee (as the case may be), may
elect to purchase Equipment to which the Transfer Notice refers at the price
specified in the Transfer Notice. If no price is specified in the Transfer
Notice, the purchase price shall be the then current Market Value of the
Equipment as determined by a qualified independent equipment appraiser selected
by the Seller. Such Right of First Refusal shall be exercised by delivery to the
Buyer by the Seller or its designee of a written election to exercise such Right
of First Refusal, specifying the Equipment to be purchased by the Seller or its
designee (as the case may be). Notwithstanding the foregoing, the Seller may
elect to offset against and deduct from any payment of the purchase price any
indebtedness then owed by the Buyer to the Seller.
(c) Closing for Purchase of Units. In the event the Seller elects to
acquire the Equipment as specified in the Transfer Notice, the Seller shall so
notify the Buyer and settlement thereof shall be made in cash within thirty (30)
days after the Seller receives the Transfer Notice, provided that if the terms
of payment set forth in the Transfer Notice were other than cash against
delivery, the Seller shall pay for the Equipment on the same terms and
conditions set forth in the Transfer Notice.
(d) Transfer Free of Right of First Refusal. If the Equipment referred
to in the Transfer Notice is not purchased as indicated above by the Seller, or
its designee(s), the Buyer within a period of ninety (90) days from the date of
delivery of the Transfer Notice to the Seller, may sell such Equipment to the
person or persons named in the Transfer Notice at the price and on the terms
specified in the Transfer Notice, provided that such sale or transfer is
consummated within ninety (90) days following the date of delivery of the
Transfer Notice to the Seller and, provided further, that such sale is in
accordance with all the terms and conditions hereof.
(e) Nullification of Improper Transfer. Any transfer by the Buyer in
violation of this Section shall be null and void and of no effect.
(f) Change of Control. All of the above notwithstanding, the sale of a
majority interest in the stock or other ownership interest of Buyer, the merger
of Purchaser with another entity, or the sale of all or substantially all of the
assets of Buyer, shall not constitute a sale, assignment or transfer subject to
the Right of First Refusal contained herein.
6. Products Liability Indemnity. Subject to the express warranty
provided to Buyer by Seller, Seller shall not be liable or responsible for, and
shall be saved and held harmless by, Buyer from and against any and all suits,
actions, losses, damages, claims, or liability of any character, type, or
description, including without limiting the generality of the foregoing all
expenses of litigation, court costs, and attorney's fees for damage suffered by
Buyer arising out of, or occasioned by, directly or indirectly, the failure or
defectiveness of the Equipment sold by Seller pursuant to this Agreement,
including all cases in which the defect or failure, and the resultant damage,
results from the design, manufacture, marketing, distribution, or operation of
the Equipment, or from the failure of Seller to provide timely warnings to any
person concerning the Equipment or its use whether that failure or defectiveness
is the sole or contributory cause of the resultant damage.
It is the expressed intention of Buyer and Seller that the indemnity
provided for in this Paragraph is designed and intended to protect Seller from
the consequences of defects in the design, manufacture, marketing, distribution,
or operation of the Equipment, or from the failure of Seller to provide timely
warning to any person concerning the Equipment or its use.
7. Training. Included in the purchase price is the availability of
onsite training at Seller's facility in Odessa, Texas. This three-week training
is available for up to two of the Buyer's personnel, on a concurrent basis,
within 30 days of delivery of the first item of Equipment. This includes all
instructor time, classroom materials and equipment. The Buyer is responsible for
all costs of transportation to and from the training facility, hotel
accommodations, food and other ancillary costs. In addition, the Buyer shall
indemnify and hold harmless the Seller, it's employees, officers, directors and
agents from any liability, loss, damage, injury or claim resulting from any
injury caused the personnel of Buyer while attending this training. In addition,
Buyer shall provide to Seller a copy of Buyer's Texas Xxxxxxx Compensation
Insurance coverage. Additional training may be available at Buyer's site at
additional costs and at discretion of Seller.
8. Service Agreement. The Service Agreement attached hereto, available
for PIWS 3000, describes service and technical support available for the
Equipment and the costs of such service agreements.
9. Warranty. The Limited Warranty Agreement for PIWS 3000 attached
hereto as Attachment B, describes approved usage for the Equipment. Usage
outside of that described in the warranty could result invalidation of the
warranty.
10. Assignment. This Agreement is not assignable, nor the performance
of Buyer's or Seller's duties delegable, without the Buyer's and Seller's prior
written consent.
11. Disclaimer. THE SELLER DOES NOT WARRANT THAT THE EQUIPMENT IS
MERCHANTABLE OR FIT FOR ANY PARTICULAR PURPOSE AND THIS SALE IS MADE "AS IS" AND
WITH ALL FAULTS. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY
OR USE FOR A PARTICULAR PURPOSE MADE BY THE SELLER, EXCEPT AS EXPRESSLY STATED
IN THIS AGREEMENT. BUYER SHALL BE LIMITED SOLELY TO THE WARRANTIES, IF ANY, OF
THE MANUFACTURER MADE WITH RESPECT TO THE EQUIPMENT.
12. Interpretation. This Agreement is intended by the parties to be a
final, exclusive, and complete expression of their agreement and its terms with
respect to the subject matter herein. No course of prior dealings between the
parties and no usage of the trade shall be relevant to supplement or explain any
term used herein. Acceptance of, or acquiescence in, a course of performance
rendered under this Agreement shall not be relevant to determine the meaning of
this Agreement even though the accepting or acquiescing party has knowledge of
the nature of the performance and an opportunity to object.
13. Amendment. This Agreement may be amended only by an instrument
signed by the parties or their respective agents.
14. Time for bringing action. Any action for a breach of this Agreement
must be commenced within six (6) months after the cause of action has accrued.
15. Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or delivered by hand, messenger or reputable overnight courier,
and shall be deemed given when received at the addresses of the parties set
forth below, or at such other address furnished in writing to the other parties
hereto.
If to Seller: Xxxxxxx X. Xxxxxxx, President
Positive Impact Waste Solutions, L.L.C.
Xxxxxx, Xxxxx 00000-0000
If to Buyer: MedSolutions, Inc.
00000 Xxxxx Xxxxx, Xxxx Xxxxxxx XXXX,
Xxxxx 000
Xxxxxx, Xxxxx 00000
16. Governing Law. This Agreement shall be interpreted and the rights
of the parties determined in accordance with the laws of the United States
applicable thereto and the laws of the State of Texas. Venue of all matters
pertaining to this Agreement shall be in the District Courts of Ector County,
Texas. Positive Impact Waste Solutions, Inc.
By:_____________________________
Xxxxxxx X. Xxxxxxx, President
By:_____________________________
__________________, President
Attachment A
PIWS-3000 - Pricing Attachment
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Medical Waste Processing System
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Mobile Unit Specifications and Warranty Sheet
A. Positive Impact Waste Solutions, Inc.'s PIWS-3000 (Mobile System) VIN
No. - TBD
Tag No. - TBD
PIWS ID No. - NE001
Trailer - Standard Equipment
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Dimensions (Trailer) 30'(9,14m)L x 8'(2.33m)W x 12' 11"(3.93m)H
Weight (approximately) 48,000 Lbs. (21,600 kg)
Generator Cummins Model 150DGFA Diesel Generator Set
Monitoring System Weigh Tronix System w/pH monitor and Scale
Continous pH monitoring and data capture system
Dot matrix printer
Shredding Power 2 @ 60 hp ea. (44.8 kW ea.)
Auger Power 2 @ 5 hp ea. (3.7 kW ea.)
HEPA Filter Power 1/2 hp (.4 kW)
Electrical Equipment NEMA Standards
Power Supply Required 480 vac/3 (phi) /60 Hz, 200 amp
380 vac/3 (phi) /60 Hz, 200 amp (Minimum)
Unit Power Use 45 kWh
Processing Rate 2000 lbs./hour (908 kg/hr)
Water Usage 3-4 gallons/hour (11.4-15.2 l/hr) Load Dependant
Exit Waste Moisture Content .5% to 1% (Waste Dependent)
Water Tank Capacity 50 gallons (45.4l) with heat source
Treatment Time 5 - 8 minutes (Load Dependent)
Load and Scale System Toter TrimLift System with Weightronix scale system
Load Container Size @96 Gal. ea. (363.4 l ea.)
Waste Lift Load Capacity 150 lbs. maximum (68.4 kg)
Scale Calibration @ 200 lbs. (90.7 kg)
HEPA Filter Flow 525cfm@1"H2 O (248l/s@25.4kg/min)
Load Height Auto Load Ground or Loading Dock +44.5" (113cm)
Xxxxxx Pressure less than one atmosphere
Xxxxxx Filtration HEPA 99.99% Efficient @ .3(mu)
Operational Temperature -20(Degree)F - 120(Degree)F (-6.66(Degree)C - 48.8(Degree)C)
Loading Interlock for: pH levels below 11.0 or above 12.5
Radioisotope Detected
Machine Malfunction
Cold-Ster(R) Xxxxxx Top mounted, 100 lbs. capacity, 7.5% distribution
Floor Cold-Ster(R) Xxxxxx Additional Xxxxxx with 350 lbs. capacity and auger tube for direct introduction into
the Tube mounted Cold-Ster(R) Xxxxxx
Program Logic Control Standard programmable interface
Optional Equipment not Currently Quoted (Additional Costs - Change Order Required)
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Electrical Connection Xxxxxxx Xxxxx Disconnect with 50 to 100 feet of cable
Program Logic Control Additional programming over standard
Attachment B
Installation & Warranty
1. Prices include installation of generator to power mobile system.
Customer must provide any required water and alternate power for the
system.
2. All Prices are FOB Odessa, Texas, excluding taxes, licenses and duties,
subject to Domestic Warranty. 3. Delivery of the system is available
after payment is received from customer for the entire sales price.
B. PIWS' standard warranty, listed below, is the sole and complete
warranty provided for the PIWS-3000 System. There are no warranties,
express or implied, statutory or otherwise, except such warranties as
are expressly set forth herein. We warrant the equipment described
herein against defects in material and workmanship, only under the
normal use and service for which it is designed, for a period of one
year after the date of shipment; provided, however, that if the
warranty provided by any third-party manufacturer for any part
incorporated into such equipment is greater or less than such one-year
period, then such part shall be warranted for such greater or lesser
period, and PIWS shall be responsible for obtaining for the benefit of
customer all rights and benefits pursuant to such third-party
manufacturer parts warranty.
C. Subject to the requirements of paragraph 3.B above, all auxiliary
equipment and components specified by PIWS and purchased from others
and furnished by us are warranted only to the extent of the warranties
of the original manufacturer.
D. In simple terms, PIWS will repair or replace parts manufactured by us
deemed defective under the terms of our warranty. Commercial items are
covered directly by warranties of their appropriate manufacturers.
(Commercial items are items that are the suppliers standard products
sold to many, for a variety of applications.)
E. For commercial items that PIWS has specified and provided, defective
parts in-warranty should be returned to PIWS for replacement. Credit
will be given to the customer upon receipt of credit from the supplier.
F. For commercial items that the customer has specified, the customer will
return defective in-warranty parts to the component supplier for
replacement.
G. In cases in which customer service issues are overriding, the customer
and PIWS will work together to get the customer unit back in operation
as soon as possible.
H. PIWS shall be responsible for all costs and expenses related to the
warranty provided pursuant to paragraph 3.B above, including without
limitation costs and expenses relating to removal and replacement of
defective parts, associated packaging and shipping costs travel
expenses for PIWS personnel or any local repair vendor performing
services covered by the terms of our warranty under our direction. PIWS
shall respond to customer's request for warranty services within 24
hours of such request. Notwithstanding any provision of this paragraph
3.H to the contrary, customer shall be responsible for removing and/or
installing any part if and only if customer can remove and/or install
such part during its normal business hours and using its normal
business personnel, without undue burden on customer's operations, and
without incurring any costs or expenses payable to third parties for
any services, tools or equipment.
I. PIWS may decide, from time to time, to offer assistance beyond the
terms of this warranty at no cost to the customer, however, any such
actions will be solely at PIWS' discretion.
J. PIWS will provide field repair services upon request by the customer in
accordance with a rate sheet to be provided. If the customer desires
such field service, it will be authorized by a purchase order number in
advance or by the establishment of a standing purchase order. PIWS will
make every effort to dispatch a field service person within 24 hours of
receiving notification and a purchase order number. Invoices for field
service are payable within 30 days of issuance.
K. PIWS maintains the right to retrofit the PIWS-3000 Systems with design
enhancements or product improvements that are deemed by PIWS to improve
the overall performance or reliability of the equipment within twelve
(12) months of date of shipment. These design enhancements or
performance improvements, when done would be at PIWS expense.
L. Warranty: Disclaimer of implied Warranties, Etc. PIWS does warrant that
the PIWS-3000 shall operate in accordance with all other specifications
set forth in the Operations and Maintenance Manual delivered to
Customer by PIWS for the term of the Agreement unless the
non-conformity is caused by casualty, misuse, failure to maintain in
accordance with the Operations and Maintenance Manual or other causes
beyond the reasonable control of PIWS (herein "Excepted Causes"). In
the event that the PIWS-3000 fails to so conform, PIWS shall provide
diagnostic services to determine the nature and extent of the
non-conformance and shall with reasonable promptness correct the
non-conformity.
M. PIWS sole liability hereunder in the event of the non-conformance of
the PIWS-3000 with the specifications (except for the volume and or
poundage of throughput of RMW) of the Operations and Maintenance Manual
shall be to promptly repair or replace the PIWS-3000, any parts or
components thereof not resulting from the Excepted Causes and further
payments shall not be abated for any periods of maintenance.
N. The Customer acknowledges that the use of PIWS' registered product
Cold-Ster(TM) is a vital part of the performance of the PIWS-3000. The
use of any other chemical or the non-use of Cold-Ster(TM) in the
correct proportions to neutralize the waste will negate all warranties,
expressed or implied herein.
O. PIWS MAKES NO WARRANTY, EXPRESS OR IMPLIED, TO ANYONE, AS TO THE
FITNESS, MERCHANTABILITY, DESIGN, CONDITION, CAPACITY, PERFORMANCE OR
OTHER ASPECT OF THE PIWS-3000, PIWS-3000 SYSTEM, ANY COMPONENT OF
EITHER, OR THE MATERIAL OR WORKMANSHIP, EXCEPT AS SET FORTH EXPRESSLY
ABOVE.
P. PIWS further disclaims any liability for loss, damage or injury to
Customer or third persons (including employees, agents and independent
contractors of Customer) as a result of any defects, latent or
otherwise, in any of the equipment including the PIWS-3000 itself,
whether arising from PIWS negligence or application of the laws of
strict liability.
Q. Waiver of Damages - REGARDLESS OF CAUSE OF ANY ACTUAL OR ALLEGED LOSS
OR DAMAGE, CUSTOMER WILL NOT ASSERT ANY CLAIM WHATSOEVER UNDER ANY
THEORY WHATSOEVER, AGAINST PIWS FOR LOSS OF ANTICIPATORY PROFITS, OR
ANY OTHER INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, OR ANY PUNITIVE
OR EXEMPLARY DAMAGES.
I hereby accept and agree to the terms and conditions as set forth above in this
Quotation and acknowledge by my signature below:
______________________________ _______________________
Name Date
______________________________
Title
______________________________
Company
______________________________
Address
______________________________
City, State, Country, Zip
EXHIBIT M
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FORM OF SECURITY AGREEMENT
SECURITY AGREEMENT
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This Security Agreement, dated effective as of November 30, 2005 (this
"Agreement"), is entered into by and between MedSolutions, Inc., a Texas
corporation (the "Pledgor"), and Positive Impact Waste Solutions, LLC, a
Delaware limited liability company (the "Secured Party").
WITNESSETH:
WHEREAS, on even date herewith, the Pledgor has issued (i) a Promissory
Note (the "$550,000 Note") to Secured Party evidencing indebtedness in the
principal amount of $550,000.00 with simple interest at the annual rate of 8.0%
payable in six equal installments of interest only in the amount of $3,666.66
each due monthly beginning on December 30, 2005, and 54 equal installments of
principal and interest in the amount of $12,161.83 due each Payment Date (as
such term is defined in the Note) thereafter, with the final such installment
due on November 30, 2010; and (ii) a Promissory Note (the "$300,000 Note", and
collectively with the $550,000 Note, the "Notes") to Secured Party evidencing
indebtedness in the principal amount of $300,000 with out interest payable in
three equal installments of principal in the amount of $100,000.00 each with the
first such installment due on March 30, 2006, the second such installment due on
July 28, 2006, and the third such installment due on November 30, 2006;
WHEREAS, the Pledgor has agreed to secure the payment of the Notes by
the pledge to the Secured Party of all of the Pledgor's right, title, and
interest in certain of the assets of Pledgor as set forth on Exhibit A attached
hereto (the "Assets");
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and undertakings herein, and for such other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:
ARTICLE I
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PLEDGE
1.01 Pledge of Collateral. The Pledgor hereby grants to the Secured
Party a first-lien security interest in the Assets, together with all proceeds
thereto and accretions thereon (collectively, the "Collateral").
1.02 Secured Obligation. The security interest granted by this
Agreement shall secure the Pledgor's payment and performance under the Notes,
together with any and all renewals, extensions, and modifications of the same,
and all costs of collection thereunder (the "Obligations").
1.03 Termination of Agreement. This Agreement and the security interest
created hereby shall terminate as of the date on which the Obligations, and any
other amounts that the Pledgor may owe to the Secured Party as a result of this
Agreement, including, but not limited to, Sections 3.03 and 4.13 below, are paid
in full. Upon the termination of this Agreement, the Secured Party shall, as
soon as practical but in no event later than 30 days, file a termination with
respect to any financing statement(s) that may have been filed pursuant to this
Agreement.
M-1
ARTICLE II
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REPRESENTATIONS AND COVENANTS OF THE PLEDGOR
2.01 Representations with Respect to the Collateral. The Pledgor
represents and warrants that (i) the Pledgor has the legal capacity to enter
into this Agreement; (ii) except for any financing statement that may be filed
by the Secured Party with respect to the Collateral, no financing statement
covering the Collateral, or any part thereof, has been filed with any filing
officer or agency; (iii) no other security agreement covering the Collateral, or
any part thereof, has been made and no security interest, other than the one
created herein, has attached to or been perfected in the Collateral or in any
part thereof; (iv) no dispute, right of setoff, counterclaim, or defense exists
with respect to any part of the Collateral; (v) the Collateral is not subject to
the interest of any third person, and the Pledgor will defend the Collateral and
its proceeds against the claims and demands of any third person claiming against
the Pledgor to the extent that such claims are adverse to the Secured Party's
rights to the Collateral; (vi) the Pledgor has delivered true and correct asset
descriptions of the Collateral; and (vii) the Pledgor is owner of the
Collateral.
2.02 Affirmative Covenants of the Pledgor. The Pledgor covenants and
agrees to each and all of the following: (i) to promptly execute and deliver to
the Secured Party all such other assignments, certificates, and supplemental
writings, and to do all other acts or things, as the Secured Party may
reasonably request in order more fully to evidence and perfect the security
interest created herein; (ii) to promptly furnish the Secured Party with any
information or writings that the Secured Party may reasonably request concerning
the Collateral; (iii) to promptly notify the Secured Party of any change in any
material fact or circumstances warranted or represented by the Pledgor in this
Agreement or in any other writings furnished by the Pledgor to the Secured Party
in connection with the Collateral; (iv) to promptly notify the Secured Party of
any claim, action, or proceeding affecting title to the Collateral, or any part
thereof, or the security interest herein, and at the request of the Secured
Party, to appear in and defend, at the Pledgor's sole expense, any such action
or proceeding; (v) to promptly pay to the Secured Party the amount of all court
costs and reasonable attorneys' fees incurred by the Secured Party in the
enforcement of its rights hereunder; (vi) demand, notice, protest, notice of
intent to accelerate, notice of acceleration and all demands and notices of any
action taken by the Secured Party under this Security Agreement or in connection
with the Notes, except as otherwise provided in this Security Agreement, are
hereby waived, and any indulgence of the Secured Party, substitution for, or
exchange or release of, Collateral, in whole or in part, or addition or release
of any person liable on the Collateral is hereby assented and consented to by
the Pledgor; (vii) the Pledgor will not subject the Collateral to any lien or
security interest, except in favor of the Secured Party, or assign any part or
all of the Collateral to any party other than the Secured Party; and (ix) the
Pledgor shall pay prior to delinquency all taxes, charges, liens and assessments
against the Collateral, and upon the Pledgor's failure to do so, the Secured
Party, at its option, may pay any of them. Such payment shall become part of the
indebtedness and obligations secured by this Security Agreement and shall be
paid to the Secured Party by the Pledgor immediately and without demand, with
interest thereon at the Default Rate (as such term is defined in the Notes).
2.03 Negative Covenants of the Pledgor. The Pledgor covenants and
agrees that, without the prior written consent of the Secured Party, the Pledgor
will not (i) sell, assign, or transfer any of the Pledgor's rights in the
Collateral other than in the ordinary course of business with respect to
inventory; or (ii) create any other security interest in, mortgage, or otherwise
encumber the Collateral or any part thereof, or permit the Collateral to be or
become subject to any lien, attachment, execution, sequestration, other legal or
equitable process, or any encumbrance of any kind or character senior to the
security interest created herein in favor of the Secured Party.
M-2
ARTICLE III
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DEFAULT AND RIGHTS AND REMEDIES OF THE SECURED PARTY
3.01 Definition of Default. The term "Default," as used herein, means
the occurrence of any of the following events: (i) the failure of the Pledgor to
make any payment (whether at maturity or otherwise) of principal or interest on
the Notes when due and payable under the Notes; (ii) except as otherwise
provided in this Section 3.01, the failure of the Pledgor to perform any
material covenant, agreement, or condition contained herein, which failure
continues for a period of 10 days after the Secured Party gives written notice
thereof; (iii) the levy against the Collateral, or any part thereof, of any
execution, attachment, sequestration, or other writ; (iv) the appointment of a
receiver with respect to the Collateral, or any part thereof; (v) the filing by
the Pledgor, by way of petition or answer, of any petition or other pleading
seeking relief as a debtor, or an adjustment of the Pledgor's debts, or any
other relief under any bankruptcy, reorganization, or insolvency laws now or
hereafter existing; or (vi) the receipt by the Secured Party of information
establishing that any representation or warranty made by the Pledgor herein is
false, misleading, or erroneous in any material respect and such default is not
cured within 20 days thereafter.
3.02 Remedies Upon Event of Default. Upon the occurrence of a Default
and the continuance thereof, in addition to any and all other rights and
remedies that the Secured Party may then have hereunder, under the Uniform
Commercial Code as enacted in the State of Texas (the "Code"), or otherwise, the
Secured Party at its option may, subject to any limitation or restriction
imposed by any applicable bankruptcy, insolvency, or debtor-relief law, (i)
after notification required pursuant to Section 3.03 hereof, sell or otherwise
dispose of, at the Pledgor's principal place of business, or elsewhere, as
chosen by the Secured Party, all or any part of the Assets, and any such sale or
other disposition may be as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Assets shall not exhaust the Secured Party's power of sale,
but sales may be made from time to time until all of the Assets have been sold
or until the Obligations have been paid in full), and at any such sale it shall
not be necessary to exhibit the Assets; (ii) reduce its claim to judgment,
foreclose, or otherwise enforce its security interest in all or any part of the
Collateral by any available judicial procedure; (iii) with the consent of the
Pledgor, retain the Collateral in complete satisfaction of the Obligations
whenever the circumstances are such that the Secured Party is entitled to do so
under the Code, provided only that the Secured Party comply with all applicable
procedural requirements imposed by the Code; (iv) apply by appropriate judicial
proceedings for appointment of a receiver for the Collateral, or any part
thereof; (v) buy the Collateral at any public sale; and (vi) buy the Collateral
at any private sale if the collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations. The Secured Party shall be entitled to apply the
proceeds of any distribution, sale, or other disposition of the Collateral in
the following order: first, to the payment of all of its reasonable expenses
incurred as a result of the Pledgor's Default, including, but not limited to,
holding and preparing the Collateral, or any part thereof, for sale or other
disposition, in arranging for such sale or other disposition, and in actually
selling the same; and second, toward payment of the Obligations in such order
and manner as the Secured Party, in its discretion, may deem advisable. Except
in the case of clause (iii) above, the Secured Party shall remit to the Pledgor
any surplus. If the proceeds are not sufficient to satisfy the Obligations in
full, the Pledgor shall remain personally liable for any deficiency with respect
thereto.
3.03 Sale of Collateral. Reasonable notification of the time and place
of any public sale of the Collateral, or reasonable notification of the time
after which any private sale or other intended disposition of the Collateral is
to be made, shall be sent to the Pledgor, and to any other person entitled under
the Code to notice; provided, however, that if the Collateral is declining, or
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threatens to decline, speedily in value, or is of a type customarily sold on a
recognized market, the Secured Party may sell or otherwise dispose of the
Collateral without notification, advertisement, or other notice of any kind. It
is agreed that notice sent or given not less than 20 calendar days prior to the
taking of the action to which the notice relates is reasonable notification and
notice for the purpose of this Section 3.03.
ARTICLE IV
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MISCELLANEOUS
4.01 Rights and Remedies Cumulative. All rights and remedies of the
Secured Party hereunder are cumulative of each other and of every other right or
remedy that the Secured Party may otherwise have at law or in equity or under
any other contract or other writing for the enforcement of the security interest
herein or the collection of the Obligations, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies. Should the Pledgor have heretofore
executed or hereafter execute any other security agreement in favor of the
Secured Party, the security interest therein created and all other rights,
powers, and privileges vested in the Secured Party by the terms thereof shall
exist concurrently with the security interest created herein.
4.02 Binding Agreement. This Security Agreement shall be binding upon
and inure to the benefit of the respective successors, representatives, and
assigns of the Pledgor and the Secured Party, provided, however, that the
Pledgor may not assign or transfer its rights or duties hereunder without the
prior written consent of the Secured Party.
4.03 Waiver of Rights. No waiver by the Secured Party of any Default
shall be deemed to be a waiver of any other subsequent Default, nor shall any
such waiver by the Secured Party be deemed to be a continuing waiver. No delay
or omission by the Secured Party in exercising any right or power hereunder, or
under any other writings executed by the Pledgor as security for or in
connection with the Obligations, shall impair any such right or power or be
construed as a waiver thereof or any acquiescence therein, nor shall any single
or partial exercise of any such right or power preclude other or further
exercise thereof, or the exercise of any other right or power of the Secured
Party hereunder or under such other writings.
4.04 Subrogation. If the Obligations, or any part thereof, be given in
renewal or extension, or applied toward the payment of indebtedness secured by
mortgage, pledge, security agreement, or other lien, the Secured Party shall be,
and is hereby, subrogated to all of the rights, titles, security interests, and
other liens securing the indebtedness so renewed, extended, or paid.
4.05 Usury Savings Clause. No provision herein shall require the
payment or permit the collection of interest in excess of the maximum permitted
by law, if any. If any excess of interest in such respect is provided for
herein, the provisions of this Section 4.05 shall govern, and the Pledgor shall
not be obligated to pay the amount of such interest to the extent that it is in
excess of the amount permitted by law.
4.06 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF.
4.07 Agreement as Financing Statement. The Secured Party shall have the
right at any time to execute and file this Agreement as a financing statement
within the meaning of the Code, but the failure of the Secured Party to do so
shall not impair the validity or enforceability of this Agreement.
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4.08 Further Assurances. Each party hereto agrees to perform any
further acts and to execute and deliver any further documents that may be
reasonably necessary to carry out the provisions of this Agreement.
4.09 Severability. In the event that any of the provisions, or portions
thereof, of this Agreement are held to be unenforceable or invalid by any court
of competent jurisdiction, the validity and enforceability of the remaining
provisions, or portions thereof, shall not be affected thereby.
4.10 Construction. Whenever used herein, the singular number shall
include the plural, and the plural number shall include the singular.
4.11 Gender. Any references herein to the masculine gender, or to the
masculine form of any noun, adjective, or possessive, shall be construed to
include the feminine or neuter gender and form, and vice versa.
4.12 Headings. The headings contained in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
of any of the provisions contained herein.
4.13 Court Costs and Attorneys' Fees. If any action at law or in
equity, including an action for declaratory relief, is brought to enforce or
interpret the provisions of this Agreement, the prevailing party shall be
entitled to recover costs of court and reasonable attorneys' fees from the other
party or parties to such action, which fees may be set by the court in the trial
of such action or may be enforced in a separate action brought for that purpose,
and which fees shall be in addition to any other relief that may be awarded.
4.14 Inurement. Subject to the restrictions against transfer or
assignment as herein contained, the provisions of this Agreement shall inure to
the benefit of, and shall be binding on, the assigns, successors in interest,
personal representatives, estates, heirs, and legatees of each of the parties
hereto.
4.15 Amendment. This Agreement may be amended only by the unanimous
written consent of the parties hereto.
4.16 Entire Agreement. This Agreement and the Notes contain the entire
understanding between the parties hereto concerning the subject matter contained
herein. There are no representations, agreements, arrangements, or
understandings, oral or written, between or among the parties hereto relating to
the subject matter of this Agreement that are not fully expressed herein.
4.17 Multiple Counterparts. This Agreement may be executed in multiple
counterparts, including by facsimile signature, each of which shall be deemed to
be an original but all of which together shall constitute one and the same
instrument.
[The remainder of page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties to this Agreement have set their
respective hands hereto as of the date first written above.
PLEDGOR:
MedSolutions, Inc.
By:___________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
SECURED PARTY:
Positive Impact Waste Solutions, LLC
By:___________________________________
Xxx Xxxxxxx, President
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Exhibit A
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ASSETS
PIWS 3000 mobile treatment units with serial numbers 1, 4 and 5
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