MUTUAL SETTLEMENT AGREEMENT
Exhibit A
This MUTUAL SETTLEMENT AGREEMENT dated June 3rd, 2004 (the “Agreement”) is made and entered into by and among Absolute Waste Services, Inc. (formally known as Thermacell Technologies, Inc.), a Florida corporation (“AWS”), Absolute Waste Acquisitions, Inc., a Texas corporation and wholly owned subsidiary of AWS (“Absolute Sub”), and the former holders of membership interests (“Holders”) of Absolute Industries, LLC, a Texas limited liability company (“Absolute”). AWS, the Holders, Absolute, PAC Funding, LLC (“PAC”), Xxx Xxxxxxxxx and Xxxxxx Xxxxxxx are collectively referred to herein as the “Parties” and each individually as a “Party”.
RECITALS
A. On July 2, 2003, AWS, Absolute Sub, Absolute and the Holders entered into a certain Agreement and Plan of Merger (“Merger Agreement”).
B. Immediately prior to the Merger, AWS had 10,000,000 shares of its common stock issued and outstanding.
C. The Merger Agreement provided for a tax-free issuance of securities pursuant to the provisions of Section 368(a) of the Internal Revenue Code, as amended (“IRC”), whereby AWS acquired 100% of the membership interests of Absolute through the merger of Absolute with and into Absolute Sub (the “Merger”).
D. On August 25, 2003 (the “Effective Date”), a Certificate of Merger by and between Absolute and Absolute Sub (“Certificate of Merger”) was issued by the Texas Secretary of State pursuant to which Absolute merged with and into Absolute Sub, and the separate legal existence of Absolute ceased and Absolute Sub continued as the surviving corporation to operate the former business of Absolute.
E. In consideration of the Merger and the acquisition by AWS of Absolute in connection therewith, AWS issued 27,000,000 shares of ASW’s Class A convertible preferred stock (“Merger Stock”) which, following the Merger, represented all of the issued and outstanding shares of ASW’s Class A convertible preferred stock.
F. Absolute Sub is a wholly owned subsidiary of AWS and, since the Merger, the former business and operations of Absolute have been carried out by and through Absolute Sub.
G. In connection with the Merger, PAC Funding, LLC (“PAC”), Xxx Xxxxxxxxx and Xxxxxx Xxxxxxx executed a certain Inducement/Indemnity Agreement requiring PAC to undertake certain actions and indemnify AWS against certain liabilities and obligations (“Inducement Agreement”).
H. The Board of Directors of AWS and the Holders have determined that as a result of the failure to cause AWS common stock to be tradable on the over-the-counter bulletin board, the failure to file the reports required under the Exchange Act of 1934, as amended (“Exchange Act”) in a timely manner, and other breaches of the Merger Agreement and the Inducement Agreement, it is equitable and appropriate to rescind the Merger Agreement and terminate the Merger ab initio, for each Party to return to the other Party the consideration received in connection with the Merger, and to release each other from all duties, rights, claims, causes of action, obligations and liabilities arising from, in connection with or relating to the Merger Agreement and the Merger, all as provided herein.
NOW, THEREFORE, in consideration of the above recitals and the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
1. Agreement to Rescind. Subject to the terms and conditions set forth herein, the Parties agree to rescind the Merger Agreement and terminate the Merger ab initio, and the Merger Agreement (together with all agreements, documents and instruments delivered in connection therewith including, without limitation, the Inducement Agreement) shall be rescinded ab initio and shall be of no further force and effect, as of the Closing. On the Closing, the Parties shall have no further liabilities and obligations under or with respect to the Merger Agreement (or any agreements, documents and instruments delivered in connection therewith including, without limitation, the Inducement Agreement). In furtherance of the foregoing, at the Closing, AWS and the Holders agree to exchange the Merger Stock and the issued and outstanding shares of stock in the Absolute Sub as more fully set forth in Section 5 hereof, so that: (i) AWS will divest itself of and no longer will have any ownership interest in Absolute Sub; (ii) the Holders and their assignees (“Absolute Group”), all other persons who were issued AWS stock in consideration for causing the Merger to occur (“Merger Facilitators”), and those who have been issued AWS stock subsequent to the merger in consideration for services rendered or assets conveyed to Absolute Sub (“Post Merger Group”) will divest themselves of and no longer have any ownership interest in AWS; and (iii) after the Closing, the Absolute Group and the Post Merger Group will own 100% of the common stock of Absolute Sub, the successor-in-interest to the business of Absolute by virtue of the Merger.
2. Regulatory Compliance. AWS agrees, following the execution of this Agreement, and at its cost, to (a) file a Current Report on Form 8-K pursuant to the Exchange Act to disclose this Agreement (“Form 8-K”); and (b) file an Information Statement pursuant to Section 14(c) of the Exchange Act (“Information Statement”), each of which shall be acceptable to the Parties and are attached hereto as Schedule A.
3. Closing. The closing (“Closing”) of the transactions and the effectiveness of this Agreement as contemplated by Section 1 hereof shall take place at the principal offices of AWS at the time this agreement is executed by all parties.
4. Approval. Prior to Closing, the Board of Directors of AWS and a majority of its stockholders will have consented in writing to the actions contemplated hereby. Copies of such consents are attached hereto as Schedule B.
5. Return of Consideration. At the Closing, each Party agrees to return to the other the consideration received by it in connection with the Merger Agreement as follows:
a) Merger Stock. The Holders agree to endorse, assign and transfer to AWS and cause their assignees to endorse, assign and transfer to AWS all of their right
title and interest in and to the Merger Stock. The Holders shall, at Closing, deliver the certificate(s) representing the Merger Stock, duly endorsed to AWS or accompanied by stock powers duly endorsed to AWS, with each Holder’s signature medallion guaranteed by a national bank. From time to time after the Closing, and without further consideration, the Holders agree to execute and deliver such other instruments of transfer and take such other actions as AWS may reasonably request in order to effectively transfer the Merger Stock to AWS. Thereafter, AWS shall take such actions to cancel the Merger Stock.
b) Absolute Sub Stock. AWS hereby agrees to endorse, assign and transfer to the members of the Absolute Group and the members of the Post Merger Group all of its right, title and interest in and to all of the issued and outstanding shares of stock (“Absolute Sub Stock”) in Absolute Sub, in such proportion as directed by the Holders in a writing signed by all of the Holders. AWS shall, at Closing, deliver the certificate(s) representing the Absolute Sub Stock, duly endorsed to the members of the Absolute Group and the Post Merger Group or accompanied by stock powers duly endorsed to the members of the Absolute Group and the Post Merger Group, with AWS’s signature medallion guaranteed by a national bank. From time to time after the Closing, and without further consideration, AWS agrees to execute and deliver such other instruments of transfer and take such other actions as the Holders may reasonably request in order to effectively transfer the Absolute Sub Stock.
c) Merger Facilitators. Xxxxxx Xxxxxxxxx agrees to endorse, assign and transfer to AWS for cancellation the one million shares of common stock in AWS issued to him in connection with the Merger. Messrs. Xxxxxxx and Xxxxxxxxx shall cause the two million shares of common stock in AWS issued to Xxxx Xxxxxxx, as escrow agent, to be surrendered for cancellation with any necessary or appropriate endorsement thereof. Xx. Xxxxxxx shall cause the 4 million shares of common stock in AWS issued to Private Capital Group, Inc. to be surrendered for cancellation with any necessary or appropriate endorsement thereof. Messrs. Xxxxxxxxx and Xxxxxxx shall use their best efforts to cause three million shares of common stock in AWS issued to the Xxxxxxxxx Group in connection with the Merger to be surrendered for cancellation with any necessary pr appropriate endorsement thereof.
d) Post-Merger Group. The Holders shall cause the Post-Merger Group to endorse, assign and transfer to AWS for cancellation the shares of stock in AWS issued to each such person.
6. Other Closing Matters. At the Closing, the Holders shall each tender his resignation as an officer and/or director of AWS, all effective as of the Closing. At the Closing, AWS shall cause to be filed an amendment to its articles of incorporation changing its name to a name other than Absolute Waste Services, Inc. and shall execute and deliver to Absolute Sub an assignment of all of its rights and interest in the name “Absolute Waste Services.”
7. Representations and Warranties of AWS. AWS warrants and represents to the Holders that: (i) AWS has and shall transfer at the Closing, good and marketable title to the Absolute Sub Stock, free and clear of all liens, claims, charges, encumbrances, pledges, mortgages, security interests, options, rights to acquire, proxies, voting trusts or similar agreements, restrictions on transfer or adverse claims of any nature whatsoever (“Liens”); (ii) AWS has all requisite power and authority to execute and perform its obligations under this Agreement; that it has taken all necessary action to authorize such execution, delivery and performance; that such execution, delivery and performance does not violate or conflict with any law applicable to it, any provision of its charter or bylaws, or any order or judgment or order of any court or other agency of government applicable to it and that it has obtained any and all consents necessary such that this Agreement, when executed, will constitute the legal, valid and binding obligation of the Parties, enforceable in accordance with its respective terms, subject only to the laws of bankruptcy or insolvency; and (iii) since the Effective Date, AWS has not incurred, nor has it caused the incurrence of, any liabilities or obligations for or on the account of Absolute Sub, other than liabilities and obligations arising out of the actions of the Holders or duly authorized by the Board of Directors of AWS.
8. Representations and Warranties of the Holders. The Holders warrant and represent to AWS that: (i) the Holders shall transfer or cause to be transferred to AWS at the Closing, good and marketable title to the Merger Stock, free and clear of all Liens; (ii) each Holder has all requisite power and authority to execute and perform its obligations under this Agreement; that it has taken all necessary action to authorize such execution, delivery and performance; that such execution, delivery and performance does not violate or conflict with any law applicable to it, or any order or judgment or order of any court or other agency of government applicable to it and that it has obtained any and all consents necessary such that this Agreement, when executed, will constitute the legal, valid and binding obligation of the Parties, enforceable in accordance with its respective terms, subject only to the laws of bankruptcy or insolvency; and (iii) since the Effective Date, the Holders have not incurred, nor have they caused the incurrence of, any liabilities or obligations for or on the account of AWS or any changes in the capital structure of AWS, or agreements to effect any changes in the capital structure, except for liabilities or obligations or changes duly authorized by the Board of Directors of AWS.
9. Survival; Indemnification. The representations and warranties of the Parties contained herein shall survive the Closing. The Holders, jointly and severally, agree to indemnify and hold AWS harmless (from and after the Closing), and its directors, officers, shareholders, employees and agents (collectively, the “AWS Indemnified Parties”) against any and all liabilities, obligations, losses, damages, claims, or actions (including reasonable attorneys’ fees) based upon, resulting from or arising out of, any breach or inaccuracy of any representation or warranty by Holders, or any statement, agreement or covenant made by the Holders in or pursuant to this Agreement. AWS agrees to indemnify and hold the Holders harmless (from and after the Closing), against any and all liabilities, obligations, losses, damages, claims, or actions (including reasonable attorneys’ fees) based upon, resulting from or arising out of, any breach or inaccuracy of any representation or warranty by AWS, or any statement, agreement or
covenant made by AWS in or pursuant to this Agreement. No claim for indemnity by Holders or AWS shall be made hereunder after 11:59 p.m. on the date that is one year after the Closing hereof.
10. Releases.
(a) The Parties hereby unequivocally release and discharge each other Party and any of its directors, agents, attorneys, representatives, stockholders, managers, members, financial advisors, affiliates, principals, or parents, and any administrators, successors and assigns (“Related Parties”) of any action, choses in action, cases, claims, suits, injuries, damages, judgments, obligations, debts, and liabilities whatsoever, in law, equity or otherwise arising under, in connection with or relating to the Merger Agreement, the Merger, any documents and agreements delivered pursuant to the Merger Agreement, any transactions contemplated thereby, or in connection with the events leading to the termination of the Merger and the rescission of the Merger Agreement, including without limitation the Inducement Agreement. Notwithstanding the foregoing, the obligations of the Parties specifically set forth in this Agreement are not hereby released, discharged or compromised.
(b) Each Party hereby irrevocably agrees to refrain from directly or indirectly asserting any claim or demand or commencing (or causing to be commenced) any suit, action, or proceeding of any kind, in any court or before any tribunal, against any other Party or their Related Parties based upon any released claim.
11. Publicity and Disclosure. Except as required by law, no press releases except as set forth herein shall be issued regarding the rescission of the Merger Agreement by any Party without the prior written consents of the other Parties.
12. Entire Agreement. This Agreement constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and supercedes all prior and contemporaneous agreements and understandings. This Agreement is binding upon and shall inure to the benefit of the Parties hereto and their legal representatives, successors and permitted assigns. This Agreement may not be assigned and, except as stated herein, may not be altered or amended except in writing executed by all of the Parties hereto.
13. Governing Law, Dispute Resolution and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without giving effect to the conflicts of laws principles thereof. All disputes, controversies or claims (“Disputes”) arising out of or relating to this Agreement shall in the first instance be the subject of a meeting between a representative of each Party who has decision-making authority with respect to the matter in question. Should the meeting either not take place or not result in a resolution of the Dispute within twenty (20) business days following notice of the Dispute to the other Party, then the Dispute shall be resolved in a binding arbitration proceeding to be held in Dallas, Texas, in accordance with the international rules of the American Arbitration Association. The Parties agree
that a panel of three arbitrators shall be required. Any award of the arbitrators shall be deemed confidential information for a minimum period of five years. The arbitrators may award attorneys’ fees and other arbitration related expense, as well as pre- and post-judgment interest on any award of damages, to the prevailing Party, in their sole discretion.
14. Notices. All notices or other communications to be sent by any Party to this Agreement to any other Party shall be sent by certified mail, personal delivery or national overnight courier to the addresses herein designated or as may hereafter be designated in writing by a Party. Notice shall be deemed given and received on the date of actual delivery to the address specified thereon.
15. Counterparts. This Agreement may be executed in counterparts, all of which, when taken together, shall constitute the entire Agreement.
16. Severability. The provisions of this Agreement shall be severable, so that the unenforceability, validity or legality of any one provision shall not affect the enforceability, validity or legality of the remaining provisions thereof.
17. Joint Drafting. This Agreement shall be deemed to have been drafted jointly by the Parties hereto, and no inference or interpretation against any Party shall be made solely by virtue of such Party allegedly having been the draftsperson of the Agreement.
IN WITNESS WHEREOF, the Parties have made and executed this Agreement as of the day and year first above written.
Absolute Waste Services, Inc.
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Absolute Waste Acquisitions, Inc. | |
By:
/s/ Xxxxx X. Xxxxxx
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By: /s/ Xxxxx X. Xxxxxx | |
Title:
CEO
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Title: President | |
Holders:
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| /s/ Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx |
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| /s/ Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxx |
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| /s/ Xxxxx Xxxxx Xxxxx Xxxxx |
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PAC Funding, LLC |
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By:
/s/ Xxxxxx Xxxxxxx |
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Title:
Co-Manager |
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| /s/ Xxxxxx Xxxxxxx, Xx. Xxxxxx Xxxxxxx, Xx. |
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| /s/ Xxxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxxxxx |
