EXHIBIT 99.3
INDUCEMENT/INDEMNITY AGREEMENT
WHEREAS, Xxxxxx X. Xxxxxxxxx and Xxx Xxxxxxx sought out the members and
owners of Absolute Industries, LLC ("ABSOLUTE"), solicited the acquisition of
the ABSOLUTE membership interests and proposed a merger transaction to the
holders of Absolute membership interests by and between ABSOLUTE and ThermaCell
Technologies, Inc. ("THERMACELL") (now known as Absolute Waste Services, Inc.).
WHEREAS, Pac Funding, LLC, as the debtor in possession funding source,
is willing to indemnify ABSOLUTE and THERMACELL for liabilities, debts and
obligations of THERMACELL that exist or relate to events or circumstances prior
to the Effective Time of the Agreement and Plan of Merger.
NOW, THEREFORE, in order to induce the members and owners of ABSOLUTE
to close the Agreement and Plan of Merger with THERMACELL without obtaining
certain opinions from THERMACELL's counsel and without THERMACELL having taken
the appropriate actions to cause its common stock to be fully tradable on the
OTC:BB as required under such Agreement, Xxxxxx X. Xxxxxxxxx and Xxx Xxxxxxx
hereby represent and warrant to the best of each of their respective knowledge
to the members of ABSOLUTE that the following are true and correct as of the
Closing:
1. Bankruptcy Status. In November, 2001, THERMACELL filed a voluntary petition
("Bankruptcy Proceeding") for reorganization under Chapter 11 of the United
States Bankruptcy Code. Pursuant to that action, the United States
Bankruptcy Court for the Middle District of Florida confirmed THERMACELL's
Plan of Reorganization on August 30, 2002 ("Plan of Reorganization"). A
true and correct copy of the Plan of Reorganization is attached hereto as
Exhibit 1. The previously existing assets and business of THERMACELL have
been transferred to a newly-formed subsidiary free and clear of any and all
debts, claims, liens, demands and interest of creditors, equity security
holders and parties and interests, except as described on Schedule 1
attached hereto. The Plan of Reorganization does not provide for the
liquidation of all or substantially all of the property of the bankruptcy
estate of THERMACELL. THERMACELL, the reorganized debtor, did engage in its
pre-petition business following consummation of the Plan of Reorganization.
Schedule 1 attached hereto sets forth all debts, claims and demands that
arose before the date of confirmation but that were not discharged upon the
entry on March 21, 2003 of the Final Decree in the Bankruptcy Proceeding.
2. Pac Funding, LLC Indemnity. Provided that THERMACELL and ABSOLUTE WASTE
ACQUISITIONS, INC. furnishes at their expense the required audited
financial statements and other financial information Pac Funding, LLC ("PAC
FUNDING") hereby agrees to pay the professional fees and other expenses
incurred to file on behalf of THERMACELL and ABSOLUTE WASTE ACQUISITIONS,
INC. for (i) the Form 15(c)(2)(11) with NASD, (ii) the XXXXX filing costs
and expenses for Couture & Co. with the SEC the Form 10-KSB annual reports
for the years ending September 30, 2003 and September 30, 2004, (iii) the
Form 10-Q's and Form 8-K's required for all periods through September 30,
2004, the Form D required in connection with the consummation of the
Agreement and Plan of Merger, and (iv) any other XXXXX costs and expenses
of Couture & Co. for SEC filings required for all periods through September
30, 2004 (i.e. Forms 3, 4 and Schedule 13D). PAC FUNDING hereby agrees to
indemnify and hold harmless THERMACELL, ABSOLUTE, ABSOLUTE WASTE
ACQUISITIONS, INC. and their respective successors ("INDEMNITEES") from (i)
all debts, claims, liabilities and demands of THERMACELL that arose before
the date of confirmation of the Plan of Reorganization but were not
discharged upon the entry on March 21, 2003 of the Final Decree in the
Bankruptcy Proceeding, (ii) all liabilities, debts and obligations of
THERMACELL or ABSOLUTE WASTE ACQUISITIONS, INC. that arose after the Final
Decree in the Bankruptcy Proceeding from events or circumstances that
occurred prior to the Effective Time of the Agreement and Plan of Merger,
including without limitation professional fees and other expenses incurred
by either THERMACELL or ABSOLUTE WASTE ACQUISITIONS, INC. in connection
with the negotiation, documentation and consummation of the Agreement and
Plan of Merger, (iii) liability for the professional fees and other
expenses that PAC FUNDING, Xxxxxx X. Xxxxxxxxx, Xxx Xxxxxxx have agreed to
pay in connection with the filings set forth above, and (iv) reasonable
attorney's fees and expenses incurred by INDEMNITEES in enforcing this
indemnification obligation. Schedule 2, attached hereto, sets forth all
such debts, claims, demands and liabilities ("Assumed Liabilities"). PAC
FUNDING shall deliver via wire transfer to THERMACELL cash in the total
amount of the Assumed Liabilities on or before the Effective Time of the
Merger. Xxxxxx X. Xxxxxxxxx and Xxx Xxxxxxx represent to ABSOLUTE and
THERMACELL that PAC FUNDING is authorized to enter into this Agreement and
undertake the indemnification obligations described herein. The Indemnity
obligations set forth in this Section 2 are not personal obligations or
guaranties of Xxxxxx X. Xxxxxxxxx and Xxx Xxxxxxx.
3. Litigation. Except as disclosed in Schedule 3 and except for the bankruptcy
proceeding described in Section 1 above, neither THERMACELL nor its
Subsidiaries:
a. is a party to any litigation, proceeding or
administrative investigation, and, none is pending or
to the best of its knowledge threatened against them,
their respective properties, any property used in the
business of THERMACELL and its Subsidiaries or the
transactions contemplated by this Agreement;
b. knows of any outstanding order, writ, injunction or
decree of any court, government, governmental
authority or arbitration against or affecting it, its
properties or business;
c. knows of any basis for any such litigation,
proceeding or investigation to have a materially
adverse effect, financial or otherwise, on the
business, property, operations or prospects of
THERMACELL and its Subsidiaries; and
d. knows of any material infringement of any copyright,
trademark, trade name, patent or other proprietary
right owned or licensed by it.
There is no action, suit or proceeding pending against
THERMACELL or its Subsidiaries before or by any court,
administrative agency or other governmental authority which
brings into question the validity of, or might in any way
impair, the execution, the delivery or the performance by
THERMACELL of this Agreement or of any of the other
instruments, agreements and documents described herein or
constitute a default with respect to any other instrument,
agreement or document to which THERMACELL is subject or bound.
4. Investment Representations. THERMACELL and its representatives have been
provided ample opportunity to ask questions of ABSOLUTE's management, and
have received answers satisfactory to such representatives regarding the
financial condition, business and affairs of ABSOLUTE and such other
information as it desired in order to evaluate the purchase of membership
interests in ABSOLUTE. THERMACELL is purchasing membership interests in
ABSOLUTE for its own account for the purpose of investment and not with a
view for sale in connection with any distribution thereof. THERMACELL has
been advised prior to investing that the Absolute interests may not be
resold without an exemption from registration. THERMACELL's representatives
have the knowledge and experience to evaluate the merits and risks of the
purchase of the ABSOLUTE membership interests. THERMACELL acknowledges that
Xxxxxx X. Xxxxxxxxx and Xxx Xxxxxxx are the representatives of THERMACELL.
Neither of the THERMACELL representatives has any material relationship to
Absolute. Thermacell has the financial ability to bear the economic risk of
holding the ABSOLUTE membership interests for an indefinite period of time
and to suffer the complete loss of its investment in the ABSOLUTE
membership interests. Thermacell sought out Absolute, solicited the
acquisition of the ABSOLUTE membership interests and proposed the merger
transaction to the holders of Absolute membership interests.
5. Financial Statements. Except as disclosed on Schedule 5 attached hereto,
the annual financial statements of THERMACELL dated as of September 30,
2002 and the 9 month quarter financial statements as of June 30, 2003 (the
"Financial Statements"):
a. are in accordance with the books and records of THERMACELL;
b. fairly set forth the financial condition and results of the
operations of THERMACELL as of the relevant dates thereof
and for the periods covered thereby;
c. contain and reflect all necessary and material adjustments
for a fair representation of the results of operations and
financial condition for the periods covered by the
statements.
6. Absence of Undisclosed Liabilities. Except as disclosed in the Financial
Statements or in Schedules 2 or 6 attached hereto, THERMACELL is not
obligated for, nor are any of the assets or properties of THERMACELL
subject to, any liabilities of any kind, including without limitation trade
liabilities incurred in the ordinary course of business and professional
fees incurred in connection with the negotiation, documentation and
consummation of the Agreement and Plan of Merger.
7. Tax Matters. THERMACELL and its subsidiaries have prepared and filed or
will file in a timely manner all federal, state and local tax returns and
reports as are and have been required to be filed, which returns were
prepared on a basis consistent with the financial statements of THERMACELL
and its subsidiaries, and all taxes shown thereon to be due have been paid
in full. Neither THERMACELL nor any of its subsidiaries have executed or
filed with the Internal Revenue Service or any other taxing authority any
agreement extending the period for assessment or collection of any income
or other taxes; and, as of the date hereof other than as disclosed on
Schedule 1, neither THERMACELL nor any of its subsidiaries is a party to
any pending action or proceeding by any governmental authority for
assessment or collection of taxes, and no claim for assessment or
collection of taxes has been asserted against THERMACELL or any of its
subsidiaries. No formal claims have been made or asserted against
THERMACELL or any of its subsidiaries or any property in which THERMACELL
or any of its subsidiaries has an interest, and no formal claims have been
made or asserted against THERMACELL, its subsidiaries or its properties by
the United States Government or by any state or foreign country or local
government for income, sales or any other taxes, except such as have been
paid or are disclosed herein.
8. Material Contracts. THERMACELL has furnished to ABSOLUTE copies, where such
is in writing, of all agreements, contracts and commitments of the
following types, written or oral, to which THERMACELL or its subsidiary is
a party or by which it or any of its properties is bound as of the date
hereof: (a) mortgages, indentures, notes, letters of credit, security
agreements and other agreements and instruments relating to the borrowing
of money by or extension of credit to THERMACELL or any of its
subsidiaries; (b) employment and consulting agreements; (c) employee
benefit, profit-sharing and retirement plans; (d) collective bargaining
agreements; (e) all joint venture or partnership agreements to which
THERMACELL or any of its subsidiaries is a party; (f) licenses of software
and any material patent, trademark and other industrial property rights;
(g) agreements or commitments for capital expenditures in excess of $5,000;
(i) brokerage or finder's agreements; and (h) agreements, contracts, leases
and commitments of a type other than those described in the foregoing
clauses (a) through (h) which, in any case, involve aggregate payments or
receipts of more than $2,000 per annum. THERMACELL has made available to
ABSOLUTE complete and correct copies of all written agreements, contracts
and commitments, together with all amendments thereto, and accurate
descriptions of all oral agreements. All such agreements, contracts and
commitments are in full force and effect and, to the best of THERMACELL's
Knowledge, all parties thereto have performed all material obligations
required to be performed by them to date, are not in default in any
material respect thereunder, and have not violated any representation or
warranty, explicit or implied, contained therein.
9. PAC Funding, LLC the secured creditor in Class D-1 in the Plan of
Reorganization approved by the Court on or about August 30, 2002, in Xxxx
Xx. 00-00000-0X0, Xx re: Thermacell Technologies, Inc. has elected to have
its claim for secured debt converted to equity in the Reorganized Debtor in
an amount equal to fifty percent (50%) of the newly issued common stock as
provided in the Order Confirming Plan.
10. All Class E-1 Allowed Unsecured Claims in the Plan of Reorganization
approved by the Court on or about August 30, 2002, in Case No.
01-20854-8G1, In re: Thermacell Technologies, Inc. have been paid in full
and no remaining balances are due.
11. THERMACELL has instructed its transfer agent to issue and the transfer
agent is in the process of issuing to all Class E-2 Allowed Unsecured
Claims in the Plan of Reorganization approved by the Court on or about
August 30, 2002, in Case No. 01-20854-8G1, In re: Thermacell Technologies,
Inc. their pro rata share of newly issued common stock as provided in such
Plan.
12. THERMACELL has instructed its transfer agent to issue and the transfer
agent is in the process of issuing to all Class F-1 equity interest holders
in the Plan of Reorganization approved by the Court on or about August 30,
2002, in Case No. 01-20854-8G1, In re: Thermacell Technologies, Inc. their
pro rata share of newly issued common stock as provided in the Plan.
13. Assignability. This Agreement shall not be assignable by any of the parties
to this Agreement without the prior written consent of all other parties to
this Agreement.
14. Venue; Process. The parties to this Agreement agree that jurisdiction and
venue shall properly lie in the courts of the State of Texas in Nueces
County, Texas, or in the United States District Court for the Southern
District of Texas (Corpus Christi Division), with respect to any legal
proceedings arising from this Agreement.
15. Governing Law. This Agreement has been negotiated and prepared and shall be
performed in the State of Texas, and the validity, construction and
enforcement of, and the remedies under, this Agreement shall be governed in
accordance with the laws of the State of Texas (except that if any choice
of law provision under Texas law would result in the application of the law
of a state or jurisdiction other than the State of Texas, such provision
shall not apply).
16. Successors and Assigns. The rights and obligations of the parties hereunder
shall inure to the benefit of, and shall be binding and enforceable upon,
the respective heirs (if personal), successors, assigns and transferees of
either party.
17. Reliance. All representations and warranties contained herein, or any
certificate or other instrument delivered in connection herewith, shall be
deemed to have been relied upon by the parties hereto, notwithstanding any
independent investigation made by or on behalf of such parties.
18. Attorney's Fees. The parties hereby agree that in the event any of the
terms and conditions contained in this Agreement must be enforced the
defaulting party shall be liable for reasonable collection and/or legal
fees, trial and appellate levels, any expenses and legal fees incurred,
including time spent in supervision of paralegal work and paralegal time,
and any other expenses and costs incurred in connection with the
enforcement of any available remedy.
19. Schedules. The Schedules and Exhibits to this Agreement, and the other
materials and documents referenced herein, are incorporated by reference
herein and are made a part hereof as if they were fully set forth herein.
IN WITNESS WHEREOF, the parties have executed this Inducement Agreement
as of the ____ day of ___________, 2003.
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Xxxxxx X. Xxxxxxxxx
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Xxx Xxxxxxx
PAC FUNDING, LLC
By:
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Xxx Xxxxxxx
Co-Manager
By:
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Xxxxxx X. Xxxxxxxxx
Co-Manager
MTC/ej/299303
