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Exhibit 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") entered into as of
the 22nd day of October, 1997 between SAFETY DISPOSAL SYSTEM OF VIRGINIA, INC.,
a Virginia corporation, MED/WASTE, INC., a Delaware corporation, REPUBLIC
INDUSTRIES, INC., a Delaware corporation and INCENDERE, INC., a Virginia
corporation.
R E C I T A L S
A. Republic, through Incendere, operates a medical waste collection
and disposal business in which it collects medical waste from generators located
east of the Mississippi River;
B. Buyer desires to purchase 100% of the outstanding capital stock
of Incendere and Republic desires to sell such capital stock, upon the terms and
subject to the conditions set forth herein.
C. Republic indirectly owns 100% of the outstanding capital stock
of Incendere;
D. Republic and Incendere desire to make certain representations,
warranties and agreements in connection with this Agreement and also to
prescribe various conditions to the Agreement.
E. The parties agree that the transaction contemplated by this
Agreement shall be treated for federal income tax purposes in accordance with
Section 338(h)(10) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived therefrom and of the respective mutual covenants and
agreements hereinafter set forth and such other good and valuable consideration,
the adequacy and receipt of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
ARTICLE 1. - DEFINITIONS
All capitalized terms used in this Agreement are used as defined in
this Article I or elsewhere in this Agreement.
1.1 AFFILIATE - shall mean with respect to any party to this
Agreement, any entity or individual directly or indirectly controlling or
controlled by or under the direct or indirect common control with such party.
For purposes of this Agreement "control" means the power to direct the
management and policies of such entity or individual, directly or indirectly,
whether through ownership of voting securities or otherwise.
1.2 ASSUMED LIABILITIES - shall have the meaning set forth in
Section 2.5 herein.
1.3 BUSINESS - shall mean the provision by Incendere and York Waste
Disposal, Inc. of medical waste collection and disposal services of medical
waste to generators located in the United States east of the Mississippi River,
as provided by Incendere or any of its Affiliates, during the 12 month period
preceding the execution of this Agreement;
1.4 BUYER - shall mean SAFETY DISPOSAL SYSTEM OF VIRGINIA, INC. a
Virginia corporation.
1.5 CLOSING DATE - shall mean the third business day following the
date of receipt by Incendere and Buyer of all necessary approvals and consents
required hereunder, or such other date as may be agreed upon in writing by all
parties hereto.
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1.6 COLLATERAL AGREEMENTS - shall mean and include any and all
agreements, instruments, certificates or documents required or expressly
provided for in this Agreement to be executed and delivered in connection with
the transaction contemplated by this Agreement.
1.7 COMMON STOCK - shall mean the common stock of Incendere as
described in its Certificate of Incorporation.
1.8 CONTRACTS - shall mean and include any and all contracts,
agreements, understandings, arrangements, leases, licenses, registrations,
authorizations, easements, servitudes, rights of way, mortgages, bonds, notes,
guaranties, liens, indebtedness, approvals, or other instruments or undertaking
to which such person is a party or to which or by which such person or the
property of such person is subject or bound, excluding any Permits, all as
listed on the Disclosure Schedule.
1.9 DAMAGES - shall mean any and all damages, liabilities,
obligations, penalties, fines, judgments, claims, deficiencies, losses, costs,
expenses and assessments, including all attorneys' fees and costs, and interest
accruing on such Damages.
1.10 DISCLOSURE SCHEDULE - shall mean the Disclosure Schedule
prepared by Republic and Incendere containing the disclosures, exhibits and
schedules required pursuant to the terms of this Agreement.
1.11 ENVIRONMENTAL CLAIM - shall mean any investigation, notice,
violation, demand, allegation, action, suit, injunction, judgment, order,
consent, decree, penalty, fine, lien, proceeding, or claim (whether
administrative, judicial or private in nature) arising (a) pursuant to, or in
connection with, an actual or alleged violation of any Environmental Law, (b) in
connection with any Hazardous Material, Medical Waste or actual or alleged
Hazardous Material Activity, (c) from any abatement, removal, remedial,
corrective or other response action in connection with a Hazardous Material or
Medical Waste, Environmental law or other order of a Governmental Authority, or
(d) from any actual or alleged damage, injury, threat or harm to health, safety,
natural resources or the environment.
1.12 ENVIRONMENTAL LAW - shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, and the Occupational Safety and Health act of 1970, each
as amended, together with all other laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings and charges thereunder)
of federal, state, local, and foreign governments (and all agencies thereof)
concerning pollution or protection of the environment, public health and safety,
or employee health and safety, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, medical or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutant, contaminants, or chemical, industrial, hazardous, medical
or toxic materials or wastes.
1.13 ERISA - shall mean the Employment Retirement Income Security
Act of 1974, as amended.
1.14 EXCLUDED ASSETS - shall have the meaning set forth in Section
2.4.
1.15 FINANCIAL STATEMENTS - shall mean Incendere's audited
Financial Statements consisting of Statements of Net Assets as of December 31,
1995 and 1996 and statements of income for the two (2) years ended December 31,
1996, the notes to the Financial Statements thereto, as attached to the
Disclosure Schedule.
1.16 GAAP - shall mean generally accepted accounting principles
consistently applied, for financial statements used in the United States.
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1.17 GOVERNMENTAL AUTHORITY - shall mean and include the United
States of America and any commonwealth, state, territory or possession thereof
and any political subdivision of any of the foregoing, including, but not
limited to courts, departments, commissions, boards, bureaus, agencies,
ministries or other instrumentalities.
1.18 HAZARDOUS MATERIAL - shall mean any substance, chemical,
compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant,
or material which is hazardous or toxic, and includes, without limitation, (a)
any medical waste, (b) asbestos, polychlorinated biphyenls and petroleum
(including crude oil or any fraction thereof) and (c) any such material
classified or regulated as "hazardous" or "toxic" pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund amendments and Reauthorization Act of 1986, 42 U.S.C. ss. 9601, et
seq., Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and Hazardous an Solid Waste Amendments of 1984, 42 U.S.C.
ss. 6901, et seq., Federal Water Pollution Control Act, as amended by the Clean
Water Act of 1977, 33 U.S.C. ss. 1251, et seq., Clean Air Act of 1966, as
amended, 42 U.S.C. ss. 7401, et seq., Toxic substances Control Act of 1976, 15
U.S.C. ss. 2601, et seq., or Hazardous Materials Transportation Act, 49 U.S.C.
App. ss. 1801, et seq.
1.19 HAZARDOUS MATERIAL ACTIVITY - shall mean any activity, event
or occurrence involving a Hazardous Material, including, without limitation, the
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, Release, threatened Release, abatement, removal, remediation,
handling of or corrective or response action to any Hazardous Material.
1.20 INCENDERE - shall mean Incendere, Inc., a Virginia
corporation, an indirect wholly owned subsidiary of Republic.
1.21 INTANGIBLE RIGHTS - shall mean and include any and all
information, trade secrets, patents, copyrights, trademarks, trade names and
other intangible properties that are necessary or customarily used in the
operation of its Business and listed on Schedule 1.21 to the Disclosure
Schedule.
1.22 INTERIM FINANCIAL STATEMENTS - shall mean the unaudited
consolidated financial statements of Incendere consisting of Statements of Net
Assets as of June 30, 1996 and 1997 and statements of income for the six months
ended June 30, 1996 and 1997, respectively, all as attached to the Disclosure
Schedule. If the closing of the transaction contemplated by this Agreement is
extended beyond November 14, 1997, the Interim Financial Statements shall be as
of September 30, 1996 and 1997, and for the nine-month periods ended September
30, 1996 and 1997.
1.23 KNOWLEDGE - shall mean any fact or matter of which any of the
persons identified on SCHEDULE 1.23,has actual or constructive knowledge or
which such officer or employee should have had knowledge considering the
circumstances and operations of the Business.
1.24 MATERIAL ADVERSE EFFECT - shall mean any change, event or
occurrence which has or could reasonably be expected to have a material adverse
effect upon the Business taken as a whole, other than those occurrences which
relate to the medical waste industry generally or the general economy. It shall
be presumed that any change, occurrence or event which in the aggregate would
involve $50,000 or more shall be a Material Adverse Effect on the Business.
1.25 MEDICAL WASTE - shall mean and include any waste which may
cause an infectious disease or can reasonably be suspected of harboring
pathogenic organisms, including predominately all materials that come in contact
with human and animal body fluids.
1.26 NET REVENUE - shall mean all revenues generated by the
Business for bona fide goods and services provided to third parties during the
Test Period, net of returns, allowances and discounts, all as determined in
accordance with GAAP. Net revenue shall not include any intercompany
transactions.
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1.27 MWI - shall mean MED/WASTE, INC., a Delaware corporation.
1.28 ORDINARY COURSE OF BUSINESS - shall mean the ordinary course
of business of Incendere, with respect to the Business consistent with past
practice during the six months ended June 30, 1997.
1.29 PERMITS - shall mean and include any and all permits,
certificates of need, licenses, agencies, orders or contracts granted by any
Governmental Authority necessary or used in the operation of the Business as
presently conducted and which are listed on Schedule 1.29 to the Disclosure
Schedule.
1.30 PURCHASE PRICE - shall mean the consideration paid by Buyer
for the Acquired Assets as specifically set forth in Section 3.1 herein.
1.31 RELEASE - shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the indoor or outdoor environment, including, without limitation,
the abandonment or discarding of barrels, drums, containers, tanks and other
receptacles containing or previously containing any Hazardous Material or
Medical Waste.
1.32 REPUBLIC - shall mean Republic Industries, Inc., a Delaware
corporation.
1.33 TAX OR TAXES - shall mean any federal, state, local or
foreign, income, gross receipt, license, payroll, employment, excise,
communications, severance, stamp, occupation, premium, windfall profits,
environmental, customs, duties, capital stock, franchise profits, withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transaction, transfer, registration, value added, alternative,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto.
1.34 TEST PERIOD - shall mean the four month period ending October
31, 1997.
ARTICLE 2 - THE TRANSACTION
2.1 SALE AND PURCHASE OF COMMON STOCK - Subject to the terms and
conditions of this Agreement, on the Closing Date, Republic shall sell, convey,
assign, transfer, and deliver to Buyer, and Buyer shall purchase, acquire, and
accept delivery of, ten (10) shares of Incendere's voting Common Stock and one
hundred (100) shares of non-voting Incendere Common Stock. The Common Stock to
be transferred in accordance with this Agreement represents 100% of the issued
and outstanding capital stock of Incendere and is owned indirectly, and is to be
caused to be sold by, Republic.
2.2 METHOD OF TRANSFER - The sale, transfer, conveyance,
assignment, and delivery of the Common Stock to the Buyer to be caused by
Republic in accordance with Section 2.1 hereof shall be effected by Republic
causing to be duly endorsed for transfer in blank, the certificate(s)
representing the Common Stock registered in Republic's name or the name of a
wholly-owned subsidiary of Republic and delivery of same to Buyer at closing.
2.3 NO LIENS - Republic and Incendere shall transfer good and
marketable title to the Common Stock to Buyer free and clear of all liens,
charges, claims, security interests, adverse interests, and encumbrances of any
kind whatsoever owed to, owed by, accrued to, or in favor of any person or party
whatsoever.
2.4 EXCLUDED ASSETS - Notwithstanding anything in this Agreement to
the contrary, the following assets shall be retained by Republic and not
transferred to Buyer:
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2.4.1 Cash and cash equivalents of Incendere, including the
Purchase Price;
2.4.2 Any and all assets owned by Incendere which are listed
as Excluded Assets on Schedule 2.4.2 to the Disclosure Schedule;
2.4.3 Any and all rights of Republic created in this
Agreement;
2.4.4 All claims, refunds, rights of recovery, rights of set
off and rights of recoupment, of any kind with respect to (i) Taxes incurred by
Incendere prior the Closing Date, and (ii) insurance proceeds with respect to
Excluded Assets; and
2.4.5 all rights to receive mail and other communications
addressed to Republic or Incendere relating to any of the Excluded Assets or
Excluded Liabilities.
2.5 ASSUMED LIABILITIES - On and subject to the terms and
conditions of this Agreement, Buyer shall assume the following liabilities
(other than Excluded Liabilities): (i) liabilities of Incendere with respect to
the future performance of Contracts; (ii) accounts payable existing as of the
Closing Date; (iii) payment of not more than $50,000 to Aiken Hospital in
Aiken., South Carolina; (iv) payment of the remaining balance to Xxxxxx Xxxx,
which payments will not exceed an aggregate of $200,000.00; (v) contingent
liabilities incurred in the Ordinary Course of Business.
2.6 EXCLUDED LIABILITIES - Notwithstanding anything herein to the
contrary in this Agreement, Buyer shall not assume or be liable for the
following (collectively, the "Excluded Liabilities"):
2.6.1 Any of Republic's or Incendere's liabilities under
this Agreement or any Collateral Agreements;
2.6.2 Amounts owed by Incendere to Republic or any of its
Affiliates;
2.6.3 Except as provided in Section 2.5 herein, any
indebtedness of Incendere;
2.6.4 Payroll, payroll tax and other payroll deduction
obligations of Incendere incurred prior to the Closing Date;
2.6.5 Any liability of Incendere or Republic in connection
with any employee benefit plan or program, including without limitation any
liability arising under ERISA;
2.6.6 Except as otherwise provided herein, any liability of
Incendere under any Environmental Law incurred prior to the Closing Date;
2.6.7 Any breach of warranty, product liability or other
claims pertaining to services performed or products sold prior to the Closing
Date;
2.6.8 Taxes of Incendere incurred prior to the Closing
Date; and
2.6.9 Such other liabilities of Incendere not included in
the definition of Assumed Liabilities.
Republic hereby acknowledges it is retaining the Excluded Liabilities and shall
have sole responsibility to pay, discharge and perform all such Excluded
Liabilities and obligations promptly when due.
ARTICLE 3 - PURCHASE PRICE AND METHOD OF PAYMENT
3.1 PURCHASE PRICE - As consideration for the Common Stock
purchased by the Buyer, and subject to the terms and conditions of this
Agreement and any adjustment which may be required
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pursuant to Sections 3.2 or 3.3 herein, Buyer shall pay the aggregate Purchase
Price of $12,000,000 as set forth below:
3.1.1 CASH - Buyer shall pay to Republic by wire transfer
$10,000,000 in cash on the Closing Date, for the Assets;
3.1.2 REVENUE ESCROW - Buyer shall deposit the sum of
$2,000,000 in cash in escrow on the Closing date, all on the terms and the
conditions described below, with Wallace, Bauman, Fodiman & Xxxxxxx, P.A. (the
"Escrow Agent") to be held in escrow pursuant to a mutually acceptable escrow
agreement between the parties hereto and the Escrow Agent.
3.2 ACCOUNTS RECEIVABLE - At the Closing, Buyer shall transfer to
Republic a one-half (1/2) interest in the accounts receivable of Incendere (the
"Republic Receivables") outstanding as of the Closing Date. Buyer shall use its
reasonable best efforts to collect the Republic Receivables for the 150 day
period following the Closing Date. Not later that twenty (20) days following the
end of each calendar month after the Closing Date, Buyer shall remit to Republic
all collections of Republic Receivables received by Buyer during the prior month
less sixty percent (60%) of such collections, which amount shall be retained by
Buyer as a collection fee. If, at the end of the 150 day period, there remains
any Republic Receivables which have not been collected, such Republic
Receivables shall revert to Incendere and be deemed to constitute a portion of
the Purchase Price payable hereunder.
3.3 ADJUSTMENTS TO PURCHASE PRICE -
3.3.1 NET REVENUE GUARANTEE. Republic guarantees that the
Net Revenue generated by the Business for the Test Period will not be less than
$3,500,000. In the event that Net Revenues generated in the Test Period is less
than $3,500,000, the product of (A) the difference between (i) $3,500,000 and
the (ii) Net Revenues, multiplied by (B) 3.43, shall be paid to Buyer from the
escrow and the balance shall promptly be paid to Republic. If Net Revenues
exceeds $3,500,000 for the Test Period, the Escrow Agent shall disburse
$2,000,000, together with interest accruing therein, to Republic.
3.3.2 CALCULATION OF NET REVENUES. The calculation of Net
Revenues for the Test Period shall be made by the Buyer and Republic no later
than ninety (90) days following the Closing Date. If the Buyer and Republic are
unable to agree on the calculation of the Net Revenues for the Test Period,
Buyer and Republic shall jointly engage a firm of independent certified
accountants to make such determination (the "Accountants"). The determination of
the Accountants shall be final and conclusive and not subject to review by
either party. The Escrow shall be disbursed within ten (10) days following the
final determination of Net Revenues for the Test Period. Buyer and Republic
shall each be responsible for half of the cost of the Accountants.
ARTICLE 4 - CLOSING
4.1 CLOSING - Subject to the terms and conditions of this
Agreement, the Closing shall take place at 9:30 a.m. on the Closing Date, or
such other date as is mutually agreed between the parties. The Closing shall
take place at the offices of Wallace, Bauman, Fodiman & Xxxxxxx, P.A., 0000
Xxxxx xx Xxxx Xxxxxxxxx, 0xx Xxxxx, Xxxxx Xxxxxx, Xxxxxxx 00000.
4.2 REPUBLIC AND INCENDERE PERFORMANCE AT CLOSING - At or prior to
the Closing, Republic and Incendere shall deliver, or cause to be delivered, to
Buyer:
4.2.1 duly executed and issued certificates representing the
Common Stock owned by Republic, endorsed by Republic in blank, representing 100%
of the outstanding shares of Common Stock;
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4.2.2 a certificate duly executed by a duly authorized
officers of Republic and Incendere to the effect that:
(i) all of the representations and warranties made
by Republic and Incendere in this Agreement are true and correct in all material
respects as of the Closing Date;
(ii) none of the covenants made by Republic and
Incendere in this Agreement have been breached in any material respect as of the
Closing Date;
(iii) there have been no Material Adverse Effect of
he Business, financial or otherwise since June 30, 1997;
4.2.3 all appropriate consents to the transactions
contemplated herein, without conditions or limitations,
4.2.4 all approvals and consents of all appropriate state
regulatory agencies, if any, including all consents to the transfer of ownership
of the Common Stock as it impacts the licenses, Permits and certifications of
the Business;
4.2.5 a schedule of liabilities of Incendere as of the
Closing certified by Republic and Incendere;
4.2.6 a certified copy of the corporate actions taken by
Republic and Incendere and their respective shareholders, if necessary,
authorizing and approving this Agreement and the transactions contemplated by
it;
4.2.7 a reasonably acceptable Computer Services Agreement
with a term ending on February 28, 1998;
4.2.8 a certificate of incumbency duly executed by
Republic's and Incendere's respective secretaries;
4.2.9 a mutually acceptable Escrow Agreement executed by
Republic;
4.2.10 a mutually acceptable agreement for the use of the
transfer stations as provided in Section 9.8 herein following the Closing;
4.2.11 satisfactory evidence that Buyer's designees shall be
the only authorized signatories with respect to each of the bank accounts of
Incendere, including such as are listed on the Disclosure Schedule;
4.2.12 an opinion of counsel in the form attached to the
Disclosure Schedule.
4.2.13 such other certificates, documents, and instruments
as may be reasonably requested by Buyer in connection with the transactions
contemplated by this Agreement.
4.3 BUYER'S PERFORMANCE AT CLOSING - At or prior to Closing, Buyer,
shall deliver or cause to be delivered to Republic the following:
4.3.1 The cash to close as required in Section 3.1.1 herein;
4.3.2 The cash into escrow as required in Section 3.1.2
herein;
4.3.3 A certificate executed by an officer of Buyer to the
effect that all of the representations and warranties made by Buyer in this
Agreement are true and correct as of the Closing Date;
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4.3.4 Written evidence that Buyer's board of directors
approved consummation of the transaction.
4.3.5 A mutually acceptable Escrow Agreement executed by
Buyer and MWI.
4.4 TERMINATION IN ABSENCE OF CLOSING - This Agreement and the
transaction contemplated herein may be terminated and abandoned at any time on
or prior to the Closing Date by any party hereto, if:
4.4.1 any representation or warranty made herein for the
benefit of the other party or any certificate, schedule or document furnished to
the other party pursuant to this Agreement is materially untrue; or
4.4.2 the other party shall have defaulted in any material
respect in the performance of any obligation under this Agreement; or
4.4.3 there has occurred a Material Adverse Effect to the
Business.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF
REPUBLIC AND INCENDERE
Republic and Incendere jointly and severally represent and warrant
to Buyer and MWI that the representations and warranties contained in this
Article 5 are true and correct as of the date hereof (or are otherwise set forth
in the Disclosure Schedule) and as of the Closing Date:
5.1 ORGANIZATION OF REPUBLIC - Republic is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Republic has the corporate power to own, manage, lease and hold its
assets and engage in its businesses where such assets are located, is duly
qualified to do business and is in good standing in each jurisdiction in which
the character and location of the properties owned by it or the nature of the
business transacted by it makes such qualification necessary, except where such
failure would not have a Material Adverse Effect.
5.2 ORGANIZATION OF INCENDERE - Incendere is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Virginia. Incendere has the corporate power to own, manage, lease and hold its
assets and engage in its businesses where such assets are located, is duly
qualified to do business and is in good standing in each jurisdiction in which
the character and location of the properties owned by it or the nature of the
business transacted by it makes such qualification necessary, except where the
failure to so qualify would not have a Material Adverse Effect.
5.3 CAPITALIZATION OF INCENDERE - Incendere is authorized to issue
fifty-five thousand (55,000) shares of Common Stock, $0.001 par value, of which
ten (10) shares of voting Common Stock and one hundred (100) shares of
non-voting Common Stock are issued and outstanding in the name of Republic or a
wholly-owned subsidiary of Republic. There is no other capital stock authorized
or issued by Incendere. All shares of Common Stock are validly issued, fully
paid and non-assessable. There are no stockholder agreements, voting trust
agreement or any other agreements restricting the transfer of the Common Stock.
Incendere has not authorized and there is not outstanding at the date hereof,
any preferred stock, options, warrants or other rights to purchase any capital
stock of Incendere. All of the Common Stock is owned free and clear of any and
all encumbrances, liens, claims, security agreements, pledges or other
restrictions. All of the shares of Common Stock, were not issued in violation of
(i) any preemptive rights of any person to acquire securities of Incendere or
(ii) any Federal or state securities laws.
5.4 CORPORATE DOCUMENTS - The Certificate of Incorporation and
Bylaws of Incendere attached to the Disclosure Schedule are true and correct as
of the date hereof. The stock and minute books of Incendere that have been made
available to Buyer for review contain a complete and accurate
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record of all shareholders of Incendere and all actions of the shareholders and
directors (and any committees thereof) of Incendere.
5.5 AUTHORITY - Republic and Incendere have full power and
authority to enter into this Agreement and to consummate the transaction
contemplated hereby. This Agreement and any Collateral Agreements executed in
connection with the Closing constitutes, or upon execution and delivery will
constitute, the legal, valid and binding obligations of such parties enforceable
in accordance with their terms. Except as set forth in the Disclosure Schedule,
no consent of any Federal, state, municipal or other Governmental Authority is
required for the execution, delivery or performance of this Agreement.
5.6 FINANCIAL STATEMENTS - The Financial Statements and the Interim
Financial Statements present fairly in all material respects the financial
condition and results of operations of the Business at and as of the dates and
for the periods indicated therein and were prepared in accordance with GAAP.
Since the date of the Interim Financial Statements, there has not occurred a
Material Adverse Effect on the assets, liabilities, business, operations or
condition, financial or otherwise, of the Business from that shown on the
Interim Financial Statements.
5.7 TITLE TO ASSETS - The Disclosure Schedule contains a list of
all tangible and intangible assets owned and related to the Business. Incendere
has good, marketable and insurable title to such assets, free and clear of any
and all liens, mortgages, pledges, conditional sales assignments, security
interests, judgments, options, adverse claims, encumbrances or other
restrictions or limitations whatsoever. The assets listed on the Disclosure
Schedule represent all of the assets necessary to operate the Business in the
same manner as operated prior to the date hereof and to the Knowledge of
Incendere for the balance of their estimated useful lives will be suitable and
sufficient for the conduct of the Business in the same manner as presently
conducted.
5.8 LIABILITIES - As of the date hereof, Incendere has no
liabilities, fixed or contingent, which are not reflected on the Interim
Financial Statements or as listed in the Disclosure Schedule which are required
to be recorded in accordance with GAAP or which would be considered to be
material to the Incendere Interim Financial Statements. All liabilities of
Incendere were incurred in the Ordinary Course of Business.
5.9 MEDICAL WASTE BUSINESS - Incendere does not have any direct or
indirect interest, investment or commitment to purchase any interest or make an
investment in any other corporation, partnership, joint venture or other
business in which a portion of such operations are in the Medical Waste industry
east of the Mississippi River, and which are not included in the Acquired
Assets.
5.10 PROPERTIES - The Business does not own any real property. The
Disclosure Schedule identifies each real property lease (the "Leases") used in
the operation of the Business (real and personal), entered into in connection
with the Business (the "Leased Property"). Each Lease so listed is valid,
subsisting and fully enforceable in accordance with its terms, and there exists
no default thereunder. Incendere has not received any notice, and have no
Knowledge, of any defaults under any lease. The Leased Property is free and
clear of any and all liens, mortgages or restrictions other than as noted in the
Disclosure Schedule. No person other than the Business is in actual possession
of any of such Leased Property. The Leased Property is not subject to any
pending or threatened special assessments or, to the Knowledge of Incendere,
threatened condemnation or eminent domain proceedings.
5.11 EMPLOYEE BENEFITS PLANS -
5.11.1 Except as set forth on the Disclosure Schedule,
Incendere does not maintain or contribute for the benefit of the Business'
employees, any employee benefit plan including:
(i) any employee benefit plan as such term is defined
in ss. 3(3) of ERISA, including but not limited to employee benefit plans which
are not subject to the provisions of ERISA;
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(ii) any personnel policy, stock option plan,
collective bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation policy, severance pay policy or agreement, deferred
compensation agreement or arrangement or any other employee benefit plan,
agreement, arrangement, program, practice or understanding.
(iii) any multi-employer plan with the meaning of ss.
3(37) of ERISA, or a multiple employer plan within the meaning of ss. 413(b) and
(c) of the Internal Revenue Code of 1986, as amended.
5.11.2 There has been furnished to Buyer, with respect to
all Plans or Benefit Programs required to comply with ERISA, all reports and
summary plan descriptions. Except as otherwise set forth in the Disclosure
Schedule:
(i) Incendere does not contribute to or have any
obligation to contribute to, and has not at any time contributed to or had an
obligation to contribute to, a multi-employer plan within the meaning of ss.
3(37) of ERISA ("Multi-Employer Plan") or a multiple employer plan within the
meaning of ss. 413(b) and (c) of the Internal Revenue Code of 1986, as amended
(the "Code");
(ii) Incendere has performed all obligations whether
arising by operation of law or by contract required to be performed by it in
connection with the Plans and Benefit Programs and there have been no defaults
or violations by any other party to the Plans or Benefit Programs.
(iii) all reports and disclosures relating to the
Plans required to be filed with or furnished to governmental agencies, Plan
participants or Plan beneficiaries have been filed or furnished in accordance
with applicable law in a timely manner and each Plan and each Benefit Program
has been administered in compliance with its governing documents;
(iv) each of the Plans intended to be qualified under
ss. 401 of the Code satisfies the requirements of the Code and has received a
favorable determination letter from the Internal Revenue Service regarding such
status and has not, since receipt of the most recent favorable determination
letters, been amended or operated in a way which could adversely affect such
qualified status;
(v) there are no actions, suits, or claims pending
(other than routine claims for benefits) or threatened against or with respect
to, any of the Plans, Benefit Programs or their respective assets;
(vi) all contributions required to be made to the
Plans and Benefit Programs pursuant to their respective terms and provisions and
applicable law have been timely made;
(vii) as to any Plan subject to ERISA, no event or
condition which presents a risk of Plan termination or accumulated funding
deficiency within the meaning of ss. 302 of ERISA or ss. 412 of the Code has
occurred. No reportable event within the meaning of ss. 4043 of ERISA has
occurred, no notice of intent to terminate the Plans has been given, no
proceeding to terminate the Plan has been instituted, there has been no
termination of the Plan and no liability to the Pension Benefit Guaranty
Corporation has been incurred;
(viii) none of the Plans or their trustees has engaged
in any prohibited transactions or party in intent transactions as such terms are
defined in ss. 4975 of the Code and ss. 406 of ERISA;
(ix) there is no matter pending with respect to any
Plan or Benefit Program before the Internal Revenue Service, the U.S. Department
of Labor, or the Pension Benefit Guaranty Corporation;
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(x) except as otherwise disclosed on any schedule
attached to this Agreement, neither the execution or delivery of this Agreement
or the consummation of the transactions contemplated hereby will:
A. entitle any current or former employee of
Incendere to severance pay, unemployment compensation or any similar payment;
B. accelerate the time of payment or vesting or
cause any increase in the amount of any compensation due to any such employee or
former employee; or
C. directly or indirectly result in any payment
made to or on behalf of any person to constitute a parachute payment within the
meaning of ss. 2805 of the Code.
5.12 EMPLOYEE MATTERS -
5.12.1 Except as set forth on the Disclosure Schedule, the
Business does not have any (i) controversies between it and its employees, (ii)
unresolved labor lien, grievances or organization efforts; or (iii) unfair labor
practices or labor arbitration proceedings pending or threatened.
5.12.2 Except as set forth on the Disclosure Schedule, the
Business is not a party to any agreement and has not established any policy or
practice requiring the Business to make a payment or provide any other form of
compensation or benefit to any person performing services for the Business upon
termination of such services.
5.12.3 The Disclosure Schedule sets forth by name,
employment classification and compensation, all of the employees of the Business
as of the date indicated thereon. Except as set forth on the Disclosure
Schedule, none of such employees are subject to collective bargaining
agreements. The Business has not, nor at any time had, or been threatened with,
any work stoppages or other labor disputes or controversies with respect to its
employees.
5.13 EMPLOYMENT PRACTICES - Incendere has paid in full to its
employees all wages, salaries, commissions, bonuses and other direct
compensation for all services performed by them, other than amounts which have
not yet become payable in accordance with Incendere's customary practices.
5.14 INSURANCE - The Disclosure Schedule contains a list of all
policies of insurance owned by the Business, and the amounts of such coverage of
each policy, all premiums on such policies or renewals thereof having been paid.
5.15 CONTRACTS AND COMMITMENTS - Except as set forth on the
Disclosure Schedule, the Business is not a party to, or bound or affected by any
contract, lease, agreement, covenant, license, instrument or commitment (whether
written or oral) of any type, including the following:
5.15.1 contracts for the employment or compensation of any
officer or individual employee, not terminable without further liability at any
time:
5.15.2 contracts with any labor union;
5.15.3 continuing contracts for the future purchase of
materials, supplies or equipment, at a cost of $10,000 or more, or to be
delivered more than thirty (30) days after the date hereof;
5.15.4 continuing contracts for the future provision of its
services;
5.15.5 distribution or agency contracts, franchise
contracts, or advertising commit ments, which cannot be terminated without
further liability to the Business upon no more than thirty (30) days' notice;
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5.15.6 pension, profit sharing, deferred compensation,
retirement or stock option or stock purchase plans in effect with respect to
officers, employees or others;
5.15.7 real or personal property leases under which it is
lessor or lessee;
5.15.8 underwriting agreements or agreements with a broker
or finder;
5.15.9 consulting agreements;
5.15.10 contracts for the acquisition of a business, or
substantially all of the property, assets, or stock of a business under which
there are any continuing or unperformed obligations on the part of any of the
parties thereto; or
5.15.11 Any other contract, agreement, or commitment
involving $10,000 or more or which is not terminable without further liability
to the Business upon no more than thirty (30) days' notice.
There will be delivered or made available to Buyer prior to the Closing true and
correct copies of each of the Contracts listed in the Disclosure Schedule. All
Contracts are valid, binding and in full force and effect and are enforceable in
accordance with their terms against all other parties to such Contracts, except
where such enforcement may be limited by bankruptcy or similar laws regarding
debtors relief and general principals of equity. Incendere has performed
substantially all obligations required to be performed by it to date and is not
in default in any material respect under any Contract to which it is a party.
Except as listed on the Disclosure Schedule, none of the Contracts were arrived
at, or otherwise reflect, less than arms length negotiations or bargaining.
5.16 INVENTORIES - The inventory of Incendere as of the Closing
Date shall, in all material respects, consist of items of a quality, condition
and quantity consistent with normal inventory levels of Incendere and be useable
and saleable in the Ordinary Course of Business for the purposes for which
intended.
5.17 EQUIPMENT AND OTHER TANGIBLE PROPERTY - The equipment,
furniture, machinery, vehicles, structures, fixtures and other tangible property
related to the Business and included in the Financial Statements, Interim
Financial Statements or as listed in the Disclosure Schedule shall, as of the
Closing Date, be in all material respects suitable for the purposes for which
intended and in good operating condition and repair consistent with normal
industry standards, except for reasonable and ordinary wear and tear.
5.18 PERMITS - Incendere has all material Permits necessary to
construct, own, operate, use and/or maintain its assets and the Business in all
locations where Incendere is conducting such Business, all of which are listed
on the Disclosure Schedule. Such Permits are valid and subsisting and all fees
required to be paid thereon have been paid. No proceeding is pending or to the
Knowledge of Incendere threatened to modify, suspend, revoke, withdraw,
terminate or otherwise limit any Permit which could have a Material Adverse
Effect.
5.19 INTANGIBLE RIGHTS - Listed on the Disclosure Schedule are all
of material Intangible Rights owned or used by Incendere. Incendere is the legal
and equitable owner or have the right to use all of the Intangible Rights listed
on the Disclosure Schedule. The conduct of the Business does not infringe or
conflict with, and has not in the past infringed or conflicted with, and
Incendere is not in receipt of any notice or complaint of conflict with or
infringement of, the asserted rights of others in any Intangible Rights of
others.
5.20 LITIGATION - Except as set forth in the Disclosure Schedule,
there are no actions, suits, proceedings or investigations, either
administrative or judicial (whether or not on behalf of the Business) pending
or, to the Knowledge of Republic or Incendere threatened against or affecting
the Business, its
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properties or which involve the possibility of any judgment or liability not
fully covered by insurance which could have a Material Adverse Effect. Incendere
is not in default with respect to any order, writ, injunction or decree of any
court or Governmental Authority. Incendere is in compliance in all material
respects with all laws, rules, regulations and orders materially applicable
thereto.
5.21 COMPLIANCE WITH LAWS - Except as set forth on the Disclosure
Schedule, Incendere is, and has been, in compliance in all material respects
with any and all laws, regulations, ordinances, rules, orders or decrees
applicable thereto, including, but not limited to all Environmental Laws and
regulations. Incendere has not received or entered into any citation,
complaints, consent order, compliance agreements or other similar enforcement
order or received written notice from any Governmental Authority that would
indicate that Incendere is not currently in compliance with all such laws,
regulations, ordinances, rules, orders or decrees.
5.22 RECENT EVENTS - Since June 30, 1997, neither Incendere or the
Business have experienced any Material Adverse Effect, and to the Knowledge of
Republic or Incendere, no event has occurred or circumstance exists that would
likely result in such a Material Adverse Effect. Except as expressly
contemplated by this Agreement or as set forth in the attached Disclosure
Schedule, since June 30, 1997, Incendere has not, with respect to the Business:
5.22.1 issued any capital stock or other corporate
securities or granted any option to any person for the acquisition of any
capital stock or other corporate securities;
5.22.2 sold, assigned, transferred, leased, licensed or
otherwise encumbered (or otherwise entered into an agreement to do any of the
foregoing) any of their tangible assets in excess of $50,000, except in the
Ordinary Course of Business;
5.22.3 deviated from their customary policies and procedures
relating to customer credit evaluations and Contract negotiation and execution;
5.22.4 delayed or postponed the payment of any accounts
payable or any other liability or agreed or negotiated with any party to extend
the payment date of any accounts payable or accelerated the collection of any
accounts or notes receivable other than in the Ordinary Course of Business;
5.22.5 discharged or satisfied any lien or encumbrance or
paid any obligation or liability (absolute or contingent) other than obligations
or liabilities in the Ordinary Course of Business;
5.22.6 declared or made any payment or distribution to
stockholders, or purchased or redeemed any shares of their capital stock;
5.22.7 made any change in any method of accounting or
accounting policies, made any change in their cash management policies or made
any material non-Ordinary Course of Business, write-down in the value of their
inventory;
5.22.8 mortgaged, pledged, or subjected to any lien, charge,
or other encum brance, any of their assets, tangible or intangible, other than
liens for taxes not yet due or which are being contested in good faith by
appropriate proceedings;
5.22.9 entered into any other material transaction, whether
or not in the Ordinary Course of Business;
5.22.10 sold, assigned, or transferred any material
Intangible Rights;
5.22.11 suffered any material operating or extraordinary
loss or waived any right of substantial value;
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5.22.12 made any payment or contracted for payment of any
bonus, gratuity, or other compensation to employees, other than wages and
salaries in effect as of the date of the Interim Financial Statements, except
wage and salary adjustments made in the Ordinary Course of Business for
employees who are not officers or directors;
5.22.13 had any union or labor difficulties or work
stoppage;
5.22.14 entered into any transaction other than in the
Ordinary Course of Business;
5.22.15 entered into any material leases of real or personal
property;
5.22.16 received any notice of termination of any material
contract, lease or other agreement; or
5.22.17 agreed, whether orally or in writing, to do any of
the foregoing.
5.23 TAXES -Except as set forth on the Disclosure Schedule,
Incendere has not failed to (i) file, or cause to be filed, in respect of the
Business, any required foreign, federal, state, county and local Tax returns
which are required to be filed and or (ii) pay any Taxes which have become due
pursuant to applicable Tax law. Except as set forth on the Disclosure Schedule,
federal, state and local tax returns of Incendere have never been examined by
the Internal Revenue Service. Except as set forth on the Disclosure Schedule,
Incendere is not a party to any action or proceeding by any governmental
authority for assessment or collection of taxes, nor have any claims for
assessment and collection been asserted against Incendere. Incendere has not
failed to (a) collect or withhold any monies required to be withheld by the
Business from employees of the Business for income taxes, social security and
other payroll Taxes, or (b) either pay to the respective governmental agencies,
set aside, in accounts for such purpose, or accrue, reserve against and enter
upon the books of Incendere amounts sufficient to cover Taxes. Incendere shall
(a) make adequate provision on its books for all taxes accruable and (b) timely
remit all withholding, 1099's, 1120's, employment, sales, ad valorem, personal
property and estimated income taxes due and payable to date and which becomes
due prior to, or on, the Closing Date. Incendere has made available copies of
all Incendere's federal, state and local Tax returns. Incendere is not obligated
to make any payment, and is not a party to any agreement that under certain
circumstances could obligate it to make any payment that will not be deductible
under Internal Revenue Code Section 280G.
5.24 ACCOUNTS RECEIVABLE - The accounts receivable and other
receivables shown on the Financial Statements, Interim Financial Statements or
thereafter acquired prior to the Closing Date hereof, have been collected or, to
the Knowledge of Republic and Incendere, are collectible in amounts not less in
the aggregate than the net book amount thereof. All such 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 for the
customers of the Business as covered by the account obligor. No further goods
are required to be provided and no services are required to be rendered in order
to complete the sales and to entitle the Business to collect the account
receivables. None of the accounts receivable are subject to set-off or
counterclaim and Incendere has any Knowledge which would lead them to believe
such account receivables are not collectible in accordance with their respective
terms. Since the date of the Interim Financial Statements, there has been no
reduction in the accounts receivable and other receivables of the Business other
than reductions which may have occurred in the Ordinary Course of Business. All
accounts receivable as of the date herein are listed on the Disclosure Schedule.
5.25 COMPLIANCE WITH INSTRUMENTS - The consummation of the
transaction contemplated by this Agreement will not result in a breach or
violation of any of the terms, provisions or conditions of, or constitute a
default under, or result in the creation of any lien, charge or encumbrance on
any property or assets of Incendere pursuant to its Certificate of
Incorporation, all amendments thereto, By-Laws, any provision of law, judgment,
decree, indenture, agreement or instrument to which Incendere is a party or by
which it is bound.
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5.26 BROKERS' COMMISSIONS - Republic and Incendere have not entered
into any agreement or understanding with any person, firm or entity or have
become indirectly a party to any agreement for the payment or any commission,
finders or brokerage fee in connection with this Agreement and the transaction
contemplated hereof. Republic and Incendere hereby agree to indemnify and hold
harmless the Buyer and MWI from any claims for a commission, finder's or
broker's fee.
5.27 BOOKS AND RECORDS - The books of account and other records of
Incendere are materially complete and correct and in the aggregate present and
reflect all of the transactions entered into by it or to which it is a party.
Republic and Incendere have no Knowledge of any condition whether pending or
threatened which would have a material adverse effect upon the Business or
prevent Incendere from continuing the Business in substantially the same manner
in which it is presently carried on.
5.28 ENVIRONMENTAL LAWS - Incendere is in compliance with all
applicable federal, state and local Environmental Laws, except where the failure
of such compliance would not have a Material Adverse Effect and no Environmental
Claim has been filed or commenced against the Business alleging any failure to
comply with any such Environmental Law or regulation. Except as set forth on the
Disclosure Schedule, neither Incendere nor any of its Affiliates, agents or
licensees have engaged in the storage, Release, holding, generation, processing,
handling or transportation of any substance or material designated as a
Hazardous Material or Medical Waste in violation of any Environmental Law,
ordinance or regulation. There are no Hazardous Materials or Medical Waste at,
on or in any of the properties of the Business in violation of any Environmental
Laws, ordinances or regulations and there is no proceeding or inquiry pending or
threatened by any federal, state or local Governmental Authority with respect
thereto.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF BUYER AND MWI
Buyer and MWI, jointly and severally represent and warrant to
Republic and Incendere that:
6.1 ORGANIZATION - Buyer is duly organized and validly existing as
a corporation in good standing under the laws of the State of Virginia and has
full corporate power to carry on its business as now conducted and is entitled
to own or lease its properties and to carry on its business as now conducted in
the places where such properties are now leased, owned or operated or such
business is now conducted.
6.2 ORGANIZATION - MWI is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware and has
full corporate power to carry on its business as now conducted and is entitled
to own or lease its properties and to carry on its business as now conducted in
the places where such properties are now leased, owned or operated or such
business is now conducted.
6.3 AUTHORITY - Buyer and MWI have full power and authority to
enter into this Agreement and the consummation of the transaction contemplated
by this Agreement will not result in any breach of any of the terms, provisions,
or conditions of, or constitute a default under, or result in the creation of,
any lien, charge, or encumbrance of any property or assets of Buyer or MWI
pursuant to their respective Articles of Incorporation, By-Laws or any
indenture, agreement, instrument, order, judgment, or decree to which they are a
party or by which they are bound.
6.4 GOVERNMENTAL CONSENT - Other than as may be required for
compliance with the provisions of the federal securities laws or to cause the
Permits, licenses and other certifications of the Business to remain in good
standing following the Closing, neither Buyer nor MWI is required to make any
declaration to or filing with, or to obtain any permit, license, consent,
accreditation, approval or
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authorization from, any governmental or regulatory authority in connection with
the execution, delivery or performance of this Agreement or the consummation of
any of the transactions contemplated hereby.
6.5 BROKERS' FEE - Neither Buyer nor MWI has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Republic or
Incendere could become liable or obligated.
6.6 ADEQUATE FINANCING AVAILABLE - Buyer and MWI have sufficient,
unrestricted cash on hand from readily available internal or available from
external financing sources in order to pay the Purchase Price in full at the
Closing, and the transactions contemplated hereby are not subject to any
financing contingencies.
ARTICLE 7 - OBLIGATIONS PRIOR TO CLOSING
7.1 OPERATION OF BUSINESS - Republic and Incendere agree that, from
the date hereof to the Closing Date, they shall conduct the Business only in the
Ordinary Course of Business.
7.2 REASONABLE ACCESS TO BOOKS AND RECORDS - From and after the
date hereof, Incendere shall (a) afford to the officers, employees and
representatives of Buyer and MWI reasonable access to its assets, properties,
records and books of account at all reasonable times during business hours, (b)
to furnish to such officers, employees and representatives such other
information as Buyer and MWI may reasonably request, including complete
information concerning the customers, suppliers, vendors and other aspects of
the Business, and (c) to authorize its accountants and auditors to permit
Buyer's and MWI's independent public accountants and representatives to examine
all records pertaining to the Financial Statements and other books and records
of the Business. Buyer and MWI agree to treat all such material as confidential
and not make use of such materials except for the purposes expressed in this
Agreement unless such use comes into the public domain.
7.3 NEGATIVE COVENANTS - Republic and Incendere covenant that from
and after the date hereof and through the Closing Date, without the prior
written consent of Buyer and MWI, they will not permit the Business to:
7.3.1 enter into any written or oral contract, agreement, or
commitment of any type, relating to:
(i) contracts for the employment or compensation of
any officer, director, or individual employee;
(ii) contracts with any labor union;
(iii) continuing contracts for the future purchase of
inventory, materials, supplies, or equipment at a cost of $10,000 or more;
(iv) continuing contracts for future services having
an aggregate value exceeding $10,000;
(v) distribution or agency contracts, franchise
contracts, or advertising commitments;
(vi) pension, profit sharing, deferred compensation
retirement, stock option, stock purchase plans, group health insurance, or
similar plans with respect to officers, directors, employees, or others;
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(vii) leases under which the Business is a lessor or
lessee having an aggregate value exceeding $10,000;
(viii) underwriting agreements or agreements with a
broker or finder;
(ix) consulting agreements;
(x) contracts for the acquisition of a business or
substantially all of the property, assets or capital stock of a business;
(xi) any other contract, agreement, or commitment
involving $10,000 or more.
7.3.2 declare or pay any dividend, or make any distribution
of their properties or assets to their stockholders, or allow the transfer of
any of its securities.
7.3.3 make any change in their respective Certificates of
Incorporation or By-Laws;
7.3.4 issue any capital stock or other corporate securities
or grant options, warrants or rights of any kind to purchase any of their
capital stock or corporate securities;
7.3.5 discharge or satisfy any lien or encumbrance or pay
any obligation or liability except in the Ordinary Course of Business;
7.3.6 mortgage, pledge or subject to any lien, charge or
other encumbrance any of its tangible or intangible assets;
7.3.7 make any payment, or enter into any contract for
payment of any bonus, gratuity or other compensation, or increase the rate or
form of compensation payable to any agent or employee, except salary adjustments
in the Ordinary Course of Business for employees;
7.3.8 dispose of any of its properties or assets of the
Business except in the Ordinary Course of Business;
7.3.9 incur any indebtedness, except for operating expenses
in the Ordinary Course of Business, nor allow any material adverse change to be
made in its financial affairs, nor allow any tax or other liability to be
extended by waiver of the statutes of limitation or otherwise;
7.3.10 enter into any other transaction, other than in the
Ordinary Course of Business.
7.3.11 make any loan to, borrow any money from, or entered
into any contract or understanding with, any officer, director or stockholder.
7.4 AFFIRMATIVE COVENANTS - Republic and Incendere covenant that
from and after the date hereof and through the Closing Date, they will:
7.4.1 keep the properties and assets of the Business insured
consistent with prior practices in respect thereto;
7.4.2 perform in the Ordinary Course of Business all of the
obligations of the Business under Contracts, and instruments relating to or
affecting its Assets, properties and Business;
7.4.3 use their best efforts to materially preserve intact
the Business, organization, and goodwill, to the end that the Buyer shall
continue to operate the Assets as a going business as now constituted, after the
consummation of the transaction contemplated hereunder.
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7.5 FORM 8-K FINANCIAL STATEMENTS - Republic and Incendere shall
permit Buyer to cause to be audited the Financial Statements by a firm of
independent certified public accountants, in accordance with generally accepted
auditing standards. In addition, Republic shall cause to be provided Interim
Financial Statements of the Business necessary for MWI to comply with Regulation
S-B as promulgated by the Securities and Exchange Commission ("SEC"). In the
event that the audited Financial Statements at December 31, 1995 and 1996 and
for the years ended December 31, 1995 and 1996 or the Interim Financial
Statements do not show any material deviation from the unaudited Financial
Statements or Interim Financial Statements provided to Buyer, MWI shall bear the
cost of the audit and the review of the Interim Financial Statements. In the
event that the audited Financial Statements at December 31, 1995 and 1996 and
for the years ended December 31, 1995 and 1996 or the Interim Financial
Statements shows a material deviation from the unaudited Financial Statements or
Interim Financial Statements provided to Buyer, Republic shall bear the cost of
the audit and the review of such Interim Financial Statements by the independent
certified public accountant. The Financial Statements, when audited, will comply
in all respects, with the requirements of Regulation S-B as promulgated by the
SEC. Republic and Incendere shall deliver to the auditors all necessary
documentation, including management representation letters, necessary for the
completion of the audit.
7.6 DISCLOSURE SCHEDULES - Republic shall use its reasonable best
efforts to prepare and provide to the Buyer the Disclosure Schedules
contemplated by this Agreement as soon as reasonably practicable following the
execution of this Agreement, and in any event, Republic and Incendere shall
provide to Buyer copies of all Disclosure Schedules not later than five (5)
business days prior to the Closing Date. Buyer shall have three (3) business
days to review and provide comments on the Disclosure Schedules. In the event
that the Disclosure Schedules disclose facts or omit to disclose facts which can
reasonably be deemed by Buyer to have a Material Adverse Effect on Incendere,
Buyer shall have the right to terminate this Agreement on the terms provided
herein, but Buyer and Republic shall first engage in good faith discussions
regarding resolution of the disclosure or disclosures which have been deemed to
be the cause of such Material Adverse Effect.
7.7 TRANSFER OF MEDICAL WASTE ASSETS - Prior to the Closing,
Republic shall cause the assets owned by York Waste Disposal, Inc. and used in
the operation of the Business to be transferred to Incendere.
ARTICLE 8 - CONDITIONS PRECEDENT TO THE CLOSING
8.1 CONDITIONS TO OBLIGATIONS OF BUYER AND MWI- The obligations of
Buyer and MWI to consummate this Agreement shall be subject to, and be
conditioned upon, each of the following conditions:
8.1.1 PROPERTIES INTACT - No properties or assets of the
Business shall have suffered any destruction or damage by fire, accident or
other casualty or act of God not fully covered by insurance or having Material
Adverse Effect.
8.1.2 REPRESENTATIONS AND WARRANTIES - The representations
and warranties made by Republic and Incendere in Article 5 hereof shall be
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date and none of the covenants of Republic and Incendere
contained in this Agreement shall have been material breached in any respect as
of the Closing Date.
8.1.3 NO ADVERSE CHANGES - That since the date of the
Interim Financial Statements there has been no Material Adverse Effect.
8.1.4 APPROVALS AND CONSENTS - All consents, approvals,
authorizations or orders of any individual, entity, court or Governmental
Authority or administrative body, if any, shall have been
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obtained and in effect on the Closing Date including such consents and approvals
necessary to maintain the Permits in good standing following the Closing, which
are required for the consummation of the transaction be contemplated by this
Agreement.
8.1.5 AUTHORIZATION OF AGREEMENT BY INCENDERE - All actions
of Incendere's respective Board of Directors and their shareholders, necessary
to authorize the execution, delivery and performance of this Agreement by
Republic and Incendere shall have been duly and validly taken.
8.1.6 NO INJUNCTION - No order has been entered which
enjoins or prevents the Closing of the transaction contemplated by this
Agreement and no claim, proceeding, investigation, or litigation, either
administrative or judicial, shall be threatened in writing or be pending against
the Business which, in the reasonable opinion of counsel for Buyer, presents a
likely probability that the transaction contemplated by this Agreement would be
enjoined or prevented or that the right of Buyer to continue the operations of
the property, assets and Business would be materially affected.
8.1.7 NO LIENS - Buyer shall have received written evidence
in form and substance satisfactory to it of the termination of any and all liens
that encumber any of the assets or other properties of Incendere.
8.1.8 NO VIOLATIONS OF LAW - At the Closing Date, there
shall exist no violations of any Federal, state or local law, ordinance or
regulation having a Material Adverse Effect on the Acquired Assets, properties
or Business.
8.1.9 PERFORMANCE BY REPUBLIC AND INCENDERE - All of the
terms and conditions of this Agreement to be complied with and performed by
Republic and Incendere on or before the Closing Date shall have been complied
with and performed.
8.1.10 PROCEEDINGS AND INSTRUMENTS SATISFACTORY - All
proceedings, corporate or other to be taken in connection with the transaction
contemplated by the Agreement and all documents incident thereto, including any
Collateral Agreement, shall be reasonably satisfactory in form and substance to
Buyer and Buyer's counsel.
8.1.11 FINANCIAL STATEMENTS - The audited Financial
Statements and Interim Financial Statements shall have been delivered to Buyer
pursuant to Section 7.5 herein in all material respects.
8.2 CONDITIONS TO OBLIGATIONS OF REPUBLIC AND INCENDERE - The
obligations of Republic and Incendere to consummate this Agreement are subject
to and shall be conditioned upon each of the following conditions:
8.2.1 REPRESENTATIONS AND WARRANTIES - The representations
and warranties made by Buyer and MWI herein shall be correct in all material
respects on and as of the Closing Date with the same force and effect as though
such representations had been made on and as of the Closing Date. The covenants
of Buyer and MWI contained herein shall not have been breached in any material
respects as of the Closing Date, and Buyer and MWI shall have delivered to the
Seller certificates to such effect signed by duly authorized officers of Buyer
and MWI.
8.2.2 PERFORMANCE BY BUYER AND MWI - All of the terms,
covenants and conditions of this Agreement to be complied with and performed by
Buyer and MWI on or before the Closing Date shall have been complied with and
performed.
8.2.3 CONSENTS AND APPROVALS - No consent, approval,
authorization or order of any individual, entity, court or governmental agency
or administrative body not obtained and in effect on the Closing Date shall be
required for the consummation of the transaction contemplated by this Agreement.
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ARTICLE 9 - POST-CLOSING OBLIGATIONS
9.1 SURVIVAL OF THE CLOSING - All covenants, agreements,
representations, and warranties made hereunder and in any certificates delivered
at the Closing pursuant hereto shall be deemed to have been relied upon by
Buyer, MWI, Republic and Incendere, and shall survive the Closing for a period
of twelve (12) months.
9.2 FURTHER ASSURANCES - Following the Closing, each of Republic,
Incendere, MWI and Buyer shall execute and deliver such documents, and take such
other action as shall be reasonably requested by any other party hereto to carry
out the transaction contemplated by this Agreement.
9.3 INDEMNIFICATION BY REPUBLIC - Republic hereby indemnifies,
reimburses and hold Buyer and MWI harmless against and from:
9.3.1 All Damages suffered, incurred, or sustained by Buyer
or MWI as a result of (i) the existence on or before the Closing Date of any
liabilities, absolute or contingent, of Incendere which were not disclosed to,
and assumed by, Buyer in accordance with this Agreement (ii) the material
untruth of any representation or the breach of any warranty made in this
Agreement by Republic or Incendere; (iii) the material untruth of any
certificate required under this Agreement to be delivered by Republic or
Incendere to Buyer or MWI on the Closing Date; (iv) the material breach of this
Agreement by Republic, Incendere.
9.3.2 Buyer and MWI shall give Republic prompt written
notice of any claim to indemnification it may wish to assert pursuant to this
Article 9. Before being required to make any payments pursuant to this Section
9.3, Republic may, in their discretion and at their expense, take all necessary
steps properly to contest any claim or liability or action in respect thereof
involving third parties, or to prosecute such contest or action to conclusion or
settlement satisfactory to Buyer. Buyer and MWI shall cooperate fully with
Republic in the reasonable conduct of any such contest or action, legal
proceedings, negotiation, or settlement and will not permit compromise
voluntarily or settle any such contest, action, legal proceeding, claim or
demand without prior notice to Republic
9.3.3 Upon the payment to Buyer or MWI by Republic of any
amount which Buyer or MWI is entitled to receive by way of indemnification under
this Section 9.3, Buyer and MWI shall forthwith assign to Republic all of its
right, title, and interest in any item for which indemnification shall so be
made, including claims against third parties relating therewith.
9.3.4 In the event that Republic shall dispute the right of
Buyer or MWI to be indemnified under this Section 9.3, or any item with respect
to which Buyer or MWI shall so request indemnification, or if Republic shall
dispute the amount which Buyer or MWI shall be entitled to receive with respect
to such item by way of indemnification, such dispute shall be submitted to
arbitration in the City of Miami, in accordance with the rules then in effect of
the American Arbitration Association.
9.4 INDEMNIFICATION BY BUYER AND MWI - Buyer and MWI hereby jointly
and severally indemnify, reimburse and hold Republic harmless against and from:
9.4.1 All Damages suffered, incurred, or sustained by
Republic as a result of (i) the material untruth of any representation or the
breach of any warranty made in this Agreement by Buyer or MWI; (ii) the material
untruth of any certificate required under this Agreement to be delivered by
Buyer and MWI to Republic on the Closing Date; (iii) the material breach of this
Agreement by Buyer and MWI.
9.4.2 Republic shall give Buyer and MWI prompt written
notice of any claim to indemnification it may wish to assert pursuant to this
Article 9. Before being required to make any payments pursuant to this Section
9.4, Buyer and MWI may, in their discretion and at their expense, take all
necessary steps properly to contest any claim or liability or action in respect
thereof involving third
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parties, or to prosecute such contest or action to conclusion or settlement
satisfactory to Republic. Republic shall cooperate fully with Buyer and MWI in
the reasonable conduct of any such contest or action, legal proceedings,
negotiation, or settlement and will not permit compromise voluntarily or settle
any such contest, action, legal proceeding, claim or demand without prior notice
to Buyer and MWI.
9.4.3 Upon the payment to Republic by Buyer and MWI of any
amount which Republic is entitled to receive by way of indemnification under
this Section 9.4, Republic shall forthwith assign to Buyer and MWI all of its
right, title, and interest in any item for which indemnification shall so be
made, including claims against third parties relating therewith.
9.4.4 In the event that Buyer and MWI shall dispute the
right of Republic to be indemnified under this Section 9.4, or any item with
respect to which Republic shall so request indemnification, or if Buyer and MWI
shall dispute the amount which Republic shall be entitled to receive with
respect to such item by way of indemnification, such dispute shall be submitted
to arbitration in the City of Miami, in accordance with the rules then in effect
of the American Arbitration Association.
9.5 LIMITATION ON INDEMNITY - Notwithstanding anything in this
Agreement to the contrary, (i) Republic shall not be obligated to pay any
Damages until the aggregate of all Damages incurred or suffered by Buyer or MWI
exceeds $200,000; provided however, that such limitation shall not apply to any
Damages attributable to Excluded Liabilities; and (ii) Buyer and MWI shall not
be obligated to pay any Damages until the aggregate of all Damages incurred or
suffered by Republic exceeds $200,000; provided however, that such limitation
shall not apply to any Damages attributable to Assumed Liabilities.
9.6 NON-COMPETITION AGREEMENT -
(a) Republic and its Affiliates covenant and agree that for
a period of three (3) years from the Closing Date, they will not establish,
operate, manage or own a Medical Waste Business similar to the Business anywhere
within the continental United States east of the Mississippi River (the
"Restricted Territory").
(b) Republic, and the Affiliates agree that for a period of
three years following the Closing, they shall not at any time, disclose,
directly or indirectly to any person, firm or entity any confidential
information about the Business, Buyer, or any information concerning their
respective financial condition, customers, and methods of obtaining business or
any other methods generally of doing and operating the Business, except to the
extent that such information is a matter of public knowledge or is required to
be disclosed by law through judicial or administrative process.
(c) It is recognized and acknowledged by the parties hereto
that a breach or violation by Republic or its Affiliates of any of the covenants
and agreements contained in Section 9.4 may cause irreparable harm and Damage to
Buyer in a monetary amount which may be impossible to ascertain. Republic or its
Affiliates agree that Buyer shall be entitled to an injunction from any court of
competent jurisdiction enjoining or restraining any breach or violation of any
or all of the covenants and agreements contained in this Section 9.4 and that
such right to injunction shall be cumulative and in addition to whatever other
rights or remedies the Buyer may possess hereunder at law or in equity.
9.7 MWI RIGHT OF FIRST REFUSAL - Notwithstanding anything in
Section 9.6 to the contrary, nothing herein shall prohibit Republic or its
Affiliates from acquiring solid waste companies or assets within the Restricted
Territories, which company or assets operates a medical waste business
incidental to solid waste business; provided, however for a period of three (3)
years following the Closing Date, Republic hereby grants to Buyer the right of
first refusal to purchase any such medical waste assets in the Restricted
Territory acquired in such transactions. If Republic or its Affiliates receives
a bona fide offer to purchase any such medical waste assets (which offer may be
orally or in writing), Republic will provide written notice of such offer to
Buyer promptly after receipt by Republic. No such offer shall be deemed to be
bona fide if such offer contains any terms which are impossible for Buyer to
perform, such
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22
as the exchange of specific real or personal property, employment agreements or
similar matters, except if any such offer that requires payment of property,
stock or other assets, Buyer shall have the right to pay cash with or equivalent
fair value to such property, stock or other assets. A duty of good faith shall
be applicable to any such offer and the right of first refusal granted herein.
Buyer shall have forty-five (45) days following written notice within which to
exercise the right of first refusal granted herein . If Buyer exercises such
right of first refusal, Buyer shall close on such transaction on the same terms
as provided in the offer, except that Buyer shall have a minimum of within
thirty (30) days following exercise within which to close. If Buyer does not
exercise the right of first refusal, Republic may proceed with the bona fide
offer. If any material terms of the offer are thereafter modified, the right of
first refusal of Buyer shall be renewed on such different terms. If the bona
fide offer is not thereafter closed, the right of first refusal shall again be
applicable to any such future sale.
9.8 REPUBLIC RIGHT OF FIRST REFUSAL - In the event Buyer or its
Affiliates acquires solid waste assets incidental to a medical waste
acquisition, Buyer hereby grants to Republic the right of first refusal to
purchase any such solid waste assets in the Restricted Territory acquired in
such transactions. If Buyer or its Affiliates receives a bona fide offer to
purchase any such solid waste assets (which offer may be orally or in writing),
Buyer will provide written notice of such offer to Republic promptly after
receipt by Buyer. No such offer shall be deemed to be bona fide if such offer
contains any terms which are impossible for Republic to perform, such as the
exchange of specific real or personal property, employment agreements or similar
matters, except if any such offer that requires payment of property, stock or
other assets, Republic shall have the right to pay cash with or equivalent fair
value to such property, stock or other assets. A duty of good faith shall be
applicable to any such offer and the right of first refusal granted herein.
Republic shall have forty-five (45) days following written notice within which
to exercise the right of first refusal granted herein . If Republic exercises
such right of first refusal, Republic shall close on such transaction on the
same terms as provided in the offer, except that Republic shall have a minimum
of within thirty (30) days following exercise within which to close. If Republic
does not exercise the right of first refusal, Buyer may proceed with the bona
fide offer. If any material terms of the offer are thereafter modified, the
right of first refusal of Republic shall be renewed on such different terms. If
the bona fide offer is not thereafter closed, the right of first refusal shall
again be applicable to any such future sale.
9.9 PUBLICITY - Except as provided herein, no party hereto shall
issue or make, or cause to have made, any public release or announcement
concerning this Agreement or the transaction contemplated hereby, without the
advance written approval of the form and substance by the other party.
Notwithstanding, Buyer and MWI shall have the right to issue a press release
announcing the execution of this Agreement, containing a description of the
transaction contemplated herein.
9.10 USE OF TRANSFER STATION - Republic shall cause its
subsidiaries to allow Buyer and Incendere to use the transfer stations owned by
Republic or its Affiliates which were used by Incendere or the Business prior to
the Closing, for a period ending on January 31, 1998, at no charge. The parties
will enter into a mutually acceptable sublease agreement which will allow Buyer
and Incendere the use and access to such transfer stations in the same manner
and under the same procedures as used by the Business prior to the Closing.
9.11 SECTION 338(H)(10) ELECTION - The parties agree and
acknowledge that the transaction contemplated hereby shall be treated for
Federal income tax purposes in accordance with Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended. Republic agrees that Buyer and MWI
shall make a Section 338(h)(10) election to treat the acquisition as if it were
and asset purchase. Republic shall take whatever steps necessary to permit the
Section 338 election and file all appropriate returns accordingly.
ARTICLE 10 - MISCELLANEOUS
10.1 COSTS AND EXPENSES - Except as otherwise provided herein in
this Agreement, each of the parties to this Agreement shall bear their own
expenses incurred in connection with the
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23
negotiation, preparation, execution and closing of this Agreement and the
transaction contemplated hereby, including but not limited to, transfer taxes,
legal fees and accounting fees.
10.2 NO NEGOTIATIONS - Republic and Incendere shall not encourage,
solicit or engage in discussions or negotiations with, or provide any
information to, or consider any proposal or offer presented by any party
concerning any sale of the Business, the capital stock or assets of Incendere or
any similar transaction or enter into any agreement or take any action that by
its terms or effect could affect adversely the ability of the parties hereto to
consummate the transaction contemplated hereby.
10.3 REMEDIES - The right and remedies provided by this Agreement
are cumulative, and the use of any one right or remedy by any party hereto shall
not preclude or constitute a waiver of its right to use any and all other
remedies. Such rights and remedies are given in addition to any other rights and
remedies a party may have by law, statute or otherwise.
10.4 DISCLOSURE SCHEDULE - The Disclosure Schedule shall in each
instance, include the Schedules and the Exhibits referred to herein and therein.
The Disclosure Schedule shall be deemed an integral part hereof and is
incorporated herein by this reference. Disclosure of an item on a Disclosure
Schedule shall be deemed a disclosure with respect to each and every provision
of this Agreement.
10.5 ATTORNEYS' FEES - In the event of any litigation or
arbitration arising out of this Agreement, the prevailing party shall be
entitled to an award of its attorneys' fees and costs (including any fees and
costs incurred in Appellate proceedings) against the losing party.
10.6 RISK OF LOSS - Prior to the Closing, the risk of loss, damage
to, or destruction of any assets of the Business shall remain with Republic and
Incendere.
10.7 ASSIGNMENT AND AMENDMENT OF AGREEMENT - This Agreement shall
not be assignable by any of the parties hereto except with the written consent
of the other party. This Agreement may not be amended except by written
agreement executed by all of the parties hereto.
10.8 NOTICES - Any notice or communication given pursuant hereto by
either party to the other party shall be in writing and delivered or mailed by
certified mail, return receipt requested, postage prepaid, as follows:
If to Buyer: MED/WASTE, INC.
0000 X.X. 000xx Xxxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, President
Copy to: Wallace, Bauman, Fodiman & Xxxxxxx, P.A.
0000 Xxxxx xx Xxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxx Xxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Business: REPUBLIC INDUSTRIES
000 X.X. 0xx Xxxxxx, Xxxxx 0000
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
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Copy to: Xxxxx Xxxxxxx, Esq.
Republic Industries, Inc.
000 X.X. 0xx Xxxxxx, Xxxxx 0000
Xx. Xxxxxxxxxx, XX 00000
or at such other address as hereafter shall be furnished in writing by any party
hereto to the other parties.
10.9 ENTIRE AGREEMENT - This Agreement, together with the
Disclosure Schedule, is the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written of the
parties. No other agreement not specifically referred to herein, oral or
otherwise, shall be deemed to exist or to bind any of the parties. No officer or
employee of any party has any authority to make any representation or promise
not contained in this Agreement and each of the parties agrees that it has not
executed this agreement in reliance upon any such representation or promise.
10.10 WAIVER - Any forbearance, failure or delay by any of the
parties hereto to exercise any right, power or remedy hereunder shall not be
deemed a waiver of such right, power or remedy and any single or partial
exercise of any such right, power or remedy hereunder shall not preclude the
further exercise thereof and every right, power or remedy of either party shall
continue in full force and effect unless waived specifically by an instrument in
writing executed by such party.
10.10 GOVERNING LAW - This Agreement shall be construed in
accordance with the laws of the State of Florida.
10.11 COUNTERPARTS - This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
10.12 CAPTIONS - The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
10.13 SUCCESSORS AND ASSIGNS - All of the terms of this Agreement
shall be binding upon and inure to the benefit of, and be enforceable by and
against the parties and their respective successors and assigns.
10.14 INTERPRETATION - Handwritten provisions inserted in this
Agreement, initialed in ink, shall control all typewritten provisions in
conflict therewith. This Agreement shall not be construed more strongly against
or in favor of any party, regardless of who is responsible for its preparation.
10.15 SEVERABILITY - In the event any provision of this Agreement
or the application of such provision to any part shall be held by a court of
competent jurisdiction to be contrary to any rule of law or public policy, the
remaining provisions of this Agreement shall remain in full force and effect.
10.16 RIGHTS OF THIRD PARTIES - Except as may otherwise be
specifically provided in this Agreement, nothing expressed or implied in this
Agreement is intended, or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
shareholders, any rights or remedies under or by reason of this Agreement.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE TO FOLLOW
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date set forth above.
MED/WASTE, INC., a Delaware corporation
By: /S/ XXXXXX X. XXXXXXX
-------------------------------------
XXXXXX X. XXXXXXX, President
REPUBLIC INDUSTRIES, INC., a Delaware
corporation
By: /S/ XXXXX XXXXXXX
-------------------------------------
Title: VICE PRESIDENT
-----------------------------
INCENDERE, INC., a Virginia corporation
By: /S/ XXXXX XXXXXXX
-------------------------------------
Title: ASSISTANT SECRETARY
------------------------------
SAFETY DISPOSAL SYSTEM OF VIRGINIA,
INC., a Virginia corporation
By: /S/ XXXXXX X. XXXXXXX
-------------------------------------
Title: PRESIDENT
------------------------------
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