Exhibit 10.1
LEASE/PURCHASE AGREEMENT
THIS LEASE/PURCHASE AGREEMENT is made as the 1st day of January,
1999, by and among WasteMasters, Inc., a Maryland corporation
(hereinafter called "Lessor"), and X. Xxxxxx Enterprises, Inc.
(hereinafter called "Lessee").
WITNESSETH:
1. Leased Property. Lessor, for and in consideration of the
rents, covenants, agreements, and stipulations hereafter mentioned,
provided for and contained to be paid, kept and performed by Lessee,
leases and rents unto Lessee, and Lessee hereby leases and takes upon the=
terms and conditions which hereinafter appear, the following described
property, (hereinafter called the "Property"), to wit: Wood Management,
Inc., a New Jersey corporation; Mini-Max Enterprises, Inc., a New Jersey
corporation; Tri-State Waste Disposal, Inc., a New Jersey corporation;
Southeastern Research & Recovery, Inc., a South Carolina corporation;
Atlantic Coast Demolition & Recycling, Inc., a Pennsylvania corporation
(hereinafter, the "Corporations"); and all of the real estate and
personal property normally used by the Lessor in the operation of that
landfill in Lisbon, Ohio (hereinafter, the "Landfill"), which real estate=
is more particularly described on Exhibit A attached hereto.
2. Term. The Lessee shall have and hold the Property for a term
equal to the shorter of one year or the date of Closing in the event the
Lessee exercises the Option (as defined herein).
3. Rental. Lessee agrees to pay to Lessor at the address of
Lessor as stated in this Lease, without demand, deduction or set off,
monthly rental in the amount of $10.00 per month. Monthly rental
payments shall be paid in advance on the first day of each calendar month=
during the term hereof. Upon execution of this Lease, Lessee shall pay
to Lessor the first full month's rent due hereunder.
4. Management of Property. During the term of this Lease, the
Lessee shall have the sole and exclusive right to operate and manage the
Property. As sole shareholder of the Corporations, the Lessor hereby
grants the Lessee an irrevocable proxy during the term of this Lease to
vote the Lessor's shares in the Corporations to appoint such persons that=
the Lessee deems advisable to the board of directors of each of the
Corporations, and the Lessee hereby agrees to replace the board of
directors of each of the Corporations with the Lessee's nominees promptly=
after execution of this Lease. Lessor and Lessee agree that the
foregoing proxy shall not entitle the Lessee to vote the Lessor's shares
of stock in the Corporations on any matter other than the election of
directors to the Corporations during the term of this Lease, including
without limitation any proposed merger, share exchange, sale of assets,
amendment to articles of incorporation or any other act which requires
approval of the shareholders of the Corporations under the Corporations'
articles of incorporation, bylaws or applicable law. The Lessee further
agrees that the foregoing proxy shall expire upon the expiration or
termination of this Lease, and that the foregoing proxy is not
exercisable at any time that the Lessee is in default under this Lease.
The Lessee further agrees that it will not take any action to cause the
Corporations to sell, mortgage, pledge or lease any assets outside the
ordinary course of business or file any petition for relief under the
United States Bankruptcy Code without the prior written consent of the
Lessor.
5. Operation of Property. The Lessee shall be responsible for
providing all management, consulting, financial, marketing and
operational support services to the Property. The Lessee shall be
entitled to all revenues generated by the Property and shall be
responsible for paying all expenses and liabilities incurred and accrued
by the Property on and after the date of this Agreement including,
without limitation, all installments of approved Company Debt. Lessee
agrees that it shall be responsible for providing funds to the Property
to the extent the expenses of the Property are greater than the revenues
of the Property during the term of this Lease determined on an accrual
basis under generally accepted accounting principles (but excluding any
noncash expenses such as depreciation or amortization of goodwill), and
the Lesseee shall be entitled to retain all profits generated by the
Property determined under the same principles. The obligations of the
Lessee to manage the Property include the obligation to:
(a) Administer, supervise and control all of the finances of the
Property, including payroll, taxes, accounting, bookkeeping, record
keeping, managing or accounts payable, and accounts receivable, banking,
financial records and reporting functions as they pertain to the business=
of the Property, with the power to make such changes therein, in its sole=
discretion, and to incorporate such functions into systems used by
Lessee. Lessee shall prepare and maintain financial statements for the
Property according to generally accepted accounting principles
consistently applied and shall provide the Lessor with monthly operating
reports and statements including but not limited to cash flow statements,=
income statements, accounts payable and accounts receivable reports and
such other reports and information as may be requested by Lessor from
time to time to enable the Lessor to comply with its reporting
requirements under the Securities Exchange Act of 1934.
(b) Select and employ all personnel necessary to service the
Property.
(c) Supervise and control the purchase of all materials and
supplies, and acquire, lease, dispose of and repair equipment and
facilities necessary to provide safe and adequate service to the business=
of the Property.
(d) Manage, at Lessee's sole discretion, all costs and all pricing
on a customer-by-customer basis, estimate all costs on new contracts, bid=
on and enter into new contracts, and control all costs for contracts in
progress.
(e) Commence, defend and control all legal actions, arbitrations,
investigations and proceedings that arise or are pending during the term
of this Lease.
(f) Maintain the assets of the Property in good repair, order and
condition, normal and reasonable wear and tear excepted.
6. Licenses and Permits. The parties acknowledge that this Lease=
as well as the transfer of the Property to the Lessee pursuant to the
option herein may be subject to approval by the State of Ohio
Environmental Protection Agency, and similar state agencies in New Jersey=
and Pennsylvania and they will cooperate in seeking such approval. The
Lessee shall be responsible for the cost of transferring or obtaining any=
licenses or permits necessary to conduct the business of the Property,
and for maintaining such licenses and permits in good standing during the=
term of this Lease.
7. Books and Records. The Lessor shall provide the Lessee with
access to all books and records necessary for the transition of
management of the Property to the Lessee hereunder, including any
corporate records of the Property, any payroll records for employees of
the Property, any customer lists, and any financial records, such as the
general ledger, accounts payable, accounts receivable, etc. Promptly
after the termination or expiration of this Lease, the Lessee shall turn
over to the Lessor all books and records relating to or generated during
the Lessee's operation of the Property during the term of this Lease, or
which was turned over to Lessee at the commencement of this Lease.
8. No Agency. The Lessee shall, at all times, be independent of=
the Lessor. Nothing contained herein shall be deemed to make or render
the Lessor a partner, co-venturer or other participant in the business or=
operations of the Lessee, or in any manner to render Lessor liable, as
principal, surety, guarantor, agent or otherwise for any of the debts,
obligations or liabilities of the Property incurred during the term of
this Lease.
9. Abandonment of Property. Lessee agrees not to abandon or
vacate the Property during the term of this Lease and agrees to use the
Property for the purposes herein leased until the expiration hereof.
10. Indemnity; Insurance. Lessee agrees to and hereby does
indemnify and save Lessor harmless against all claims for damages to
persons or property by reason of Lessee's use or occupancy of the
Property, and all expenses incurred by Lessor because thereof, including
attorney's fees and court costs. Lessee agrees that it will, at its own
expense, at all times procure for, deliver to and maintain for the
benefit of Lessor during the term of this Lease, original paid up
insurance policies of such insurance companies, in such amounts, in such
form and substance, and with such expiration dates as are acceptable to
Lessor and which name the Lessor as additional insured. Until the Lessee=
is notified otherwise in writing by the Lessor, the Lessee shall maintain=
the following insurance: (a) Comprehensive General Liability of
$1,000,000.00, which includes insurance against liability for injury to
or death of persons or loss or damage to their property occurring in or
about the Property; (b) Hazard insurance against loss or damage to the
Property by fire, lightning, windstorm, hail, explosion, riot, riot
attending a strike, civil commotion, aircraft, vehicles, smoke, vandalism=
and malicious mischief and against such other hazards as, under good
insurance practices, from time to time are insured against for properties=
of similar character and location, the amount of which insurance shall be=
not less than one hundred (100.0%) per cent of the full replacement cost
of the Property without deduction for depreciation and which policies of
insurance shall contain satisfactory replacement cost endorsements.
Lessee shall deliver to Lessor a certificate of any renewal insurance
policies on or before the date of expiration of any existing insurance
policy.
11. Governmental Orders. Lessee agrees, at his own expense, to
comply promptly with all requirements of any legally constituted public
authority made necessary by reason of Lessee's occupancy and management
of the Property. Lessor agrees to comply promptly with any such
requirements if not made necessary by reason of Lessee's occupancy and
management.
12. Assignment and Subletting. Lessee shall not have the right
to sublease the Property or any part thereof, assign this Lease or any
interest hereunder, or permit the use of the Property by another party
other than the Lessee without the prior written consent of Lessor. No
sublease or assignment by Lessee shall relieve Lessee of any liability
hereunder.
13. Termination of Lease. Lessor may, at its option, upon ten
(10) days' written notice terminate this Lease (if such default is not
cured within such ten (10) day period or such longer period as required
to effect a cure if a cure is commenced within 10 days and diligently
prosecuted): (i) if Lessee shall violate any material provision of this
Lease; (ii) if Lessee shall violate or be in material breach of any
provision, representation, warranty, covenant or undertaking herein; or
(iii) if Lessee (a) makes an assignment for the benefit of creditors, (b)=
is adjudicated a bankrupt, (c) files or has filed against it any
bankruptcy, reorganization, liquidation or similar petition or any
petition seeking the appointment of a receiver, conservator or other
representative, or (d) proposes a composition arrangement with creditors.=
Termination of the Lease pursuant to this paragraph shall not limit or
impair any other rights which the Lessor has hereunder, including without=
limitation the right to file suit against the Lessee to recover damages
for the violation of any term herein or to right to set off any debt
which the Lessor may owe the Lessee against any liability of the Lessee
to the Lessor hereunder.
14. Quiet Enjoyment. So long as Lessee observes and performs
the covenants and agreements contained herein, it shall at all times
during the Lease term peacefully and quietly have and enjoy possession of=
the Property, but always subject to the terms hereof.
15. No Estate in Property. This Lease shall create the
relationship of Lessor and Lessee between the parties hereto. No estate
shall pass out of Lessor. Lessee has only a usufruct not subject to levy=
and sale, and not assignable by Lessee except by Lessor's consent.
16. Attorney's Fees. In the event that any action or proceeding=
is brought to enforce any term, covenant or condition of this Lease on
the part of Lessor or Lessee, the prevailing party in such litigation
shall be entitled to recover reasonable attorney's fees to be fixed by
the court in such action or proceeding. Furthermore, Lessor and Lessee
agree to pay the attorney's fees and expenses of the other party to this
Lease (either Lessor or Lessee) if it is made a party to litigation
because of its being a party to this Lease and when it has not engaged in=
any wrongful conduct itself.
17. Press Releases. No publicity release or announcement
concerning this Lease or the Option or the transactions contemplated
hereby shall be issued without advance approval of the form and substance=
thereof by Lessor or Lessee.
18. Rights Cumulative. All rights, powers, and privileges
conferred hereunder upon the parties hereto shall be cumulative and not
restrictive of those given by law.
19. Waiver of Rights. No failure of Lessor to exercise any
power given Lessor hereunder or to insist upon strict compliance by
Lessee of its obligations hereunder and no custom or practice of the
parties at variance with the terms hereof shall constitute a waiver of
Lessor's right to demand exact compliance with the terms hereof.
20. Agency Disclosure. Lessor represents to Lessee that Lessor
has not engaged any agent in regard hereto or to the sale or lease of the=
Property, and Lessor hereby agrees to indemnify Lessee and hold Lessee
harmless against all liability, loss, cost, damage and expense
(including, without limitation, attorneys' fees and cost of litigation)
Lessee shall ever suffer or incur because of any claim by any agent
claiming by, through or under Lessor, whether or not meritorious, for any=
fee, commission or other compensation with respect hereto. Lessee
represents to Lessor that it has not engaged any agent in regard hereto,
and Lessee hereby agrees to indemnify Lessor and hold Lessor harmless
against all liability, loss, cost, damage and expense (including, without=
limitation, attorneys' fees and cost of litigation) Lessor shall ever
suffer or incur because of any claim by any agent claiming by, through or=
under Lessee, whether or not meritorious, for any fee, commission or
other compensation with respect hereto or with respect to the Property.
21. Environmental Laws. Lessor represents, to the best of their=
knowledge and belief, that 1) the Property are in compliance with all
applicable environmental laws, and 2) there are not excessive levels (as
defined by the Environmental Protection Agency) of radon, toxic waste or
hazardous substances on the Property. Lessee represents and warrants
that Lessee shall comply with all applicable environmental laws and that
Lessee shall not permit any of his employees, agents, contractors for
subcontractors, or any person present on the Property to generate,
manufacture, store, dispose or release on, about, or under the Property
any hazardous substances which would result in the Property not complying=
with any applicable environmental laws, and Lessee hereby indemnifies and=
holds Lessor harmless from any liability or claim, including attorney's
fees incurred by Lessor, arising out of a breach of Lessor's obligations
under this paragraph.
22. Option to Purchase. The Lessor hereby grants to the Lessee
an option to purchase the Property on the terms and conditions set forth
below:
a) Option Price. The Lessee may purchase the Property for
consideration of seven million dollars ($7,000,000) ("Aggregate Purchase
Price"), which amount will be payable as follows: one million dollars
($1,000,000) at Closing ("Initial Consideration"); two million dollars
($2,000,000) exactly one (1) year thereafter from Closing ("Year One (1)
Consideration"); two million dollars ($2,000,000) exactly two (2) years
from Closing ("Year Two (2) Consideration"); and two million dollars
($2,000,000) exactly three (3) years from Closing ("Year Three (3)
Consideration"). However, in year one (1), Lessee shall have the option,=
for delivering unto Lessor consideration in the amount of fifty thousand
dollars ($50,000) and four hundred thousand (400,000) shares of its SEC
Rule 144 common stock, to Satisfy the Year One (1) Consideration; in year=
two (2), Lessee shall have the option, for delivering consideration unto
Lessor in the amount of seventy five thousand dollars ($75,000) and four
hundred thousand (400,000) shares of its SEC Rule 144 common stock, to
Satisfy the Year Two (2) Consideration; and in year three (3), Lessee
shall have the option, for delivering consideration unto Lessor in the
amount of one hundred and twenty five thousand dollars ($125,000) and
four hundred thousand (400,000) shares of its SEC Rule 144 common stock,
to Satisfy the Year Three (3) Consideration.
b) Term of Option. The Lessee may exercise this Option at any time
prior to the expiration or termination of this Lease.
c) Manner of Exercise of Option. The Lessee may exercise this
Option by written notice to the Lessor in the manner set forth in this
Lease for the giving of notice to the Lessor. Such notice shall state
the Lessee's election to exercise this Option, shall be signed by an
officer of the Lessee, and shall state a date, time and location in the
Atlanta, Georgia metro area where the Closing of the purchase of the
Property will take place, which date shall be between 10 and 20 days
after the date of receipt of such notice. The exercise of the Option by
the Lessee shall constitute a binding obligation on the part of the
Lessee to purchase the Property on the terms and conditions set forth
herein and on the Lessor to convey the Property on the terms and
conditions set forth herein.
d) Title to Property. In the event the Option is exercised, the
Corporations shall be conveyed to the Lessee by assignment of all of the
issued and outstanding common stock of the Corporations to the Lessee by
the Lessor free and clear of all liens, claims or encumbrances. The
Landfill shall be conveyed to the Lessee by limited warranty deed, to the=
extent the Landfill constitutes real property, and by xxxx of sale, to
the extent the Landfill constitutes personal property, subject to all
liens, claims and encumbrances which encumbered such property when it was=
acquired by the Lessor, but otherwise free and clear of any liens, claims=
and encumbrances.
e) Condition of Property. In the event the Option is exercised,
the Property shall be conveyed to the Lessee "as is, where is," without
any express or implied warranties, including any warranties of condition,=
of merchantability or fitness for a particular purpose. Furthermore, the=
Lessor makes no warranties as to the financial condition of the
Corporations, it being understood by the parties that the Lessee shall
conduct any due diligence investigation of the Property while it is the
Lessee under this Lease prior to exercising the Option to purchase the
Property.
f) Conditions to Conveyance. The Lessee acknowledges and agrees
that the Lessor's obligation to convey the Property is conditioned upon
the subsequent approval of the Option price by the board of directors of
the Lessor after receipt of such independent valuations or reports as may=
be necessary in the judgment of the board to determine that the Option
price fairly represents the value of the Property. The Lessor agrees to
commission and obtain any fairness opinions or reports which it may need
to approve the Option price herein as soon as practical after the
execution of this Lease.
23. Time of Essence. Time is of the essence with respect to
this Lease.
24. Notices. All notices required or permitted under this Lease=
shall be in writing and shall be personally delivered or sent by U.S.
Certified Mail, return receipt requested, postage prepaid. Agent shall
be copied with all required or permitted notices. Notices to Lessee
shall be delivered or sent to the address shown below, except that upon
Lessee's taking possession of the Property, the Property shall be
Lessee's address for notice purposes. Notices to Lessor and Agent shall
be delivered or sent to the addresses hereinafter stated, to wit:
Lessor:
Xxxxxxx Xxxxx
WasteMasters, Inc.
0000 Xxxxxxxxx Xxxxxx X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx, Xxxxxx & Xxxxxxxxx, P.C.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Lessee:
All notices shall be effective upon delivery. Any party may change his
notice address upon written notice to the other parties.
25. Entire Agreement. This Lease contains the entire agreement
of the parties hereto, and no representations, inducements, promises or
agreements, oral or otherwise, between the parties not embodied herein,
shall be relied upon by the other party or be of any force or effect.
IN WITNESS WHEREOF, the parties herein have hereunto set their hands and
seals, in triplicate, the date and year first above written.
LESSOR:
WASTEMASTERS, INC.
________________________________
By: A. Xxxx Xxxxxx, CEO
ATTEST:
________________________________
By: _____________________________
Title: ___________________________
[SEAL]
LESSEE:
X. XXXXXX ENTERPRISES, INC.
________________________________
By: _____________________________
Title: ___________________________
ATTEST:
________________________________
By: _____________________________
Title: ___________________________
[SEAL]
