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EXHIBIT 10.8
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into by and between Xxxx Xxxxxx, an
individual residing at 0000 Xxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000 (hereinafter
sometimes referred to as "Seller"), and EarthCare Company, a Delaware
Corporation (hereinafter referred to as "EarthCare" or "Buyer").
WITNESSETH:
WHEREAS, the Seller is the owner of five hundred (500) shares of common stock
no par value per share of Xxxx Xxxxxx Plumbing Heating & Cooling, Inc., a
Georgia corporation, (said corporation is hereinafter sometimes referred to as
the "Company") (said shares of Xxxx Xxxxxx Plumbing Heating & Cooling, Inc.
common stock are hereinafter sometimes collectively referred to as the "Xxxxxx
Common Stock"); and
WHEREAS, the Xxxxxx Common Stock constitutes all of the issued and outstanding
shares of the Company; and
WHEREAS, the parties hereto desire that the Buyer acquire the Xxxxxx Common
Stock in exchange for cash and shares of the common stock, $.0001 par value of
the Buyer (said shares of common stock are hereafter sometimes referred to as
the "EarthCare Common Stock")
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration the mutual receipt and sufficiency of which is
hereby acknowledged by the parties hereto, THE PARTIES HERETO AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
A. Upon the basis of the representations and warranties contained
herein and subject to the terms and conditions of this Agreement, at the time
of "Closing" (as hereinafter defined) Seller shall sell, convey, transfer,
assign and deliver to Buyer, and Buyer shall purchase from Seller, all of the
Xxxxxx Common Stock.
B. At the time of Closing, as the purchase price for the Xxxxxx Common
Stock, and in exchange therefor, Buyer shall pay to Seller:
(1) $1,406,250 cash;
(2) 19,223 shares of EarthCare Common Stock; and
(3) Seller shall also pay certain liabilities of Company
in the
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amount of $31,500.
C. Additional consideration consisting of shares of unregistered
EarthCare Common Stock in an amount equal to $752,250 divided by the average
closing sale price of a share of EarthCare Common Stock on the NASDAQ system as
reported in the Wall Street Journal for the five trading days in the week
preceding the Closing ("Earnout Consideration") will be delivered to Seller
provided that the following conditions are met:
(i) If the Company and Xxxxxx Environmental Services Co., Inc.
("Environmental") generate earnings before interest, taxes, depreciation and
amortization (EBITDA) in the aggregate amount of $722,978 twelve months
subsequent to Closing, 50% of the Earnout Consideration shall be delivered to
the Seller.
(ii) If the Company and Environmental, in the aggregate, generate
EBITDA of $927,918 in the second twelve months subsequent to Closing, 50% of
the Earnout Consideration shall be delivered to Seller. All of the Earnout
Consideration will be delivered to Seller if the Company and Environmental, in
the aggregate, generate EBITDA in an amount equal to or in excess of $1,650,896
for the period ending 24 months after Closing.
(iii) Buyer promises in calculating earnings in the EBITDA formula,
that it will not intentionally through bad faith impact earnings so as to
prevent Seller from receiving the Earnout Consideration.
(a) To facilitate the foregoing, Buyer agrees that for
two (2) years after the Closing, the Company acquired hereunder shall be placed
in and remain the sole assets of Buyer subsidiary entities for which separate
financial statements are prepared and reflected in the annual EBITDA
computation referred to herein and none of the assets of the Company shall be
transferred to Buyer or its subsidiaries or affiliates, whether in liquidation
or otherwise.
(iv) In addition, the principal executives of the Company,
including Seller are to be employed (provided they are surviving) under the
terms of mutually agreeable employment agreements, the form of which is
attached hereto as ____________, and no material breach of this Agreement
between Buyer and Seller shall remain unresolved.
(v) If the above requirements are not satisfied, Buyer shall have
no obligation to pay Seller additional consideration; provided, however, Seller
shall receive one-third of the Earnout Consideration two years after the
Closing Date, regardless of any failure to meet the EBITDA requirements.
(vi) Termination of Seller's employment with Buyer for any reason
shall not affect Seller's Earnout Consideration.
2. CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the
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purchase and sale of the Xxxxxx Common Stock (the "Closing") shall be effective
as of November 16, 1999, at the offices of Xxxxxxxx & Link, P.C., 000 Xxxxxx
Xxxxxx, Xxxxxxxxxxx, XX 00000 or at such other time and date as shall be
mutually agreed upon by the parties hereto in writing. (Such time and date is
sometimes hereinafter referred to as the "Closing Date" or "Closing".)
3. PROCEDURE AT THE CLOSING. The parties hereto agree to take the
following steps in the order listed:
A. Seller shall deliver to the Buyer the Xxxxxx Common Stock, and such
bills of sale, assignments and other instruments to transfer to the Buyer good
and marketable title to the Xxxxxx Common Stock, free and clear of all liens,
claims and encumbrances.
B. In exchange for the Xxxxxx Common Stock, Buyer shall deliver to
Seller:
(1) 19,223 shares of unregistered EarthCare Common
Stock;
(2) $1,406,250 cash or certified check; and
(3) Buyer shall also pay the liabilities of Company set
forth on Schedule 3.B., attached hereto.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. In order to induce the
Buyer to enter into this Agreement and to consummate the transactions
contemplated hereunder, the Seller hereby makes the following representations,
warranties, covenants and agreements:
A. ORGANIZATION AND EXISTENCE. The Company is a corporation duly
organized and legally existing in good standing under the laws of the State of
Georgia, and has all requisite corporate power and authority to carry on its
business as now conducted. The Company is qualified to do business in the State
of Georgia which is the only state which by the nature of the business of the
Company and the character of the properties owned or leased by it requires
qualification to do business as a foreign corporation. Seller has delivered to
Buyer a true and correct copy of the Articles of Incorporation (duly certified
by the Secretary of State of Georgia) and By-Laws of the Company (certified by
its Secretary).
B. SUBSIDIARIES OR OTHER ENTITIES. Company has no investments or
ownership interests in any corporations, partnerships, joint ventures or other
business enterprises.
C. CAPITALIZATION. The Company is authorized to issue 50,000 shares of
common stock, no par value, of which 500 shares are issued and outstanding at
the time of the execution of this Agreement. All of the issued and outstanding
shares of capital stock of the Company (the "Xxxxxx Common
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Stock") have been duly issued, are validly outstanding, are fully paid and
nonassessable, and are held of record and beneficially by Seller; there are no
outstanding subscriptions, options, warrants or rights to receive, purchase or
subscribe to, or securities convertible into or exchangeable for, any issued or
unissued shares of the capital stock of the Company. The Company has no
liability for dividends declared but unpaid. Prior to Closing, the Seller shall
not, and shall not permit the Company, to issue or enter into any
subscriptions, options, agreements or other commitments in respect of the
issuance, transfer, sale or encumbrance of any shares of the Xxxxxx Common
Stock. Provided, however, the parties acknowledge that the HVAC assets of the
Company will be "spun-off" into another corporation, and that Seller will
exchange shares of Company for shares in the new corporation, resulting in the
creation of treasury stock and a reduction in the number of shares to be
purchased hereunder.
D. STOCK OWNERSHIP. Seller has, and at the time of Closing will have,
good and marketable title to the Xxxxxx Common Stock, and there are, and at the
time of Closing will be, no impediments to the sale and transfer of the Xxxxxx
Common Stock to Buyer. Upon delivery of the Xxxxxx Common Stock to Buyer, the
Xxxxxx Common Stock (i) shall constitute all of the issued and outstanding
shares of capital stock of the Company, and (ii) shall be free and clear of all
security interests, liens, charges, pledges, mortgages, encumbrances or rights
of third parties whatsoever.
E. FINANCIAL CONDITION. Seller has furnished to Buyer copies of the
following financial statements of the Company, all of which are to the best of
Seller's knowledge, true and complete in all material respects and have been
prepared in accordance with generally accepted accounting principles
consistently applied (except to the extent otherwise reported):
1. A Balance sheet ("Balance Sheet") of the Company as of December 31,
1998.
2. Statements of income and retained earnings of the Company for the
eight months ended August 31, 1999. (Collectively, the Balance Sheet and
statements of income and retained earnings are hereinafter referred to as the
"Financial Statements").
The Financial Statements are to the best of Seller's knowledge, complete and
correct and in accordance with the books of account and records of the Company
and present fairly the financial position of the Company's business and the
income, stockholders' equity and cash flow of the Company's business at the
dates and for the periods indicated.
3. Subject to Paragraph 10, Seller warrants that current assets of the
Company will be sufficient to pay the liabilities of the Company as of the
Closing Date. All term liabilities shall be paid on or before Closing Date.
4. Seller warrants that the Company's revenue run rate (first and second
quarter revenue x 2)is not less than $2,500,000.
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F. ASSETS.
1. The Company has good and marketable title to, and is in possession of,
all of its assets, equipment, vehicles, properties and rights, including all
properties, assets, vehicles and equipment listed on Schedule 4-F-1 attached
hereto and as shown on the Balance Sheet, free and clear of all liabilities,
mortgages, liens, pledges, security interests, restrictions, conditional sales
agreements, title retention agreements, charges or encumbrances except as shown
on the Balance Sheet. Seller represents that Schedule 4-F-1 sets forth a list
of all material items of equipment, vehicles, properties, containers,
machinery, shop equipment, welders, grinders, work benches, jacks, stands,
parts, office furniture, fixtures, computer hardware/software and equipment
owned by the Company as of the date of this Agreement and used in connection
with its business operations (hereinafter sometimes referred to as the
"Operating Equipment"); such list identifies the Operating Equipment by size,
manufacturer, model number and serial number, where available.
2. Except as set forth on Schedule 4-F-2, all of the Operating Equipment
is in good operating condition (normal wear and tear excepted), has been well
maintained, and is in adequate condition to service the Company's Customer
Accounts (as herein defined) and to conduct the operations of the Company as it
exists on the Closing Date.
3. There has not been any material change in the Operating Equipment, in
the aggregate, since the inspection of such Operating Equipment by Buyer on
June 19, 1999, and there shall not be any material change in the Operating
Equipment, in the aggregate, subsequent to a final inspection of the Operating
Equipment to be performed by Buyer and Seller prior to Closing.
4. Schedule 4-F-4 shall identify all assets and property of the Company
which shall be excluded from this Agreement (Excluded Assets).
G. LIABILITIES. Except as set forth in Schedule 4-G attached hereto or in
the Financial Statements submitted to Buyer, or in any other Exhibit delivered
pursuant hereto, neither the Company nor its assets or properties are subject
to any liabilities or obligations (accrued, absolute, contingent or otherwise),
except for liabilities incurred in the ordinary course of business affairs and
the Company is not in material default in respect of any material term or
condition of any material indebtedness or liability. The transactions
contemplated by this Agreement do not and will not subject the Company or the
Buyer to any claim or liability for any obligation, debt or contract other than
as specifically disclosed in this Agreement and the Schedules attached hereto.
All required consents of creditors, if any have been, or by closing will be,
obtained for performance of this Agreement.
H. CUSTOMER ACCOUNTS, MUNICIPAL CONTRACTS AND RELATED MATTERS.
1. Customer Accounts are the commercial, industrial, municipal, and
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residential accounts of the Company pursuant to which the Company provides
plumbing services. Said Customer Accounts are listed on Schedule 4-H-1 attached
hereto. (Each of the Customer Accounts listed in Schedule 4-H shall identify
the name and address of each of the Customer Accounts, and shall reflect as to
each the current monthly billing amount, frequency of service and size and type
of container.)
2. Schedule 4-H-2 is a true, accurate and complete listing of all written
service agreements, franchises, licenses or other contracts, if any, to which
the Company is a party and which relate to Customer Accounts. Original copies
of all such contracts shall be delivered by the Seller to the Buyer no later
than the Closing Date, and such copies shall be true, accurate and complete and
shall include all amendments, supplements or other modifications to such
contracts. Except as disclosed in Schedule 4-H-2, to the knowledge of the
Seller, neither the Company nor any other party to any of the Company's
municipal contracts or Customer Accounts is in material default or alleged to
be in material default thereunder and there exists no condition or event which,
after notice or the lapse of time or both, would constitute such a default. The
sale, transfer and assignment of the Xxxxxx Common Stock will not result in a
breach, violation or default of any of the Company's municipal contracts or
Customer Accounts, and all of the Company's municipal contracts and Customer
Accounts will remain in full force and effect as if there had been no sale,
transfer and assignment thereof.
3. Except as otherwise disclosed in Schedule 4-H-3, the Seller knows of
no oral or written communication, fact, event or action which exists or has
occurred within 90 days prior to the date of execution of this Agreement, which
would tend to indicate that any current customers of the Company intends to
terminate its business relationship with the Company.
I. MATERIAL CONTRACTS. Attached hereto as Schedule 4-I is a list and
brief description, as of the date of this Agreement, of certain leases,
contracts, commitments, agreements and other documents to which the Company is
a party or by which it is bound and which is related to the operation of its
business. Except for contracts and documents listed in Schedule 4-I, to the
best of Seller's knowledge, the Company is not a party to or bound by any
written or oral (i) contracts not made in the ordinary course of business; (ii)
employment contracts, other than those terminable at the will of the Company;
(iii) contracts with any labor union or association; (iv) bonus, pension,
profit sharing, retirement, hospitalization, insurance or other plan providing
employee benefits; (v) leases with respect to any property, real or personal,
whether as lessor or lessee; (vi) continuing contracts for the future purchase
of materials, supplies or equipment in excess of the requirements of its
business now booked; (vii) contracts or commitment for capital expenditures;
(viii) contracts continuing over a period of more than six (6) months from its
date; or (ix) material contracts necessary to conduct the operations and
business of the Company. A true copy of each contract, commitment and agreement
listed on Schedule 4-I will be furnished to Buyer prior to Closing.
J. EMPLOYEES - LABOR MATTERS. The Company has generally enjoyed a
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good employer-employee relationship with its employees. Attached hereto as
Schedule 4-J is a complete list of all employees of the Company whose duties
are related to the operation of the business of the Company. Seller warrants
there exists no pending or threatened actions by any employees alleging sex,
age, race, or other discriminatory practices, no current effort to organize
these employees into collective bargaining units, and no collective bargaining
agreement is now in effect. There are no contracts, written or oral, between
the Company and any of its employees, except as specifically disclosed in
Schedule 4-J.
K. INSURANCE. The Company maintains in effect insurance covering its
assets and businesses and any liabilities relating thereto in an amount
believed adequate by the Seller, and such insurance coverage shall be
maintained by the Company through the Closing Date. Between the date hereof and
the Closing Date, the Seller shall cause the Company to furnish to the Buyer
such information as the Buyer shall reasonably request regarding the Company's
insurance. Except as set forth in Schedule 4-K attached hereto, there are no
pending material property damage or personal injury claims against the Company
or any of its assets.
L. LICENSES AND PERMITS. To the best of Seller's knowledge, the Company
possesses all licenses and other required governmental or official approvals,
permits or authorizations, if any, the failure to possess which would have a
material adverse effect on the businesses, financial condition or results of
operations of the Company including, without limitation, all common carrier
rights, certificates of public need, waste material transportation permits,
trademarks and trade names necessary to carry on its business as now being
conducted, without known conflict with valid licenses, permits, trademarks and
trade names of others. All such licenses and permits are in full force and
effect, and no violations are or have been recorded in respect to any thereof,
and no proceeding is pending, or to the knowledge of Seller threatened, to
revoke, suspend or otherwise limit such licenses or permits. All licenses and
permits will survive the closing of the transactions contemplated by this
Agreement. The parties acknowledge that same of said licenses are personal to
the individual holding such license.
M. TAX MATTERS. The Company has timely filed all federal, state, sales
tax, franchise tax, and other tax returns which are required to be filed by it
and has paid or has made provision for the payment of all taxes which have or
may become due pursuant to said returns. All taxes, including, without
limitation, withholding and social security taxes due with respect to the
Company's employee, federal and state income tax liabilities, corporate
franchise taxes, sales, use, excise and ad valorem taxes, due, payable or
accrued by the Company on or before the Closing Date have or will be paid. Any
of the Company's unpaid tax liabilities as of the Closing Date will be recorded
as a current liability and included in the Adjustment to Purchase Price
calculation subject to paragraph 10. The Company has filed all reports required
to be filed by it with all such taxing authorities. Seller shall be responsible
for any tax liability attributable to operations of the Company prior to
Closing. Buyer and Seller agree to cause the Company to make the election
provided by Section 338(h)(10) of the Internal Revenue Code of 1986,
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as amended and Treas. Reg ss.1.338(h)(10)-1(d)(1), and in connection therewith,
the parties agree that the allocation of the purchase price as set forth on
Schedule 4-M shall be used in connection with the preparation of tax returns
reflecting the sale and purchased contemplated hereby. Buyer agrees to
reimburse Seller for any additional income tax liability incurred by Seller as
a result of such election.
N. LITIGATION. Except as disclosed in Schedule 4-N attached hereto, to
the best of Seller's knowledge, the Company has not received any notices of
material default and is not in material default of (i) any order, writ,
injunction or decree of any court, or any federal, state, municipal or other
governmental department, commission, board, bureau or instrumentality, or (ii)
any agreement or obligation to which the Company is a party or by which the
Company is bound or to which the Company or any of the property of the
Company's may be subject. Except as disclosed in Schedule 4-N, there are no
material outstanding claims, actions, suits, proceedings or investigations
pending or, to the knowledge of the Seller, threatened against the Company or
which affect the Company or any of its assets or property, at law or in equity
before or by any federal, state, municipal court or other governmental
department, authority, commission, board, bureau, agency or instrumentality.
O. COMPLIANCE WITH LAWS. Except as otherwise disclosed in Schedule 4-O
attached hereto, to the best of Seller's knowledge, the Company is in
compliance in all material respects with all federal, state, and local laws,
ordinances, regulations, rules, and orders applicable to it or to its assets
including, without limitation, all laws and regulations relating to the
protection of the environment, the safe conduct of the Company's business,
anti-competitive practices, discrimination, employment, wage and hour practices
and health. The Company has not received notification of any asserted past or
present failure to comply with any of such laws or regulations.
P. ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 4-P attached
hereto, to the best of Seller's knowledge, there are no claims, actions, suits,
proceedings or investigations relating to any Environmental Law (as hereinafter
defined) pending or threatened against or affecting the Company. To the best of
Seller's knowledge, except as set forth on Schedule 4-P attached hereto: (i) no
release of any hazardous substance, medical waste, toxic waste or controlled
substance has occurred or is occurring as a result of the business of the
Company; (ii) no hazardous substance, medical waste, toxic waste or controlled
substance is currently present at, or has been previously generated, stored,
treated or disposed of at any landfill by the Company or through the conduct of
the business of the Company except deminimis amounts mixed with household
waste; (iii) no underground or partially underground storage tank has been or
is currently located at any facility of the Company; (iv) the business,
activities and processes heretofore conducted by the Company comply in all
material respects with all applicable Environmental Laws; (v) no facility of
the Company is listed on any list, registry or other compilation of sites that
require, or potentially require, removal, remedial action or any other response
under any Environmental Law as the result of the presence, release or potential
release of any hazardous substance, medical waste, toxic waste, or controlled
substance; (vi) neither Seller nor the Company has received any notice that the
Company is liable or responsible, or potentially liable or responsible, for any
costs of any removal, remedial action or other response under any Environmental
Law as the result of the presence, release or potential release of any
hazardous
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substance, medical waste, toxic waste, or controlled substance; and (vii) there
is no pending litigation or administrative proceeding (and neither Seller nor
the Company knows or has reason to know of any potential or threatened
litigation or administrative proceeding) in which it is asserted that the
Company has violated or is not in compliance with any material Environmental
Law. "Environmental Law" means all laws, statutes or acts of the United States
of America, the State of Georgia, or any political subdivision thereof, that
relate to the condition of the air, ground or surface water, land or other
parts of the environment, to the release or potential release of any substance
or radiation into the air, ground or surface water, land or other parts of the
environment, or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or other handling of substances that might
pollute, contaminate or be hazardous or toxic if present in the air, ground or
surface water, land, or other parts of the environment. The Company has not
received any written notice to the effect that the landfills and other disposal
sites to which waste material transported by the Company has been delivered are
not properly licensed pursuant to applicable Environmental Laws to receive the
material disposed of therein.
Q. NO BROKERS' OR AGENT'S FEES. No agent, broker, finder, representative
or other person or entity acting pursuant to authority of the Seller will be
entitled to any commission or finder's fee in connection with the origination,
negotiation, execution or performance of the transactions contemplated under
this Agreement.
R. NO MATERIAL OR ADVERSE CHANGE. Except as otherwise disclosed in
Schedule 4-R attached hereto, since December 31, 1998, to the best of Seller's
knowledge, there has not been: (i) any material adverse change in the financial
condition, assets, liabilities, business or results of operations of the
Company; (ii) to the knowledge of the Seller, any threatened or prospective
event or condition of any character whatsoever which could materially and
adversely affect the business, financial condition or results of operations of
the Company; (iii) any sale or other disposition of any of the Company's assets
(other than the Excluded Assets) other than in the ordinary course of business;
or (iv) any damage, destruction or loss (whether or not insured) materially and
adversely affecting the property, business or prospects of the Company.
S. DUE AUTHORIZATION AND ABSENCE OF BREACH. This Agreement and all other
agreements of the Seller contemplated hereunder constitute valid and binding
obligations of the Seller, enforceable in accordance with their respective
terms. Neither the execution and delivery of this Agreement (or any agreement
contemplated hereunder) nor the consummation of the transactions contemplated
hereby will: (i) conflict with or violate any provision of the Articles of
Incorporation or By-Laws of the Company; (ii) conflict with or violate any
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decree, writ, injunction or order of any court or administrative or other
governmental body which is applicable to, binding upon or enforceable against
the Company or Seller; or (iii) except as set forth on Schedule 4-S result in
any breach of or default (or give rise to any right of termination,
cancellation or acceleration) under any mortgage, contract, agreement,
indenture, will, trust or other instrument which is either binding upon or
enforceable against the Seller or the Company or its assets.
T. AUTHORITY TO CONTRACT. Seller has the full power, right and authority
to enter into and perform this Agreement without the consent of any person,
entity or governmental agency, and the consummation of the transactions
contemplated by this Agreement will not result in the breach or termination of
any provision of or constitute a default under any lease, indenture, mortgage,
deed of trust or other agreement or instrument or any order, decree, statute or
restriction to which Seller or the Company is a party or by which the Company
is bound or to which the outstanding shares of stock of the Company or any of
the properties of the Company is subject.
U. ACCURACY OF THE INFORMATION FURNISHED BY THE SELLER. To the best of
Seller's knowledge, no representation, statement or information made or
furnished by the Seller to the Buyer, including those contained in this
Agreement and the various exhibits attached hereto and the other information
and statements referred to herein, contains or shall contain any untrue
statement of any material fact.
5. REPRESENTATION AND WARRANTIES OF BUYER. In order to induce the Seller
to enter into this Agreement and to consummate the transactions contemplated
hereunder, the Buyer hereby makes the following representations, warranties,
covenants and agreements:
A. ORGANIZATION AND EXISTENCE. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all the requisite corporate power and authority to carry on its business
as now conducted and to consummate the transactions contemplated by this
Agreement.
B. AUTHORITY TO CONTRACT. The execution, delivery and performance of this
Agreement by Buyer has been duly approved by its Board of Directors, and no
further corporate action is necessary on the part of Buyer to consummate the
transactions contemplated by this Agreement, assuming due execution of this
Agreement by the Parties.
C. NO BROKER'S OR AGENT'S FEES. No agent, broker, finder, representative
or other person or entity acting pursuant to the authority of the Buyer will be
entitled to any commission or finder's fee in connection with the origination,
negotiation, execution or performance of the transactions contemplated under
this Agreement.
D. ACCURACY OF INFORMATION FURNISHED BY BUYER. No representation,
statement or information made or furnished by Buyer to the Seller in this
Agreement, or in connection with the transactions contemplated hereby
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including, without limitation copies of the Buyer's filings with the Securities
and Exchange Commission, contains, or shall contain any untrue statement of any
material fact or omits or shall omit any material fact necessary to make the
information contained herein true.
E. REGISTRATION. The EarthCare common stock delivered to Seller on the
Closing Date has been duly registered with the Securities and Exchange
Commission on Form S-1 effective December 9, 1998, and such registration
statement is true and correct in all material respects and does not omit to
state any material information necessary to make such registration statement
not misleading.
6. ADDITIONAL AGREEMENT OF THE SELLER. The Seller further agrees with the
Buyer as follows:
A. ACCESS TO OFFICES AND RECORDS. The Seller shall cause the Company to
afford representatives of the Buyer, from and after the date of execution of
this Agreement, full access, during normal business hours and upon reasonable
notice, to all offices, books, properties, contracts, documents and records of
the Company and to furnish to the Buyer or its representatives all additional
information, including financial or operating information with respect to the
business and affairs of the Company that the Buyer or its representatives may
reasonably request. Seller acknowledges that Buyer is a publicly-traded
corporation and that Buyer will be required under the applicable securities
laws to make public disclosure of detailed financial data concerning the
Company's operations. Prior to the Closing Date, Buyer has Seller's permission
to disclose publicly: (i) the amount of the Company's revenues; and (ii) such
other information as shall be included in any press release of Buyer which
Seller approves in advance of being released; such approval shall not be
unreasonably withheld. Provided, however, that any furnishing of such
information to the Buyer and any investigation by the Buyer shall not affect
the right of the Buyer to rely solely upon the representations and warranties
made by the Seller in or pursuant to this Agreement; and provided further, that
the Buyer: (i) will hold in strict confidence all documents and information
concerning the Company so furnished; and (ii) will promptly return all such
documents and all copies to the Company if this Agreement is not closed for any
reason.
B. CONDUCT OF BUSINESS PENDING THE CLOSING. With the exception of
activities incident to the Excluded Assets, from and after the execution and
delivery of this Agreement and until the Closing Date, except as otherwise
provided by the prior written consent or approval of the Buyer:
1. The Seller will cause the Company to conduct its business and
operations in the manner in which the same has heretofore been conducted and
Seller will use his best efforts to cause the Company to: (i) preserve the
Company's current business organization intact; (ii) keep available to the
Buyer the services of the Company's current employees and the Company's agents
and distributors; and (iii) preserve the Company's current relationships with
customers, suppliers and others having business dealing with the Company.
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2. The Seller will cause the Company to maintain all of its properties in
customary repair, order and condition, reasonable wear and use excepted, and
will maintain its existing insurance upon all of its properties and with
respect to the conduct of its business in such amounts and of such kinds
comparable to that in effect on the date of this Agreement.
3. The Seller will take action to insure that the Company will not: (i)
pay any bonus or increase the rate of compensation of any of the Company's
employees or enter into any new employment agreement or amend any existing
employment agreement; (ii) make any general increase in the compensation or
rate of compensation payable or to become payable to the Company's hourly-rated
employees; (iii) sell or transfer any of the Company's assets; (iv) obligate
itself for capital expenditures other than in the ordinary course of business
and not unusual in amount; or (v) incur any material obligations or
liabilities, which are not in the ordinary course of business, or enter into
any material transaction.
4. The Seller shall not, and shall not permit the Company to, issue or
enter into any subscriptions, options, agreements or other commitments in
respect of the issuance, transfer, sale or encumbrance of any shares of the
Xxxxxx Common Stock.
C. EXECUTION OF FURTHER DOCUMENTS BY SELLER. From and after the Closing,
upon the reasonable request of the Buyer, the Seller shall execute, acknowledge
and deliver such documents as may be appropriate to carry out the transactions
contemplated by this Agreement.
D. INDEMNIFICATION BY SELLER.
(1) The Seller will indemnify and hold the Buyer harmless from
and against any and all damage, loss, cost, deficiency,
assessment, liability or other expense (including reasonable
attorney's fees, costs of court and litigation expenses, if
any) suffered, incurred or paid by the Buyer as a result of:
(a) The untruth, inaccuracy, breach or violation of any
representation, warranty, covenant or other
obligation of the Seller set forth in or made in
connection with this Agreement;
(b) The assertion against the Buyer or any of the
Companies of any material liability or obligation of
any of the Companies or of any claim relating to the
operation of the Companies' businesses, prior to the
Closing Date, whether absolute or contingent,
matured or unmatured, known or unknown (except as
qualified with respect to knowledge) as of the
Closing Date (including, without limitation,
customer claims or disputes); and,
(c) The enforcement of the Buyer's right to
indemnification under this Agreement.
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2. The Buyer shall give written notice to the Seller of any
claim, action, suit or proceeding relating to the indemnity
herein provided by Seller not later than ten (10) days after
Buyer has received notice thereof. Seller shall have the
right, at his option, to compromise or defend, at his own
expense and by his own counsel (which counsel shall be
reasonably satisfactory to Buyer), any such action, suit or
proceeding. Buyer and Seller agree to cooperate in any such
defense or settlement and to give each other full access to
all information relevant thereto.
3. The Earnout Consideration shall constitute security for
Seller's indemnification. If Buyer makes no claim of breach
of any of Seller's representations, warranties or covenants,
or of any deficiency resulting from uncollectible account
receivable, then the Earnout Consideration shall be delivered
in full to Seller in accordance with the schedule set forth
above.
4. Except as herein expressly provided, the remedies provided in
Paragraph 6.D. hereof shall be cumulative and shall not
preclude assertion by the Buyer of any other rights or the
seeking of any other remedies available against the Seller at
law or in equity.
5. Indemnification shall not be applicable to any claim covered
by insurance. Buyer shall cause Company to continue with all
insurance coverage carried by Company prior to sale,
including but not limited to, completed operations and
failure to continue insurance coverage identical in all
material respects to such previous coverage shall void
Seller's warranty with regard to any type of claim previously
insured.
7. ADDITIONAL AGREEMENT OF THE BUYER.
A. EXECUTION OF FURTHER DOCUMENTS BY BUYER. From and after the
Closing, upon reasonable request of Seller, Buyer shall
execute, acknowledge and deliver to Seller all such further
documents as may be appropriate to carry out the transactions
contemplated by this Agreement.
B. INDEMNIFICATION BY BUYER.
(1) The Buyer will indemnify and hold the Seller
harmless from and against any and all damages, loss,
cost, deficiency assessment, liability or other
expense (including reasonable attorney's fees, costs
of court and costs of litigation, if any) suffered,
incurred or paid by the Seller as a result of:
(a) The untruth, inaccuracy, breach or
violation of any representation, warranty,
covenant or other obligation of the Buyer
set forth in or made in connection with
this Agreement;
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(b) The assertion against the Seller of any
liability or obligation of the Buyer or any
of the Companies or of any claim relating
to the operation of the Companies' business
subsequent to the Closing Date (including,
without limitation, customer claims or
disputes); or,
(c) The enforcement of the Seller's right to
indemnification under this Agreement.
2. The Seller shall give written notice to the Buyer of
any claim, action, suit or proceeding relating to
the indemnity herein provided by Buyer not later
than ten (10) days after Seller has received notice
thereof. Buyer shall have the right, at its option,
to compromise or defend, at its own expense and by
its own counsel (which counsel shall be reasonably
satisfactory to Seller), any such action, suit or
proceeding. Seller and Buyer agree to cooperate in
any such defense or settlement and to give each
other full access to all information relevant
thereto.
(3) Except as herein expressly provided, the remedies
provided in Paragraph 7.B. hereof shall be
cumulative and shall not preclude assertion by the
Seller of any other rights or the seeking of any
other remedies available against the Buyer at law or
in equity.
8. CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligations of the Buyer
to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of each of
the following conditions:
A. VALIDITY OF SELLER'S REPRESENTATIONS. All representations and
warranties of the Seller contained in this Agreement or
otherwise made in writing pursuant to this Agreement shall
have been true and correct at and as of the date hereof and
they shall be true and correct at and as of the Closing Date,
with the same force and effect as though made at and as of
the Closing Date.
B. PRE-CLOSING OBLIGATIONS. The Seller shall have performed and
complied with all the obligations and conditions required by
this Agreement to be performed or complied with by Seller at
or prior to the Closing Date, including the execution and
delivery of all documents and contracts required to be
delivered at or before the Closing Date pursuant to this
Agreement.
C. OPINION OF COUNSEL FOR SELLER. The Buyer shall have received
a favorable opinion from counsel for the Seller dated the
date of the Closing, in form satisfactory to counsel for the
Buyer, to the effect that:
(1) Each of the Companies is a corporation duly
organized and
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legally existing in good standing under the laws of
its respective jurisdiction, and it has the
corporate power and authority to carry on its
business as now being conducted and to own or hold
under lease, or otherwise, its assets.
(2) This Agreement has been duly executed and delivered
by the Seller, and constitutes a valid, enforceable
and binding obligation of the Seller pursuant to the
terms of this Agreement.
(3) Except as otherwise disclosed in this Agreement,
counsel does not know of any action, suit,
investigation or other legal, administrative or
arbitration proceeding pending against the Seller or
any of the Companies, or which questions the
validity or enforceability of this Agreement or of
any action taken or to be taken pursuant to or in
connection with this Agreement or any agreement
contemplated herein.
(4) To the knowledge of such counsel, no consent,
authorization, license, franchise, permit, approval
or order of any court or governmental agency or
body, other than those obtained by Seller and
delivered to the Buyer prior to or on the date of
the opinion, is required for the sale of the
Acquisition Stock by the Seller pursuant to this
Agreement.
(5) The execution and performance of this Agreement by
the Seller will not violate: (i) the Articles of
Incorporation or the By-Laws of any of the
Companies, or (ii) any order of any court or other
agency of government known to said counsel.
D. RECEIPT BY THE BUYER OF NECESSARY CONSENTS. All necessary
consents or approvals of third parties to any of the
transactions contemplated hereby shall have been obtained,
and satisfactory evidence of such consents or approvals shall
have been delivered to the Buyer at Closing.
E. RESIGNATION OF OFFICERS AND DIRECTORS. Buyer shall have
received such resignations of officers and directors of the
Companies as shall have been requested by Buyer.
9. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of the Seller
to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of each of
the following conditions:
A. VALIDITY OF BUYER'S REPRESENTATIONS. All representations and
warranties of the Buyer contained in this Agreement or
otherwise made in writing pursuant to this Agreement shall
have been true and correct at and as of the date hereof and
they shall
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be true and correct at and as of the Closing Date, with the
same force and effect as though made at and as of the Closing
Date.
B. PRE-CLOSING OBLIGATIONS. The Buyer shall have performed and
complied with all the obligations and conditions required by
this Agreement to be performed or complied with by Seller at
or prior to the Closing Date, including the execution and
delivery of all documents and contracts required to be
delivered at or before the Closing Date pursuant to this
Agreement.
C. CORPORATE AUTHORITY OF BUYER. The execution and performance
of this Agreement by the Buyer shall have been duly and
legally authorized in accordance with applicable law, and the
Buyer shall have furnished to counsel for the Seller
certified copies of resolutions adopted by the Board of
Directors of the Buyer authorizing and proving the execution
and delivery of this Agreement and performance of the
transactions contemplated hereunder.
D. OPINION OF COUNSEL FOR BUYER. The Seller shall have received
a favorable opinion from counsel for the Buyer dated the date
of the Closing, in form satisfactory to counsel for the
Seller, to the effect that:
(1) The Buyer is a corporation, duly organized and
legally existing in good standing under the laws of
the State of Delaware, and it has the corporate
power and authority to carry on its business as now
being conducted and to carry out the transactions
and agreements contemplated hereby.
(2) All corporate and other proceedings required to be
taken by or on the part of the Buyer in order to
authorize it to perform its obligations hereunder
have been duly and properly taken, including any
necessary approval or authorization by the Board of
Directors of the Buyer.
(3) This Agreement has been duly executed and delivered
by the Buyer and constitutes a valid, enforceable
and binding obligation of the Buyer pursuant to the
terms of this Agreement.
(4) Except as otherwise disclosed in this Agreement,
said counsel does not know of any action, suit,
investigation or other legal, administrative or
arbitration proceeding which questions the validity
or enforceability of this Agreement or of any action
taken or to be taken pursuant to or in connection
with this Agreement or any agreement contemplated
herein.
(5) The execution and performance of this Agreement by
the Buyer will not violate: (i) the Articles of
Incorporation or the
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By-Laws of the Buyer; or (ii) any order of any court
or other agency of government known to said counsel.
E. Buyer shall have provided to Seller a written Plan
of Merger to reflect tax free exchange treatment.
10. ADJUSTMENT TO PURCHASE PRICE.
A. The Purchase Price shall be adjusted as follows:
1. If the Company's current assets as of the Closing
Date exceed the Company's liabilities as of such
date, then such excess shall be paid to Seller as an
addition to the Purchase Price.
2. If the Company's liabilities as of the Closing Date
exceed the Company's current assets as of such date,
then Seller shall reimburse to Buyer an amount equal
to such deficiency.
B. The adjustment to be made under this paragraph shall be made
120 days after the Closing Date ("the Adjustment Date").
Current assets and liabilities shall be determined in
accordance with generally accepted accounting principles
except that accounts receivable, including unbilled services
rendered to the date of closing and billed thereafter, will
be considered current assets only if collected prior to the
Adjustment Date or are otherwise accepted in writing by
Buyer.
C. The adjustment shall be made hereunder as follows:
1. If there is an excess of current assets over
liabilities, the excess, to the extent of cash
collected, shall be paid to Seller on the Adjustment
Date. To the extent such excess is in the form of
yet uncollected accounts receivable, Buyer shall
cause the Company to continue to collect such
outstanding receivables and Buyer shall pay to
Seller, monthly, receivables thereafter collected.
Payment on account of such receivables shall be made
by the 10th day of each month for collections
received during the preceding month and shall be
accompanied by a statement of accounts collected.
2. If the liabilities exceed current assets then Seller
shall pay to Buyer the amount of such deficiency.
Buyer shall pay to Seller on a monthly basis as
described above, an amount equal to the accounts
receivable thereafter collected by the Company.
3. All payment received after Closing in respect of
Customer Accounts shall be applied to the oldest
receivables then outstanding. In addition, the
Seller shall cause the
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Company to collect all accounts receivable in its
normal course provided that the Seller shall not be
required to cause the Company to pursue the
collection of accounts receivable for the direct or
indirect benefit of Seller unless Seller shall have
agreed to bear the costs thereof.
11. SELLER'S NON-COMPETE AND NON-SOLICITATION AGREEMENT. As inducement to
Buyer to enter into this Agreement and perform its obligations hereunder, and
in consideration of the payments to Seller pursuant to this Agreement (with the
exception of activities incident to the Excluded Assets and LHR Farms), the
Seller agrees that Seller will not, for a period of three (3) years from the
Closing Date, directly or indirectly (whether as owner, partner, shareholder,
agent, employee, independent contractor, consultant or otherwise): (i) engage
in the plumbing business, or any other business which directly or indirectly
competes with business of the Buyer, or with any subsidiary of Buyer, in each
case, within the County of Hall, State of Georgia; (ii) solicit any party who
is or was a customer or supplier of the Company on the Closing Date or at any
time during the 12 month period immediately prior thereto for services of any
type or quality being provided by the Company; (iii) solicit for employment any
person who was or is an employee of the Company on the Closing Date, or at any
time during the 12 month period immediately prior thereto; or (iv) either
directly or indirectly, divulge, disclose, or communicate to any person, firm
or corporation in any manner whatsoever any confidential information relating
to the business of Buyer, or the Company. The term, "confidential information",
as used herein means all information of a business or technical nature relative
to the business of Buyer, the business of any customers of the Company or any
business of any person, firm or corporation which consults with, or is
affiliated with, Buyer or the Company. The term "confidential information"
shall not include information so generally known as to be part of the public
domain. Each of the covenants contained in this Article are separate and
independent. The Seller acknowledges and agrees that Buyer's and Company's
remedies at law may be inadequate in the event of a breach or threatened breach
of the covenants set forth herein, and in such event, Buyer and the Company
shall be entitled to have an injunction issued by any court of competent
jurisdiction, enjoining and restraining each and every party concerned
therewith from the creation or continuation of such breach.
12. OTHER PROVISIONS.
A. EMPLOYMENT AGREEMENTS. At Closing, Buyer will enter into
written Employment Agreements with key employees of Company
in a form satisfactory to Buyer and such employees.
B. INCOMPLETE EXHIBITS. The parties hereto acknowledge and agree
(a) that many, if not all, of the schedules to be attached to
this Agreement will not have been prepared by the time of
execution of this Agreement, and (b) that consummation of the
transactions contemplated by this Agreement are subject to
the completion of such exhibits by Seller (to the extent that
an exhibit is to be completed by Seller, such exhibit must be
reasonably acceptable to
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Buyer) or Buyer (to the extent that an exhibit is to be
completed by Buyer, it must be reasonably acceptable to
Seller) as the case may be, prior to or at the Closing,
pursuant to the terms of this Agreement.
C. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, obligations and agreements of
the parties contained in this Agreement, or in any writing
delivered pursuant to provisions of this Agreement, shall
survive the Closing for a period of two (2) years with the
exception of representations and warranties concerning
Paragraph 4.M. hereof, Tax Matters and Paragraph 4.P. hereof,
Environmental Matters, which will survive for as long as any
claims may be asserted under the applicable periods of
limitation for violations of any tax or environmental law,
rule or regulation.
D. WAIVER OR EXTENSION OF CONDITIONS. The Seller or the Buyer
may extend the time for or waive the performance of any of
the obligations of the other party, waive any inaccuracies in
the representations or warranties by the other party, or
waive compliance by the other party with any of the covenants
or conditions contained in this Agreement. Any such extension
or waiver shall be in writing and signed by the Seller and
the Buyer. Any such extension or waiver shall not act as a
waiver or an extension of any other provisions of this
Agreement.
1. NOTICES. Any notice, request or other document shall be in
writing and sent by registered or certified mail, return
receipt requested, postage prepaid and addressed to the party
to be notified at the following addresses, or such other
address as such party may hereafter designate by written
notice to all parties, which notice shall be effective as of
the date of posting:
1. If to the Buyer:
EarthCare Company
00000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Copy to:
Xxxxxx X. Xxxx, Esq.
00000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000-0000
2. If to the Seller:
Xxxx Xxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
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Copy to:
Xxxxx Xxxxxxxx, Esq.
X.X. Xxx 00
Xxxxxxxxxxx, XX 00000
2. GOVERNING LAW. This Agreement shall be governed by the laws
of the State of Georgia.
3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective heirs, representatives, successors and assigns.
4. HEADINGS. The subject headings of the Sections of this
Agreement are included for purposes of convenience only and
shall not affect the construction or interpretation of any of
its provisions.
5. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one
and the same instrument.
6. ARBITRATION. Any controversy or claim arising out of, in
connection with, or relating to this Agreement or a breach
thereof shall be settled by binding arbitration in
Gainesville, Georgia. The arbitration panel shall be
comprised of three arbitrators. Each party shall appoint one
arbitrator for the panel and the two so appointed shall
appoint a third. The panel shall resolve the dispute within
sixty (60) days of the appointment of the panel and shall
notify the parties of its findings in writing. Each party
agrees to bear its own costs of arbitrators and to split
equally the cost of the third arbitrator.
7. ENTIRE AGREEMENT; MODIFICATION. This Agreement (including the
schedules attached hereto) and the documents delivered
pursuant hereto constitute the entire agreement and
understanding between the parties, and supersede any prior
agreements and understandings relating to the subject matter
hereof. This Agreement may be modified or amended by a
written instrument executed by all parties hereto.
IN WITNESS WHEREOF the parties have executed this Agreement as of the
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_____ day of November, 1999
"Seller"
-----------------------------------
Xxxx Xxxxxx
"Buyer"
EarthCare Company
By:
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