EXHIBIT 2(iii)
Stock Purchase Agreement
among
Enviro-Clean of America, Inc.,
SCS Acquisition Corporation
and
Superior Chemical and Supply, Inc.
dated as of
August 1, 1999
ARTICLE I
PURCHASE AND SALE OF STOCK ............................................. 1
1.01. Purchase and Sale of Stock ................................ 1
1.02. Consideration ............................................. 1
1.03 Escrowed Consideration .................................... 2
1.04 Contingent Consideration .................................. 2
(a) Earn-Out Bonus ....................................... 2
(b) e-Commerce Profits Distribution ...................... 3
(c) Adjustment for Over-Payments.......................... 3
1.05. Closing ................................................... 3
1.06. Further Assurances ........................................ 4
ARTICLE II
RELATED MATTERS ................................................... 4
2.01. Confidentiality ........................................... 4
2.02. Definitions ............................................... 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND SHAREHOLDERS .................................... 5
3.01. Corporate Organization; Etc. .............................. 6
3.02. Capitalization of the Company.............................. 6
3.04. Authorization, Etc. ....................................... 6
3.05 No Violation .............................................. 6
1
3.06. Statement of Accounts; No Undisclosed Liabilities ......... 7
3.07. Accounts Receivable ........................................ 7
3.08. Inventory .................................................. 7
3.09. Interim Operations ......................................... 7
3.10. Title to Properties; Encumbrances .......................... 7
3.11. Legal Compliance ........................................... 8
3.12. Plant and Equipment ........................................ 8
3.13. Leases ..................................................... 8
3.14. Bank Accounts .............................................. 9
3.15. Taxes ...................................................... 9
3.16. Contracts and Commitments .................................. 9
3.17. Customers and Suppliers .................................... 10
3.18. Orders, Commitments and Returns ............................ 10
3.19. Agreements in Full Force and Effect ........................ 11
3.20. Insurance .................................................. 11
3.21. Labor Difficulties ......................................... 11
3.22. Fringe Benefit Plans ....................................... 11
3.23. Litigation ................................................. 11
3.24. No Condemnation or Expropriation ........................... 12
3.25. Consents and Approvals of Governmental Authorities ......... 12
3.26. Consents ................................................... 12
3.27. Compliance with Law ........................................ 12
2
3.28. Environmental Protection ................................... 12
3.29. Compliance with ERISA ...................................... 13
3.30. Good Title Conveyed, Etc. .................................. 13
3.31. Brokers and Finders ........................................ 13
3.32. Absence of Questionable Payments ........................... 13
3.33. Personnel .................................................. 13
3.34. Insider Interests .......................................... 13
3.35. Products Liability ......................................... 13
3.36. Disclosure ................................................. 14
ARTICLE IV
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE SHAREHOLDERS ...................................... 14
4.01. Investment ................................................. 14
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
ACQUIROR AND ACQUIROR'S SUBSIDIARY .................................. 15
5.01. Corporate Organization; Etc. ............................... 15
5.02. Authorization; Etc. ........................................ 15
5.03. No Violation ............................................... 15
ARTICLE VI
COVENANTS OF THE SHAREHOLDERS AND THE COMPANY ....................... 16
6.01. Full Access ................................................ 16
3
6.02. Consents of Company Lenders, Etc. ...................... 16
6.03. Supplements to Disclosure Schedule ..................... 16
6.04. Additional Financial Statements ........................ 16
6.05. Other Transactions ..................................... 16
6.06. Covenant to Satisfy Conditions ......................... 17
6.07. Certificates ........................................... 17
6.08 Resignation of Directors ............................... 17
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE
SHAREHOLDERS AND THE COMPANY .................................... 17
7.01. Representations and Warranties True .................... 17
7.02. Performance ............................................ 17
7.03. No Governmental Proceeding or Litigation ............... 17
7.04. Certificates ........................................... 17
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF ACQUIROR
AND ACQUIROR'S SUBSIDIARY ....................................... 18
8.01. Representations and Warranties True .................... 18
8.02. Performance ............................................ 18
8.03. Investigations; Etc. ................................... 18
8.04. Consents Obtained ...................................... 18
8.05. No Government Proceeding or Litigation ................. 18
4
8.06. No Injunction .......................................... 18
8.07. Material Change ........................................ 18
8.08. Opinion of the Company's Counsel ....................... 19
8.09. Consents Obtained ...................................... 20
8.10. Employment Contract .................................... 20
ARTICLE IX
CONDUCT OF THE COMPANY'S BUSINESS
PENDING THE CLOSING ............................................. 20
9.01. Regular Course of Business ............................. 21
9.02. Amendments ............................................. 21
9.03. Capital Changes; Dividends or Redemptions .............. 21
9.04. Subsidiaries ........................................... 21
9.05. Organization ........................................... 21
9.06. Certain Changes ........................................ 21
9.07. Contracts .............................................. 22
9.08. Insurance; Property .................................... 23
9.09. No Default ............................................. 23
9.10. Compliance With Laws ................................... 23
9.11. Tax Returns ............................................ 23
ARTICLE X
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION ................................. 23
5
10.01. Investigations; Survival of Warranties ................. 23
10.02. Indemnification; Rights of Set-off ..................... 23
10.03 Injunctive Relief ...................................... 24
10.04. Dispute Resolution ..................................... 24
(a) Arbitration ........................................ 24
10.05 Procedure .............................................. 25
ARTICLE XI
TERMINATION AND ABANDONMENT ..................................... 25
11.01. Methods of Termination ................................. 25
11.02. Procedure Upon Termination ............................. 25
ARTICLE XII
MISCELLANEOUS PROVISIONS ........................................ 26
12.01. Amendment and Modification ............................. 26
12.02. Waiver of Compliance ................................... 26
12.03. Expenses; Transfer Taxes, Etc. ......................... 26
12.04. Notices ................................................ 26
12.05. Assignment ............................................. 27
12.06. Publicity .............................................. 27
12.07. Governing Law .......................................... 28
12.08. Counterparts ........................................... 28
12.09. Headings ............................................... 28
6
12.10. Entire Agreement ....................................... 28
12.11. Third Parties .......................................... 28
12.12. Severability ........................................... 28
7
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of August 1, 1999 among Enviro-Clean of
America, Inc., a Nevada corporation ("Acquiror"), SCS Acquisition Corp., a
Nevada corporation which is a wholly owned subsidiary of Acquiror ("Acquiror
Subsidiary"), Superior Chemical and Supply, Inc., (the "Company"), a Kentucky
corporation, and the Shareholders of the Company set forth on the signature page
hereto (the "Shareholders").
This Agreement sets forth the terms and conditions upon which the
Shareholders will sell to Acquiror and convey to Acquiror's Subsidiary or other
entities designated by Acquiror, and Acquiror will purchase from the
Shareholders, all the shares of no par common stock of the Company, representing
all of the issued and outstanding capital stock of the Company (the "Company
Stock"). As used in this Agreement, capitalized terms not otherwise defined
have the meanings ascribed to them in Article II.
In consideration of the mutual agreements contained herein, intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
--------------------------
1.01. Purchase and Sale of Stock. Subject to the terms and conditions
--------------------------
of this Agreement, at the Closing, the Shareholders shall sell, transfer,
convey, assign and deliver to Acquiror and Acquiror shall purchase, acquire and
accept from the Shareholders, the Company Stock free and clear of all liens,
charges or encumbrances of whatsoever nature.
1.02. Consideration. Subject to the terms and conditions of this
-------------
Agreement, in reliance on the representations, warranties and agreements of the
Shareholders and the Company contained herein, and in consideration of the sale,
assignment, transfer and delivery of the Company Stock, Acquiror or Acquiror's
Subsidiary will deliver at Closing:
(a) The sum of Four Hundred Thousand Dollars ($400,000) in cash,
company check or verified wire transfer; and
(b) A promissory note in the principal amount of One Million Two
Hundred Thousand Dollars ($1,200,000) maturing three years from the Closing Date
and bearing interest at an annual rate equal to the prime rate of Chase
Manhattan Bank, N.A. as published on the Business Day immediately preceding the
Closing Date (the "Note"). The principal of the Note shall be payable in twelve
equal quarterly payments (each a "Payment Date"). Accrued interest on the Note
shall also be paid on each Payment Date. Payment of principal and interest on
the Note shall be secured by the accounts receivable and inventory of the
Company. The
8
security interest in such collateral shall be subordinated to any bank or other
senior lender to the Company, Acquiror or Acquiror's subsidiary. If Acquiror or
Acquiror's Subsidiary shall default in payment of any installment on the Note,
and such default shall remain unremedied for a period of thirty (30) days or
more, any non-competition clause in the employment agreement of Xxxxxxx Xxxxxx
with the Company shall become null, void, and of no further force and effect.
1.03 Escrowed Consideration. Simultaneously with the execution and
----------------------
delivery of this Agreement, the parties have entered into an Escrow Agreement in
the form attached as Exhibit B (the "Escrow Agreement") with Stursberg & Xxxxx,
as Escrow Agent. Pursuant to the Escrow Agreement, Acquiror is depositing into
escrow Fifty Thousand (50,000) shares of Acquiror's Common Stock ("Escrowed
Shares"). Subject to the terms of the Escrow Agreement, Ten Thousand (10,000) of
the Escrowed Shares shall be delivered to the Shareholders within ninety days of
the end of Acquiror's fiscal years ended December 31, 2000, December 31, 2001,
December 31, 2002 and December 31, 2003; provided, however, the Company's
-------- -------
Target Amount (as hereinafter defined) is met for each year. In the case of the
fiscal periods from the Closing Date to December 31, 1999 and January 1, 2004
through the fifth anniversary of the Closing Date, the number of shares to be
issued and the Target Amount shall be adjusted by multiplying 10,000 shares, or
the Target Amount, as the case may be, by a fraction the numerator of which is
the number of calendar days elapsed from but not including the Closing Date to
and including December 31, 1999 or from January 1, 2004 through the fifth
anniversary of the Closing Date, as the case may be, and the denominator of
which is 365. If the Target Amount is not met in any year, number of shares to
be delivered from escrow shall be equal to the product of (x) 10,000 multiplied
----------
by (y) a fraction, the numerator of which shall be the Company's pre-tax income
--
for such year and the denominator of which shall be the Target Amount for such
year. In the event that Company does not meet the Target Amount in any year,
and the Company exceeds the Target Amount in the next year, the Company may
apply an amount equal to the extent by which the Company's pre-tax earnings
exceed the Target Amount for such year, to the prior year's Target Amount and
cause a proportionate amount of the Escrowed Shares that were withheld with
respect to the prior year to be released to the Shareholders. In no event shall
the aggregate number of Acquiror's Shares issued in respect of any two-year
period exceed 20,000.
1.04 Contingent Consideration. In addition to the consideration to be
------------------------
paid by Acquiror to the Shareholders at the closing and the escrowed
consideration, Acquiror shall pay the following contingent consideration to the
Shareholders upon satisfaction of the relevant conditions as follows:
(a) Earn-Out Bonus. Within ninety (90) days from the close of each of
--------------
Acquiror's fiscal years ended December 31, 1999, December 31, 2000, December 31,
2001 and December 31, 2002, Acquiror shall make a cash payment to the
Shareholders equal to twenty-five percent (25%) of: (i) in the case of the
fiscal period from the Closing Date to December 31, 1999 the excess of the
Company's pre-tax earnings over the product of (x) $300,000 multiplied by (y) a
fraction the numerator of which is the number of calendar days elapsed from (but
not including) the Closing Date to (and including) December 31, 1999 and the
denominator of which is 365, (ii) in the case of the full year ended December
31, 2000, the excess of the Company's pre-tax earnings for such full year over
$315,000, (iii) in the case of the full year ended December 31, 2001, the excess
of the Company's pre-tax earnings for such full fiscal year over $330,750, (iv)
9
in the case of the full year ended December 31, 2002, the excess of the
Company's pre-tax earnings for such full fiscal year over $347,288, (v) in the
case of the full year ended December 31, 2003, the excess of the Company's pre-
tax earnings for such full fiscal year over $364,652; and (vi) for the fiscal
period from January 1, 2004 through the fifth anniversary of the Closing Date,
the excess of the Company's pre-tax earnings over the sum of $382,884.60
annually pro rated for the number of days actually elapsed. Anything in this
Section 1.04 to the contrary notwithstanding, no such payments in respect of
contingent payments under this Section 1.04 shall accrue for any period
subsequent to the termination of the Company's Employment Agreement with Xxxxxxx
Xxxxxx.
(b) e-Commerce Profits Distribution. On or prior to March 31, 2000,
-------------------------------
2001, 2002, 2003, 2004 and 2005, Acquiror shall make a cash payment to the
Shareholders equal to twenty-five percent (25%) of the net, after tax profits
for the fiscal years ended December 31, 1999, December 31, 2000, December 31,
2001, December 31, 2002 and December 31, 2003, respectively, and the period from
January 1, 2004 to the fifth anniversary of the Closing Date from any of
Acquiror's sales of janitorial and sanitary supplies which are also sold by the
Company, from all sales of such products by Acquiror through its own Internet
"e-commerce" program, to customers located within a sixty (60) mile radius of
any of the Company's three facility locations in Kentucky.
(c) Adjustment for Over-Payments. In the event that the total amount of
----------------------------
payments made to on for the benefit of the Shareholders pursuant to any
provisions of this Article exceeds the aggregate amount of payments to which the
Shareholders were entitled to receive pursuant to such provisions, Acquiror
shall promptly notify the Shareholders in writing of the excess payment and
shall at its option set off any shortfall against any subsequent payment or
require the Shareholders to refund to Acquiror the amount of any such excess
payments within thirty (30) days from the receipt of such notice.
1.05. Closing. The Closing of the transactions contemplated by this
-------
Agreement will take place by delivery of all documents, shares, checks and other
items required for Closing to the offices of Harrington, Ocko, and Monk, LLP,
counsel to Acquiror ("HOM"), at 00 Xxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx. All
such items will be held in excrow by HOM until such time as all items necessary
for Closing have been received and approval to complete the Closing has been
received and approval to complete the Closing has been received by HOM from
Acquiror, the Company and Xxxxxx.
(a) At the Closing, the Shareholders will deliver to Acquiror or
Acquiror's Subsidiary the Company Stock, together with a stock power or stock
powers duly endorsed for transfer, and Company will deliver to Acquiror or
Acquiror's Subsidiary all other previously undelivered documents required to be
delivered by the Company or any of its officers or directors at or prior to the
closing in connection with the transactions contemplated by this Agreement.
(b) At the Closing, there will be delivered to the Company and the
Shareholders respectively (i) by Acquiror or Acquiror's Subsidiary, the
consideration referred to in Section 1.02 hereof to be delivered at the closing,
and (ii) by Acquiror or Acquiror's Subsidiary, all previously undelivered
documents required to be delivered by Acquiror or Acquiror's Subsidiary
10
to the Company at or prior to the Closing.
1.06. Further Assurances. After the Closing, the Shareholders and the
------------------
Company shall from time to time, at the request of Acquiror or Acquiror's
Subsidiary and without further cost or expense to Acquiror, execute and deliver
such other instruments of conveyance and transfer and take such other actions as
Acquiror or Acquiror's Subsidiary may reasonably request, in order to more
effectively consummate the transactions contemplated hereby.
ARTICLE II
RELATED MATTERS
---------------
2.01. Confidentiality. Each party hereto will hold and will cause its
---------------
consultants and advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all documents and information concerning
the other party furnished it by such other party or its representatives in
connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) previously known by
the party to which it was furnished, (ii) in the public domain through no fault
of such party, or (iii) later lawfully acquired from other sources by the party
to which it was furnished), and each party will not release or disclose such
information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors in connection with this
Agreement. If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained except to the extent such
information comes into the public domain through no fault of the party required
to hold it in confidence, and such information shall not be used to the
detriment of, or in relation to any investment in, the other party and all such
documents (including copies thereof) shall be returned to the other party
immediately upon the written request of such other party. Each party shall be
deemed to have satisfied its obligation to hold confidential information
concerning or supplied by the other party if it exercises the same care as it
takes to preserve confidentiality for its own similar information.
2.02. Definitions. For all purposes of this Agreement, except as
-----------
otherwise expressly provided or unless the context otherwise requires:
"Acquiror" means Enviro-Clean of American, Inc., a corporation formed
under the laws of Nevada.
"Acquiror's Subsidiary" means SCS Acquisition Corp., a corporation formed
under the laws of Nevada.
The terms "Affiliate" and "Associate" have the meanings prescribed by Rule
12b-2 of the regulations promulgated pursuant to the Securities Exchange Act.
"Balance Sheet" means the unaudited consolidated balance sheet of the
Company referred
11
to in Section 3.06(ii) of this Agreement.
"Closing" means the closing referred to in Section 1.01 of this Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1954, as amended.
"Company" means Superior Chemical and Supplies, Inc., a corporation formed
under the laws of Kentucky.
"Company Affiliate" means each Affiliate of the Company.
"Disclosure Schedule" means the document delivered by the Shareholders and
the Company to the Acquiror simultaneously with the execution hereof containing
the information required to be included therein pursuant to this Agreement.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Shareholder" means the Shareholders of the Company whose names are set
forth on the signature page hereto, who, in the aggregate, own beneficially and
of record all issued and outstanding capital stock of the Company.
"Target Amount" means pre-tax earnings of the Company amounting to $250,000
per annum, pro rated for any period of less than one full year and increased by
5% for each year under this Agreement.
Certain terms used in this Agreement are defined in the section used. The
plural of any defined term shall have a meaning correlative to such defined
term.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
OF THE COMPANY AND SHAREHOLDERS
-------------------------------
The Company and the Shareholders hereby represent, covenant and warrant to
Acquiror as follows:
12
3.01. Corporate Organization; Etc. The Company is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Kentucky and has full corporate power and authority to carry on its business as
it is now being conducted and to own the properties and assets it now owns and
is duly qualified or licensed to do business in the jurisdiction of Kentucky,
which is the only jurisdiction in which qualification or licensing is required
The copies of the Certificate of Incorporation and By-Laws of the Company
heretofore delivered to Acquiror are complete and correct copies of such
instruments as presently in effect.
3.02. Capitalization of the Company. As of the date of this Agreement,
-----------------------------
the authorized capital stock of the Company consists of one hundred (100) shares
of common stock, no par value, of which 100 shares are issued and outstanding
and no shares are held in the treasury of the Company. All issued and
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable. As of the date of this Agreement, there are no (i)
securities convertible into or exchangeable for the Company capital stock; (ii)
options, warrants or other rights to purchase or subscribe to capital stock of
the Company or securities convertible into or exchangeable for capital stock of
the Company; or (iii) contracts, commitments, agreements, understandings or
arrangements of any kind oral or written relating to the issuance of any capital
stock of the Company, any such convertible or exchangeable securities or any
such options, warrants or rights.
3.03. No Affiliates. The Company does not own, directly or indirectly,
-------------
any capital stock or other equity securities of any corporation, partnership
trust, joint venture or other entity nor have any direct or indirect equity or
ownership interest in any business.
3.04. Authorization, Etc. The Shareholders have full legal competence
------------------
and the Company has full corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby. The Board of
Directors and Shareholders of the Company have taken all action required by law,
the Company's Certificate of Incorporation, the Company By-Laws or otherwise to
be taken by them to authorize the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby. This Agreement is a
valid and binding agreement of the Shareholders and the Company enforceable in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditor's rights, (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought, and (iii) enforceability of certain
sections of this Agreement may be subject to limitations of public policy under
Federal and State securities laws.
3.05 No Violation. Neither the execution and delivery of this
------------
Agreement nor the consummation of the transactions contemplated hereby will
violate any provision of the Certificate of Incorporation or By-Laws of the
Company or violate, or be in conflict with, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
cause the acceleration of the maturity of any debt or obligation pursuant to, or
result in the creation or imposition of any security interest, lien or other
encumbrance upon any property or assets of the Company under, any agreement or
commitment to which the Company or any Shareholder is a
13
party or by which the Company or any Shareholder is bound, or to which the
property of the Company is subject, or violates any statute or law or any
judgment, decree, order, regulation or rule of any court or governmental
authority.
3.06. Statement of Accounts; No Undisclosed Liabilities. As of July 31,
--------------------------------------------------
1999, the balances of the following accounts of the Company were as follows:
Cash in Bank $ 7,779.12
Accounts Receivable 180,350.67
Inventory 192,820.76
Accounts Payable 75,909.45
Such accounts present fairly the financial condition of the Company as of such
dates and the results of operations of the Company for such periods. The
statement of account as of July 31, 1999 is herein referred to as the "Balance
Sheet".
The Company has no liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) which were not fully reflected or reserved
against in the financial statements, except for liabilities and obligations
incurred in the ordinary course of business and consistent with past practice
since the date thereof which do not, in the aggregate, exceed $25,000, and the
reserves for liabilities and contingencies reflected in the financial statements
are adequate, appropriate and reasonable.
3.07. Accounts Receivable. All accounts receivable of the Company,
-------------------
whether reflected in the Balance Sheet or otherwise, represent sales actually
made in the ordinary course of business, and are current and collectible net of
any reserves shown on the Balance Sheet (which reserves are adequate and were
calculated consistent with past practice). Subject to such reserve, each of the
accounts receivable either has been collected in full or will be collected in
full, without any set-off, within 120 days after the day on which it became due
and payable.
3.08. Inventory. All inventory of the Company, whether reflected in
---------
the Balance Sheet or otherwise, consists of a quality and quantity usable and
salable in the ordinary course of business, except for items of obsolete
materials and materials of below-standard quality, all of which have been
written down in the Balance Sheet to realizable market value or for which
adequate reserves have been provided therein. The quantities of all inventory of
the Company are reasonable and warranted in the present circumstances of its
business.
3.09. Interim Operations. Since the date of the Balance Sheet, the
------------------
business of the Company has been conducted only in the ordinary and usual course
consistent with past practice. Since the date of the Balance Sheet, to the best
knowledge of the Company and the Shareholders there have not been any adverse
changes in the financial condition, assets or results of operations of the
Company. Since such date such assets have not been affected in any way as a
result of flood, fire, explosion or other casualty (whether or not covered by
insurance). The Company is not aware of any circumstances which may cause it to
suffer any adverse change in its business, operations or prospects.
14
3.10. Title to Properties; Encumbrances. The Company has good, valid and
---------------------------------
marketable title to all the properties and assets which it purports to own
(real, personal and mixed, tangible and intangible), including, without
limitation, all the properties and assets reflected in the Balance Sheet, and
all the properties and assets purchased by the Company since the date of the
Balance Sheet. All properties and assets reflected in the Balance Sheet have a
fair market or realizable value at least equal to the value thereof as reflected
therein, and all such properties and assets are free and clear of all title
defects or objections, liens, claims, charges, security interests or other
encumbrances of any nature whatsoever including, without limitation leases,
chattel mortgages, conditional sales contracts, collateral security arrangements
and other title or interest retention arrangements, and are not, in the case of
real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations or limitations of any nature whatsoever
except, with respect to all such properties and assets, (a) liens shown on the
Balance Sheet as securing specified liabilities or obligations and liens
incurred in connection with the purchase of property and/or assets, if such
purchase was effected after the date of the Balance Sheet, with respect to which
no default exists; (b) minor imperfections of title, if any, none of which are
substantial in amount, materially detract from the value or impair the use of
the property subject thereto, or impair the operations of the Company and which
have arisen only in the ordinary course of business and consistent with past
practice since the date of the Balance Sheet; and (c) liens for current taxes
not yet due. The rights, properties and other assets presently owned, leased or
licensed by the Company and described elsewhere in this Agreement include all
rights, properties and other assets necessary to permit the Company to conduct
its business in all material respects in the same manner as its business has
been conducted prior to the date hereof.
3.11. Legal Compliance. The Company has complied with all applicable
-----------------
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), except where the failure to
comply would not have a material adverse effect upon the financial condition of
the Company taken as a whole.
3.12. Plant and Equipment. The plants, structures and equipment of the
-------------------
Company are structurally sound with no defects and are in good operating
condition and repair and are adequate for the uses to which they are being put;
and none of such plants, structures or equipment are in need of maintenance or
repairs except for ordinary, routine maintenance and repairs which are not
material in nature or cost. The Company has not received notification that it
is in violation of any applicable building, zoning, anti-pollution, health or
other law, ordinance or regulation in respect of its plants or structures or
their operations and no such violation exists.
3.13. Leases. Section 3.13 of the Disclosure Schedule contains an
------
accurate and complete description of the terms of all leases pursuant to which
the Company or leases real or personal property. All such leases are valid,
binding and enforceable in accordance with their terms, and are in full force
and effect; there are no existing defaults by the Company; no event of default
has occurred which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default
thereunder; and all lessors under such leases have consented (where such consent
is necessary) to the consummation of the transactions contemplated by this
Agreement without requiring modification in the rights or obligations of the
lessee under such leases. Executed counterpart copies of all consents referred
to in the preceding
15
sentence will be delivered to Acquiror prior to or at the Closing. The Company
and Shareholder have not received any written or oral notice to the effect that
any leases will be renewed at a substantially higher rent than otherwise
provided in such lease.
3.14. Bank Accounts. Section 3.14 of the Disclosure Schedule sets forth
-------------
the names and locations of all banks, trust companies, savings and loan
associations and other financial institutions at which the Company maintains
safe deposit boxes or accounts of any nature. At the Closing, the Company will
deliver to Acquiror copies of all records, including all signature or
authorization cards, pertaining to such bank accounts.
3.15. Taxes. The Company has duly filed all tax reports and returns
-----
required to be filed by it and have duly paid all taxes and other charges due or
claimed to be due from it by federal, state, local or foreign taxing authorities
(including, without limitation, those due in respect of the properties, income,
franchises, licenses, sales or payrolls of any of them); the reserves for taxes
reflected in the Balance Sheet are adequate; and there are no tax liens upon any
property or assets of the Company except liens for current taxes not yet due.
The federal income tax returns of the Company have been examined by the Internal
Revenue Service for all periods to and including those set forth in Section
3.15(a) of the Disclosure Schedule; and, except to the extent shown therein, all
deficiencies asserted as a result of such examinations have been paid or finally
settled and no issue has been raised by the Internal Revenue Service in any such
examination which, by application of the same or similar principles, reasonably
could be expected to result in a proposed deficiency for any other period not so
examined. Further, no state of facts exists or has existed which would
constitute grounds for the assessment of any tax liability with respect to the
periods which have not been audited by the Internal Revenue Service. There are
no outstanding agreements or waivers extending the statutory period of
limitation applicable to any federal income tax return for any period. Copies
of all income tax returns for the Company in respect of all years not barred by
the statute of limitations have heretofore been delivered by the Company to
Acquiror and all such returns are listed in Section 3.15(b) of the Disclosure
Schedule. The Company has not, with regard to any assets or property held,
acquired or to be acquired by any of them, filed a consent to the application of
Section 341(f)(2) of the Code.
3.16. Contracts and Commitments. The Company and Shareholders covenant
-------------------------
that:
(a) The Company has no agreements, contracts, commitments or
restrictions which are material to its business, operations or prospects or
which require the making of any charitable contribution;
(b) No purchase contracts or commitments of the Company continue for
a period of more than twelve (12) months or are in excess of the normal,
ordinary and usual requirements of business or at any excessive price;
(c) There are no outstanding sales contracts, commitments or
proposals of the Company which continue for a period of more than twelve (12)
months or will result in any loss to the Company upon completion or performance
thereof, after allowance for direct distribution expenses nor are there any
outstanding contracts, bids or sales or service proposals quoting prices which
will not result in a normal profit;
16
(d) The Company has no outstanding contracts with officers,
employees, agents, consultants, advisors, salesmen, sales representatives,
distributors or dealers that are not cancelable by it on notice of not longer
than 30 days and without liability, penalty or premium;
(e) The Company has no employment agreement, or any other agreement
that contains any severance, or termination liabilities or obligations;
(f) The Company has no collective bargaining or union contracts or
agreements;
(g) The Company is not in default, nor is there any basis for any
valid claim of default, under any contract made or obligation owed by it;
(h) The Company has no employee other than Xxxxxxx Xxxxxx to whom it
is paying compensation at the annual rate of more than $50,000 for services
rendered;
(i) The Company is not restricted by agreement from carrying on its
business anywhere in the world;
(j) The Company is not under any liability or obligation with
respect to the return of inventory or merchandise in the possession of
wholesalers, distributors, retailers or their customers;
(k) Except as set forth in Section 3.16 (k) of the Disclosure
Schedule, the Company has no debt obligation for borrowed money, including
guarantees of or agreements to acquire any such debt obligation of others;
(1) The Company has no outstanding loans to any person or entity;
and
(m) The Company has no power of attorney outstanding or any
obligations or liabilities (whether absolute, accrued, contingent or otherwise),
as guarantor, surety, co-signer, endorser, comaker, indemnitor or otherwise in
respect of the obligation of any person, corporation, partnership, joint
venture, association, organization or other entity.
3.17. Customers and Suppliers. Sections 3.17(a) and (b), respectively,
-----------------------
of the Disclosure Schedule set forth: (a) a list of (i) the ten largest
customers of the Company in terms of sales during the fiscal year ended December
31, 1998 and (ii) the ten largest customers of the Company in terms of sales
during the seven months ending July 31, 1999, showing the approximate total
sales by the Company to each such customer during the fiscal year ended December
31, 1998 and the seven months ending July 31, 1999, respectively; (b) a list of
(i) the ten largest suppliers of the Company in terms of purchases during the
fiscal year ended December 31, 1998, and (ii) the ten largest suppliers of the
Company in terms of purchases during the seven months ending July 31, 1999,
showing the approximate total purchases by the Company from each such supplier
during the fiscal year ended December 31, 1998 and the seven months ending July
31, 1999, respectively. There has not been any material adverse change in the
business relationship of the Company with any customer or supplier named in
Sections
17
3.17(a) and 3.17(b) of the Disclosure Schedule. The Company has not had any
customer who accounted for more than 5% of Company's sales during the period
from January 1, 1999 to July 31, 1999 or any supplier from whom it purchased
more than 5% of the goods or services which it purchased during the period
January 1, 1999 to July 31, 1999.
3.18. Orders, Commitments and Returns. As of the date of this Agreement,
-------------------------------
the aggregate of all accepted and unfulfilled orders for the sale of merchandise
entered into by the Company does not exceed $20,000, and the aggregate of all
contracts or commitments for the purchase of supplies by them does not exceed
$20,000 all of which orders, contracts and commitments were made in the ordinary
course of business. As of the date of this Agreement, there are no claims
against the Company to return in excess of an aggregate of $500 of merchandise
by reason of alleged overshipments, defective merchandise or otherwise, or of
merchandise in the hands of customers under an understanding that such
merchandise would be returnable.
3.19. Agreements in Full Force and Effect. All contracts, agreements,
-----------------------------------
plans, leases, policies and licenses referred to in the Disclosure Schedule are
valid and in full force and effect, and true copies thereof have been heretofore
made available to Acquiror.
3.20. Insurance. Section 3.20 of the Disclosure Schedule contains an
---------
accurate and complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by the
Company. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of the Closing
have been paid, and no notice of cancellation or termination has been received
with respect to any such policy. Such policies are sufficient for compliance
with all requirements of law and of all agreements to which the Company is a
party; are valid, outstanding and enforceable policies; provide adequate
insurance coverage for the assets and operations of the Company; will remain in
full force and effect through the respective dates set forth in Section 3.20(a)
of the Disclosure Schedule without the payment of additional premiums; and will
not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Section 3.20(b) of the Disclosure
Schedule identifies all risks which the Company, its Board of Directors or
officers have designated as being self insured. The Company has not been
refused any insurance with respect to its assets or operations, nor has its
coverage been limited, by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last years.
3.21. Labor Difficulties. (a) The Company is in compliance with all
------------------
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any unfair
labor practice; (b) there is no unfair labor practice complaint against the
Company pending before the National Labor Relations Board; (c) there is no labor
strike, dispute, slowdown or stoppage actually pending or threatened against or
affecting the Company; (d) no representation question exists respecting the
employees of the Company; (e) no grievance nor any arbitration proceeding
arising out of or under collective bargaining agreements is pending and no claim
therefor exists; (f) no collective bargaining agreement which is binding on the
Company restricts it from relocating or closing any of their operations; and (g)
the Company has not experienced any work stoppage or other labor difficulty
18
in the past twenty-four months.
3.22. Fringe Benefit Plans. The Company has no bonus, deferred
--------------------
compensation, pension, profit-sharing, retirement, stock purchase, stock option
or any other fringe benefit plan, arrangement or practice, whether formal or
informal. The Company has no commitments, whether formal or informal and
whether legally binding or not, to create any such plan or arrangement.
3.23. Litigation. Except as set forth in Section 3.23 of the
----------
Disclosure Schedule, there is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or threatened against or involving
the Company or the Shareholders, or which questions or challenges the validity
of this Agreement or any action taken or to be taken by the Company or the
Shareholders pursuant to this Agreement or in connection with the transactions
contemplated hereby; nor is there any valid basis for any such action,
proceeding or investigation. The Company is not in default under or in
violation of, nor is there any valid basis for any claim of default under or
violation of, any contract, commitment or restriction to which it is a party or
by which it is bound. The Company is not subject to any judgment, order or
decree entered in any lawsuit or proceeding which may have an adverse effect on
its business practices or on its ability to acquire any property or conduct its
business in any area.
3.24. No Condemnation or Expropriation. Neither the whole nor any portion
--------------------------------
of the leaseholds or any other assets of the Company is subject to any
governmental decree or order to be sold or is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor has any such condemnation, expropriation or taking been proposed.
3.25. Consents and Approvals of Governmental Authorities. No consent,
--------------------------------------------------
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority is required in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
3.26. Consents. No consent of any person is necessary to the
--------
consummation of the transactions contemplated hereby, including, without
limitation, consents from parties to loans, contracts, leases or other
agreements and consents from governmental agencies, whether federal, state or
local.
3.27. Compliance with Law. The operations of the Company have been
-------------------
conducted in accordance with all applicable laws, regulations and other
requirements of all national governmental authorities, and of all states,
municipalities and other political subdivisions and agencies thereof, having
jurisdiction over the Company, including, without limitation, all such laws,
regulations and requirements relating to antitrust, consumer protection,
currency exchange, equal opportunity, health, occupational safety, pension,
securities and trading-with-the-enemy matters. The Company has not received
any notification of any asserted present or past failure by the Company to
comply with such laws, rules or regulations.
19
3.28. Environmental Protection. The Company has obtained all permits,
------------------------
licenses and other authorizations which are required under federal, state and
local laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes. The Company is in full compliance with all terms and
conditions of the required permits, licenses and authorizations, and is also in
full compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
those laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder.
The Company and Shareholders are not aware of, nor has the Company or any
Shareholder received notice of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent continued compliance, or which may give rise to any
common law or legal liability, or otherwise form the basis of any claim, action,
suit, proceeding, hearing or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, or hazardous or
toxic material or waste.
3.29. Compliance with ERISA. The Company has never had a benefit plan
---------------------
that is governed by ERISA.
3.30. Good Title Conveyed, Etc. The Shareholders have complete and
------------------------
unrestricted power and the unqualified right to sell, assign, transfer and
deliver to Acquiror, and upon consummation of the transactions contemplated by
this Agreement, Acquiror's Subsidiary will acquire, good, valid and marketable
title to, the Company Stock to be transferred to Acquiror's Subsidiary
hereunder, free and clear of all mortgages, pledges, liens, security interests,
conditional sales agreements, encumbrances or charges of any kind.
3.31. Brokers and Finders. Neither the Shareholders, the Company nor
-------------------
any of its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement.
3.32. Absence of Questionable Payments. Neither the Company nor any
--------------------------------
director, officer, agent, employee or other person acting on behalf of the
Company, has used any corporate or other funds for unlawful contributions,
payments, gifts, or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of Section 30A of the
Securities Exchange Act. The Company nor any current director, officer, agent,
employee or other person acting on behalf of the Company has accepted or
received any unlawful contributions, payments, gifts, or expenditures.
3.33. Personnel. Section 3.33 of the Disclosure Schedule sets forth a
---------
true and complete list of:
20
(a) the names and current salaries of all directors and elected and
appointed officers of each of the Company, the number of shares of the Company
Stock owned beneficially or of record, or both, by each such person and the
family relationships, if any, among such persons;
(b) the wage rates for non-salaried and nonexecutive salaried
employees of the Company by classification, and all labor union contracts if
any; and
(c) all group insurance programs in effect for employees of the
Company. The Company is not in default with respect to any of its obligations
referred to in the preceding sentence.
3.34. Insider Interests. Except as set forth in Schedule 3.34, no officer
-----------------
or director of the Company has any material interest in any property, real or
personal, tangible or intangible, including without limitation, inventions,
patents, trademarks or trade names, used in or pertaining to the business of the
Company or any Company Subsidiary.
3.35. Products Liability. There is no action, suit, inquiry, proceeding or
------------------
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or threatened against or involving
the Company relating to any product alleged to have been manufactured or sold by
the Company and alleged to have been defective, or improperly designed or
manufactured, nor is there any valid basis for any such action, proceeding or
investigation.
3.36. Disclosure. No representations or warranties by the Shareholders or
----------
the Company in this Agreement and no statement contained in any document
(including, without limitation, financial statements and the Disclosure
Schedule), certificate, or other writing furnished or to be furnished by the
Company or any Shareholder to Acquiror or any of its representatives pursuant to
the provisions hereof or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of material fact or omits
or will omit to state any material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS, WARRANTIES, COVENANTS AND
------------------------------------------
AGREEMENTS OF THE SHAREHOLDERS
------------------------------
Each of the Shareholders hereby represents and warrants to, and covenants
and agrees with, the Acquiror, as of the date of the Closing, that:
21
4.01. Investment. (a) Such Shareholder has received such information
----------
relating to the business and affairs of the Acquiror which such Shareholder has
requested, and all additional information which such Shareholder has considered
necessary to verify the accuracy of the information so received. Such
Shareholder has had the opportunity to ask questions of and receive answers from
the Acquiror concerning the terms and conditions of the transactions
contemplated by this Agreement. On the basis of the foregoing, such Shareholder
is familiar with the operations, business plans and financial condition of the
Acquiror.
(b) Such Shareholder understands that the Acquiror proposes to issue
and deliver to such Shareholder, under certain circumstances, shares of
Acquiror's Common Stock pursuant to this Agreement without registration under
the Securities Act or the laws of any state in reliance upon various exemptions
from registration contained in such laws and regulations; that for purposes of
determining the availability of the applicable exemptions from registration the
Acquiror will rely upon the representations, warranties, covenants and
agreements contained herein. Such Shareholder is an "accredited investor" as
such term is defined in Rule 501 under the Securities Act.
(c) Such Shareholder understands that, under existing rules of the
Securities and Exchange Commission, such Shareholder may be unable to sell his
shares of Acquiror's Common Stock except to the extent that such shares of
Acquiror's Common Stock may be sold (A) pursuant to an effective registration
statement covering such shares pursuant to the Securities Act or (B) in a bona
fide private placement to a purchaser who shall be subject to the same
restrictions on any resale or (C) subject to the restrictions contained in Rule
144 under the Securities Act ("Rule 144"). Such Shareholder understands that
the Acquiror is under no obligation to effect a registration of the
Shareholder's shares of Acquiror's Common Stock under the Securities Act.
(d) Such Shareholder is familiar with the provisions of Rule 144 and
the limitations upon the availability and applicability of such Rule.
(e) Such Shareholder is a sophisticated investor familiar with the
type of risks inherent in the acquisition of restricted securities such as the
shares of Acquiror's Common Stock and his financial position is such that he can
afford to retain his shares of Acquiror's Common Stock for an indefinite period
of time without realizing any direct or indirect cash return on his investment.
(f) Such Shareholder is acquiring his shares of Acquiror's Common
Stock for his account and not with a view to, or for sale in connection with,
the distribution thereof within the meaning of the Securities Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
22
ACQUIROR AND ACQUIROR'S SUBSIDIARY
----------------------------------
Acquiror and Acquiror's Subsidiary, jointly and severally, represent and
warrant to the Company as follows:
5.01. Corporate Organization; Etc. Acquiror and Acquiror's Subsidiary
---------------------------
are corporations duly organized, validly existing and in good standing under the
laws of the State of Nevada. All the issued and outstanding shares of capital
stock of Acquiror's Subsidiary have been duly authorized by all necessary
corporation action and are validly issued, fully paid and nonassessable and are
owned by Acquiror.
5.02. Authorization; Etc. Acquiror and Acquiror's Subsidiary have full
------------------
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The Boards of Directors of Acquiror and
Acquiror's Subsidiary have taken all action required by law, their respective
Certificates of Incorporation and By-Laws or otherwise to authorize the
execution and delivery of this Agreement and the transactions contemplated
hereby, and this Agreement is a valid and binding agreement of Acquiror and
Acquiror's Subsidiary enforceable in accordance with its terms except that (i)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
5.03. No Violation. Neither the execution and delivery of this Agreement
------------
nor the consummation of the transactions contemplated hereby will violate any
provisions of the respective Certificate of Incorporation or By-Laws of Acquiror
or Acquiror's Subsidiary, or violate, or be in conflict with, or constitute a
default under, or cause the acceleration of the maturity of any debt or
obligation pursuant to, any agreement or commitment to which Acquiror or
Acquiror's Subsidiary is a party or by which Acquiror or Acquiror's Subsidiary
is bound, or violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority.
ARTICLE VI
COVENANTS OF THE SHAREHOLDERS AND THE COMPANY
---------------------------------------------
The Shareholders and the Company hereby covenant and agree with Acquiror:
6.01. Full Access. The Shareholders shall cause the Company to, and
-----------
the Company shall, afford to Acquiror, its counsel, accountants and other
representatives full access to the
23
plants, offices, warehouses, properties, books and records of the Company in
order that Acquiror may have full opportunity to make such investigations as it
shall desire to make of the affairs of the Company; and the Company will cause
its officers and accountants to furnish such additional financial and operating
data and other information as Acquiror shall from time to time request;
provided, however, that any such investigation shall be conducted in such a
-------- -------
manner as not to interfere unreasonably with the operation of the businesses of
the Company.
6.02. Consents of Company Lenders, Etc. The Shareholders shall cause
--------------------------------
the Company to, and the Company shall, use its best efforts to obtain at the
earliest practicable date and prior to the Closing all consents necessary, as
reasonably requested by counsel to the Acquiror for the consummation of the
transactions contemplated hereby and will provide to Acquiror copies of each
such consent promptly after it is obtained.
6.03. Supplements to Disclosure Schedule. From time to time prior to
----------------------------------
the Closing, the Company will promptly supplement or amend the Disclosure
Schedule with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in the Disclosure Schedule. No supplement or amendment of the
Disclosure Schedule made pursuant to this section shall be deemed to cure any
breach of any representation of or warranty made in this Agreement unless
Acquiror specifically agrees thereto in writing.
6.04. Additional Financial Statements. The Company shall furnish Acquiror
-------------------------------
with financial statements similar to those referred to in Section 3.07(ii) as of
July 31, 1999, and for the six month periods ended on such date, all certified
by the chief financial officer and President of the Company, as soon as they
become available, but in no event later than forty-five (45) days following the
Closing Date.
6.05. Other Transactions. Neither the Company nor its Board of Directors
------------------
shall enter into any discussions concerning, or approve or recommend to the
holders of any shares of its capital stock, any merger, consolidation,
disposition of all or substantially all of its business, properties or assets
(other than pursuant to this Agreement), any tender offer, acquisition or other
business combination, or proposal therefor, or furnish or cause to be furnished
any information concerning the business, properties or assets of the Company to
any party in connection with any tender offer or other transaction involving the
acquisition of the Company or all or any substantial part of its assets by any
person other than Acquiror or Acquiror's Subsidiary.
6.06. Covenant to Satisfy Conditions. The Shareholders and the Company
------------------------------
will use their best efforts to ensure that the conditions set forth in Article
VIII hereof are satisfied, insofar as such matters are within the control of any
of them.
6.07. Certificates. At the Closing the Company will furnish Acquiror
------------
with such certificates of its officers and others to evidence compliance with
the covenants set forth in this Article VI as may be reasonably requested by
Acquiror.
6.08 Resignation of Directors. Immediately prior to the Closing, each
------------------------
member of the Board of Directors of the Company so requested by Acquiror shall
have delivered to Acquiror a
24
written resignation from such Board of Directors effective as of the Closing
Date.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE
------------------------------------
SHAREHOLDERS AND THE COMPANY
----------------------------
Each and every obligation of the Shareholders and the Company under this
Agreement to be performed on or before the Closing shall be subject to the
reasonable satisfaction, on or before the Closing, of each of the following
conditions, unless waived in writing by the Shareholders and the Company:
7.01. Representations and Warranties True. The representations and
-----------------------------------
warranties of Acquiror and Acquiror's Subsidiary contained herein shall be in
all material respects true and accurate as of the date when made and at and as
of the Closing as though such representations and warranties were made at and as
of such date, except for changes expressly permitted or contemplated by the
terms of this Agreement.
7.02. Performance. Acquiror and Acquiror's Subsidiary shall have
-----------
performed and complied with all agreements, obligations and conditions required
by this Agreement to be performed or complied with by them on or prior to the
Closing.
7.03. No Governmental Proceeding or Litigation. No suit, action,
----------------------------------------
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
7.04. Certificates. Acquiror and Acquiror's Subsidiary shall have
------------
furnished the Company with such certificates of their officers and others to
evidence compliance with the conditions set forth in this Article VII as may be
reasonably requested by the Company.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF ACQUIROR
-------------------------------------
AND ACQUIROR'S SUBSIDIARY
-------------------------
25
Each and every obligation of Acquiror and Acquiror's Subsidiary under this
Agreement to be performed on or before the Closing shall be subject to the
satisfaction, on or before the Closing, of each of the following conditions,
unless waived in writing by Acquiror:
8.01. Representations and Warranties True. The representations and
-----------------------------------
warranties contained in Article III hereof, the Disclosure Schedule and in all
certificates and other documents delivered and to be delivered by the
Shareholders and the Company to Acquiror or Acquiror's Subsidiary or their
representatives pursuant hereto or in connection with the transactions
contemplated hereby shall be true, complete and accurate as of the date when
made and at and as of the Closing Date as though such representations and
warranties were made at and as of such date, except for changes expressly
permitted or contemplated by the terms of this Agreement.
8.02. Performance. The Shareholders and the Company shall have performed
-----------
and complied with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by them on or prior to the Closing,
to the satisfaction of Acquiror's Counsel.
8.03. Investigations; Etc. No investigation of the Company, nor the
-------------------
Disclosure Schedule or any supplement thereto nor any other document delivered
to Acquiror as contemplated by this Agreement, shall have revealed any facts or
circumstances which, in the sole and exclusive judgment of Acquiror, reflect in
a material adverse way on the financial condition, assets, liabilities
(absolute, accrued, contingent or otherwise), reserves, business, operations or
prospects of the Company.
8.04. Consents Obtained. All consents from third parties and government
-----------------
agencies required to consummate the transactions contemplated hereby shall have
been obtained.
8.05. No Government Proceeding or Litigation. No suit, action,
--------------------------------------
investigation, inquiry or other proceeding-by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened against the Company or any Shareholder which questions the validity
or legality of any of the transactions contemplated by this Agreement.
8.06. No Injunction. On the Closing Date there shall be no effective
-------------
pending or threatened injunction, writ, preliminary restraining order or any
order of any nature issued by a court of competent jurisdiction directing that
the transactions provided for herein or any of them not be consummated as so
provided or imposing any conditions on the consummation of the transaction
contemplated hereby which the Acquiror deems unacceptable in its sole
discretion.
8.07. Material Change. From the date of the Balance Sheet to the Closing
---------------
Date, the Company shall not have suffered any adverse change (whether or not
such change is referred to or described in any supplement to the Disclosure
Schedule) in its business, prospects, financial condition, working capital,
assets, liabilities (absolute, accrued, contingent or otherwise), reserves or
operations.
26
8.08. Opinion of the Company's Counsel. The Company shall have delivered
--------------------------------
to Acquiror an opinion of Xxxxxx, Xxxxxxx & Xxxxxxx, counsel to the Company,
dated as of the Closing Date, in form and substance satisfactory to Acquiror, to
the effect that:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation;
(b) The Company is duly qualified as a foreign corporation and in
good standing in each jurisdiction in which the properties owned or leased by it
or the nature of the business conducted by it makes such qualification
necessary;
(c) The Company has the corporate power and authority to carry on
its business as it is now being conducted and to own the properties and assets
it now owns, and the Company has the full corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby;
(d) The Shareholders have the authority to enter into the Agreement
and to consummate the transactions contemplated hereby;
(e) The only authorized capital stock of the Company consists of
One Hundred (100) shares of no par Common Stock, One Hundred (100) shares of
which are issued and outstanding, that such issued shares have been duly and
validly authorized and issued and are fully paid and nonassessable;
(f) Based upon an examination of the records of the Company, there
are no outstanding options, warrants, calls, commitments or other rights or
agreements to which the Company or any Shareholder is bound relating to the
issuance, sale or redemption of common stock of the Company to purchase or
acquire any capital stock of the Company;
(g) All corporate action by the Company required in order to
authorize the transactions contemplated hereby has been duly and validly taken;
and this Agreement has been duly executed and delivered by the Company and is
the valid and binding obligation of the Company enforceable in accordance with
its terms except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors, rights and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought;
(h) The Shareholders have complete and unrestricted power to sell,
convey, assign, transfer and deliver to Acquiror the Company Stock; and the
instruments of sale, conveyance, assignment and transfer executed and delivered
to Acquiror or Acquiror's Subsidiary hereunder are duly executed, are valid and
binding obligations of the Shareholders, and effectively vest in Acquiror's
Subsidiary good, clear, marketable title in and to such Company Stock as
contemplated by this Agreement, free and clear of any lien, charge or
encumbrance of any kind whatsoever;
27
(i) Neither the execution and delivery of this Agreement by the
Shareholders and the Company nor the consummation of the transactions
contemplated hereby will violate the Certificate of Incorporation or By-Laws of
the Company will violate, conflict with, or constitute a default under, or cause
the acceleration of maturity of any debt or obligation pursuant to, or result in
the creation or imposition of any security interest, lien or other encumbrance
upon any property or assets of the Company under, any contract, commitment,
agreement, trust, understanding, arrangement or restriction of any kind to which
the Company is a party or by which the Company or any Shareholder is bound or
violates any statute or law, or any judgment, decree, order, regulation or rule
of any court or governmental authority;
(j) The Company is not engaged in or threatened with any legal
action or other proceeding or has incurred or been charged with or is under
investigation with respect to any violation of any federal, state or local law
or administrative regulation which if adversely determined might adversely
affect or impair the business or condition, financial or otherwise, of the
Company.
(k) No consent of any governmental body of any other person is
required for the consummation by the Company of the transactions contemplated
hereby, except consents the need for which is disclosed in this Agreement or the
Disclosure Schedule, all of which have been duly and validly obtained;
(1) To the best knowledge of such counsel, the Company is in
compliance with all applicable laws and regulations;
(m) No facts have come to the attention of such counsel which would
lead them to believe that any representation or warranty of the Company
contained herein or in the Disclosure Schedule or any supplement thereto is
incorrect, false or misleading in any manner;
(n) As to such other matters incident to the matters herein
contemplated as Acquiror and its counsel may reasonably request, including the
form of all documents and the validity of all proceedings.
8.09. Consents Obtained. All consents referred to in this Agreement or
-----------------
the Disclosure Schedule shall have been obtained.
8.10. Employment Contract. At or prior to the Closing, Acquiror's
-------------------
Subsidiary and Xxxxxxx Xxxxxx shall have entered into a contract satisfactory to
Acquiror providing for his employment by Acquiror commencing upon the Closing.
ARTICLE IX
CONDUCT OF THE COMPANY'S BUSINESS
---------------------------------
PENDING THE CLOSING
-------------------
28
Pending the Closing, and except as otherwise expressly consented to or
approved by Acquiror in writing:
9.01. Regular Course of Business. The Company and Shareholders covenant
--------------------------
and agree that they will carry on the Company's business diligently and
substantially in the same manner as heretofore conducted, and the Company shall
not institute any new methods of manufacture, purchase, sale, lease, management,
accounting or operation or engage in any transaction or activity, enter into any
agreement or make any commitment, except in the ordinary course of business and
consistent with past practice.
9.02. Amendments. No change or amendment shall be made in the Certificate
----------
of Incorporation or By-Laws of the Company.
9.03. Capital Changes; Dividends or Redemptions. Neither the
-----------------------------------------
Shareholders nor the Company will issue or sell any shares of the Company's
capital stock or other securities, acquire directly or indirectly, by redemption
or otherwise, any such capital stock, reclassify or split-up any such capital
stock, declare or pay any dividends thereon in cash, securities or other
property or make any other distribution with respect thereto, or grant or enter
into any options, warrants, calls or commitments of any kind with respect
thereto.
9.04. Subsidiaries. The Company will not organize any subsidiary,
------------
acquire any capital stock or other equity securities of any corporation or
acquire any equity or ownership interest in any business.
9.05. Organization. The Company shall use its best efforts to preserve
------------
its corporate existence and business organization intact, to keep available to
Acquiror its officers and key employees, and to preserve for Acquiror its
relationships with licensors, suppliers, distributors, customers and others
having business relations with it.
9.06. Certain Changes. The Company and the Shareholders agree that the
---------------
Company will not:
(a) Borrow or agree to borrow any funds or incur, or assume or
become subject to, whether directly or by way of guarantee or otherwise, any
obligation or liability (absolute or contingent), except obligations and
liabilities incurred in the ordinary course of business and consistent with past
practice;
(b) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of liabilities or obligations reflected or reserved against in the
Balance Sheet or incurred in the ordinary course of business and consistent with
past practice since the date of the Balance Sheet;
(c) Prepay any obligation having a fixed maturity of more than 90
days from the date such obligation was issued or incurred;
29
(d) Permit or allow any of its property or assets (real, personal
or mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien
or encumbrance;
(e) Write down the value of any inventory or write off as
uncollectible any notes or accounts receivable except for immaterial write-downs
and write-offs in the ordinary course of business and consistent with past
practice;
(f) Cancel any debts or waive any claims or rights of substantial
value or sell, transfer, or otherwise dispose of any of its properties or
assets, except in the ordinary course of business and consistent with past
practice;
(g) Dispose of or permit to lapse any rights to the use of any
patent, trademark, trade name or copyright, or dispose of or disclose to any
person any trade secret, formula, process or know-how not theretofore a matter
of public knowledge;
(h) Grant any general increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employee;
(i) Make any single capital expenditure or commitment in excess of
$10,000 for additions to property, plant or equipment or make aggregate capital
expenditures and commitments in excess of $10,000 (on a consolidated basis) for
additions to property, plant or equipment;
(j) Pay, loan or advance any amount to, or sell transfer or lease
any properties or assets to, or enter into any agreement or arrangement with,
any of its officers or directors or any affiliate or Associate of any of its
officers or directors, except for directors' fees and compensation to officers
at rates not exceeding the rates of compensation paid during the fiscal year
ended
(k) Change any of the banking or safe deposit arrangements
described in Section 3.14 of the Disclosure Schedule;
(1) Grant or extend any power of attorney or act as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any person, corporation, partnership, joint venture, association,
organization or other entity; or
(m) The Company and its Shareholders shall not fail to cooperate
fully with Acquiror, do all things reasonably necessary to assist Acquiror and
use its reasonable best efforts at its own expense to obtain all consents and
approvals necessary for the transfer of the stock, including the furnishing of
all financial and other information reasonably required by the party whose
consent or approval is being sought.
(n) Agree, whether in writing or otherwise, to do any of the
foregoing.
30
9.07. Contracts. No contract or commitment will be entered into, and
---------
no purchase of raw material or supplies and no sale of assets will be made, by
or on behalf of the Company except (i) normal contracts or commitments for the
purchase of, and normal purchases of, raw materials or supplies, made in the
ordinary course of business and consistent with past practice, (ii) normal
contracts or commitments for the sale of, and normal sales of, inventory in the
ordinary course of business and consistent with past practice, and (iii) other
contracts, commitments, purchases or sales in the ordinary course of business
and consistent with past practice not in excess of $10,000 in the aggregate.
9.08. Insurance; Property. The Company shall adequately insure all
-------------------
property, real, personal and mixed, owned or leased by the Company against all
ordinary and insurable risks; and all such property shall be used, operated,
maintained and repaired in a careful and reasonably efficient manner.
9.09. No Default. The Company shall not do any act or omit to do any
----------
act, or permit any act or omission to act, which will cause a breach of any
material contract or commitment of the Company or which would cause the breach
of any warranty made hereunder.
9.10. Compliance With Laws. The Company shall duly comply with all laws
--------------------
applicable to it and its properties, operations, business and employees.
9.11. Tax Returns. The Company and Shareholders shall prepare and file
-----------
all federal, state, local and foreign tax returns and amendments thereto
required to be filed by them. The Company and Shareholders will ensure that
Acquiror shall have a reasonable opportunity to review each such return and
amendment prior to the filing thereof.
ARTICLE X
SURVIVAL OF REPRESENTATIONS
---------------------------
AND WARRANTIES; INDEMNIFICATION
-------------------------------
10.01. Investigations; Survival of Warranties. The respective
--------------------------------------
representations and warranties of the Company, Shareholders, Acquiror's
Subsidiary and Acquiror contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party hereto. Each and every
such representation and warranty shall survive for a period of two (2) years
after the date such representation and warranty is deemed made, except (i) for
covenants and agreements to be performed subsequent to the Closing and (ii) that
nothing in the foregoing shall be deemed to diminish any Indemnifying Party's
(as hereinafter defined) indemnification obligations to an Indemnified Party
respecting (a) any matter for which written notice to the Indemnifying Party has
been given prior to the end of the applicable indemnification period, and (b)
claims for
31
indemnification for tax matters and common law fraud, which shall survive for
the duration of the applicable statutes of limitations.
10.02. Indemnification; Rights of Set-off. The Company and the
----------------------------------
Shareholders jointly and severally agree to save harmless, defend and indemnify
Acquiror, Acquiror's Subsidiary and their respective officers, directors,
agents, attorneys, accountants, or other representatives of such parties
(jointly or severally "Indemnified Parties") against, and hold them harmless
from any and all liabilities, of every kind, nature and description, fixed or
contingent (including, without limitation, reasonable counsel fees, expert
witness fees, and expenses in connection with any action, claim or proceeding
relating to such liabilities) arising out of a breach of any of the
representations and warranties or covenants contained herein and/or any
transaction or event commencing or occurring on or prior to the Closing Date,
which is not fully disclosed or provided for in this Agreement, the Disclosure
Statement or the due diligence items provided in connection with this
transaction.
In the event that Acquiror or Acquiror's Subsidiary believes that there has
been a breach of any representation or warranty or covenant of the Shareholders
or the Company under this Agreement or that the Company or the Shareholders have
otherwise breached any obligation of any of them under this Agreement, Acquiror
and Acquiror's Subsidiary shall have the right, upon written notice to the
Shareholders, to withhold from any payment otherwise to be made to or for the
benefit of the Shareholders under this Agreement, an amount equal to the amount
by which Acquiror or Acquiror's Subsidiary believes it has been damaged by such
breach. The rights of the Indemnified Parties under this Section 10.02 are
without prejudice to any other rights or remedies that it may have by reason of
this Agreement or as otherwise provided by law. In addition to, and not in
derogation of, any rights to indemnification hereunder or otherwise available to
Acquiror or Acquiror's Subsidiary, the Shareholders specifically agree to
indemnify the Company, Acquiror and Acquiror's Subsidiary from any liability or
expense including legal fees and disbursements of counsel to any party so
indemnified, in connection with the action entitled BGM Equipment v. Xxxxxxx
Xxxxxxx individually and d/b/a Superior Chemical & Supply Company, Warrren
Circuit Court, Civil Action No. 95-CI-01290, or any appeal in connection
therewith.
If any dispute or disagreement arises between Acquiror and Acquiror's
Subsidiary, on the one hand, and the Shareholders, on the other hand, with
respect to any right of set off claimed by Acquiror or Acquiror's Subsidiary,
under this, and Acquiror and Acquiror's Subsidiary, on the one hand, and the
Shareholders and or the Company, on the other hand, are unable to resolve such
dispute the Arbitration provisions of Section 10.04, below, shall control.
10.03 Injunctive Relief. Notwithstanding the provisions of Section
-----------------
10.04 hereof, in the event of a breach or threatened breach by any of the
Shareholders of the provisions of this Agreement, the Acquiror or Acquiror's
Subsidiary shall be entitled in order to maintain the status quo ante pending
the outcome of any arbitration pursuant to Section 10.04 hereof to seek an
injunction or similar equitable relief restraining any of the Shareholders or
the Company, as the case may be, from committing or continuing any such breach
or threatened breach or granting specific performance of any act required to be
performed by any of the Shareholders or the Company, as the case may be, under
any such provision, without the necessity of showing that
32
money damages would not afford an adequate remedy and without the necessity of
posting any bond or other security. The parties hereto hereby consent to the
jurisdiction of the federal courts located in The City of New York and the New
York state courts located in New York City for any proceedings under this
Section 10.03. The parties hereto agree that the availability of arbitration in
Section 10.04 hereof shall not be used by any party as grounds for the dismissal
of any injunctive actions instituted by the Acquiror pursuant to this Section
10.03.
10.04. Dispute Resolution
------------------
(a) Arbitration. The parties shall attempt amicably to resolve
-----------
disagreements by negotiating with each other. In the event that the matter is
not amicably resolved through negotiation, any controversy, dispute or
disagreement arising out of or relating to this Agreement (a "Controversy")
shall be submitted to final binding arbitration, which shall be conducted by a
single arbitrator (the "Arbitrator") in New York, New York, pursuant to the
rules of the American Arbitration Association (the "Rules").
In the event that the parties cannot agree as to the Arbitrator to be
named, each party to the Controversy shall appoint one arbitrator and those two
arbitrators shall select the Arbitrator.
10.05 Procedure. If any party shall desire relief of any nature
---------
whatsoever from any other party as a result of any Controversy, such party will
initiate such arbitration proceedings within a reasonable time, but in no event
more than one (1) year after the facts underlying said Controversy first arise
or become known to the party seeking relief (whichever is later). The failure of
such party to institute such proceedings within said period shall be deemed a
full waiver of any claim for such relief. Arbitrator may award the prevailing
party its costs for the arbitration proceeding, including its reasonable
attorneys' fees and costs. The parties agree that the decision and award of the
Arbitrator shall be final and conclusive upon the parties, in lieu of all other
legal, equitable or judicial proceedings between them, and that no appeal or
judicial review of the award or decision of the Arbitrator shall be taken, but
that such award or decision may be entered as a judgment and enforced in any
court having jurisdiction over the party against whom enforcement is sought.
ARTICLE XI
TERMINATION AND ABANDONMENT
---------------------------
11.01. Methods of Termination. The transactions contemplated herein may
----------------------
be terminated and/or abandoned at any time but not later than the Closing:
(a) By mutual consent of the respective Boards of Directors of
Acquiror and the Company; or
33
(b) By the Board of Directors of Acquiror on or after July 30,
1999, or such later date as may be established pursuant to Section 1.03 hereof,
if any of the conditions provided for in Article VIII of this Agreement shall
not have been met or waived in writing by Acquiror prior to such date.
11.02. Procedure Upon Termination. In the event of termination and
--------------------------
abandonment by the Board of Directors of Acquiror pursuant to Section 11.01
hereof, written notice thereof shall forthwith be given to the other party and
the transactions contemplated by this Agreement shall be terminated and/or
abandoned, without further action by Acquiror or the Company. If the
transactions contemplated by this Agreement are terminated and/or abandoned as
provided herein:
(a) Each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) All confidential information received by any party hereto with
respect to the business of any other party or its subsidiaries shall be treated
in accordance with Section 2.01 hereof; and
(c) No party hereto shall have any liability or further obligation
to any other party to this Agreement except as stated in subparagraphs (a) and
(b) of this Section 11.02, (provided, however, that if such termination and/or
abandonment is a result of the failure of any condition set forth in Article
VIII hereof, then Acquiror shall be entitled to recover from the Company all
out-of-pocket costs which Acquiror has incurred (including reasonable attorney's
fees and expenses).
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
12.01. Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified and supplemented by written agreement of the
Shareholders and the respective Boards of Directors of the Company and Acquiror
or by their respective officers authorized by such Boards of Directors at any
time prior to the Closing with respect to any of the terms contained herein.
12.02. Waiver of Compliance. Any failure of the Shareholders or the
--------------------
Company, on the one hand, or Acquiror, on the other, to comply with any
obligation, covenant, agreement or condition herein may be expressly waived in
writing by the President of Acquiror or the Company, respectively, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with
34
respect to, any subsequent or other failure.
12.03. Expenses; Transfer Taxes, Etc. Except as otherwise provided in
-----------------------------
Sections 2.02 and 11.02 hereof, whether or not the transaction contemplated by
this Agreement shall be consummated, the Shareholders and the Company agree that
all fees and expenses incurred by them in connection with this Agreement shall
be borne by them and Acquiror agrees that all fees and expenses incurred by it
in connection with this Agreement shall be borne by it, including, without
limitation as to the Company or Acquiror, all fees of counsel, actuaries and
accountants.
12.04. Notices. All notices, requests, demands and other communications
-------
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed, certified or registered mail
with postage prepaid:
(a) If to the Shareholders or the Company, to:
Xxxxxxx Xxxxxx
c/o Superior Chemical and Supply, Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
(with a copy to:)
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxxxx
X.X. Xxx 0000
000 Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other person or address as the Company shall furnish to Acquiror in
writing.
(b) If to Acquiror, to:
Enviro-Clean of America, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, President
Phone: (000) 000-0000
Fax: (000) 000-0000
(with a copy to:)
35
Xxxxxxxxxx, Xxxx & Xxxx, LLP
00 Xxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other person or address as Acquiror shall furnish to the Company in
writing.
12.05. Assignment. This Agreement and all of the provisions hereof shall
----------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except by operation of law and except that Acquiror may assign its rights, but
not its obligations, under this Agreement to any subsidiary of Acquiror.
12.06. Publicity. Neither the Company nor Acquiror shall make or issue,
---------
or cause to be made or issued, any announcement or written statement concerning
this Agreement or the transactions contemplated hereby for dissemination to the
general public without the prior consent of the other party. This provision
shall not apply, however, to any announcement or written statement required to
be made by law or the regulations of any federal or state governmental agency or
any stock exchange, except that the party required to make such announcement
shall, whenever practicable, consult with the other party concerning the timing
and content of such announcement before such announcement is made.
12.07. Governing Law. This Agreement and the legal relations among the
-------------
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York without regard to its conflicts of law doctrine.
12.08. 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.
12.09. Headings. The headings of the Sections and Articles of this
--------
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
12.10. Entire Agreement. This Agreement, including the Exhibits hereto,
----------------
the Disclosure Schedule and the other documents and certificates delivered
pursuant to the terms hereof, set forth the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein, and
supersede all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
12.11. Third Parties. Except as specifically set forth or referred to
-------------
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or
36
corporation other than the parties hereto and their successors or assigns, any
rights or remedies under or by reason of this Agreement.
12.12. Severability. Should any provision of this Agreement be held by a
------------
court or arbitration panel of competent jurisdiction to be enforceable only if
modified, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties
hereto with any such modification to become a part hereof and treated as though
originally set forth in this Agreement. The parties further agree that any such
court or arbitration panel is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing such unenforceable
provision from this Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending provision, adding
additional language to this Agreement, or by making such other modifications as
it deems warranted to carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The parties expressly
agree that this Agreement as modified by the court or the arbitration panel
shall be binding upon and enforceable against each of them. In any event, should
one or more of the provisions of this Agreement be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and if such provision or provisions
are not modified as provided above, this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been set forth herein.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be affixed hereto, all as
of the day and year first above written.
ENVIRO-CLEAN OF AMERICA, INC.
By: _________________________
Xxxxxxx Xxxxxx
President
SCS ACQUISITION CORP.
By: _________________________
Xxxxxxx Xxxxxx
President
SUPERIOR CHEMICAL AND SUPPLY, INC.
By: _________________________ _______________________
Xxxxxxx X. Xxxxxx Secretary
President
THE SHAREHOLDERS
---------------------------
Xxxxxxx X. Xxxxxx,
as Shareholder
38
