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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into, effective as of February 17, 1998 (the "CLOSING DATE"), between and among
BONE-DRY ENTERPRISES, INC. , a Georgia corporation (the "BUYER"); QUALITY
PLUMBING & SEPTIC, a Georgia general partnership (the "SELLER"); and XXXXX X.
XXXXXXXXX, a Georgia resident ("X. XXXXXXXXX"), XXXXX X. XXXXXXXX, a Georgia
resident ("XXXXXXXX") (X. XxXxxxxxx and Xxxxxxxx sometimes collectively referred
to herein as the "SELLER PARTNERS" and sometimes individually referred to herein
as a "SELLER PARTNER"), and XXXXXX X. XXXXXXXXX, a Georgia resident ("X.
XXXXXXXXX") (the Seller Partners and X. XxXxxxxxx sometimes collectively
referred to herein as the "SELLER PARTNER PARTIES" and sometimes individually
referred to herein as a "SELLER PARTNER PARTY") (the Buyer, the Seller and the
Seller Partner Parties are sometimes referred to collectively herein as the
"PARTIES" and sometimes referred to individually herein as a "PARTY").
WHEREAS, the Seller owns certain contract rights, customer accounts,
trucks, containers and other assets and is engaged in the non-hazardous liquid
waste collection and disposal business in the Lithia Springs, Georgia area,
including, but not limited to, under the names "Quality Plumbing & Septic" and
"Stan's Cans" (the "BUSINESS"); and
WHEREAS, this Agreement contemplates a transaction in which the Buyer
will purchase all of the assets of the Seller used in the Business and assume
certain of the liabilities of the Seller in return for cash and the SanTi Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, the Parties agree as follows.
ARTICLE 1. KEY DEFINITIONS
"ACCOUNTS" means (i) all customer accounts, names, lists, purchase
orders, service agreements and contracts (including implied or quantum meruit
contractual rights) or other rights of the Seller to provide liquid waste
services to customers of the Seller, and all rights to and in connection with
any activities commonly associated with such services, customer service
agreements, and contract rights (including implied or quantum meruit contractual
rights) with customers, and (ii) all files, correspondence, records (including
billing and service records for the preceding twelve (12) months) and related
proprietary information and material and other intellectual property which is
necessary, helpful or related to providing such services described above;
excluding, however, (x) all customer accounts, rights or contracts which deal in
hazardous chemical toxic or low-level radioactive waste or any Hazardous
Materials which the Buyer determines it does not wish to purchase, and (y) all
small business set aside contracts which the Buyer determines it does not wish
to purchase. All of the customer accounts, contracts and other rights which are
not being purchased, including those accounts described in items (x) and (y) of
this definition, shall be set forth on Schedule 1 and are hereinafter referred
to collectively as the "EXCLUDED ACCOUNTS".
"ACQUIRED ASSETS" means all right, title and interest in and to all of
the assets of the Seller used or useful in the Business, and shall include, but
not be limited to, all of the Seller's: (a) Accounts, (b) real property,
leaseholds and subleaseholds therein, improvements, fixtures, and fittings
thereon, and easements, rights-of-way, and other appurtenants thereto (such as
appurtenant rights in and to public streets), (c) tangible personal property
(such as repair parts, machinery, equipment, inventories of raw materials and
supplies, manufactured and purchased parts, goods in process and finished goods,
furniture, automobiles, trucks, tractors, trailers, tankers, tools, pumps,
stabilizers, jigs, and dies), (d) intellectual property (including, but not
limited to, the names "Quality Plumbing & Septic" and "Stan's Cans"), goodwill
associated therewith, licenses and sublicenses granted and obtained with respect
thereto, and rights
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thereunder, remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions, (e) leases, subleases,
and rights thereunder, (f) agreements (such as equipment rental agreements and
service agreements), contracts, customer agreements, disposal agreements,
service agreements, indentures, mortgages, instruments, Security Interests,
guaranties, other similar arrangements, and rights thereunder, (g) notes
receivable and other receivables, other than accounts receivable, (h)
securities, (i) claims, deposits, prepayments, refunds, causes of action, choses
in action, rights of recovery, rights of set off, and rights of recoupment
(including any such item relating to the payment of Taxes), (j) franchises,
approvals, permits (including but not limited to disposal permits), licenses
(including but not limited to radio transmitter licenses), orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies, servicemarks, trademarks, logos, (k)
telephone numbers, yellow page advertising, books, records, ledgers, files,
documents, correspondence, lists, plats, architectural plans, drawings and
specifications, creative materials, advertising and promotional materials,
operational, billing and payable information, studies, reports, and other
printed or written materials, computer hardware and software, and (l) rights in
and with respect to the assets associated with its Employee Benefit Plans;
provided, however, that the Acquired Assets shall not include those assets of
the Seller set forth on Schedule 2 (collectively the "EXCLUDED ASSETS").
"EMPLOYEE BENEFIT PLAN" means any (i) nonqualified deferred
compensation or retirement plan or arrangement, (ii) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (iii) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), or (iv)
Employee Welfare Benefit Plan or material fringe benefit or other retirement,
bonus, or incentive plan or program.
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, each as amended and as now or hereafter in
effect.
"HAZARDOUS MATERIALS" means any substance that has been designated by
any governmental authority whose requirements are applicable to the Seller to be
radioactive, toxic, hazardous, or otherwise pose potential danger to health or
the environment, including, but not limited to, volatile organic compounds and
all substances listed pursuant to the federal Comprehensive Environmental
Response, Compensation and Liability Act, the federal Resource Conservation
Recovery Act, the federal Clean Air Act, the federal Water Pollution Control
Act, the Toxic Substance Control Act and the Occupational Safety and Health Act,
as such acts are amended to the Closing Date, and the regulations and
publications promulgated to the Closing Date pursuant to said acts, and
"extremely hazardous substances" (as said term is defined in ss.302 of the
Emergency Planning and Community Right-to-Know Act of 1986, as amended).
"KNOWLEDGE" means actual knowledge after reasonable investigation and
includes constructive knowledge.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
"LITIGATION" means any legal action, administrative or other
proceeding, arbitration, cause of action, claim, complaint, criminal
prosecution, inquiry, hearing, investigation (governmental or otherwise), or
notice (written or oral) by any Person alleging potential liability or
requesting information relating to or affecting the Seller, the Business, the
Acquired Assets or the transactions contemplated by this Agreement.
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"LOSSES" means any and all direct or indirect demands, claims,
payments, obligations, recoveries, deficiencies, fines, penalties, interests,
assessments, actions, causes of action, suits, losses, diminution in the value
of any of the Acquired Assets, compensatory, punitive, exemplary or
consequential damages (including, without limitation, lost income and profits
and interruptions of business), Liabilities, costs, expenses (including, without
limitation, (i) interest, penalties and reasonable attorneys' fees and expenses,
(ii) attorneys' fees and expenses necessary to enforce rights to indemnification
hereunder, and (iii) consultant's fees and other costs of defense or
investigation); and interest on any amount payable to a third party as a result
of the foregoing, whether accrued, absolute, contingent, known, unknown or
otherwise.
"MONTHLY GROSS REVENUES" means the monthly gross revenues received by
the Seller on all the Accounts which are fulfilled by the Seller for the
provision of nonhazardous liquid waste management services. The term Monthly
Gross Revenues shall not include (i) any revenues received by the Seller with
respect to extraordinary sales which may take place or which may be included in
the Accounts, (ii) any revenues received by the Seller for services not actually
rendered, or (iii) any revenues received by the Seller on Excluded Accounts.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (i) mechanic's, materialmen's,
and similar liens, (ii) liens for Taxes not yet due and payable or for Taxes
that the taxpayer is contesting in good faith through appropriate proceedings,
(iii) purchase money liens and liens securing rental payments under capital
lease arrangements, and (iv) other liens arising in the Ordinary Course of
Business and not incurred in connection with the borrowing of money.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, documentary,
occupation, premium, windfall profits, environmental (including taxes under
ss.59A of the Internal Revenue Code of 1986, as amended (the "CODE")), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE 2. BASIC TRANSACTIONS
2.1 PURCHASE AND SALE OF ASSETS. On and subject to the terms and
conditions of this Agreement, and effective as of 11:59 pm on the Closing Date,
the Buyer hereby purchases from the Seller, and the Seller hereby sells,
transfers, conveys, and delivers to the Buyer, all of the Acquired Assets, for
the consideration specified below in this Article 2, free and clear of any and
all Security Interests.
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2.2 ASSUMPTION OF LIABILITIES. On and subject to the terms and
conditions of this Agreement, and effective as of the Closing, the Buyer hereby
assumes and becomes responsible for those, and only those, liabilities of the
Seller specifically set forth on Schedule 3 (collectively the "Assumed
Liabilities"). Except for the Assumed Liabilities, nothing in this Agreement or
any other document entered into on or about the Closing Date shall in any way
obligate the Buyer for any Liabilities, obligations or charges of the Seller, or
any of the Seller Partner Parties (including, without limitation, any
Liabilities attributable to Environmental, Health and Safety Requirements, or
Liabilities or charges for Taxes or recording fees arising out of the sale or
transfer of the Acquired Assets), all of which shall remain those of the Seller
and/or the Seller Partner Parties, as the case may be, exclusively.
2.3 PURCHASE PRICE. The Buyer agrees to pay, issue and deliver to the
Seller the following (collectively, the "PURCHASE PRICE"): (i) cash in the
amount of $2,250,000, payable by wire transfer or delivery of other immediately
available funds, (ii) 10,000 shares (the "SANTI STOCK") of the common stock of
SanTi Group, Inc., a Delaware corporation ("SANTI"), and (iii) documentation
effecting the assumption of the Assumed Liabilities. The Buyer is
contemporaneously at the Closing tendering to the Seller (i) $2,000,000 of the
cash portion of the Purchase Price, less the sum of the amount(s) set forth on
Schedule 4 which is required to be paid to the third parties set forth on
Schedule 4 at the Closing in order to remove those Security Interests set forth
on Schedule 4 which encumber certain of the Acquired Assets immediately prior to
the Closing, and (ii) documentation effecting the assumption of the Assumed
Liabilities. The Seller acknowledges and agrees that the Buyer is retaining the
balance of the cash portion of the Purchase Price and all of the SanTi Stock to
hold as security to offset against any Losses asserted against, imposted upon or
incurred by the Buyer arising out of any of the matters listed in items (i)
through (v) of Section 5.2 hereof, and the Buyer shall deliver the remaining
balance of said security to the Seller on that date which is one hundred twenty
(120) days after the Closing Date.
2.4 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") is contemporaneously taking place at the offices of
Chorey, Taylor & Xxxx, A Professional Corporation, Suite 1700, The Lenox
Building, 0000 Xxxxxxxxx Xxxx, X.X., Xxxxxxx, Xxxxxxx 00000, commencing at 9:00
a.m. local time on the Closing Date.
2.5 ALLOCATION. The Parties agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets for all purposes
(including financial accounting and tax purposes) consistent with the Code and
in accordance with the allocation schedule prepared by the Buyer; provided,
however, that the portion of the Purchase Price consisting of SanTi Stock shall
be allocated based on a valuation of the SanTi Stock at the time of the Closing,
said valuation to be undertaken by an appraiser commissioned by the Buyer.
2.6 USE OF NAME. Following the Closing Date, the Seller shall not use
or give permission to any other Party to use the name "Quality Plumbing &
Septic" or "Stan's Cans."
2.7 CONFIDENTIALITY. The Seller and each Seller Partner Party agree
that for a period of three (3) years after the Closing Date, none of them shall
at any time divulge the existence and terms of the negotiations resulting in
this Agreement, the terms and conditions of this Agreement and the financing
arrangements of the Buyer and its "AFFILIATES" (as said term is defined in Rule
12b-2 of the regulations promulgated under the Securities Exchange Act of 1934,
as amended), except as required by applicable federal, state or local statutes.
2.8 TELEPHONE REFERRALS. From and after the Closing Date, the Seller
shall refer, and cause its agents to refer, all telephone calls to it or them
for liquid waste collection and disposal to the Buyer.
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ARTICLE 3. REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE SELLER PARTNER PARTIES
The Seller and each of the Seller Partner Parties jointly and severally
represent and warrant to the Buyer that the statements contained in this Article
3 are correct and complete as of the Closing Date, except as set forth in the
disclosure schedule accompanying this Agreement and initialed by the Parties
(the "DISCLOSURE SCHEDULE"). The Disclosure Schedule will be arranged in
sections corresponding to the lettered and numbered sections contained in this
Article 3.
3.1 ORGANIZATION OF THE SELLER AND CERTAIN SELLER PARTNER PARTIES. The
Seller is a partnership duly organized, validly existing, and in good standing
under the laws of Georgia. The Seller is duly authorized to conduct business and
the Business, and is in good standing, under the laws of each jurisdiction where
such qualification is required. If any Seller Partner Party is an entity, such
Seller Partner Party is duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation or other formation and
organization.
3.2 AUTHORIZATIONS. The Seller has full power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the Seller Partners have duly
authorized the execution, delivery, and performance of this Agreement by the
Seller. Each of the Seller Partner Parties has full power and authority
(including, if any Seller Partner Party is a corporation or other entity, full
corporate or other entity power and authority) to execute and deliver this
Agreement and to perform such Seller Partner Parties' obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of the
Seller and each Seller Partner Party, enforceable in accordance with its terms
and conditions, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally, or by the exercise of judicial discretion in accordance with general
equitable principles.
3.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement by the Seller and the Seller Partner Parties, nor the consummation by
the Seller and the Seller Partner Parties of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, stipulation, ruling, charge, or other
restriction of any government, governmental agency, or court to which the Seller
or any Seller Partner Party is subject (or, if any Seller Partner Party is a
corporation or other entity, any provision of its charter or bylaws or other
governing documents) or any provision of the governing documents of the Seller,
or (ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, permit, instrument, or other arrangement to which the Seller or any
Seller Partner Party is a party or by which the Seller or any Seller Partner
Party is bound or to which any assets of the Seller or any Seller Partner Party
is subject (or result in the imposition of any Security Interest upon any assets
of the Seller or any Seller Partner Party). The Seller does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
3.4 SELLER EQUITY; BROKERS' FEES. Each Seller Partner holds of record
the outstanding equity held in the Seller set forth next to such Seller
Partner's name in Section 3.4 of the Disclosure Schedule. The Seller has no
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
the Buyer could become liable or obligated.
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3.5 TITLE TO ASSETS. The Seller has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the balance sheet contained within the Most Recent
Financial Statements (the "MOST RECENT BALANCE SHEET") or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet. Without limiting the generality of the foregoing, the
Seller has good and marketable title to all of the Acquired Assets, free and
clear of any Security Interest or restriction on transfer.
3.6 [THIS SECTION INTENTIONALLY LEFT BLANK]
3.7 FINANCIAL STATEMENTS. Attached hereto as Exhibit A are the
following financial statements (collectively, the "FINANCIAL STATEMENTS"): (i)
audited consolidated and unaudited consolidating balance sheets and statements
of income, changes in partners' equity, and cash flow as of and for the fiscal
years ended December 31, 1996 and December 31, 1997 (the "MOST RECENT FISCAL
YEAR END") for the Seller; and (ii) unaudited consolidated and consolidating
balance sheets and statements of income, changes in partners' equity, and cash
flow (the "MOST RECENT FINANCIAL STATEMENTS") as of and for the one (1) month
period ended January 31, 1998 (the "MOST RECENT FISCAL MONTH END") for the
Seller. The Financial Statements (including the notes thereto) have been
prepared in accordance with United States generally accepted accounting
principles as in effect from time to time ("GAAP") applied on a consistent basis
throughout the periods covered thereby, present fairly the financial condition
of the Seller as of such dates and the results of operations of the Seller for
such periods, are correct and complete, and are consistent with the books and
records of the Seller (which books and records are correct and complete). The
net book value of the Acquired Assets calculated in accordance with GAAP is not
less than $650,000.00.
3.8 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most
Recent Fiscal Year End, there has not been any adverse change in the Business or
the business, financial condition, operations, results of operations, or future
prospects of the Seller. Without limiting the generality of the foregoing, since
that date: (i) the Seller has not sold, leased, transferred, pledged or assigned
any of its assets, tangible or intangible, other than for a fair consideration
in the Ordinary Course of Business; (ii) the Seller has not entered into (or
issued), accelerated, terminated, modified, or canceled any agreement, contract,
lease, note, bond, debt security or license either involving more than $5,000 or
outside the Ordinary Course of Business; (iii) the Seller has not made any
capital expenditure (or series of related capital expenditures) either involving
more than $5,000 or outside the Ordinary Course of Business; (iv) the Seller has
not delayed or postponed the payment of accounts payable and other Liabilities
outside the Ordinary Course of Business; (v) the Seller has not canceled,
compromised, waived, or released any right or claim (or series of related rights
and claims) either involving more than $5,000 or outside the Ordinary Course of
Business; (vi) the Seller has not issued, sold, disposed of or granted any
rights to purchase any of its equity, or declared, set aside, or paid any
dividend or made any distribution with respect to its equity (whether in cash or
in kind), or redeemed, purchased, or otherwise acquired any of its equity; (vii)
the Seller has not experienced any damage, destruction, or loss (whether or not
covered by insurance) to its property; (viii) the Seller has not made any loan
to, or entered into any other transaction with, any of its partners, officers,
or employees outside the Ordinary Course of Business; (ix) the Seller has not
(a) entered into any employment contract or collective bargaining agreement,
written or oral, or modified the terms of any existing such contract or
agreement; (b) granted any increase in the base compensation of any of its
partners, officers, or employees (or made any other change in employment terms
for such persons) outside the Ordinary Course of Business; or (c) adopted,
amended, modified, or terminated any Employee Benefit Plan; (x) there has not
been any other occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business involving the Seller; and
(xi) the Seller has not committed to any of the foregoing.
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3.9 UNDISCLOSED LIABILITIES. The Seller has no Liability (and there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
3.10 LEGAL COMPLIANCE. Each of the Seller and its predecessors and
Affiliates has complied with all applicable laws (including rules, statutes,
regulations, codes, permits, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply. None
of the Seller Partner Parties and the officers and management employees of the
Seller has any Knowledge of any basis (existing prior to the Closing) which
could result in (i) any failure of the Buyer (based upon its acquisition of the
Business) to comply after the Closing with any and all applicable laws
(including rules, statutes, regulations, codes, permits, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), or any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
being filed or commenced after the Closing against the Buyer or any of its
Affiliates alleging any failure to so comply.
3.11 TAX MATTERS. The Seller has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by the Seller (whether or not shown on any Tax Return)
have been paid. There is no dispute or claim concerning any Tax Liability of the
Seller either (i) claimed or raised by any authority in writing or (ii) as to
which any of the Seller Partner Parties and the officers (and employees
responsible for Tax matters) of the Seller has Knowledge based upon personal
contact with any agent of such authority. Section 3.11 of the Disclosure
Schedule lists all federal, state, local, and foreign income Tax Returns filed
with respect to the Seller for taxable periods ended on or after December 31,
1996, indicates those Tax Returns that have been audited, and indicates those
Tax Returns that currently are the subject of audit. The Seller has delivered to
the Buyer correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by the Seller since December 31, 1996. The unpaid Taxes of the Seller (i) did
not, as of the Most Recent Fiscal Month End, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii) do not
exceed that reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Seller in filing its Tax
Returns.
3.12 REAL PROPERTY.
(i) The Seller owns no real property.
(ii) Section 3.12(ii) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to or not owned but
otherwise used by the Seller. The Seller has delivered to the Buyer correct and
complete copies of the leases and subleases (as amended to date) required to be
listed in Section 3.12(ii) of the Disclosure Schedule. With respect to each
lease and sublease required to be listed in Section 3.12(ii) of the Disclosure
Schedule: (A) the lease or sublease is legal, valid, binding, enforceable, and
in full force and effect; (B) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby; (C) no party
to the lease or sublease is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default or
permit termination, modification, or
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acceleration thereunder; (D) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease and no party to the
lease or sublease has repudiated any provision thereof; (E) with respect to each
sublease, the representations and warranties set forth in subsections (A)
through (D) above are true and correct with respect to the underlying lease; (F)
the Seller has not assigned, transferred, conveyed, mortgaged, deeded in trust,
or encumbered any interest in the leasehold or subleasehold; (G) all facilities
leased or subleased thereunder have received all approvals of governmental
authorities (including licenses and permits) required in connection with the
operation thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations; (H) all facilities leased or subleased
thereunder are supplied with utilities and other services necessary for the
operation of said facilities; (I) no Hazardous Material is present in, on or
under such real property at any time prior to the Closing Date, including any
land and the improvements, ground water and surface water thereof, except in
accordance with applicable laws and regulations; and (J) there are and have been
no storage tanks located on or under such property. With respect to each such
property used by but not owned by, leased to or subleased to the Seller, Section
3.12(ii) of the Disclosure Schedule states the nature and terms of the
relationship pursuant to which such property is used.
3.13 TANGIBLE ASSETS. The Seller owns or leases all buildings,
machinery, equipment, other tangible assets, permits, licenses and agreements
necessary for the conduct of the Business as presently conducted and as
presently proposed to be conducted. Each such tangible asset is free from
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear), is suitable and valid for the purposes for which it presently is
used and presently is proposed to be used, and is sufficient to use in the
Business as conducted by the Seller during the twelve (12) months immediately
preceding the Closing and to be conducted by the Buyer during the twelve (12)
months subsequent to the Closing. None of the Seller Partner Parties and the
officers and management employees of the Seller has any Knowledge that there are
any defects in the Acquired Assets which affect the plumbing, electrical, sewer,
ventilating or air conditioning systems thereof.
3.14 CONTRACTS. Section 3.14 of the Disclosure Schedule lists all
contracts and other agreements to which the Seller is a party, and for each
waste disposal contract or agreement, the termination or expiration date
thereof, and for each vendor service contract or agreement, the termination or
expiration date thereof and the consideration or other amounts to be paid by the
Seller thereunder. The Seller has delivered to the Buyer a correct and complete
copy of each written agreement (as amended to date) required to be listed in
Section 3.14 of the Disclosure Schedule and a written summary setting forth the
terms and conditions of each oral agreement required to be referred to in
Section 3.14 of the Disclosure Schedule. With respect to each agreement required
to be listed or referred to in Section 3.14 of the Disclosure Schedule: (i) the
agreement is legal, valid, binding, enforceable, and in full force and effect;
(ii) the agreement will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (iii) no party thereto is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (iv) no party thereto has repudiated any
provision of the agreement. Each of the Seller's agreements which is a waste
disposal agreement has a term which will not expire until at least one (1) year
after the Closing.
3.15 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed by or on behalf of the Seller.
3.16 INSURANCE. Section 3.16 of the Disclosure Schedule includes
certificates of insurance with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Seller has been a party,
a named insured, or otherwise the beneficiary of coverage at any time within the
past 3 years. With respect to each insurance policy for which a certificate of
insurance is required to be included in Section 3.16 of the
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Disclosure Schedule: (i) the policy is legal, valid, binding, enforceable, and
in full force and effect; (ii) the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (iii) neither the
Seller nor any other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination, modification, or acceleration, under the
policy; and (iv) no party to the policy has repudiated any provision thereof.
The Seller has been covered during the past 3 years by insurance in scope and
amount customary and reasonable for the Business and the other businesses in
which it has engaged during the aforementioned period. Section 3.16 of the
Disclosure Schedule describes any self-insurance arrangements affecting the
Seller, as well as any pending claims with respect to insurance coverage owned
by the Seller, including amounts held in reserve by the Seller in connection
with any such claim.
3.17 LITIGATION. Section 3.17 of the Disclosure Schedule sets forth
each instance in which the Seller (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or is threatened
to be made a party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator. None of
the actions, suits, proceedings, hearings, and investigations required to be set
forth in Section 3.17 of the Disclosure Schedule could result in any "material"
(as defined in this Section 3.17) adverse change in the Business, the other
business, financial condition, operations, results of operations, or future
prospects of the Seller. None of the Seller Partner Parties and the officers
(and employees with responsibility for litigation matters) of the Seller has any
reason to believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Seller. For purposes of
this Section 3.17, "material" shall mean any Liability or Loss in excess of
$2,500 per occurrence or in excess of $10,000 in the aggregate.
3.18 SERVICE WARRANTY AND LIABILITY. Each service provided or delivered
by the Seller has been in conformity with all applicable contractual commitments
and all express and implied warranties, and the Seller has no Liability (and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against Seller giving rise to
any Liability) (i) for damages in connection therewith, subject only to the
reserve for service warranty claims set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
the Seller, or (ii) arising out of any injury to individuals or property as a
result of the use of any service provided or delivered by the Seller. No service
provided or delivered by the Seller is subject to any guaranty, warranty, or
other indemnity beyond the applicable standard terms and conditions of sale.
Section 3.18 of the Disclosure Schedule includes copies of the standard terms
and conditions of sale for the Seller (containing applicable guaranty, warranty,
and indemnity provisions).
3.19 [THIS SECTION INTENTIONALLY LEFT BLANK]
3.20 EMPLOYEES AND INDEPENDENT CONTRACTORS. Section 3.20 of the
Disclosure Schedule contains a complete list of all employees and independent
contractors of the Seller engaged in the conduct of the Business, and for each
employee or independent contractor required to be listed on Section 3.20 of the
Disclosure Schedule, their address, social security number, current annual base
salary or hourly rate and years of employment or engagement with the Seller.
None of the Seller Partner Parties and the officers and management employees of
the Seller has any Knowledge that any executive, key employee, group of
employees, key independent contractor or group of independent contractors has
any plans to terminate employment or engagement with the Seller or with the
Buyer if the Buyer has made known to the Seller its intention to employ or
engage such person, persons, entity or entities, except that each of Xxxx Xxx
and Xxxxx Xxxxxxx have expressed an interest to work with X. XxXxxxxxx in
another business of X. XxXxxxxxx'x,
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provided that neither Xxxx Xxx nor Xxxxx Xxxxxxx would do so until at least 90
days after the Closing. The Seller is not a party to or bound by any collective
bargaining agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. The Seller has
committed no unfair labor practice or taken an action which would give rise to a
claim under any federal or state law restricting discrimination in employment.
None of the Seller Partner Parties and the officers (and employees with
responsibility for employment matters) of the Seller has any Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Seller.
3.21 EMPLOYEE BENEFITS. Section 3.21 of the Disclosure Schedule lists
each Employee Benefit Plan that the Seller maintains or to which the Seller
contributes or has any obligation to contribute. Each Employee Benefit Plan (and
each related trust, insurance contract, or fund) required to be listed on
Section 3.21 of the Disclosure Schedule complies in form and in operation in all
respects with the applicable requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Code and other applicable laws.
3.22 GUARANTIES. The Seller is not a guarantor or otherwise liable or
responsible for any Liability or obligation (including indebtedness) of any
other Person.
3.23 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) The Seller, and its predecessors and Affiliates have
complied with all Environmental, Health, and Safety Requirements, and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against any of them alleging any failure so
to comply;
(ii) The Seller has no Liability (and none of its predecessors
and Affiliates have handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or facility in any
manner that could form the basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
the Seller, giving rise to any Liability) for damage to any site, location, or
body of water (surface or subsurface), for any illness of or personal injury to
any employee or other individual, or for any reason under any Environmental,
Health and Safety Requirements, except in compliance with all applicable
Environmental, Health and Safety Requirements;
(iii) All properties and equipment used in the Seller's Business,
and its predecessors' and Affiliates' businesses, have been free of asbestos,
PCB's, methylene chloride, trichloroethylene, 1, 2-trans- dichloroethylene,
dioxins, dibenzofurans, and all Hazardous Materials;
(iv) The Seller has not transported, stored, treated or disposed,
nor has it allowed or arranged for any third person to transport, store, treat
or dispose of, waste to or at any location other than a site lawfully permitted
to receive such waste for such purposes. The Seller has not transported, stored,
treated or disposed of, nor has it allowed or arranged for any third person to
transport, store, treat or dispose of, (A) any Hazardous Materials, or (B) any
other waste to or at any location designated for remedial action pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act, as from
time to time amended, or any similar federal or state statute assigning
responsibility for the cost of investigating or remediating releases of
contaminants into the environment;
(v) Section 3.23(v) of the Disclosure Schedule is a complete and
accurate list of (A) locations (identified by name, address, owner/operator,
type of facility and type of waste) to which the Seller has ever transported, or
ever caused to be transported, allowed or arranged for any third party to
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transport, any type of waste material, generated by the Seller, or customers of
the Seller, for storage (other than at a customer's facility), treatment,
burning, recycling or disposal, and (B) storage (other than at a customer's
facility), treatment, burning, recycling or disposal activities which the Seller
has undertaken, at any time, at locations then or presently owned or occupied by
the Seller (such list to include property address, nature of the Seller's
interest in property, nature of the activity conducted at such location, type
and form or waste, estimated volume of waste disposal on or in ground, and
period of time the activity was conducted);
(vi) The Seller has received no notification (including requests
for information directed to the Seller or any Seller Partner Party) from any
governmental agency or any other person asserting that the Seller is or may be a
"potentially responsible person" or otherwise liable with respect to a
remediation or the payment of response costs at a waste storage treatment or
disposal action facility, pursuant to the provisions of the Comprehensive
Environmental Response, Compensation and Liability Act, as from time to time
amended, or any similar federal or state statute assigning responsibility for
the costs of investigating or remediating releases of contaminants into the
environment.
3.24 CERTAIN BUSINESS RELATIONSHIPS WITH THE SELLER AND ITS AFFILIATES.
None of the Seller Partner Parties nor any of their respective Affiliates has
been involved in any business arrangement or relationship with the Seller within
the past 12 months other than in their capacity as general partners of the
Seller, and none of the Seller Partner Parties nor any of their respective
Affiliates owns or leases any asset, tangible or intangible, which is used in
the Business of the Seller. Neither the Seller nor any Seller Partner Party owns
or has any interest in a Person (other than the Seller) conducting a liquid
waste management business.
3.25 INVESTMENT. The Seller and each of the Seller Partner Parties (i)
understands that the SanTi Stock has not been, and will not be, registered under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), or under any
state securities laws, and is being offered and sold in reliance upon federal
and state exemptions for transactions not involving any public offering, (ii)
understands that the Seller is acquiring the SanTi Stock solely for its own
account for investment purposes, and not with a view to the distribution
thereof, (iii) is a sophisticated investor with knowledge and experience in
business and financial matters, (iv) has received certain information concerning
the Buyer and SanTi and has had the opportunity to obtain additional information
as desired in order to evaluate the merits and the risks inherent in holding the
SanTi Stock, (v) is able to bear the economic risk and lack of liquidity
inherent in holding the SanTi Stock, and (vi) is an "ACCREDITED INVESTOR" (as
said term is defined in Regulation D promulgated under the Securities Act) for
the reasons set forth in Section 3.25 of the Disclosure Schedule.
3.26 OWNERSHIP AND ASSIGNABILITY OF ACCOUNTS. The Seller is the lawful
owner of all of the Accounts, and all such Accounts are free and clear of all
claims, liens, mortgages, pledges, encumbrances and security interests of every
kind, including, but not limited to financing arrangements (including
receivables financing). There are no outstanding rights of any kind to acquire
from either the Seller or the Seller Partner Parties, either separately or
jointly, any interest whatsoever, whether current or future, in the Accounts,
held by any Person other than Buyer. Except for those Accounts expressly set
forth in Section 3.26 of the Disclosure Schedule, all Accounts are freely
assignable by the Seller, and such assignment, transfer and delivery thereof to
the Buyer of all of the Accounts will not constitute or result in a breach,
violation or default of any agreements relating to such Accounts, and such
agreements and Accounts shall remain in full force and effect as if there had
been no assignment, transfer or delivery.
3.27 REVENUE AND MAJOR ACCOUNTS. The average Monthly Gross Revenue of
the Seller for the Accounts for the calendar months of January through November,
1997 derived solely from servicing the Accounts is $158,000.00. Section 3.27 of
the Disclosure Schedule contains a listing of all of the Accounts, and the Gross
Monthly Revenues of such Accounts for the calendar months of January through
November,
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1997. Unless otherwise noted on Section 3.27 of the Disclosure Schedule, all of
such Accounts remain currently active, there has not been a decline in the
aggregate monthly billing level of such Accounts over the 12 calendar month
period immediately preceding the Closing Date, all such Accounts are paid
currently, and during the 12 calendar month period immediately preceding the
Closing Date, the Seller has not lost any customer that generated more than ten
percent (10%) of the Seller's gross revenues in any of the Seller's past fiscal
periods. The Seller and the Seller Partner Parties further represent and warrant
that during the 90 day period immediately following the Closing, the average
monthly gross revenues received by the Buyer for the Accounts shall not be less
than $150,000.00, provided that the Buyer does not materially reduce the
aggregate amount of time that the Business is operated (in terms of number of
days a week and number of hours a day that the Business is operated) during such
90 day period. To the extent that the average monthly gross revenues during such
90 day period received by the Buyer for the Accounts are less than $150,000.00,
the Parties agree that the Buyer shall be deemed to have suffered a Loss in an
amount equal to the product of (i) the amount by which $150,000 exceeds the
average monthly gross revenues during such 90 day period received by the Buyer
for the Accounts, and (ii) the factor 14.87, and that the Buyer shall be
entitled to indemnity from the Seller in the amount of such Loss or to offset
the amount of said Loss against the portion of the Purchase Price withheld by
the Buyer pursuant to Section 2.3 hereof.
3.28 [THIS SECTION INTENTIONALLY LEFT BLANK]
3.29 POSSESSION OF FRANCHISES, LICENSES, ETC. The Seller possesses,
free from any burdensome restriction, all franchises, certificates, licenses,
permits, clearances, consents and other authorizations from governmental
political subdivisions or regulatory authorities that are necessary for (i) the
continued ownership, maintenance and operation of the Business and the other
businesses conducted by the Seller, as currently being operated and conducted,
(ii) the continued operation, use and ownership of the Acquired Assets, as
currently being operated and used, and (iii) the servicing of the Accounts, as
currently being serviced (collectively the "PERMITS"). Section 3.29 of the
Disclosure Schedule sets forth all of the Permits and for each Permit,
accurately describes the expiration and/or renewal date thereof. The Seller is
not in any way whatsoever in violation of any of the Permits and has complied
with all applicable covenants and conditions of each of the Permits. There is no
action, proceeding, permit revocation, permit amendment, writ, injunction, claim
or investigation pending or threatened, concerning or relating to any of the
Permits or the Hazardous Materials activities of the Seller, including, but not
limited to, the treatment, storage or disposal of Hazardous Materials or liquid
or solid waste materials which have been handled by the Seller or its
predecessors or Affiliates.
3.30 THIRD PARTY RELATIONSHIPS. None of the Seller Partner Parties and
the officers and management employees of the Seller has any Knowledge that the
Seller does not enjoy good working relationships in accordance with past
practices with all suppliers, subcontractors, governmental regulators and other
Persons necessary or appropriate for the normal operation of the Business. None
of the Seller Partner Parties and the officers and management employees of the
Seller has any Knowledge that the consummation of the subject transaction will
result in any injury to or disruption of such relationships, or that the Buyer
will incur any costs or expenses in order to continue such relationships as they
had been maintained previous to the Closing.
3.31 ACQUISITION QUESTIONNAIRE. All statements and representations
contained in that certain February 17, 1998 Acquisition Questionnaire (by
reference made an integral part hereof) initialed by the Seller Partner Parties
and tendered by the Seller to the Buyer is true and correct in all material
respects.
3.32 DISCLOSURE. The representations and warranties contained in this
Article 3 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article 3 not misleading.
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the statements
contained in this Article 4 are correct and complete as of the Closing Date,
except as set forth in the Disclosure Schedule. The Disclosure Schedule will be
arranged in sections corresponding to the lettered and numbered sections
contained in this Article 4.
4.1 ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
4.2 AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally, or by the exercise of judicial discretion
in accordance with general equitable principles.
4.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement by the Buyer, nor the consummation by the Buyer of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which the Buyer is subject
or any provision of its charter or bylaws or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any Person the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, permit, instrument, or
other arrangement to which the Buyer is a party or by which it is bound or to
which any of its assets is subject. The Buyer does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
4.4 BROKERS' FEES. The Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
ARTICLE 5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, agreements, covenants and obligations made or undertaken by the
Seller and each Seller Partner Party in this Agreement are, whether specified as
such or not, the joint and several representations, warranties, agreements,
covenants and obligations of all of the Seller and the Seller Partner Parties,
unless otherwise specifically indicated to the contrary herein with respect to a
particular representation, warranty, agreement, covenant or obligation; are
material, have been relied upon by the Buyer, shall survive the Closing
hereunder, and shall not merge in the performance of any obligation by any
Party; and, as to the representations and warranties, shall terminate or expire
on the fifth (5th) anniversary of the Closing Date, provided that such
representations and warranties shall not terminate or expire, but shall
continue, during the pendency of any suit, action, claim or other proceeding
brought in respect of such representations and warranties prior to the
termination or expiration of such five (5) year period. Notwithstanding the
above, all representations and warranties made by the Seller and each Seller
Partner Party in this Agreement that in any manner relate to (i) Tax matters,
(ii) environmental matters, and (iii) title matters, or as to the terms and
performance of this Agreement (collectively, the "SPECIAL MATTERS"), or any of
the foregoing, shall terminate or expire only upon the termination or expiration
of all applicable statutes of limitation. All representations, warranties,
agreements, covenants and obligations made or undertaken by the Buyer in this
Agreement shall survive
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the Closing hereunder, and shall not merge in the performance of any obligation
by any Party; and, as to the representations and warranties, shall terminate or
expire on the fifth (5th) anniversary of the Closing Date, provided that such
representations and warranties shall not terminate or expire, but shall
continue, during the pendency of any suit, action, claim or other proceeding
brought in respect of such representations and warranties prior to the
termination or expiration of such five (5) year period.
5.2 OBLIGATION OF THE SELLER AND THE SELLER PARTNER PARTIES TO
INDEMNIFY. Subject to the limitations contained in this Article 5, the Seller
and the Seller Partner Parties, jointly and severally, shall defend, indemnify
and hold the Buyer and its shareholders, officers, directors, employees,
counsel, agents, Affiliates and assigns (collectively, the "BUYER INDEMNITEES")
harmless from and against any and all Losses asserted against, imposed upon or
incurred by the Buyer Indemnitees, or any of them, by reason of or resulting
from, arising out of, based upon or otherwise in respect of:
(i) any inaccuracy in any representation or warranty made by the
Seller or any Seller Partner Party pursuant to this Agreement or the Disclosure
Schedule;
(ii) any breach of any covenant or agreement made or to be
performed by the Seller or any Seller Partner Party pursuant to this Agreement;
(iii) any Liability or Loss resulting from, arising out of, based
upon or otherwise in respect of any violation or alleged violation of any
Environmental, Health and Safety Requirements the Acquired Assets, or the
presence of any Hazardous Materials on the Acquired Assets, that occurred at any
time prior to Closing;
(iv) the Parties' failure to comply with any of the bulk sales
laws and any other similar laws in any applicable jurisdiction in respect of the
transactions contemplated by this Agreement, and any action brought or levy made
as a result thereof; and/or
(v) any Liability or obligation of the Seller or any of the
Seller Partner Parties, or in any manner related to the Business, the Acquired
Assets or the Excluded Assets, other than the Assumed Liabilities.
5.3 OBLIGATION OF THE BUYER TO INDEMNIFY. Subject to the limitations
contained in this Article 5, the Buyer shall defend, indemnify and hold the
Seller and its officers, directors, partners, employees, counsel, agents,
Affiliates and assigns (collectively, the "SELLER INDEMNITEES") harmless from
and against any and all Losses asserted against, imposed upon or incurred by the
Seller Indemnitees, or any of them, by reason of or resulting from, arising out
of, based upon or otherwise in respect of:
(i) any inaccuracy in any representation or warranty made by the
Buyer pursuant to this Agreement or the Disclosure Schedule;
(ii) any breach of any covenant or agreement made or to be
performed by the Buyer pursuant this Agreement; and/or
(iii) any Assumed Liability.
5.4 MATTERS INVOLVING THIRD PARTIES.
5.4.1 If any third party shall notify any Person that is entitled
to seek indemnification pursuant to Sections 5.2 or 5.3 hereof (the "INDEMNIFIED
PARTY") with respect to any matter (a "THIRD PARTY CLAIM") which may give rise
to a claim for indemnification against any other Person (the
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"INDEMNIFYING PARTY") under this Article 5, then the Indemnified Party shall
promptly notify the Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying the Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is prejudiced.
5.4.2 The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against all
Losses the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of or caused by the Third Party Claim, (ii) the Indemnifying
Party provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim involves only money damages
and does not seek an injunction or other equitable relief, (iv) settlement of,
or an adverse judgment with respect to, the Third Party Claim is not, in the
good faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
5.4.3 So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 5.4.2 above, (i) the
Indemnified Party may retain separate co-counsel at its cost and expense and
participate in the defense of the Third Party Claim, (ii) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (iii) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
5.4.4 In the event any of the conditions in Section 5.4.2
above is or becomes unsatisfied, however, (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, the Indemnifying Party in connection therewith), (ii) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (iii) the Indemnifying Party will
remain responsible for any and all Losses the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of or caused by the
Third Party Claim to the fullest extent provided in this Article 5.
5.5 INDEMNIFICATION PAYMENTS. An Indemnifying Party shall pay to the
Indemnified Party the full amount of any and all Losses (other than Losses
resulting from a Third Party Claim) for which it is required to indemnify the
Indemnified Party under this Article 5 within ten (10) days after its receipt of
notice thereof from the Indemnified Party, and the full amount of any and all
Losses resulting from a Third Party Claim within ten (10) days after final
settlement or adjudication thereof; and in each case, thereafter the amount of
any such Loss shall bear interest at the rate of interest publicly announced in
Atlanta, Georgia from time to time by NationsBank of Georgia, N.A. as its prime
rate, plus two percent (2%) per annum. After complying with the provisions of
Section 5.4 hereof with respect to any Loss that results from a Third Party
Claim (if applicable), the Buyer shall be entitled to offset from any payments
due the Seller or any of the Seller Partner Parties as part of the Purchase
Price or otherwise (including but not limited to the SanTi Stock), the full
amount of any and all Losses (whether or not resulting from a Third Party Claim)
for which the Seller or any Seller Partner Party is required to indemnify any
Buyer Indemnitee pursuant to Section 5.2 hereof, and the Buyer shall not be
liable for any amounts so offset.
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5.6 OTHER RIGHTS AND REMEDIES NOT AFFECTED. The indemnification rights
of the Parties and other Persons under this Article 5 are independent of and in
addition to such other rights and remedies that the Parties and such other
Persons may have at law or in equity or otherwise for any misrepresentation,
breach of warranty or failure to fulfill any agreement or covenant hereunder on
the part of any Party hereto, including, without limitation, the right to
offset, seek specific performance, rescission or restitution, none of which
rights or remedies shall be adversely affected or diminished hereby.
ARTICLE 6. MISCELLANEOUS
6.1 COMPLIANCE WITH BULK SALES LAWS. The Parties hereby waive
compliance by the Buyer and the Seller with the bulk sales law and any other
similar laws in any applicable jurisdiction in respect of the transactions
contemplated by this Agreement.
6.2 TAXES. The Seller shall pay all federal, state and local income,
sales, use, other transfer, documentary, stamp and other taxes, if any, due as a
result of the purchase, sale or transfer of the Acquired Assets in accordance
herewith, whether such Taxes are imposed by law on the Seller or the Buyer.
6.3 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be (i) delivered
by hand, (ii) mailed by United States registered or certified mail, return
receipt requested, first class postage prepaid and properly addressed, or (iii)
sent by national overnight courier service to the Parties or their permitted
assignees at the addresses set forth opposite the Parties' signatures hereto.
All notices, requests, instructions or documents given to any Party in
accordance with this Section 6.3 shall be deemed to have been given (i) on the
date of receipt if delivered by hand or overnight courier service, or (ii) on
the date five (5) business days after depositing with the United States Postal
Service if mailed by United States registered or certified mail, return receipt
requested, first class postage prepaid and properly addressed. Any Party may
change its address specified for notices herein by designating a new address by
notice in accordance with this Section 6.3.
6.4 ENTIRE AGREEMENT. All Exhibits and Schedules (including the
Disclosure Schedule) referred to herein are intended to be, and hereby are,
specifically incorporated into and made a part of this Agreement. This Agreement
constitutes the entire agreement among the Parties relating to the subject
matter hereof and supersedes all prior and contemporaneous negotiations,
writings and agreements relating to the subject matter of this Agreement.
6.5 MODIFICATIONS, AMENDMENTS AND WAIVERS. The Parties may, by mutual
written agreement and in no other manner, modify or amend the terms of this
Agreement. The failure or delay of any Party at any time or times to require the
performance of any provision of this Agreement shall in no manner affect its
right to enforce that provision. No single or partial waiver by any Party of any
condition of this Agreement, or the breach of any term, agreement or covenant
of, or the inaccuracy of any representation or warranty in, this Agreement,
whether by conduct or otherwise, in any one or more instances shall be construed
or deemed to be a further or continuing waiver of any such condition, breach or
inaccuracy or a waiver of any other condition, breach or inaccuracy.
6.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the Parties, and their
respective successors and permitted assigns. This Agreement may not be assigned
by any Party without the prior written consent of the other Parties, except that
the Buyer may assign this Agreement and its rights and obligations hereunder to
one or more of its Affiliates, or to any of its lenders as collateral security.
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6.7 GOVERNING LAW. This Agreement has been negotiated and executed in
the State of Georgia, will be substantially performed in the State of Georgia,
and shall be controlled, construed and enforced in accordance with the
substantive laws of the State of Georgia, without regard to any laws related to
choice or conflicts of laws.
6.8 SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be adversely affected or impaired thereby. The Parties
shall endeavor in good faith to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
practicable to that of the invalid, illegal or unenforceable provisions.
6.9 ATTORNEYS' FEES AND EXPENSES. In any Litigation arising out of,
under or in connection with this Agreement in which one Party prevails over
another Party, the reasonable attorneys' fees and expenses incurred by the
prevailing Party in connection with such Litigation shall be paid for or
reimbursed by the opposing Party or Parties in such Litigation.
6.10 NO BENEFIT TO OTHERS. The representation, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
Parties and, in the case of Article 5 hereof, the other Indemnified Parties, and
their respective heirs, executors, administrators, legal representatives,
successors and assigns, and they shall not be construed as conferring any rights
on any other Persons.
6.11 CONSTRUCTION. Nothing in any Schedule (including the Disclosure
Schedule) attached hereto shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Schedule identifies the
exception with particularity and describes the relevant facts in detail (and in
terms of Liabilities, quantifies the amount thereof with specificity). Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein, unless the representation
or warranty has to do with the existence of the document or other item itself.
The Parties intend that each representation, warranty and covenant contained
herein shall have independent significance. If any Party has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty or covenant.
6.12 EXPENSES. Except as otherwise provided herein, each of the Parties
will bear such Party's own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. The Seller agrees that Seller has not paid any of the costs
and expenses prior to the Closing of the Seller or any of the Seller Partner
Parties (including any of their legal fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby. The Seller also agrees
that it has not paid any amount to any third party with respect to any of the
costs and expenses of the Seller or any of the Seller Partner Parties (including
any of their legal fees and expenses) in connection with this Agreement or any
of the transactions contemplated hereby.
6.13 FURTHER ASSURANCES. From time to time, at any Party's request and
without further consideration (unless the requesting Party is entitled to
indemnity therefor as provided herein), the other Parties will execute and
deliver to the requesting Party such documents and take such other action as
such Party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
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IN WITNESS WHEREOF, the Parties have executed this Agreement under seal
effective as of the date first above written.
SELLER:
QUALITY PLUMBING & SEPTIC
Address: 0000 Xxx Xxxx By: /s/ Xxxxx X. XxXxxxxxx [SEAL]
Xxxxxx Xxxxxxx, XX 00000 --------------------------------------------------
Xxxxx X. XxXxxxxxx, Authorized Partner
By: /s/ Xxxxx X. Xxxxxxxx [SEAL]
--------------------------------------------------
Xxxxx X. Xxxxxxxx, Authorized Partner
SELLER PARTNER PARTIES
Address: 0000 Xxx Xxxx
Xxxxxx Xxxxxxx, XX 00000 /s/ Xxxxx X. XxXxxxxxx [SEAL]
-----------------------------------------------------
Xxxxx X. XxXxxxxxx
Address: 0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxx Xxxxxxx, XX 00000 /s/ Xxxxx X. Xxxxxxxx [SEAL]
-----------------------------------------------------
Xxxxx X. Xxxxxxxx
Address: 0000 Xxx Xxxx
Xxxxxx Xxxxxxx, XX 00000 /s/ Xxxxxx X. XxXxxxxxx [SEAL]
-----------------------------------------------------
Xxxxxx X. XxXxxxxxx
BUYER:
BONE-DRY ENTERPRISES, INC.
Address: 0000 Xxxxxxx Xxxx By: /s/ Xxxxx Xxxxx SEAL]
Xxxxxx, XX 00000 -----------------------------------------------------
Name:
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Title:
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