STOCK PURCHASE AGREEMENT
among
XXXXXX X. XXXX
XXXXXXX X. XXXX
and
WESTSTAR ENVIRONMENTAL, INC.,
a Florida corporation
Dated as of August 22, 2000
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS.......................................................1
ARTICLE 2 - SALE OF STOCK.....................................................3
2.1 PURCHASE AND DELIVERY OF THE COMMON SHARES...........................3
2.2 PURCHASE PRICE.......................................................3
2.3 ADDITIONAL ACTIONS AT CLOSING........................................4
2.4 XXXXXXX MONEY PAYMENTS...............................................4
ARTICLE 3 - CLOSING...........................................................4
3.1 CLOSING..............................................................4
3.2 DELIVERIES BY SELLERS AT CLOSING.....................................4
3.3 DELIVERIES BY PURCHASER AT CLOSING...................................5
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF.................................6
4.1 ORGANIZATION AND POWER OF SELLERS AND THE COMPANY....................6
4.2 AUTHORITY RELATIVE TO AGREEMENT......................................6
4.3 AUTHORIZED CAPITALIZATION............................................6
4.4 OWNERSHIP AND TRANSFER OF COMMON SHARES..............................6
4.5 ENFORCEABILITY OF AGREEMENT..........................................7
4.6 EFFECT OF AGREEMENT..................................................7
4.7 INFORMATION FURNISHED BY SELLERS TO PURCHASER........................7
4.8 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES.....................7
4.9 LITIGATION...........................................................8
4.10 RESTRICTIVE DOCUMENTS................................................8
4.11 COMPLIANCE WITH LAWS.................................................8
4.12 SUBSIDIARIES.........................................................8
4.13 PROPRIETARY RIGHTS...................................................8
4.14 TAX MATTERS..........................................................9
4.15 UNION CONTRACTS AND LABOR RELATIONS..................................9
4.16 EMPLOYEES/EMPLOYEE BENEFIT PLANS....................................10
4.17 CONDUCT OF BUSINESS.................................................10
4.18 SOLVENCY............................................................10
4.19 LEASES..............................................................11
4.20 REAL AND PERSONAL PROPERTY..........................................11
4.21 MATERIAL CONTRACTS..................................................11
4.22 GOVERNMENT PERMITS..................................................12
4.23 TITLE TO PROPERTIES.................................................12
4.24 INSURANCE...........................................................12
4.25 ACCOUNTS RECEIVABLE.................................................12
4.26 TRANSACTIONS WITH AFFILIATES........................................12
4.27 BANK ACCOUNTS, POWERS OF ATTORNEY AND COMPENSATION OF EMPLOYEES.....12
4.28 INVENTORY...........................................................13
4.29 SUPPLIERS AND CUSTOMERS.............................................13
4.30 BOOKS AND RECORDS...................................................13
4.31 DISCLOSURE..........................................................13
4.32 BROKER'S OR FINDER'S FEES...........................................13
4.33 ABSENCE OF CERTAIN EVENTS...........................................14
4.36 PRODUCT WARRANTY....................................................14
4.37 DISPOSAL OR RELEASE OF HAZARDOUS SUBSTANCES.........................14
4.38 INVESTMENT REPRESENTATION...........................................15
4.39 ACCOUNTS PAYABLE....................................................16
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ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF PURCHASER......................16
5.1 ORGANIZATION AND POWER OF PURCHASER.................................16
5.2 AUTHORITY RELATIVE TO AGREEMENT.....................................16
5.3 ENFORCEABILITY OF AGREEMENT.........................................16
5.4 EFFECT OF AGREEMENT.................................................16
5.5 RESTRICTIVE DOCUMENTS...............................................17
5.6 FULL DISCLOSURE.....................................................17
5.7 INVESTMENT REPRESENTATION...........................................17
5.8 AUTHORIZED CAPITALIZATION...........................................17
5.9 INFORMATION FURNISHED BY PURCHASER TO SELLERS.......................18
5.10 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES....................18
5.11 TAX MATTERS.........................................................18
5.12 BROKER'S OR FINDER'S FEES...........................................19
5.13 ABSENCE OF CERTAIN RECENT CHANGES...................................19
5.14 LITIGATION; DISPUTES................................................19
5.15 ABSENCE OF UNDISCLOSED LIABILITIES..................................19
5.16 NOTHING REASONABLY ANTICIPATED TO DELAY CLOSING.....................19
5.17 NO KNOWLEDGE THAT REPRESENTATIONS ARE INCORRECT.....................19
5.18 INVESTMENT INTENT...................................................19
ARTICLE 6 - COVENANTS OF SELLERS.............................................20
6.1 CONDUCT OF BUSINESS.................................................20
6.2 EXCLUSIVE DEALING...................................................20
6.3 REVIEW OF THE COMPANY OR ITS SUBSIDIARIES...........................20
6.4 REGULATORY APPROVALS................................................21
6.5 CHANGES IN CAPITAL STOCK............................................21
6.6 FURTHER ASSURANCES..................................................21
6.7 KEY EMPLOYEES.......................................................21
6.8 BEST EFFORTS........................................................21
6.9 NONSOLICITATION OF EMPLOYEES........................................21
ARTICLE 7 - COVENANTS OF PURCHASER...........................................22
7.1 REGULATORY APPROVALS................................................22
7.2 FURTHER ASSURANCES..................................................22
7.3 CONFIDENTIALITY.....................................................22
7.4 STATUS OF PURCHASER'S IPO...........................................22
7.5 CONDUCT OF BUSINESS.................................................22
7.6 BEST EFFORTS; RELEASE FROM PERSONAL GUARANTEES......................22
7.7 NONSOLICITATION OF EMPLOYEES; CONFIDENTIALITY.......................23
ARTICLE 8 - CONDITIONS TO PURCHASER'S OBLIGATIONS............................23
8.1 NO MATERIAL ADVERSE CHANGE..........................................23
8.2 TRUTH OF REPRESENTATIONS AND WARRANTIES.............................23
8.3 PERFORMANCE OF AGREEMENTS...........................................23
8.4 NO PROCEEDINGS......................................................24
8.5 GOVERNMENTAL APPROVALS..............................................24
8.6 PROCEEDINGS.........................................................24
8.7 OPINION OF COUNSEL..................................................24
ARTICLE 9 - CONDITIONS TO OBLIGATIONS OF SELLERS.............................24
9.1 TRUTH OF REPRESENTATIONS AND WARRANTIES.............................24
9.2 PERFORMANCE OF AGREEMENTS...........................................24
9.3 NO PROCEEDINGS......................................................24
9.4 GOVERNMENTAL APPROVALS..............................................25
9.5 PROCEEDINGS.........................................................25
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9.6 NO MATERIAL ADVERSE CHANGE..........................................25
9.7 TAX RETURNS.........................................................25
9.8 PURCHASER'S IPO.....................................................25
9.9 RELEASE OF SELLERS' GUARANTEES......................................25
ARTICLE 10 - SURVIVAL OF REPRESENTATIONS; INDEMNITY..........................25
10.1 SURVIVAL OF REPRESENTATIONS......................................25
10.2 INDEMNIFICATION BY SELLERS.......................................25
10.3 INDEMNIFICATION BY PURCHASER.....................................26
10.4 REDUCTION OF PAYMENTS............................................26
10.5 INDEMNIFICATION OF THIRD-PARTY CLAIMS............................26
10.6 TIME FOR NOTICE..................................................27
10.7 TIME FOR PAYMENT.................................................27
10.8 TAX EFFECT.......................................................27
10.9 AMOUNT LIMITATION................................................27
10.10 INDEMNIFICATION IS SOLE REMEDY...................................28
10.11 PURCHASER'S IPO..................................................28
ARTICLE 11 - MISCELLANEOUS...................................................28
11.1 TERMINATION OF AGREEMENT.........................................28
11.2 EXECUTION IN COUNTERPARTS........................................28
11.3 NOTICES..........................................................28
11.4 WAIVERS..........................................................29
11.5 SPECIFIC PERFORMANCE.............................................29
11.6 ENTIRE AGREEMENT.................................................29
11.7 APPLICABLE LAW...................................................30
11.8 BINDING EFFECT...................................................30
11.9 ASSIGNABILITY....................................................30
11.10 EXPENSES.........................................................30
11.11 PUBLICITY........................................................30
11.12 AMENDMENTS.......................................................30
11.13 NO THIRD PARTY BENEFICIARIES.....................................30
11.14 CERTAIN TAX MATTERS..............................................30
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SCHEDULES
Schedule 4.2 Authority Relative to Agreement
Schedule 4.6 Effect of Agreement
Schedule 4.9 Litigation
Schedule 4.13 Proprietary Rights
Schedule 4.14 Tax Matters
Schedule 4.16 Employees and Employee Benefit Plans
Schedule 4.17 Conduct of Business
Schedule 4.19 Leases
Schedule 4.20 Real and Personal Property
Schedule 4.21 Material Contracts
Schedule 4.22 Permits, Licenses, Etc.
Schedule 4.23 Title to Properties
Schedule 4.24 Insurance
Schedule 4.25 Accounts Receivable
Schedule 4.26 Transactions with Affiliates
Schedule 4.27 Bank Accounts, Etc.
Schedule 4.36 Product Warranty
Schedule 4.39 Accounts Payable
EXHIBITS
Exhibit 3.2(f) Form of Employment Agreement [Xxxxxx X. Xxxx]
Exhibit 3.2(g) Form of Noncompetition Agreement
Exhibit 3.2(h) Form of Sellers' Promissory Note
Exhibit 4.8 Sellers' Financial Statements
Exhibit 8.7 Form of Opinions of Sellers' Counsel
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of August 22, 2000, by and among XXXXXX
X. XXXX ("Xxxxxx Xxxx") and XXXXXXX X. XXXX ("Xxxxxxx Xxxx," and along with
Xxxxxx Xxxx, "Sellers"), and WESTSTAR ENVIRONMENTAL, INC., a Florida corporation
("Purchaser").
PRELIMINARY STATEMENT. Sellers own collectively 800 shares of common stock,
$5.00 par value (the "VVI Shares"), of VILLAGE VENTURES, INC., a Florida
corporation d/b/a Village Septic and Development (document # G15663; the
"Company"). The Company specializes in site preparation, underground utilities
and residential and commercial sewage systems. Sellers desire to sell and
Purchaser desires to purchase the VVI Shares, upon the terms and subject to the
conditions hereinafter set forth.
ACCORDINGLY, the parties hereby agree as follows:
ARTICLE 1 -- DEFINITIONS
All terms used herein without definition that are defined in the Uniform
Commercial Code as enacted and in effect from time to time in the State of
Florida shall have the same meanings herein as they have in the Uniform
Commercial Code, unless otherwise provided herein. In addition, the following
terms shall have the meanings assigned to them below:
ACCOUNTS PAYABLE. "Accounts Payable" shall have the meaning assigned to it
in Section 4.39 hereof.
ACCOUNTS RECEIVABLE. "Accounts Receivable" shall have the meaning assigned
to it in Section 4.25 hereof.
AFFILIATE. "Affiliate" shall mean any Person that owns or controls, is
owned or controlled by or is under common ownership or control with the Person
in question.
CASH PORTION OF THE PURCHASE PRICE. "Cash Portion of the Purchase Price"
shall have the meaning assigned to it in Section 2.2 hereof.
CLOSING. "Closing" shall have the meaning assigned to it in Section 3.1
hereof. Closing Date. "Closing Date" shall have the meaning assigned to it in
Section 3.1 hereof.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMPANY. "Company" shall have the meaning assigned to it in the Preliminary
Statement.
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DEBT. "Debt" shall mean any indebtedness or liability for borrowed money,
and any other indebtedness or liability evidenced by notes, debentures, bonds or
similar obligations incurred on behalf of and for the benefit of the Company.
EMPLOYMENT AGREEMENT. "Employment Agreement" shall mean the Employment
Agreement between Purchaser and Xxxxxx Xxxx, in the form of Exhibit 3.2(f)
attached hereto.
ENVIRONMENTAL LAW. "Environmental Law" shall mean any governmental statute,
law, ordinance, code, rule, regulation, order or decree or any decision,
conclusion or determination made by a government official relating to or
imposing liability or standards of conduct as may now or at any time hereafter
be in effect regarding any air emission, water discharge or the use, storage,
handling, generation or disposal of any hazardous materials, including without
limitation the following, as the same may be amended or replaced from time to
time, and all regulations promulgated thereunder or in connection therewith: the
Superfund Amendments and Reauthorization Act of 1986 ("XXXX"); the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"); the
Clean Air Act ("CAA"); the Clean Water Act ("CWA"); the Toxic Substances Control
Act ("TSCA"); the Solid Waste Disposal Act ("SWDA"), as amended by the Resource
Conservation and Recovery Act ("RCRA"); and the Occupational Safety and Health
Act of 1970 ("OSHA").
ERISA . "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
GAAP. "GAAP" shall mean generally accepted accounting principles,
consistently applied.
IPO Date. "IPO Date" shall have the meaning assigned to it Section 10.11
hereof.
IRS. "IRS" shall mean the Internal Revenue Service.
KNOWLEDGE AFTER INVESTIGATION. "Knowledge after investigation" shall mean
knowledge of a particular fact or matter following an investigation, reasonable
in scope and duration in light of the facts and circumstances concerning such
fact or other matter.
NONCOMPETITION AGREEMENTS. "Noncompetition Agreements" shall mean the
respective Noncompetition Agreements between Purchaser and each of the Sellers,
substantially in the form of Exhibit 3.2(g) attached hereto.
PERSON. "Person" shall mean an individual, partnership, joint venture,
corporation, trust, business entity, unincorporated organization or government
or department or agency thereof.
PURCHASER'S IPO. "Purchaser's IPO" shall have the meaning assigned to it
Section 10.11 hereof.
PURCHASE PRICE. "Purchase Price" shall have the meaning assigned to it in
Section 2.2 hereof.
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SECURITIES ACT. "Securities Act" shall have the meaning assigned to it in
Section 4.38 hereof.
SELLER LIABILITIES. "Seller Liabilities" shall have the meaning assigned to
it in Section 10.2 hereof.
SELLERS' PROMISSORY NOTE. "Sellers' Promissory Note" shall mean a
promissory note from Sellers in favor of Purchaser in the amount of $100,000,
substantially in the form of Exhibit 3.2(h) attached hereto, evidencing a loan
from Purchaser to Sellers in such amount.
SUBSIDIARY. "Subsidiary" shall mean, with respect to any corporation,
another corporation, more than 50% of whose voting securities are owned,
directly or indirectly, by the corporation in question.
VVI SHARES. "VVI Shares" shall have the meaning assigned to it in the
Preliminary Statement.
WEI SHARES. "WEI Shares" shall mean 83,333 shares of Purchaser's common
stock, $.001 par value (valued at $6.00 per share), provided by Purchaser in the
aggregate to Sellers as a portion of the Purchase Price, having an aggregate,
agreed-upon value of $500,000.00.
ARTICLE 2 -- SALE OF STOCK
2.1 PURCHASE AND DELIVERY OF THE VVI SHARES. At the Closing, Sellers shall
sell and deliver the VVI Shares, and Purchaser shall purchase and accept the VVI
Shares, on the terms and subject to the conditions of this Agreement.
2.2 PURCHASE PRICE. The Purchase Price for the VVI Shares shall be
approximately $1,350,000.00, adjusted as provided hereinbelow in this Section
2.2. In full consideration for the purchase by Purchaser of the VVI Shares,
Purchaser shall deliver to Sellers at the Closing (i) immediately available
funds by wire transfer in an amount equal to approximately $850,000.00 (adjusted
as provided hereinbelow in this Section 2.2) (referred to as the "Cash Portion
of the Purchase Price"), and (ii) the WEI Shares (valued at $6.00 per share).
The aggregate of the Purchase Price and the amount of Company Debt at the time
of Closing shall equal $2,250,000.00, plus an adjustment for any increase or
decrease in the Company's net book value as of the closest month-end that is not
less than fifteen (15) days prior to Closing compared to the Company's net book
value existing at December 31, 1999, as reflected in its audited year-end
financials (the "NBV Adjustment"). The Purchase Price for the VVI Shares shall
be reduced or increased dollar for dollar for (i) any Debt of the Company
existing as of the Closing Date, in excess of or less than $900,000.00, as the
case may be, and (ii) the NBV Adjustment; accordingly, as the value of the WEI
Shares is agreed upon to be $500,000.00, any adjustment in the Purchase Price
shall be reflected in the Cash Portion of the Purchase Price. (E.g., if the
aggregate Debt of the Company at Closing is equal to $940,000.00, the Purchase
Price of the VVI Shares shall be $1,310,000.00, which shall be represented by
the WEI Shares and the Cash Portion of the Purchase Price equal to $810,000.00;
in the alternative, if the aggregate Debt of
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the Company is equal to $860,000.00, the Purchase Price of the VVI Shares shall
be $1,390,000.00, which shall be represented by the WEI Shares and the Cash
Portion of the Purchase Price equal to $890,000.00. The foregoing example would
then take into consideration the NBV Adjustment.) In addition to the foregoing,
the Cash Portion of the Purchase Price required to be delivered at Closing shall
be reduced by the xxxxxxx money payments made by Purchaser to Sellers, as
described in Section 2.4 hereof.
2.3 ADDITIONAL ACTIONS AT CLOSING. In addition to the purchase and sale of
the VVI Shares, at Closing, Purchaser and Xxxxxx Xxxx shall deliver those items
required in Sections 3.2 and 3.3 hereof.
2.4 XXXXXXX MONEY PAYMENTS. In order to induce Sellers to enter into this
Agreement and to proceed diligently to Closing, Purchaser has paid Sellers
$25,000 in cash on January 21, 2000, $8,333 in cash on April 28, 2000, $8,333 on
May 20, 2000, and $8,333 on June 20, 2000. In addition, Purchaser shall pay to
Sellers in cash an additional $25,000 on or before September 8, 2000, which then
also shall adjust the Cash Portion of the Purchase Price to be delivered at
Closing. So long as Sellers proceed to Closing diligently and in good faith, and
so long as the transactions described in this Agreement shall not have been
terminated due to the actions of Sellers in violation of this Agreement, all of
the payments to Sellers specified in this Section 2.4 are nonrefundable and
Sellers shall have no obligation to refund these payments to the Purchaser. All
xxxxxxx money payments described in this Section 2.4 shall be credited towards
the Cash Portion of the Purchase Price, thereby reducing the amount of cash
required by Purchaser at Closing.
ARTICLE 3 -- CLOSING
3.1 CLOSING. Subject to the satisfaction or waiver of all of the
conditions set forth in Sections 8 and 9 hereof, the sale and purchase of the
VVI Shares and the consummation of the other transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Purchaser or
Purchaser's counsel, in Jacksonville, Florida, at 2:00 p.m. within seven (7)
business days following the date of Purchaser's IPO, or at such other place,
time or date as the parties may agree (the "Closing Date").
3.2 DELIVERIES BY SELLERS AT CLOSING. At the Closing, Sellers shall deliver
to Purchaser the following:
(a) The stock certificates representing the VVI Shares, duly endorsed in
blank or accompanied by a stock powers duly executed in blank, with all
necessary transfer tax and other revenue stamps paid and, if appropriate,
affixed and cancelled;
(b) (i) Copies of the Company's charter, including all amendments thereto,
certified by the Secretary of State of the State of Florida, and (ii) a
certificate from the Secretary of State of the State of Florida to the effect
that the Company is in good standing;
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(c) The Company's minute book, containing all resolutions and minutes
adopted or approved by the Company's board of directors and or shareholder
through the Closing Date, along with the Company's stock transfer records and
unissued stock certificates;
(d) A Closing Certificate as to the matters specified in Sections 8.1, 8.2,
8.3, 8.4 and 8.5 hereof;
(e) A resignation letter, whereby Sellers resign from all positions he or
she may hold as an officer or director of the Company, except as may otherwise
be provided in the Employment Agreement;
(f) The Employment Agreement, duly executed by Xxxxxx Xxxx;
(g) The Noncompetition Agreements, duly executed by each of the Sellers;
(h) Xxxxxx Xxxx'x Promissory Note, duly executed by Xxxxxx Xxxx, together
with a stock pledge agreement reasonably satisfactory in form and content to
Sellers' counsel in order to create and perfect Purchaser's security interest in
25,000 shares in Purchaser given as collateral by Xxxxxx Xxxx for payment of the
Promissory Note;
(i) An opinion of counsel to Sellers, as provided in Section 8.7 hereof;
and
(j) All other documents that are required herein to be delivered by Sellers
at or prior to Closing.
3.3 DELIVERIES BY PURCHASER AT CLOSING. At the Closing, Purchaser shall
deliver to Sellers the following:
(a) The Cash Portion of the Purchase Price in immediately available funds
by wire transfer;
(b) Stock certificate to the Sellers, as joint tenants with right of
survivorship, representing the WEI Shares having the appropriate restrictive
legends;
(c) (i) Copies of Purchaser's charter, including all amendments thereto,
certified by the Secretary of State of the State of Florida, and (ii) a
certificate from the Secretary of State of the State of Florida to the effect
that Purchaser is in good standing;
(d) A Closing Certificate as to the matters specified in Sections 9.1, 9.2,
9.3 and 9.4 hereof;
(e) A Secretary's Certificate of Purchaser, certifying resolutions adopted
by the Board of Directors of Purchaser, authorizing the transactions
contemplated hereby;
(f) The Employment Agreement, executed on behalf of Purchaser;
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(g) The Noncompetition Agreements, executed on behalf of Purchaser, along
with Purchaser's checks for the consideration provided therein;
(h) $100,000 by wire transfer as funding for the proceeds represented by
the Promissory Note from Xxxxxx Xxxx in favor of Purchaser; and
(i) All other documents that are required herein to be delivered by
Purchaser at or prior to Closing.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Purchaser that:
4.1 ORGANIZATION AND POWER OF THE COMPANY. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Florida and is duly qualified to do business as a foreign corporation
in each jurisdiction where the conduct of business or the ownership or lease of
property requires or makes it desirable for the Company to be so qualified.
4.2 AUTHORITY RELATIVE TO AGREEMENT. Except as set forth in Schedule 4.2
hereto, the execution, delivery and performance of this Agreement by Sellers,
and the consummation by Sellers of the transactions contemplated hereby and
thereby, do not require the authorization of any third party. Any such
third-party authorizations shall be required to be obtained by Sellers prior to
Closing.
4.3 AUTHORIZED CAPITALIZATION. The authorized capital stock of the Company
consists of 1,000 shares of common stock, $5.00 par value per share, of which
800 shares are issued and outstanding to Xxxxxx Xxxx and Xxxxxxx Xxxx, his wife,
as joint tenants with right of survivorship. There are no outstanding options,
warrants, rights, calls, commitments, conversion rights, rights of exchange,
plans or other agreements of any character providing for the purchase, issuance
or sale of any shares of the capital stock of the Company, other than as
contemplated by this Agreement.
4.4 OWNERSHIP AND TRANSFER OF VVI SHARES. All of the VVI Shares have been
duly authorized and validly issued and are fully paid and nonassessable. Sellers
are the lawful owners of the VVI Shares, free and clear of all liens,
encumbrances, restrictions and claims of every kind. Sellers have full legal
right, power and authority to enter into this Agreement and to sell, assign,
transfer and convey the VVI Shares to Purchaser pursuant to this Agreement. The
delivery to Purchaser of the VVI Shares pursuant to the provisions of this
Agreement will transfer to Purchaser full, valid title thereto, free and clear
of all liens, encumbrances, restrictions and claims of every kind. None of the
VVI Shares is subject to any federal or state restriction on resale or transfer
other than under applicable securities laws. The certificate representing the
VVI Shares does not bear a legend of any kind thereon.
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4.5 ENFORCEABILITY OF AGREEMENT. Sellers have duly executed and delivered
this Agreement. This Agreement constitutes a valid and binding obligation of
Sellers, enforceable in accordance with its terms.
4.6 EFFECT OF AGREEMENT. Except as set forth in Schedule 4.6 hereto, the
execution, delivery and performance of this Agreement by Sellers and the
consummation by Sellers of the transactions contemplated hereby do not and will
not (i) violate any provision of law applicable to the Company or the corporate
charter or bylaws of the Company; (ii) require the consent, waiver, approval,
license or authorization of, or filing with, any Person (any such required
authorization shall be the responsibility of Sellers to obtain prior to Closing,
except for such items as are agreed between the parties in writing to be
obtained post closing); or (iii) with or without the giving of notice or the
passage of time or both, conflict with or result in a breach or termination of,
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any of the assets of the Company, pursuant to any provision of
any mortgage, deed of trust, indenture or other agreement or instrument, or any
order, judgment, decree or any other restriction of any kind or character, to
which the Company is a party or by which its assets may be bound.
4.7 INFORMATION FURNISHED BY SELLERS TO PURCHASER. There is no fact that
the Sellers have not disclosed herein that materially and adversely affects the
properties, business, prospects, profits or condition (financial or otherwise)
of the Company, except that Sellers make no representation or warranty as to the
effect of general economic conditions, the condition of the financial markets,
future legislation or future regulatory action. There has been no materially
adverse change in the assets or liabilities, the business or condition,
financial or otherwise, the results of operations or the prospects of the
Company, taken as a whole, since June 30, 2000.
4.8 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES. Sellers have
heretofore furnished to Purchaser true and complete copies of (i) the audited
financial statements of the Company as of December 31, 1999, (ii) the unaudited
balance sheet of the Company at June 30, 2000, and (iii) the related unaudited
statement of income and retained earnings and statement of cash flows for the
Company as of June 30, 2000, together with the notes thereto (collectively, the
"Financial Statements," copies of which are attached hereto as Exhibit 4.8). To
the best knowledge of Sellers, the Financial Statements present fairly the
financial position, results of operations and cash flow of the Company as of the
date and for the period indicated. Except as disclosed in the Financial
Statements, to the best of Sellers' knowledge after investigation, the Company
has no material liabilities or obligations of any kind, whether accrued,
absolute, contingent or otherwise, whether or not such liabilities or
obligations would have been required to be disclosed on a balance sheet prepared
in conformity with GAAP, other than liabilities and obligations incurred since
June 30, 2000 in the ordinary course of business and consistent with past
practices. Without limiting the generality of the foregoing, to the best of
Sellers' knowledge after investigation, the Company has no material liability
(and there is no basis for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim or demand against it giving rise
to any material liability) arising out of any injury to persons or property as a
result of the ownership, possession or use of any product manufactured, sold,
leased or delivered by the Company or any of the Company's dealers or
representatives, other than liabilities and obligations incurred since June 30,
2000 in the ordinary course of business and consistent with past practices.
7
Third-party accountants retained by Purchaser prepared the audited
financial statements of the Company as of December 31, 1999. Although Sellers
make no representation as to the correctness of such audited financials, Sellers
do represent that all of the information provided by Sellers and the Company to
the accountants for the preparation of such audited financials was correct.
4.9 LITIGATION. Except as disclosed in Schedule 4.9 hereto, (i) there are
no claims, actions, proceedings or investigations pending or, to the best of
Sellers' knowledge after investigation, threatened against or relating to the
Company, before any court or governmental or regulatory authority or body, and
(ii) neither the Company nor any of its property is subject to any order,
judgment, injunction or decree that materially adversely affects the financial
condition, assets, business or prospects of the Company.
4.10 RESTRICTIVE DOCUMENTS. The Company is not subject to, or a party to,
any charter, bylaw, mortgage, lien, lease, license, permit, agreement, contract,
instrument, law, rule, ordinance, regulation, order, judgment or decree, or
other restriction of any kind or character (other than laws and regulations
generally applicable to similar businesses), that materially adversely affects
the business practices, operations or condition of the Company or any of its
assets or property, or that would prevent consummation of the transactions
contemplated by this Agreement, compliance by Sellers with the terms, conditions
and provisions hereof or thereof or the continued operation of the Company's
business after the date hereof on substantially the same basis as heretofore
operated.
4.11 COMPLIANCE WITH LAWS. The Company is and at all times has been in
compliance in all material respects with all applicable statutes, laws,
regulations, rules, orders, judgments and decrees, including, without
limitation, all applicable federal, state and local laws, administrative
rulings, regulations and regulating approvals relating to (a) protection of the
environment, (b) wages, hours, hiring, non-discrimination, promotion,
retirement, benefits, pensions and working conditions, (c) air, water, toxic
substances, pesticides, noise, odor or solid gaseous or liquid waste generation,
and handling, storage, disposal or transportation thereof, (d) health and
safety, (e) zoning and building codes, (f) production, storage, processing,
advertising, sale, transportation, destruction, disposal, use and warranty of
products, and (g) trade and antitrust regulations, except in any of the forgoing
cases where the failure to comply would not result in a material adverse effect
on the Company. The Company has received no notice from any governmental or
regulatory agency or authority that it is not in such compliance.
4.12 SUBSIDIARIES. The Company has no Subsidiaries.
4.13 PROPRIETARY RIGHTS. Schedule 4.13 sets forth a correct and complete
list of all licenses (or other rights to use), copyrights, trademarks, service
marks, trade names, patents, assumed or fictitious names, logos, trade secrets,
know-how and other proprietary rights and applications therefor and
registrations thereof that are material to the conduct of the business of the
Company (collectively, "Proprietary Rights"). The Company has a right to use
such proprietary rights in connection with its business as presently being
conducted, and no claim has been made against the Company that such use violates
the rights of any third party. To the best of Sellers' knowledge, all
Proprietary Rights of the Company are free from any claim of others, security
interest, lien, encumbrance or restriction, there is no default with respect
thereto on the part of the
8
Company, and such Proprietary Rights have not been and are not now being
challenged in any way or involved in any pending or threatened infringement,
unfair competition or other proceeding. To the best of Sellers' knowledge, the
Company is not infringing the rights of any other Person with respect to any
Proprietary Right and has not received any claim of any such infringement or
violation. To the best of Sellers' knowledge, none of the rights of the Company
to any Proprietary Right will be impaired in any way by the transactions
contemplated by this Agreement.
4.14 TAX MATTERS. Except as may be disclosed on Schedule 4.14 hereto:
(a) The Company (i) has duly and timely filed with the appropriate
governmental authorities all tax returns and reports required to be filed and
(ii) has duly paid all taxes, interest, penalties, assessments and deficiencies
and other governmental charges which are due and payable upon it and its
properties, assets, income, business, sales and payrolls, including all amounts
assessed as additional taxes, penalties and interest.
(b) The Company has not been audited by the IRS during the past five (5)
years. The Company has not executed or filed with the IRS or any other taxing
authority any agreement extending the period for assessment or collection of any
income or other taxes.
(c) The Company is not a party to any pending action or proceeding nor, to
the best of Sellers' knowledge, is any action or proceeding threatened by any
governmental authority for assessment or collection of taxes, and, to the best
of Sellers' knowledge after investigation, no claim for assessment or collection
of taxes has been asserted against the Company.
(d) To the best of Sellers' knowledge after investigation, the Company has
withheld proper and accurate amounts from its employees in full and complete
compliance with all withholding and similar provisions of the Code and any and
all other applicable United States, foreign, state or local laws, statutes,
codes, ordinances, rules and regulations. To the best of Sellers' knowledge
after investigation, the Company has timely filed the proper federal, foreign,
state and local returns, reports and estimates with respect to employee income
tax withholding, social security taxes and unemployment taxes (or comparable or
similar taxes or charges) for all years and periods (or portions thereof) for
which such returns and reports were due, and any and all amounts that were due
and payable have been paid in full. All payments (including interest and
penalties thereon) due and payable from the Company with respect to its employee
income tax withholding, social security taxes and unemployment taxes (or
comparable or similar taxes or charges) for any year or period (or portions
thereof) ended on or prior to or including the Closing Date, have been paid in
full.
4.15 Union Contracts and Labor Relations. The Company is not a party to any
collective bargaining or union agreement and there is no (i) labor strike,
dispute, grievance, controversy or other labor trouble pending or, to the best
knowledge of Sellers, threatened that may materially affect the Company, (ii)
application for certification of a collective bargaining agent pending or, to
the knowledge of Sellers, threatened or (iii) complaint pending or, to the
knowledge of Sellers, threatened or on file with any federal, state or local
governmental agencies alleging employment discrimination.
9
4.16 EMPLOYEES/EMPLOYEE BENEFIT PLANS. Schedule 4.16 sets forth a correct
and complete list of all current employees of the Company, and all employee
benefit plans (collectively, the "Plans") maintained by the Company, in which it
participates or may be required to participate or in respect of which it may
have any liability. Except for the Plans, the Company does not have in effect,
participate in, or have any liability for any plan, fund or program as defined
in Section III(2) of the Employee Retirement Income Act of 1974, as amended
("ERISA"), and does not have an obligation to establish any such plan, fund or
program. Sellers have furnished Purchaser with true and complete copies of all
of the Plans and the latest financial statements therefor, if any, which fairly
represent the financial condition of the Plans at such dates. There have been no
materially adverse changes to any of the Plans since the date of the latest
financial statements, if any. To the best of Sellers' knowledge after
investigation, there is not outstanding any request for information concerning
the Plans by participants, beneficiaries or government agencies. Neither the
Company nor the Plans have been involved in any transaction that would
constitute a "prohibited transaction" within the meaning of Sections 503 and
4975 of the Code or ERISA Section 406. None of the Plans has any "accumulated
funding deficiency" as described in Code Section 412, and all required
contributions to the Plans for the period through the Closing Date have been
made. All Plans are in compliance in all material respects with the applicable
provisions of ERISA, the regulations issued thereunder and all other applicable
statutes and regulations. To the extent the Plans are administered by the
Company, such Plans have been maintained and administered in accordance with
their separate terms. Each Plan which is intended to qualify under Code Section
401 has been issued a determination letter by the IRS that it is qualified under
Code Section 401(a) and its trust fund is exempt from taxation under Code
Section 501(a). All information submitted with the request for such
determination letters, if any, was true and accurate in all material respects,
all material information required to have been submitted to the IRS was
submitted, and no event has occurred with respect to any Plan that would cause
the loss of such qualification. Each trust fund established for any medical or
disability plan has been issued a determination letter by the IRS that it is
exempt from taxation under Code Section 501(c)(9), and no event has occurred
with respect to any such Plan that would cause the loss of such qualification.
None of the Plans has experienced a "reportable event" as described in ERISA
Section 4043(b) or is experiencing any condition that may constitute grounds
under ERISA Section 4042 for the termination of such Plan or the appointment of
a trustee to administer such Plan. The Company has not (i) contributed or been
required to contribute to any "multi-employer pension plan," as that term is
defined in ERISA Section III(37)(A), or (ii) incurred any withdrawal liability
under subtitle E of Title IV of ERISA or has withdrawn from any multi-employer
pension plan in any manner that could result in any liability to the Company.
4.17 CONDUCT OF BUSINESS. Between June 30, 2000, and the date of this
Agreement, except as otherwise approved by the Purchaser in writing, the
business of the Company has been conducted only in the ordinary course and there
has occurred no materially adverse change or, to the knowledge of Sellers, any
event that involved any significant possibility of a materially adverse change,
in the condition (financial or otherwise), assets, liabilities, business,
operations or affairs of the Company. (See Schedule 4.17 hereto.)
4.18 SOLVENCY. The sale and transfer of the VVI Shares pursuant to this
Agreement will not render Sellers insolvent (within the meaning of the Uniform
Fraudulent Conveyance Act or 11 X.X.X.xx. 101(31)).
10
4.19 LEASES. Schedule 4.19 sets forth a correct and complete list of all
leases under which the Company leases, as lessor or lessee, any real or personal
property along with the names of the parties to such leases, the commencement
and expiration dates of such leases and a summary description of the rental
under such leases and any options pertaining thereto. Except as described in
Schedule 4.19, all such leases are in full and force and effect, in all material
respects, and no party thereto is in material default or breach thereunder.
4.20 REAL AND PERSONAL PROPERTY. Schedule 4.20 sets forth a correct and
complete list and summary description of all real and material personal
property, tangible or intangible (other than inventory), owned by the Company
or, whether or not owned, used in its business. Except as disclosed on Schedule
4.20 or in other Schedules to this Agreement, the Company owns the property set
forth in Schedule 4.20 free and clear of all liens, charges, mortgages, security
interests, pledges and encumbrances of any nature whatsoever. Substantially all
such tangible personal property is in satisfactory condition and is suitable for
the purpose for which it is being used, subject in each case to consumption in
the ordinary course, to ordinary wear and tear and to ordinary repair,
maintenance and periodic replacement.
4.21 MATERIAL CONTRACTS. Schedule 4.21 sets forth, unless set forth in
another Schedule hereto, a correct and complete list as of the date hereof of
all written or material oral agreements, contracts and commitments of the
following types to which the Company or by which the Company is bound or
otherwise affected as of the date hereof, including, without limitation: (i)
mortgages, indentures, security agreements, loan and credit agreements and other
agreements and instruments relating to the borrowing of money or evidence of
credit, (ii) contracts or options to purchase or sell real property, (iii)
contracts for the purchase or sale of materials, supplies or equipment or for
providing services, that individually involve payments to be made of more than
$1,000, (iv) contracts between the Company and any Seller, (v) agreements and
instruments representing loans or commitments to loan to officers, directors,
employees or agents of the Company, (vi) contracts of any kind to which the
United States Government or any of its agencies or any state or local
municipality is a party or under which the Company is a contractor or
subcontractor under any federal, state or local law, regulation or executive
order, (vii) partnership or joint venture agreements of any kind, (viii)
management, employment, consulting, service and independent contractor
agreements, (ix) development, production, financing and similar agreements, (x)
license agreements, (xi) confidentiality and nondisclosure agreements, (xii)
agreements relating to a merger or to the acquisition or disposition of stock or
assets, (xiii) distribution agreements, and (xiv) other agreements, contracts
and commitments (other than those previously set forth in Schedules hereto).
Sellers have delivered or made available to Purchaser complete and correct
copies of all such written agreements, contracts and commitments, together with
all amendments thereto and waivers and consents with respect thereto. Except as
disclosed in Schedule 4.21 hereto, all of such agreements, contracts and
commitments referred to are in full force and effect and all parties to such
agreements, contracts and commitments have performed in all material respects
all of the obligations required to be performed by them to date and are not in
default thereunder in any material respect. No agreement, contract or commitment
to which the Company is a party, or by which it or any of its properties is
bound, specifically limits its freedom to compete in any line of business or
with any person or entity.
11
4.22 GOVERNMENT PERMITS. Except as set forth in Schedule 4.22 hereto, the
Company has and is in substantial compliance with all material permits,
licenses, orders and approvals of all federal, state, local or foreign
governmental or regulatory bodies required for it to carry out its business as
presently conducted, all of which are listed in Schedule 4.22. All such permits,
licenses, orders and approvals are in full force and effect, and no suspension
or cancellation, nor any proposed adverse modification of any of them is pending
or, to the knowledge of Sellers, threatened. No consent of any governmental or
regulatory body issuing such permits, licenses, orders and approvals is
necessary for the consummation of the transactions contemplated by this
Agreement, the failure of which to so obtain would result in a material adverse
effect on the transactions contemplated hereby.
4.23 TITLE TO PROPERTIES. The Company has good and marketable (as to real
estate, if any) title to all of the properties and assets reflected in the June
30, 2000 balance sheet as owned by it (other than assets disposed of in the
ordinary course of business, since June 30, 2000, or as disclosed in the notes
to the financial statements), free and clear of all restrictions, conditions,
liens, mortgages, encumbrances and similar claims (Liens") other than (a) Liens
reflected in such financial statements and notes, (b) Liens for taxes and
betterment assessments contested in good faith in appropriate proceedings or
that are not yet due and payable, (c) Liens reflected in Schedule 4.23, and (d)
and such other Liens, if any, as do not materially detract from the value of or
interfere with the present or future use of the properties or assets affected
thereby.
4.24 INSURANCE. Set forth in Schedule 4.24 hereto is a complete list of
insurance policies that the Company maintains with respect to its businesses,
properties or employees. Such policies are in full force and effect free from
any right of termination on the part of the insurance carriers. Since June 30,
2000, there has not been any material adverse change in the Company's
relationship with its insurers or in the premiums payable pursuant to such
policies.
4.25 ACCOUNTS RECEIVABLE. Set forth in Schedule 4.25 hereto is a
complete list of the Company's accounts receivables, unbilled invoices and other
debts due to the Company (the "Accounts Receivable") as of June 30, 2000. Except
as otherwise set forth in Schedule 4.25 hereto, all of the Accounts Receivable
arose from bona fide transactions in the ordinary course of business, and the
goods and services involved have been sold, delivered and performed to the
account of the Company, and no further goods are required to be provided and no
further services are required to be rendered by the Company to collect the
Accounts Receivable in full. No such account has been assigned or pledged to any
other person, firm or corporation, and except only to the extent reserved
against in the Company's financial statements, no defense or setoff to any such
account has been asserted by the account obligor. To the best of Sellers'
knowledge after investigation, the Accounts Receivable are collectible in full,
subject to any reserves for same placed on the Financial Statements.
4.26 TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule 4.26
hereto, the Company is not a party to any transaction with any Seller or any
officer, director, employee or Affiliate thereof.
4.27 BANK ACCOUNTS, POWERS OF ATTORNEY AND COMPENSATION OF EMPLOYEES. Set
forth in Schedule 4.27 is an accurate and complete list showing (a) the name and
address of each bank in
12
which the Company has an account or safe deposit box, the number of any such
account or any such box and the names of all persons authorized to draw thereon
or to have access thereto, (b) the names of all persons, if any, holding powers
of attorney from the Company and a summary statement of the terms thereof and
(c) the names of all persons whose compensation from the Company for the recent
calendar year ended exceeded an annualized rate of $20,000, together with a
statement of the full amount paid or payable to each such person for services
rendered during such calendar year.
4.28 INVENTORY. All items of the Company's inventory and related supplies
(including raw materials, work-in-progress and finished goods) are (a) usable
for the purpose intended, (b) of quality suitable and usable for the production
or completion of merchantable products, for sale in the ordinary course of
business as first quality goods at normal xxxx-ups, (c) not obsolete or below
market standards and (d) in conformity in all material respects with all
applicable government requirements. Each item of such inventory reflected in the
Company's financial statements and the books and records of the Company is
valued at the lower of historical cost or market value.
4.29 SUPPLIERS AND CUSTOMERS. Sellers are not aware of any intention on the
part of any of the Company's material customers or suppliers to terminate or
modify in a manner adverse to the Company any of such relationships. To the best
of Sellers' knowledge, no material adverse change in relations with the
Company's suppliers or customers will occur as a result of the announcement or
consummation of the transactions contemplated by this Agreement.
4.30 BOOKS AND RECORDS. The minute books of the Company, as previously made
available to Purchaser, contain accurate records of all meetings of and
corporate actions or written consents of the stockholders and the Board of
Directors of the Company. The Company has no records, systems, controls, data or
information recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) that (including all means of
access thereto and therefrom) are not under the exclusive ownership and direct
control of the Company and that are required for the day-to-day operations of
the Company.
4.31 DISCLOSURE. If requested by Purchaser, Sellers have caused to be made
available for inspection and copying by Purchaser and its advisers, true,
complete and correct copies of all documents referred to in this Article 4 or in
any Schedule furnished to Purchaser by Sellers. No representation or warranty
contained in this Agreement, and no statement, certificate, schedule, list or
other information furnished or to be furnished by or on behalf of Sellers to
Purchaser in connection with this Agreement, contains or will contain any untrue
statement of a material fact, or omits to state or will omit to state a material
fact necessary in order to make the statements herein or therein not misleading.
4.32 BROKER'S OR FINDER'S FEES. Except for Environmental & Financial
Consulting, Inc., whose fee is to be paid by Purchaser, no agent, broker, person
or firm acting on behalf of Sellers or the Company, is, or will be, entitled to
any commission or broker's or finder's fees from any of the parties hereto, or
from any Affiliate of the parties hereto, in connection with any of the
transactions contemplated herein.
13
4.33 ABSENCE OF CERTAIN EVENTS. Since June 30, 2000, there has not been (a)
any damage, destruction or casualty loss, whether covered by insurance or not,
materially and adversely affecting either the business, operations or financial
condition of the Company; (b) any material increase in the rate or terms of
compensation payable or to become payable by the Company to its directors,
officers or key employees, except increases occurring in the ordinary course of
business in accordance with its customary practices; (c) any material increase
in the rate or terms of any bonus, insurance, pension or other employee benefit
plan, payment or arrangement made to, for or with any such directors, officers
or key employees except salary increases occurring in the ordinary course of
business in accordance with its customary practices; or (d) any entry into any
material agreement, commitment or transaction (including without limitation any
borrowing, capital expenditure or capital financing) by the Company, except
agreements, commitments or transactions entered into in the ordinary course of
business or as contemplated by or referred to in this Agreement or the Schedules
hereto; or (e) any material change by the Company in its accounting method,
principles or practices.
4.34 [OMITTED]
4.35 [OMITTED]
4.36 PRODUCT WARRANTY. Each product manufactured, sold, leased or delivered
by the Company, or service provided by the Company, has been in conformity in
all material respects with all applicable contractual commitments and all
express and implied warranties, and the Company has no material liability (and,
to the best of Sellers' knowledge after investigation, there is no basis for any
present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand against it giving rise to any liability) for
replacement or repair thereof or other damages in connection therewith. Except
as provided on Schedule 4.36 hereto, no product manufactured, sold, leased or
delivered by the Company, or service provided by the Company, is subject to any
guaranty, warranty or other indemnity beyond the applicable standard terms and
conditions of sale or lease. The Company has delivered to Purchaser copies of
the form of all contracts to which the Company is a party containing guaranties,
warranties or indemnities to which the Company may become liable).
4.37 DISPOSAL OR RELEASE OF HAZARDOUS SUBSTANCES. No part of any of the
premises owned or leased by the Company (including without limitation any leased
property) has been used by the Company or any other person or entity for the
disposal, burial or placement (other than in tanks or other containers
authorized by law) of hazardous substances (as defined in or pursuant to CERCLA)
or any petroleum products, pollutants or contaminants. The Company has not
caused or permitted the release of any hazardous substances (as defined in or
pursuant to CERCLA), petroleum products, pollutants or contaminants onto the
premises or into the subsurfaces thereof, including, without limitation, surface
waters and groundwaters. The Company is not in violation of any applicable laws,
statutes, rules, regulations or ordinances in connection with the
transportation, disposal, storage, treatment, processing, release and other
handling of hazardous substances (as defined in or pursuant to CERCLA) or any
petroleum products, pollutants or contaminants or the emission or release of any
hazardous substance (as defined in or pursuant to CERCLA), effluent,
14
contaminant, pollutant or other material, and no other person has used all or
part of the premises owned or leased by the Company in violation of any of those
requirements of law.
4.38 INVESTMENT REPRESENTATION. The WEI Shares are being acquired for the
account of Sellers and not with a view to, nor for sale in connection with, any
distribution thereof, and without any present intention of selling the same. The
WEI Shares will not be sold or otherwise disposed of in the absence of a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), covering the WEI Shares, respectively, or an exemption from
the registration requirements of the Securities Act.
Sellers hereby acknowledge that (i) the WEI Shares may not be sold or
otherwise transferred unless they are registered under the Securities Act or an
exemption from such registration is available; (ii) any sales of the WEI Shares
made in reliance upon Rule 144 promulgated under the Securities Act can be made
only in accordance with the terms and conditions of Rule 144 and, further, that
if Rule 144 is not applicable, any resale of such securities under circumstances
in which Sellers or the person through whom the sale is made may be deemed to be
an underwriter, as that term is defined in the Securities Act, may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the Securities and Exchange Commission or other governmental
authority substituted therefor; and (iii) Purchaser is under no obligation to
register any of the WEI Shares under the Securities Act or to comply with the
terms and conditions of any exemption thereunder.
The instruments evidencing the WEI Shares may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer thereof):
THE SECURITIES REPRESENTED HEREBY WERE NOT REGISTERED UNDER, AND ARE
SUBJECT TO, THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"),
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED, AND THE COMPANY IS NOT
REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE, TRANSFER OR ASSIGNMENT,
EXCEPT (I) PURSUANT TO A CURRENT REGISTRATION UNDER THE 1933 ACT; (II)
IN A TRANSACTION PERMITTED BY RULE 144 UNDER THE 1933 ACT AND AS TO
WHICH THE COMPANY HAS RECEIVED REASONABLY SATISFACTORY EVIDENCE OF
COMPLIANCE WITH THE PROVISIONS OF RULE 144; OR (III) UPON RECEIPT OF A
LEGAL OPINION RENDERED BY COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT THE TRANSACTION DOES NOT REQUIRE
REGISTRATION UNDER THE 1933 ACT.
If a legal opinion complying with clause (iii) of the legend set forth
above indicates that the legend and stop-transfer order may be removed,
Purchaser will substitute unlegended instruments for and remove the
stop-transfer order from the instruments described in the opinion.
In connection with any Purchaser IPO (as defined in Section 10.11 hereof)
or any other offering involving an underwriting of shares being issued by
Purchaser, Purchaser shall not be required to include any of the WEI Shares in
such underwritings unless other shareholders of
15
Purchaser are being permitted to include some or all of their shares in the
underwritings, in which case Sellers shall be permitted to include some or all
of the WEI Shares on an equivalent basis; however, should Purchaser agree to
include a portion of the WEI Shares in such underwriting, following Sellers'
request to do so, Sellers must accept the terms of the underwriting (to the
extent applicable to the WEI Shares) as agreed upon between Purchaser and the
underwriters selected by Purchaser (all costs of registering the WEI Shares
shall be borne by Purchaser). Furthermore, in connection with any registration
of the WEI Shares, Sellers agree, if requested by Purchaser or the underwriters
managing any underwritten offering of the WEI Shares, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any of the WEI Shares (other than that included in the registration) without
the prior written consent of Purchaser or such underwriters, as the case may be,
for such period of time after the effective date of such registration as
Purchaser or the underwriters may specify, which, in any event, shall be a
minimum of twelve (12) months following any Purchaser IPO; but in any event
shall be no longer than the time period required by the underwriter for
similarly situated shareholders and senior management of Purchaser. Sellers
shall receive treatment no less favorably than any other shareholder of
Purchaser at the time of any offering involving an underwriting of shares being
issued by Purchaser.
4.39 Accounts Payable. Set forth in Schedule 4.39 hereto is a complete list
of the Company's accounts payables ("Accounts Payable") as of June 30, 2000. All
such Accounts Payable were incurred by the Company in the ordinary course of its
business, and each represents the fair market value for services or materials
rendered to or received by the Company.
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers that:
5.1 ORGANIZATION AND POWER OF PURCHASER. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida and has all requisite corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
5.2 AUTHORITY RELATIVE TO AGREEMENT. The execution, delivery and
performance of this Agreement by Purchaser, and the consummation by Purchaser of
the transactions contemplated hereby and thereby, have been duly authorized by
all necessary corporate action on the part of Purchaser.
5.3 ENFORCEABILITY OF AGREEMENT. Purchaser has duly executed and delivered
this Agreement. This Agreement constitutes a valid and binding obligation of
Purchaser, enforceable in accordance with its terms.
5.4 EFFECT OF AGREEMENT. The execution, delivery and performance of this
Agreement by Purchaser, and the consummation by Purchaser of the transactions
contemplated hereby and thereby, do not and will not (i) violate any provision
of law applicable to Purchaser or the corporate charter or bylaws of Purchaser;
(ii) require the consent, waiver, approval, license or authorization of,
16
or filing with, any Person; provided that Purchaser makes no representation to
the extent any of the foregoing is required as the result of the nature of the
business or assets of the Company; or (iii) with or without the giving of notice
or the passage of time or both, conflict with or result in a breach or
termination of, constitute a default under or result in the creation of any
lien, charge or encumbrance upon any of the assets of Purchaser pursuant to, any
provision of any mortgage, deed of trust, indenture or other agreement or
instrument, or any order, judgment, decree or other restriction of any kind or
character, to which Purchaser is a party or by which Purchaser or any of its
assets may be bound.
5.5 RESTRICTIVE DOCUMENTS. Purchaser is not subject to, or a party to, any
charter, bylaw, mortgage, lien, lease, license, permit, agreement, contract,
instrument, law, rule, ordinance, regulation, order, judgment or decree, or any
other restriction of any kind or character that would prevent consummation of
the transactions contemplated by this Agreement.
5.6 FULL DISCLOSURE. No representation or warranty contained in this
Agreement, and no statement, certificate, schedule, list or other information
furnished or to be furnished by or on behalf of Purchaser to Sellers in
connection with this Agreement, contains or will contain any untrue statement of
a material fact, or omits to state or will omit to state a material fact
necessary in order to make the statements herein or therein not misleading.
5.7 INVESTMENT REPRESENTATION. The VVI Shares are being acquired for the
account of Purchaser and not with a view to, nor for sale in connection with,
any distribution thereof, and without any present intention of selling the same.
The VVI Shares will not be sold or otherwise disposed of (except to an Affiliate
of Purchaser) in the absence of a registration statement under the Securities
Act covering the VVI Shares, or any exemption from the registration requirements
of the Securities Act.
5.8 AUTHORIZED CAPITALIZATION. The authorized capital stock of Purchaser
consists of 10,000,000 shares of common stock, $.001 par value per share, of
which, as of the date hereof, 1,814,815 shares are issued and outstanding.
Options to purchase an aggregate of 300,000 shares of common stock are issued
and outstanding as of the date hereof. Except as discussed in the immediately
preceding two sentences, there are no other authorized or outstanding equity
securities of Purchaser of any class, kind or character, and there are no
outstanding rights, contracts, rights to subscribe, conversion rights, exchange
rights, warrants, options, calls puts or other agreements or commitments of any
character relating to Purchaser's common stock or any securities convertible or
exchangeable for any of Purchaser's common stock. The issuance of the WEI shares
to Sellers has been approved by all necessary corporate action on the part of
Purchaser and, on the Closing Date, the WEI Shares will be fully paid and
nonassessable and free and clear of any lien, encumbrance, charge, security
interest or claim whatsoever (including any restriction on the right to vote,
sell or otherwise dispose of the WEI Shares other than the restrictions
specifically set forth in Section 4.38 hereof), and Purchaser has the right to
transfer the WEI Shares to Sellers. Purchaser has delivered to Sellers or their
counsel copies of all shareholder agreements or other agreements with its
stockholders relating to ownership of stock of Purchaser.
17
5.9 INFORMATION FURNISHED BY PURCHASER TO SELLERS. There is no fact that
Purchaser has not disclosed herein that materially and adversely affects the
properties, business, prospects, profits or condition (financial or otherwise)
of Purchaser, except that Purchaser makes no representation or warranty as to
the effect of general economic conditions, the condition of the financial
markets, future legislation or future regulatory action. There has been no
materially adverse change in the assets or liabilities, the business or
condition, financial or otherwise, the results of operations or the prospects of
Purchaser since December 31, 1999.
5.10 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES. Purchaser has
heretofore furnished to Sellers true and complete copies of the audited
financial statements of Purchaser as of December 31, 1999, and the unaudited
financial statements as of June 30, 2000 (the "Purchaser Financial Statements").
The Purchaser Financial Statements were prepared in accordance with GAAP and
present fairly the financial position, results of operations and cash flow of
Purchaser as of the date and for the period indicated. Except as disclosed in
the Purchaser Financial Statements, Purchaser has no material liabilities or
obligations of any kind, whether accrued, absolute, contingent or otherwise,
whether or not such liabilities or obligations would have been required to be
disclosed on a balance sheet prepared in conformity with GAAP. Without limiting
the generality of the foregoing, to the best of Purchaser's knowledge, Purchaser
has no liability (and there is no basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim or demand
against it giving rise to any liability) arising out of any injury to persons or
property as a result of the ownership, possession or use of any product
manufactured, sold, leased or delivered by Purchaser or any of its dealers or
representatives.
5.11 TAX MATTERS. (a) Purchaser (i) has duly and timely filed with the
appropriate governmental authorities all tax returns and reports required to be
filed and (ii) has duly paid, or arranged for payment, all taxes, interest,
penalties, assessments and deficiencies and other governmental charges upon it
shown to be due thereon and its properties, assets, income, business, sales and
payrolls, including all amounts assessed as additional taxes, penalties and
interest.
(b) Purchaser has not been audited by the IRS during the past five (5)
years. Purchaser has not executed or filed with the IRS or any other taxing
authority any agreement extending the period for assessment or collection of any
income or other taxes.
(c) Purchaser is not a party to any pending action or proceeding nor, to
the best of Purchaser's knowledge, is any action or proceeding threatened by any
governmental authority for assessment or collection of taxes, and no claim for
assessment or collection of taxes has been asserted against Purchaser.
(d) Purchaser has withheld proper and accurate amounts from its employees
in full and complete compliance with all withholding and similar provisions of
the Code and any and all other applicable United States, foreign, state or local
laws, statutes, codes, ordinances, rules and regulations. Purchaser has timely
filed the proper federal, foreign, state and local returns, reports and
estimates with respect to employee income tax withholding, social security taxes
and unemployment taxes (or comparable or similar taxes or charges) for all years
and periods (or
18
portions thereof) for which such returns and reports were due, and any and all
amounts that were due and payable have been paid in full. All payments
(including interest and penalties thereon) due or to become due from Purchaser
with respect to its employee income tax withholding, social security taxes and
unemployment taxes (or comparable or similar taxes or charges) for any year or
period (or portions thereof) ended on or prior to or including the Closing Date,
have been paid in full or are adequately reserved for (excluding deferred tax
accounts).
5.12 BROKER'S OR FINDER'S FEES. Except for a commission to be paid by
Purchaser to Environmental & Financial Consulting, Inc., a Florida corporation,
no agent, broker, person or firm acting on behalf of Purchaser, is, or will be,
entitled to any commission or broker's or finder's fees from any of the parties
hereto, or from any Affiliate of the parties hereto, in connection with any of
the transactions contemplated herein.
5.13 ABSENCE OF CERTAIN RECENT CHANGES. Except as may be set forth in the
financial statements of Purchaser provided to Sellers, since December 31, 1999,
Purchaser has not suffered one or more events or conditions which, individually
or in the aggregate, has resulted in a material adverse change to its financial
condition, business or prospects, and nothing has occurred which might result in
any such material adverse change.
5.14 LITIGATION; DISPUTES. (i) There are no claims, actions, investigations
or proceedings pending or, to the best of Purchaser's knowledge after
investigation, threatened against or relating to Purchaser before any court or
governmental or regulatory body or authority, and (ii) neither Purchaser nor any
of its property is subject to any judgment, order, writ, injunction or decree
that materially adversely affects the financial condition, assets, business or
prospects of Purchaser.
5.15 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
financial statements of Purchaser delivered to Sellers, Purchaser is not, nor
are any of the assets or properties of Purchaser, subject to any liabilities or
obligations, whether absolute, accrued, contingent or otherwise, which are due
and payable (including, without limitation, any liabilities for federal, state
or other taxes); and Purchaser does not know of, or have any reasonable ground
to know of, any basis for the assertion against Purchaser of any such liability,
other than unsecured trade accounts payable and accrued expenses arising in the
ordinary course of business since the date of such financial statements.
5.16 NOTHING REASONABLY ANTICIPATED TO DELAY CLOSING. To Purchaser's
knowledge, there are no contingencies, filings, or events which Purchaser
reasonably expects to delay the Closing beyond October 10, 2000.
5.17 NO KNOWLEDGE THAT REPRESENTATIONS ARE INCORRECT. Purchaser does not
have any actual knowledge that Sellers or the Company have breached any
representation or covenant contained in this Agreement. This does not include
constructive knowledge of any matters or information or imply any independent
investigation.
5.18 INVESTMENT INTENT. Purchaser is acquiring the shares for its own
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act.
19
Purchaser agrees that it will not, directly or indirectly, transfer or dispose
of the VVI Shares except in compliance with the Federal and State Securities
Laws. Purchaser understands that the shares are characterized as "restricted
securities" under the Federal Securities Laws. Purchaser confirms that Sellers
have made available to Purchaser and its representatives and agents the
opportunity to ask questions of the officers and management employees of the
Company and to acquire such additional information about the business and
financial condition of the Company as Purchaser has requested.
ARTICLE 6 -- COVENANTS OF SELLERS
Sellers hereby covenant and agree with Purchaser as follows:
6.1 CONDUCT OF BUSINESS. During the period from the date of this Agreement
to the Closing Date, Sellers shall cause the Company to conduct operations in
the ordinary and usual course of business and shall use all reasonable efforts
to preserve intact its business organizations, keep available the services of
officers and employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients and others having business relationships with
the it. Without limiting the generality of the foregoing, Sellers shall cause
the Company to (a) maintain its Articles of Incorporation and Bylaws in their
respective forms on the date of this Agreement, (b) maintain the compensation
payable or to become payable by the Company to any officer, employee or agent
being paid $20,000 per year or more at their levels on the date of this
Agreement, (c) refrain from making any bonus, pension, retirement or insurance
payment or arrangement with any such person except regular annual increases
consistent with past practices, (d) refrain from entering into any contract or
commitment except contracts in the ordinary course of business, (e) refrain from
making any change affecting any bank, safe deposit or power of attorney
arrangements, and (f) refrain from declaring or paying any dividend or
distribution of cash, stock or other property except for the distribution of two
motor vehicles identified in Schedule 4.20 hereto. Sellers shall notify
Purchaser of any unexpected emergency or other change in the normal course of
business or in the operation of the properties of the Company and of any
governmental complaints, investigations or hearings (or communication indicating
that the same may be contemplated), adjudicatory proceedings or submissions
involving any material property of the Company, and shall keep Purchaser fully
informed of such events and permit its representatives prompt access to all
materials prepared in connection therewith.
6.2 EXCLUSIVE DEALING. During the period from the date of this Agreement
through October 10, 2000, Sellers shall not take any action, directly or
indirectly, to encourage, initiate or engage in discussions or negotiations
with, or provide any information to, any Person other than Purchaser and
Purchaser's representatives, lawyers, accountants and underwriters, concerning
any purchase of the VVI Shares or any merger, sale of assets (except in the
ordinary and usual course of business of the Company) or similar transaction
involving the Company.
6.3 REVIEW OF THE COMPANY. Sellers shall permit Purchaser and its
employees, agents, attorneys, accountants and other representatives to have,
after the date of execution hereof, full access to the premises and to all of
the books, records, facilities and properties of the Company and shall, and
shall cause the officers and employees of the Company to, furnish Purchaser with
such
20
financial and operating data and other information with respect to the Company
and its business operations, financial condition and prospects as Purchaser from
time to time shall reasonably request. Such review shall not, however, affect or
limit the representations and warranties made by Sellers hereunder.
6.4 REGULATORY APPROVALS. Sellers shall, and shall use all reasonable
efforts to cause its Affiliates to, apply for all applicable federal and state
regulatory approvals required of them to effectuate the provisions of this
Agreement.
6.5 CHANGES IN CAPITAL STOCK. Prior to the Closing, Sellers shall not take
any action that would permit the Company to make or commit to make any change in
its issued and outstanding capital stock, issue any options, warrants or
convertible securities or make any commitments for the issuance of shares,
options, warrants or convertible securities.
6.6 FURTHER ASSURANCES. Sellers shall deliver or cause to be delivered such
additional instruments and take such additional actions on the Closing Date and
at such other times and places before or after Closing as Purchaser reasonably
may request for the purpose of carrying out the provisions of this Agreement.
6.7 KEY EMPLOYEES. From the date of execution of this Agreement until the
Closing Date, Sellers shall cause the Company to make its key employees
available to confer during normal business hours on a regular and frequent basis
with one or more designated representatives of Purchaser to report material
operational matters and to report the general status of ongoing operations.
Sellers shall exercise all reasonable efforts to encourage each of these
employees to continue in the employ of Purchaser after the Closing Date. Sellers
promptly shall advise Purchaser of any resignation by one of these employees
that is effective on or before the Closing Date or that is effective after the
Closing Date if notice is given prior to the Closing Date.
6.8 BEST EFFORTS. Sellers shall use all reasonable efforts to fulfill all
of the conditions set forth in this Agreement over which it has control or
influence (including obtaining any authorizations, consents, approvals or
waivers hereunder) and to consummate the transactions contemplated herein.
6.9 NONSOLICITATION OF EMPLOYEES. For the period commencing on the date of
execution of this Agreement and continuing for a period of two years after the
Closing Date, the Sellers shall refrain and shall cause its Affiliates to
refrain from directly or indirectly soliciting for employment any individual who
formerly was employed by the Company or who is in the employ of Purchaser or one
of its Affiliates, without Purchaser's prior written consent; provided, however,
that, with respect to Xxx Xxxx, such covenant shall cease at any time Xxx Xxxx'x
employment with the Company is terminated without cause under the Employment
Agreement.
21
ARTICLE 7 -- COVENANTS OF PURCHASER
7.1 REGULATORY APPROVALS. Purchaser shall, and shall use all reasonable
efforts to cause its Affiliates to, apply for all applicable federal and state
regulatory approvals required of Purchaser to effectuate the provisions of this
Agreement. Purchaser shall, and shall use all reasonable efforts to cause its
Affiliates to, reasonably provide information to and otherwise reasonably
cooperate with Sellers and their Affiliates in order to allow them to comply
with the requirements of Section 6.4 hereof.
7.2 FURTHER ASSURANCES. Purchaser shall deliver or cause to be delivered
such additional documents, and take such additional actions on the Closing Date
and at such other times and places, before or after Closing, as Sellers
reasonably may request for the purpose of carrying out the provisions of this
Agreement.
7.3 CONFIDENTIALITY. Except as may be required by law, Purchaser shall
maintain in strict confidence, and shall not disclose, any information regarding
the Company delivered to Purchaser pursuant to this Agreement, unless and until
the Closing Date; provided that, this restriction shall not apply to (i)
information in the public domain; (ii) information in the possession of
Purchaser without restriction as to use or disclosure and not acquired from
Sellers; and (iii) information obtained from third parties lawfully in
possession of it and were under no obligation of secrecy with respect thereto.
7.4 STATUS OF PURCHASER'S IPO. Purchaser shall keep Sellers advised
concerning the status of, and prospects for, the closing of its anticipated
initial public offering. Purchaser shall use its good-faith efforts to promptly
deliver to Sellers copies of all preliminary and final prospectuses,
registration statements and similar filings, and all amendments and exhibits
thereto, upon filing with the Securities and Exchange Commission. Purchaser
shall make its representatives available to discuss with Sellers and their
representatives the status of and prospects for the initial public offering.
7.5 CONDUCT OF BUSINESS. Purchaser shall notify Sellers of any unexpected
emergency or other change in the normal course of business or in the operation
of the properties of Purchaser and of any governmental complaints,
investigations or hearings (or communication indicating that the same may be
contemplated), adjudicatory proceedings or submissions involving any material
property of Purchaser, and shall keep Sellers fully informed of such events.
7.6 BEST EFFORTS; RELEASE FROM PERSONAL GUARANTEES. Purchaser shall use all
reasonable efforts to fulfill all of the conditions set forth in this Agreement
over which it has control or influence (including obtaining any authorizations,
consents, approvals or waivers hereunder) and to consummate the transactions
contemplated herein. In addition to the foregoing, Purchaser shall cause Sellers
to be released from the personal guarantees set forth on Schedule 9.9 hereto
within ninety (90) days following Closing.
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7.7 NONSOLICITATION OF EMPLOYEES; CONFIDENTIALITY. In the event that the
Closing does not occur, for the period commencing on the termination of this
Agreement and continuing for a period of three years thereafter, Purchaser shall
refrain and shall cause its Affiliates to refrain from directly or indirectly
soliciting for employment any individual who during such three-year period is in
the employ of the Company, unless having obtained Sellers' prior written
consent. During such three-year period, Purchaser shall treat the information of
the Company provided to Purchaser as proprietary and shall not use such
information knowingly to the detriment of the Company; provided, however, such
restrictions shall not apply to information which is (i) already known by
Purchaser without an obligation of confidentiality, (ii) publicly known or
becomes publicly known through no unauthorized act of Purchaser, (iii) disclosed
to Purchaser by a third party not in violation of any obligations of
confidentiality to the Company, (iv) independently developed by Purchaser
without use of the confidential information, (v) disclosed without similar
restrictions by the Company to a third party, (vi) approved by the Company for
disclosure, (vii) required to be disclosed pursuant to a requirement of a
governmental agency or law so long as Purchaser provides the Company with timely
written notice of such requirement prior to any such disclosure in order to
provide the Company an opportunity to prevent or limit such disclosure, or
(viii) required to be disclosed pursuant to litigation, deposition or law.
ARTICLE 8 -- CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser contained herein are subject to the
satisfaction or waiver of the following conditions precedent on or prior to the
Closing Date:
8.1 NO MATERIAL ADVERSE CHANGE. From June 30, 2000, through the Closing
Date, (i) there shall have been no material adverse change in the assets or
liabilities, the business or condition, financial or otherwise, the results of
operations or the prospects of the Company, (ii) there shall have been no
increase in the compensation, bonuses or benefits payable to employees generally
or to any members of management of the Company except regular annual increases
consistent with past practices, (iii) there shall have been no payment on or
distribution in respect of the capital stock of the Company, (iv) there shall
have been no amendment to the Articles of Incorporation or Bylaws of the Company
except for amendments which do not have a material adverse affect on the Company
or its obligations under this Agreement, and (v) there shall have been no, and
no agreement in respect of, a merger or sale of a material portion of the assets
of the Company. Sellers shall have delivered to Purchaser a Certificate, dated
the Closing Date, to such effect.
8.2 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Sellers contained in this Agreement or in any Schedule delivered
pursuant hereto shall be true and correct on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of such date, and Sellers shall have delivered to Purchaser on the Closing
Date a certificate, dated the Closing Date, to such effect.
8.3 PERFORMANCE OF AGREEMENTS. Each and all of the acts of Sellers to be
performed on or before the Closing Date pursuant to the terms hereof shall have
been duly performed, and Sellers
23
shall have delivered to Purchaser evidence reasonably satisfactory to Purchaser,
including a certificate, dated the Closing Date, to such effect.
8.4 NO PROCEEDINGS. No action or proceeding shall have been instituted or,
to the best knowledge, information and belief of Sellers, threatened before or
by any governmental body or agency, or by any third party, to restrain or
prohibit any of the transactions contemplated hereby, and there shall not be in
effect any injunction or order enjoining or restraining the consummation of the
transactions contemplated hereby, and Sellers shall have delivered to Purchaser
a certificate, dated the Closing Date, to the best of Sellers' knowledge, to
such effect.
8.5 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received.
8.6 PROCEEDINGS. All corporate proceedings to be taken in connection with
the transactions contemplated by this Agreement, and all documents incident
hereto and thereto, shall be reasonably satisfactory in form and substance to
Purchaser and its counsel, and Purchaser shall have received copies of all such
documents and other evidence as it or its counsel reasonably may request in
order to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
8.7 OPINION OF COUNSEL. Sellers shall have furnished Purchaser with a
favorable opinion, dated the Closing Date, of its counsel, Xxxxx & Xxxxxxx, in
form and substance reasonably satisfactory to Purchaser and its counsel
substantially in the form of Exhibit 8.7 hereto.
ARTICLE 9 -- CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers contained herein are subject to the satisfaction
or waiver of the following conditions precedent on or prior to the Closing Date:
9.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained in this Agreement shall be true and correct on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of such date, and Purchaser shall have
delivered to Sellers on the Closing Date a certificate, dated the Closing Date,
to such effect. There shall have been no material adverse change to Purchaser
since December 31, 1999.
9.2 PERFORMANCE OF AGREEMENTS. Each and all of the agreements to be
performed by Purchaser on or before the Closing Date, including delivery of the
closing documents specfied in Section 3.3 hereof, pursuant to the terms hereof
shall have been duly performed, and Purchaser shall have delivered to Sellers
evidence reasonably satisfactory to Sellers, including a certificate, dated the
Closing Date, to such effect.
9.3 NO PROCEEDINGS. No action or proceeding shall have been instituted or,
to the best knowledge, information and belief of Purchaser, threatened before or
by a governmental body or
24
agency or by any third party to restrain or prohibit any of the transactions
contemplated hereby, and there shall not be in effect any injunction or order
enjoining or restraining the consummation of the transactions contemplated
hereby. Purchaser shall have delivered to Sellers a certificate, dated the
Closing Date, to the best of Purchaser's knowledge, to such effect.
9.4 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been obtained.
9.5 PROCEEDINGS. All proceedings to be taken in connection with the
transactions contemplated by this Agreement, and all documents incident hereto
and thereto, shall be reasonably satisfactory in form and substance to Sellers
and their counsel, and Sellers shall have received copies of all such documents
and other evidence as it or its counsel reasonably may request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
9.6 NO MATERIAL ADVERSE CHANGE. From June 30, 2000, through the Closing
Date, there shall have been no material adverse change in the assets or
liabilities, the business or condition, financial or otherwise, the results of
operations or the prospects of Purchaser.
9.7 TAX RETURNS. Sellers and Purchaser shall have agreed upon the tax
returns of the Company to be filed with the Internal Revenue Service for 1999.
9.8 PURCHASER'S IPO. Purchaser's IPO shall have been consummated at a price
per share of not less than $6.00.
9.9 RELEASE OF SELLERS' GUARANTEES. If Purchaser has been unsuccessful in
effecting the release of the personal guarantees of Sellers listed on Schedule
9.9 hereto within ninety (90) days following Closing, Purchaser will cause a
partial paydown of the associated debt, or, in the alternative, if acceptable to
Sellers, will provide to Sellers such collateral, as may be reasonably
satisfactory to Sellers. In any event, at Closing, Purchaser shall cause the
Company to provide in favor of Sellers a second-priority lien in the equipment
that secures the Company's equipment loan from Clay County Bank, as disclosed on
Schedule 4.2 hereto.
ARTICLE 10 -- SURVIVAL OF REPRESENTATIONS; INDEMNITY
10.1 SURVIVAL OF REPRESENTATIONS. The respective representations and
warranties of the parties contained in this Agreement or in any Schedule
delivered pursuant hereto shall survive the consummation of the transactions
contemplated hereby and continue for a period of two (2) years thereafter;
provided, however, that all representations and warranties of Sellers relating
to ownership of the VVI Shares shall continue indefinitely.
10.2 INDEMNIFICATION BY SELLERS. Sellers shall indemnify Purchaser, its
Affiliates and their respective officers, directors and agents (collectively,
the "Purchaser Indemnified Parties") against and hold them harmless from all
damages, losses, expenses, claims, demands, suits, causes
25
of action, proceedings, judgments and liabilities, including reasonable counsel
fees and court costs, assessed, incurred or sustained by or against the
Purchaser Indemnified Parties or the Company with respect to or arising out of
(i) the failure of any representation or warranty made by Sellers in this
Agreement or in any Schedule delivered pursuant hereto to be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date, (ii) the failure of Sellers to fulfill any of their covenants or
agreements hereunder, and (iii) any action or inaction of the Company prior to
the Closing Date (collectively, "Seller Liabilities"). With respect to those
matters covered in (iii) in the immediately preceding sentence, the
indemnification shall be limited to such amounts that are in excess of
liabilities accrued on the closing balance sheet used for calculating the
Company's net book value as referred to in the second sentence of Section 2.2
hereof.
10.3 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify Sellers and
Sellers' agents (collectively, the "Seller Indemnified Parties") against and
hold them harmless from all damages, losses, expenses, claims, demands, suits,
causes of action, proceedings, judgments and liabilities, including reasonable
counsel fees and court costs, assessed, incurred or sustained by or against the
Seller Indemnified Parties with respect to or arising out of (i) the failure of
any representation or warranty made by Purchaser in this Agreement to be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date, (ii) the failure of Purchaser to fulfill any of its covenants
or agreements contained herein, and (iii) any action or inaction of the Company
after the Closing Date.
10.4 REDUCTION OF PAYMENTS. If a payment by either party gives rise to a
loss, damage or expense that is subject to indemnification by the other party
hereto, the amount for which the damaged party may receive indemnification shall
be reduced by any insurance proceeds or other payments received by the damaged
party in respect thereof.
10.5 INDEMNIFICATION OF THIRD-PARTY CLAIMS. The obligations and liabilities
of any party to indemnify any other under this Article 10 with respect to claims
relating to third parties ("Claims") shall be subject to the following terms and
conditions:
(a) NOTICE AND DEFENSE. The party or parties to be indemnified (whether one
or more, the "Indemnified Party") will give the party from whom indemnification
is sought (the "Indemnifying Party") prompt written notice of any such Claim,
and the Indemnifying Party will undertake the defense thereof by representatives
chosen by it. So long as the Indemnifying Party is defending any such Claim
actively and in good faith, the Indemnified Party shall not settle such Claim.
The Indemnified Party shall make available to the Indemnifying Party or its
representatives all records and other materials required by them and in the
possession or under the control of the Indemnified Party, for the use of the
Indemnifying Party and its representatives in defending any such Claim, and
shall in other respects give reasonable cooperation in such defense.
(b) FAILURE TO DEFEND. If the Indemnifying Party, within a reasonable time
after notice of any such Claim, fails to defend such Claim actively and in good
faith, the Indemnified Party will (upon further notice) have the right to
undertake the defense, compromise or settlement of such Claim or consent to the
entry of a judgment with respect to such Claim, on behalf of and for the account
and risk of the Indemnifying Party, and the Indemnifying Party
26
shall thereafter have no right to challenge the Indemnified Party's defense,
compromise, settlement or consent to judgment therein.
(c) INDEMNIFIED PARTY'S RIGHTS. Anything in this Section 10.5 to the
contrary notwithstanding, (i) if there is a reasonable probability that a Claim
may materially and adversely affect the Indemnified Party other than as a result
of money damages or other money payments, the Indemnified Party shall have the
right to defend, compromise or settle such Claim, and (ii) the Indemnifying
Party shall not, without the written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all Liability in respect of
such Claim.
10.6 TIME FOR NOTICE. Any party claiming indemnification hereunder with
respect to the falsity of any representations or warranties herein must give
notice to the other party of its claim for indemnification within the time
period, if any, specified in Section 10.1 hereof for the survival of the
applicable representation or warranty.
10.7 TIME FOR PAYMENT. All indemnification payments required to be made
pursuant to this Article 10 shall be made promptly after demand for payment has
been made by the indemnified party upon the indemnifying party.
10.8 TAX EFFECT. The indemnification obligation of an Indemnifying Party
shall be adjusted so as to give effect to any net reduction in federal, state,
local or foreign income or franchise tax liability actually realized at any time
by the Indemnified Party in connection with the satisfaction by the Indemnifying
Party of the Claims with respect to which indemnification is sought hereunder.
Any Claims payable by the Indemnifying Party to the Indemnified Party hereunder
shall include the federal, state, local or foreign income or franchise tax
liability which the Indemnified Party will incur upon receipt of payment in
respect of such Claims (taking into account any net operating loss, capital loss
or credit carryover of the Indemnified Party). With respect to any Claims for
which the Indemnified Party (but for the operation of this sentence) is entitled
to indemnification hereunder, there shall be disregarded any tax liabilities
arising by reason of (i) any reduction or disallowance of deductions from
taxable income in one taxable year, to the extent such reduction or disallowance
would result in a corresponding increase in allowable deductions from income in
another taxable year, (ii) the shifting of items of income from one taxable year
to another, or (iii) the capitalization of amounts which were expensed, but only
if such capitalized amounts are subject to amortization or depreciation or
recovery in costs of goods sold, inventory or materials, except insofar as such
reduction, disallowance, shifting or capitalization would only result in the
increase of any unutilized net operating loss, capital loss or credit carryover.
10.9 AMOUNT LIMITATION. An Indemnified Party shall not be entitled to
indemnification under this Article 10 for breach of a representation or warranty
unless the aggregate of the Indemnifying Party's indemnification obligations to
the Indemnified Party pursuant to this Article 10 (but for this Section 10.9)
exceeds $10,000; and in such event, the Indemnified Party shall only be entitled
to indemnification for the amount above such threshold. The Seller's total
liability shall not exceed the Purchase Price.
27
10.10 INDEMNIFICATION IS SOLE REMEDY. Except as otherwise provided for
herein, the parties' sole and exclusive remedy for breach of this Agreement or
any claim or cause of action arising out of the transactions contemplated by
this Agreement is limited to the indemnification provisions of this Article 10.
10.11 PURCHASER'S IPO. Purchaser anticipates that it will go public and
provide its initial public offering ("Purchaser's IPO") within sixty (60) days
of the date hereof, but not later than October 10, 2000 (the date of the
Purchaser's IPO shall be referred to herein as the "IPO Date"). Purchaser shall
take all reasonable steps to consummate Purchaser's IPO. Should Purchaser's IPO
not be offered at or prior to October 10, 2000, Sellers shall have the option
for a period of thirty (30) days commencing on October 10, 2000 to continue this
Agreement for an additional period specified in a notice of such continuation,
which period shall be not less than 30 days nor more than 120 days. Should
Sellers elect to continue this Agreement pursuant to the terms of this Section
10.11, Sellers shall provide Purchaser written notice to Purchaser five (5)
business days prior to October 10, 2000. If Sellers fail to provide such notice
to Purchaser, this Agreement shall terminate effective October 10, 2000.
ARTICLE 11 -- MISCELLANEOUS
11.1 TERMINATION OF AGREEMENT. The parties hereto shall use all reasonable
efforts to consummate the transactions contemplated hereby as soon as
practicable. This Agreement may be terminated (i) at any time by mutual written
agreement of Sellers and Purchaser, (ii) by either Purchaser or Sellers if any
condition to the performance of the other party's obligations herein is not
fulfilled or waived on or prior to October 10, 2000, provided that no party in
breach of its obligations hereunder shall have the right to terminate this
Agreement, and this Agreement (other than the confidentiality provisions hereof)
shall be null and void and have no further effect. All rights or remedies of a
party that accrue as a result of the breach of any provision of the Agreement
shall survive any termination of this Agreement.
11.2 EXECUTION IN COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same document.
11.3 NOTICES. All notices that are required or may be given pursuant to the
terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered either personally or sent by first
class mail, certified, return receipt requested, postage prepaid, or by
overnight courier service, addressed as follows:
If to Sellers: Xxxxxx X. Xxxx
Xxxxxxx X. Xxxx
0000 Xxxxx Xxxxx 00
Xxxxxxxx Xxxxxxx, Xxxxxxx 00000
28
with copy to: Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
If to Purchaser: Weststar Environmental, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Chief Executive Officer
with copy to: Xxxxxxxx & Thames, P.A.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or to such other address as the party to receive any such communication or
notice may have designated by notice to the other party. Any notices delivered
personally shall become effective at the time of receipt by the person to whom
they are given. Notices sent by certified mail, return receipt requested, or by
overnight courier service shall become effective on the earlier of (i) the date
on which they are accepted or rejected by the person to whom they are addressed,
or (ii) three (3) business days after being deposited in the mails or delivered
to the courier service.
11.4 WAIVERS. Either party hereto may, by written notice to the other
parties hereto, (a) extend the time for the performance of any of the
obligations or other actions of the other under this Agreement; (b) waive any
inaccuracies in the representations or warranties of the other party contained
in this Agreement or in any document delivered pursuant to this Agreement; (c)
waive compliance with any of the conditions to its obligations contained in this
Agreement; or (d) waive or modify performance of any of the obligations of the
other party under this Agreement. Except as provided in the preceding sentence,
no action taken pursuant to this Agreement, including without limitation any
investigation by or on behalf of either party, shall be deemed to constitute a
waiver by either party taking such action of compliance with any representation,
warranty, covenant or agreement contained in this Agreement. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
11.5 SPECIFIC PERFORMANCE. Each party hereto acknowledges and agrees that
the remedy at law for any breach of this Agreement would be inadequate, and
agrees and consents that temporary and permanent injunctive and other relief may
be granted without proof of actual damage or inadequacy of legal remedy in any
proceeding that may be brought to enforce any of the provisions of this
Agreement.
11.6 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and
Schedules hereto, constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes all prior representations,
agreements and understandings, oral and written, by or among the parties hereto
with respect to the subject matter hereof.
29
11.7 APPLICABLE LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Florida applicable to contracts made and performed in Florida.
11.8 BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
11.9 ASSIGNABILITY. Neither this Agreement nor any of the parties' rights
or obligations hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto, except that Purchaser may
transfer all or part of its rights and obligations under this Agreement to one
or more of its Affiliates, provided that Purchaser shall remain liable for its
obligations hereunder.
11.10 EXPENSES. The parties hereto shall pay all of their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel, accountants and
financial advisers. In the event of litigation or other adversary proceeding
with respect to this Agreement or the transactions contemplated hereby, the
nonprevailing party shall reimburse the prevailing party for all reasonable
attorneys' fees and court costs incurred in connection therewith.
Notwithstanding the foregoing, Sellers and Purchaser acknowledge that Purchaser
is responsible for the payment of the audit conducted on the Company's 1999
year-end financial statements, and any other audits of the Company by reason of
the requirements placed on Purchaser for the preparation of its registration
statement in connection with Purchaser's IPO.
11.11 PUBLICITY. Except as may be required by law, no party hereto shall
issue any press release or make any other public statement, and each party shall
keep confidential all matters, relating to or connected with or arising out of
this Agreement or the matters contained herein, unless it obtains the prior
approval of the other party hereto, which approval shall not be unreasonably
withheld; provided that, this restriction does not apply to (i) information in
the public domain, and (ii) information obtained from a third party lawfully in
possession of it and under no obligation of secrecy as to it.
11.12 AMENDMENTS. This Agreement may not be changed orally, but only by an
agreement in writing signed by the parties hereto. Any provision of this
Agreement can be waived, amended, supplemented or modified by written agreement
of the parties hereto.
11.13 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to, and
shall not, create any rights in any Person other than Purchaser and Sellers.
11.14 CERTAIN TAX MATTERS. At the request of Purchaser, Sellers agreed that
Purchaser's accountants extend the time for the filing of the Company's 1999 tax
returns to be filed with the IRS. Purchaser agrees that it shall be responsible
for the amount of any penalties or interest associated with the filing of such
extension.
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
have been duly executed and delivered on the date first above written.
/s/ XXXXXX X. XXXX
--------------------------------------
Xxxxxx X. Xxxx
/s/ XXXXXXX X. XXXX
----------------------------------
Xxxxxxx X. Xxxx
"Sellers"
WESTSTAR ENVIRONMENTAL, INC.
By: /s/ XXXXXXX X. XXXXX
---------------------------------
Xxxxxxx X. Xxxxx,
Chief Executive Officer
"Purchaser"
31
STATE OF FLORIDA
COUNTY OF XXXXX
The foregoing instrument was acknowledged before me this 22nd day of
August, 2000, by Xxxxxx X. Xxxx, who (check one) ____ is personally known to me
or ____ has produced _________________ as identification and who did/did not
take an oath.
/s/ XXXXX XXXXXX XXXXXXXX
-------------------------------------------
Print Name: Xxxxx Xxxxxx Xxxxxxxx
Notary Public, State and County Aforesaid
My commission: CC672328
My commission expires: September 16, 2001
[Notarial Seal]
STATE OF FLORIDA
COUNTY OF XXXXX
The foregoing instrument was acknowledged before me this 22nd day of
August, 2000, by Xxxxxxx X. Xxxx, who (check one) ____ is personally known to me
or ____ has produced _________________ as identification and who did/did not
take an oath.
/s/ XXXXX XXXXXX XXXXXXXX
-------------------------------------------
Print Name: Xxxxx Xxxxxx Xxxxxxxx
Notary Public, State and County Aforesaid
My commission: CC672328
My commission expires: September 16, 2001
[Notarial Seal]
STATE OF FLORIDA
COUNTY OF XXXXX
The foregoing instrument was acknowledged before me this 22nd day of
August, 2000, by Xxxxxxx X. Xxxxx, as Chief Executive Officer of Weststar
Environmental, Inc., a Florida corporation, on behalf of the corporation, who
(check one) ____ is personally known to me or ____ has produced
_________________ as identification and who did/did not take an oath.
/s/ XXXXX XXXXXX XXXXXXXX
-------------------------------------------
Print Name: Xxxxx Xxxxxx Xxxxxxxx
Notary Public, State and County Aforesaid
My commission: CC672328
My commission expires: September 16, 2001
[Notarial Seal]
32
SCHEDULES TO STOCK PURCHASE AGREEMENT
AMONG XXXXXX X. XXXX, XXXXXXX XXXX, AND WESTSTAR ENVIRONMENTAL, INC.
ACKNOWLEDGEMENT
The undersigned acknowledge that this document (including following
attached documents) are the Schedules described the Stock Purchase Agreement
among Xxxxxx X. Xxxx, Xxxxxxx X. Xxxx, and Weststar Environmental, Inc., a
Florida corporation.
Dated as of 8-22-2000.
/s/ XXXXXX X. XXXX
--------------------------------------
Xxxxxx X. Xxxx
/s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx
WESTSTAR ENVIRONMENTAL, INC.
By: /s/ XXXXXXX X. XXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President/C.E.O.
