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EXHIBIT 10.4
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of January 22, 1998, by and between SANTI GROUP OF PENNSYLVANIA, INC., a
Georgia corporation (the "Buyer"); FERRERO WASTEWATER MANAGEMENT, INC., a
Pennsylvania corporation (the "Seller"); and A. XXXXXX XXXXXXX, XX and A. XXXXXX
XXXXXXX, III (the "Seller Stockholders"). The Buyer, the Seller and the Seller
Stockholders are referred to collectively herein as the "Parties."
WHEREAS, the Seller owns certain contract rights, customer accounts,
trucks and containers and is engaged in the non-hazardous liquid waste and
septic waste collection, transportation, management and disposal business in the
Service Area (the "Business"); and
WHEREAS, this Agreement contemplates a transaction in which the Buyer
will purchase all of the assets of the Seller used in the Business and assume
certain of the liabilities of the Seller in return for cash and the SanTi Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, the Parties agree as follows.
ARTICLE 1. DEFINITIONS
"ACCOUNTS" means (a) all customer accounts, names, lists, purchase
orders, service agreements and contracts (including implied or quantum meruit
contractual rights) or other rights of the Seller to provide liquid waste
removal, collection, transportation and storage services to customers of the
Seller, and all rights to and in connection with any activities commonly
associated with such services, customer service agreements, and contract rights
(including implied or quantum meruit contractual rights) with customers, and (b)
all files, correspondence, records (including billing and service records for
the preceding twelve (12) months) and related proprietary information and
material and other intellectual property which is necessary, helpful or related
to providing such services described above; excluding, however, (x) all customer
accounts, rights or contracts which deal in hazardous chemical toxic or
low-level radioactive waste or Hazardous Materials or Extremely Hazardous
Substances which the Buyer determines it does not wish to purchase, and (y) all
small business set aside contracts which the Buyer determines it does not wish
to purchase. All of the customer accounts, contracts and other rights which are
not being purchased, including those ac counts described in subparagraphs (x)
and (y) of this paragraph, shall be set forth on Schedule 1 and are hereinafter
referred to collectively as the "Excluded Accounts".
"ACCREDITED INVESTOR" has the meaning set forth in Regulation D
promulgated under the Securities Act.
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"ACQUIRED ASSETS" means all right, title and interest in and to all of
the assets of the Seller used or useful in the Business, and shall include, but
not be limited to, all of the Seller's: (a) Accounts, (b) real property,
leaseholds and subleaseholds therein, improvements, fixtures, and fittings
thereon, and easements, rights-of-way, and other appurtenants thereto (such as
appurtenant rights in and to public streets), (c) tangible personal property
(such as containers, reservoirs, compactors, carts, repair parts, machinery,
equipment, inventories of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods, furniture, automobiles, trucks,
tractors, trailers, tankers, tools, pumps, stabilizers, jigs, and dies), (d)
intellectual property (including but not limited to the names "Ferrero
Wastewater Management" and "Nutrecon"), goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions, (e) leases, subleases,
and rights thereunder, (f) agreements (such as equipment rental agreements and
service agreements), contracts, customer agreements, disposal agreements,
service agreements, indentures, mortgages, instruments, Security Interests,
guaranties, other similar arrangements, and rights thereunder, (g) notes
receivable and other receivables, other than accounts receivable, (h)
securities, (i) claims, causes of action, choses in action, rights of recovery,
rights of set off, and rights of recoupment, (j) franchises, approvals, permits,
licenses (including but not limited to radio transmitter licenses), orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies, service marks, trademarks, logos, (k)
telephone numbers, yellow page advertising, books, records, ledgers, files,
documents, correspondence, lists, plats, architectural plans, drawings and
specifications, creative materials, advertising and promotional materials,
operational, billing and payable information, studies, reports, and other
printed or written materials, computer hardware and software, and (k) rights in
and with respect to the assets associated with its Employee Benefit Plans;
provided, however, that the Acquired Assets shall not include the Excluded
Assets.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"APPLICABLE RATE" means the rate of interest publicly announced in
Atlanta, Georgia from time to time by NationsBank of Georgia, N.A. as its prime
rate, plus two percent (2%) per annum.
"ASSUMED LIABILITIES" means all obligations of the Seller directly
associated with or under the agreements, contracts, leases, licenses, and other
arrangements referred to in the definition of Accounts either (i) to furnish
goods, services, and other non-Cash benefits to customers after the Closing, or
(ii) to pay for goods, services, and other non-Cash benefits that another Person
will furnish to it after the Closing. Under no circumstances shall the term
"Assumed Liabilities" include any Liabilities of Seller or its Subsidiaries
other than those set forth above. All Liabilities other than Assumed Liabilities
shall remain those of Seller and its Subsidiaries exclusively.
"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
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"CASH" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements.
"CLOSING" has the meaning set forth in Section 2.4 below.
"CLOSING DATE" has the meaning set forth in Section 2.4 below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"DISCLOSURE SCHEDULE" has the meaning set forth in Article 3 below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), or (d)
Employee Welfare Benefit Plan or material fringe benefit or other retirement,
bonus, or incentive plan or program.
"EMPLOYMENT AGREEMENT" has the meaning set forth in Section 2.6 below.
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all
federal, state, local and other applicable statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
Hazardous Materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" means (i) the corporate charter, qualifications to
conduct business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of the Seller
as a corporation, (ii) any of the rights of the Seller under this Agreement,
(iii) the Excluded Accounts, (iv) all tax refunds related to the operation of
the Business prior to Closing; and (v) the assets set forth on Schedule 2.
"EXTREMELY HAZARDOUS SUBSTANCES" has the meaning set forth in ss.302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
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"FINANCIAL STATEMENT" has the meaning set forth in Section 3.2.7 below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"HAZARDOUS MATERIALS" means any substance that has been designated by
any governmental authority whose requirements are applicable to the Seller to be
radioactive, toxic, hazardous, or otherwise pose potential danger to health or
the environment, including, but not limited to, volatile organic compounds and
all substances listed pursuant to the federal Comprehensive Environmental
Response, Compensation and Liability Act, the federal Resource Conservation
Recovery Act, the federal Clean Air Act, the federal Water Pollution Control
Act, the Toxic Substance Control Act and the Occupational Safety and Health Act,
as such acts are amended to the Closing Date, and the regulations and
publications promulgated to the Closing Date pursuant to said acts.
"KNOWLEDGE" means to the best of the subject party's actual knowledge
after reasonable investigation, and includes constructive knowledge.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"LITIGATION" means any legal action, administrative or other
proceeding, arbitration, cause of action, claim, complaint, criminal
prosecution, inquiry, hearing, investigation (governmental or otherwise), or
notice (written or oral) by any Person alleging potential liability or
requesting information relating to or affecting the Seller, the Business, the
Acquired Assets or the transactions contemplated by this Agreement.
"LOSSES" means any and all direct or indirect demands, claims,
payments, obligations, recoveries, deficiencies, fines, penalties, interests,
assessments, actions, causes of action, suits, losses, diminution in the value
of any of the Acquired Assets, compensatory, punitive, exemplary or
consequential damages (including, without limitation, lost income and profits
and interruptions of business), Liabilities, costs, expenses (including, without
limitation, (i) interest, penalties and reasonable attorneys' fees and expenses,
(ii) attorneys' fees and expenses necessary to enforce rights to indemnification
hereunder, and (iii) consultant's fees and other costs of defense or
investigation); and interest on any amount payable to a third party as a result
of the foregoing, whether accrued, absolute, contingent, known, unknown or
otherwise.
"MONTHLY GROSS CHARGES" means the monthly gross charges on all the
Accounts which are fulfilled by the Seller for the provision of nonhazardous
liquid waste management services. The term Monthly Gross Charges shall not
include (i) any revenues, charges or xxxxxxxx generated by extraordinary sales
which may take place or which may be included in the Accounts, (ii) any xxxxxxxx
made or revenues received by the Seller for services not actually rendered, or
(iii) any billing made or revenues received by the Seller on Excluded Accounts.
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"MOST RECENT BALANCE SHEET" means the balance sheet contained within
the Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section
3.2.7 below.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in Section
3.2.7 below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section
3.2.7 below.
"NONCOMPETITION AGREEMENT" has the meaning set forth in Section 2.5
below.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTY" has the meaning set forth in the preface above.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"PURCHASE PRICE" has the meaning set forth in Section 2.3 below.
"RELEASE" has the meaning set forth in Section 2.7 below.
"SANTI STOCK" has the meaning set forth in Section 2.3 below.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"SELLER SHARES" means the shares of issued and outstanding capital
stock of the Seller.
"SERVICE AREA" shall mean the circular area the outer boundary of which
is formed by a seventy (70) mile radius from South Main Street at Xxxxxxxx
Avenue, Ambler, Pennsylvania.
"SUBSIDIARY" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
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"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, documentary,
occupation, premium, windfall profits, environmental (including taxes under Code
ss.59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE 2. BASIC TRANSACTIONS
2.1 PURCHASE AND SALE OF ASSETS. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey, and deliver to the Buyer, all of
the Acquired Assets at the Closing for the consideration specified below in this
Article 2.
2.2 ASSUMPTION OF LIABILITIES. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to assume and become responsible
for all of the Assumed Liabilities at the Closing. Except for the Assumed
Liabilities, nothing in this Agreement or any other document which is a part
hereof shall in any way obligate the Buyer for any Liabilities, obligations or
charges of the Seller, any of its Subsidiaries or any of the Seller
Stockholders, including, but without limitation, any Liabilities attributable to
Environmental, Health and Safety Requirements, or Liabilities or charges for
Taxes or recording fees arising out of the sale or transfer of the Acquired
Assets. It is specifically understood and agreed by the Parties that the Buyer
does not assume any Liabilities, obligations or charges of the Seller, the
Seller's Subsidiaries or the Seller Stockholders except for the Assumed
Liabilities. THE SELLER WILL PAY OFF ALL DEBT AND OTHER ACCRUED THIRD PARTY
LIABILITIES RELATED TO THE ACQUIRED ASSETS PRIOR TO OR SIMULTANEOUSLY WITH THE
CLOSING.
2.3 PURCHASE PRICE. The Buyer agrees to pay, issue and deliver to the
Seller the following (collectively, the "Purchase Price"): (i) cash in the
amount of $2,489,000, payable by wire transfer or delivery of other immediately
available funds; and (ii) 80,000 shares (the "SanTi Stock") of the common stock
of SanTi Group, Inc., a Delaware corporation ("SanTi"); and (iii) documentation
effecting the assumption of the Assumed Liabilities. At the Closing, the Buyer
shall tender to the Seller $2,240,100 of the cash portion of the Purchase Price
and documentation effecting the conveyance of 72,000 shares of the SanTi Stock.
The Buyer shall retain the balance of the cash portion of the Purchase Price and
the balance of the SanTi Stock to hold as security to offset against any Losses
asserted against, imposed upon or incurred by the Buyer arising out of any of
the matters listed in items (i) through (vi) of Section 8.2 hereof, and the
Buyer shall deliver the remaining balance of said security to the Seller on that
date which is two hundred seventy (270) days after the Closing Date.
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2.4 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Chorey, Taylor &
Xxxx, A Professional Corporation, Suite 1700, The Lenox Building, 0000 Xxxxxxxxx
Xxxx, X.X., Xxxxxxx, Xxxxxxx 00000 (or at such other place as the Parties may
mutually determine), on January 22, 1998, and the Closing shall be effective for
all purposes as of 11:59 p.m. on January 22, 1998 (the "Closing Date").
2.5 NONCOMPETITION AGREEMENTS. On or prior to the Closing Date, the
Seller and each Seller Stockholder shall enter into, execute, deliver to the
Buyer and perform an agreement, substantially in the form of Exhibit A attached
hereto (each a "Noncompetition Agreement"), restricting such Party's ability to
compete with the Buyer in the Business, and to solicit the customers, suppliers
and employees of the Business, the Seller or the Buyer, for a period of five (5)
years after the Closing Date.
2.6 EMPLOYMENT AND CONSULTING AGREEMENTS. On or prior to the Closing
Date, the Buyer and those Seller Stockholders and members of senior management
of the Seller listed on Schedule 3 shall enter into employment agreements and/or
consulting agreements substantially in the form of Exhibits B and C attached
hereto (as indicated on Schedule 3) (each an "Employment Agreement"),
collectively providing for the continued employment or engagement of such
Persons by the Buyer or one of its Affiliates.
2.7 RELEASES. At the Closing, the Parties hereto shall enter into,
execute, deliver and perform an agreement, substantially in the form of Exhibit
D attached hereto (each a "Release") effecting certain releases agreed upon
among said Parties.
2.8 DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 6.1 below; (ii) the Buyer will deliver to the Seller the
various certificates, instruments, and documents referred to in Section 6.2
below; (iii) the Seller will execute, acknowledge (if appropriate), and deliver
to the Buyer (a) assignments (including real property transfer documents) in the
forms attached hereto as Exhibit E and (b) such other instruments of sale,
transfer, conveyance, and assignment as the Buyer and its counsel may request;
(iv) the Parties will deliver to each other the agreements and documents
referred to above in this Article 2; (v) the Buyer will deliver to the Seller
the portion of the Purchase Price to be paid hereunder at the Closing; and (vi)
the Seller will deliver to the Buyer the following information relating to the
Accounts on such forms as are acceptable to the Buyer: (1) a list of all
Accounts which will include all names, addresses, telephone numbers and names of
individuals to contact for each of the Accounts; (2) all collection information
concerning the frequency of collection, approximate volume of waste per
collection and a brief description of the types of waste involved with each
Account; (3) the complete service and accounting records of each of the Accounts
for the 12 month period ending on the last day of the month immediately
preceding the Closing Date; and (4) all other proprietary information necessary
or appropriate to enable the Buyer to service the Accounts properly.
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2.9 ALLOCATION. The Parties agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets for all purposes
(including financial accounting and tax purposes) consistent with the Code and
in accordance with the allocation schedule prepared by the Buyer; provided,
however, that the portion of the Purchase Price consisting of SanTi Stock shall
be allocated based on a valuation of the SanTi Stock at the time of the Closing,
said valuation to be undertaken by an appraiser commissioned by the Buyer.
2.10 PRORATIONS AS OF CLOSING. Any insurance deposits, prepaid Accounts
and similar items payable or paid by any Party and related to the Acquired
Assets shall be prorated as of the Closing Date. There shall be prorated between
the Buyer and the Seller as of the Closing Date all accrued or prepaid items
relating to (i) ad valorem and other Taxes (except sales taxes) with respect to
the Acquired Assets; (ii) rent (including percentage rent) and other payments
due under any lease or contract related to the Acquired Assets; (iii) deposits
with respect to the Acquired Assets; (iv) license fees relating to any of the
Acquired Assets, and (v) governmental assessments and charges for services to or
with respect to any of the Acquired Assets.
2.11 USE OF NAME. Following the Closing Date, the Seller shall not use
or give permission to any other Party to use the name "Ferrero Wastewater
Management," "Xxxxxxx Xxxxxxx Company", "Nutrecon," or any similar name in
connection with the operation of a waste collection and disposal business.
2.12 CONFIDENTIALITY. The Parties recognize that the Buyer and/or its
Affiliates intend to acquire numerous liquid waste businesses throughout the
country, and the violation of this Section 2.12 will result in substantial
injury and damage to the Buyer and its Affiliates. The Seller and each Seller
Stockholder agree that for a period of five (5) years after the date of this
Agreement, none of them, nor their agents, employees or Affiliates, nor any
other person connected with them, except as required by applicable federal,
state or local statutes, regulations or judicial subpoena, shall at any time
divulge the existence and terms of the negotiations resulting in this Agreement,
the terms and conditions of this Agreement and the financing arrangements of the
Buyer and its Affiliates. In addition, the Parties agree to keep such
negotiations, terms and conditions confidential and to cause their agents,
employees and other persons connected with them to observe the terms of this
Section, subject to the exceptions set forth above in this Section 2.12.
2.13 TELEPHONE REFERRALS. From and after the Closing Date, the Seller
shall refer, and cause its agents to refer, all telephone calls to it or them
for liquid waste collection and disposal to the Buyer.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF
THE SELLER AND THE SELLER STOCKHOLDERS
3.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER STOCKHOLDERS. The
Seller Stockholders jointly and severally represent and warrant to the Buyer
that the statements contained in this Section 3.1 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were
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substituted for the date of this Agreement throughout this Section 3.1) with
respect to himself, herself or itself, except as set forth in the disclosure
schedule accompanying this Agreement and initialed by the Parties (the
"Disclosure Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Article
3.
3.1.1 ORGANIZATION OF CERTAIN SELLER STOCKHOLDERS. If the
Seller Stockholder is a corporation, the Seller Stockholder is duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.
3.1.2 AUTHORIZATION. The Seller Stockholder has full power and
authority (including, if the Seller Stockholder is a corporation, full corporate
power and authority) to execute and deliver this Agreement and to perform his,
her or its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Seller Stockholder, enforceable in accordance
with its terms and conditions.
3.1.3 NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement by the Seller Stockholder, nor the performance by the Seller
Stockholder of his, her or its obligations hereunder, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
stipulation, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller Stockholder is subject (or, if
the Seller Stockholder is a corporation, any provision of its charter or bylaws)
or (ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
permit, license, instrument, or other arrangement to which the Seller
Stockholder is a party or by which he, she or it is bound or to which any of
his, her or its assets is subject.
3.1.4 SELLER SHARES. The Seller Stockholder holds of record
the number of Seller Shares set forth next to his, her or its name on Section
3.1.4 of the Disclosure Schedule.
3.2 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SELLER
STOCKHOLDERS. The Seller and each of the Seller Stockholders jointly and
severally represent and warrant to the Buyer that the statements contained in
this Section 3.2 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.2), except as set forth in the Disclosure Schedule.
3.2.1 ORGANIZATION OF THE SELLER AND NUTRECON. The Seller and
Nutrecon, Inc. ("Nutrecon") are corporations duly organized, validly existing,
and in good standing under the laws of Pennsylvania. The Seller and Nutrecon are
duly authorized to conduct business and the Business and are in good standing
under the laws of each jurisdiction where such qualification is required.
3.2.2 AUTHORIZATION OF TRANSACTION. The Seller has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform
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its obligations hereunder. Without limiting the generality of the foregoing, the
board of directors of the Seller and the Seller Stockholders have duly
authorized the execution, delivery, and performance of this Agreement by the
Seller. This Agreement constitutes the valid and legally binding obligation of
the Seller, enforceable in accordance with its terms and conditions.
3.2.3 NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Article 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of the Seller and its Subsidiaries is
subject or any provision of the charter or bylaws of any of the Seller and its
Subsidiaries or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any Person the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
any of the Seller and its Subsidiaries is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). None of the Seller and its Subsidiaries needs
to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement (including
the assignments and assumptions referred to in Article 2 above).
3.2.4 BROKERS' FEES. The Seller has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could become
liable or obligated. None of the Subsidiaries of the Seller has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
3.2.5 TITLE TO ASSETS. The Seller and its Subsidiaries have
good and marketable title to, or a valid leasehold interest in, all of the
Acquired Assets, free and clear of all Security Interests or restrictions on
transfer, except for properties and assets disposed of in the Ordinary Course of
Business since the date of the Most Recent Balance Sheet.
3.2.6 SUBSIDIARIES. Each Subsidiary of the Seller is listed on
Section 3.2.6 of the Disclosure Schedule, and is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each Subsidiary of the Seller is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required. Each Subsidiary of the Seller has full corporate
power and authority and all licenses, permits, and authorizations necessary to
carry on the Business and the other businesses in which it is engaged and in
which it presently proposes to engage and to own and use the properties owned
and used by it. All of the issued and outstanding shares of capital stock of
each Subsidiary of the Seller have been duly authorized and are validly issued,
fully paid, and nonassessable. The Seller holds of record and owns beneficially
all of the outstanding shares of each Subsidiary of the Seller, free and clear
of any restrictions on transfer (other than restrictions under
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the Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities, claims,
and demands. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require any of the Seller and its
Subsidiaries to sell, transfer, or otherwise dispose of any capital stock of any
of its Subsidiaries or that could require any Subsidiary of the Seller to issue,
sell, or otherwise cause to become outstanding any of its own capital stock
(other than this Agreement). There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of any capital stock of
any Subsidiary of the Seller. The minute books (containing the records of
meetings of the stockholders, the board of directors, and any committees of the
board of directors), the stock certificate books, and the stock record books of
each Subsidiary of the Seller are correct and complete. None of the Subsidiaries
of the Seller is in default under or in violation of any provision of its
charter or bylaws. Except as set forth on Section 3.2.6 of the Disclosure
Schedule, none of the Seller and its Subsidiaries controls directly or
indirectly or has any direct or indirect equity participation in any
corporation, partnership, trust, or other business association which is not a
Subsidiary of the Seller. Nutrecon is a Subsidiary of the Seller.
3.2.7 FINANCIAL STATEMENTS. Attached hereto as Exhibit F are
the following financial statements (collectively, the "Financial Statements"):
unaudited consolidated and consolidating balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the fiscal
years ended December 31, 1995, December 31, 1996, and December 31, 1997 (the
"Most Recent Fiscal Year End") for the Seller and its Subsidiaries. The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Seller and its
Subsidiaries as of such dates and the results of operations of the Seller and
its Subsidiaries for such periods, are correct and complete, and are consistent
with the books and records of the Seller and its Subsidiaries (which books and
records are correct and complete). For purposes of this Agreement, the Financial
Statements for the fiscal year ended December 31, 1997 shall be deemed the "Most
Recent Financial Statements," and December 31, 1997 shall be deemed the "Most
Recent Fiscal Month End." The net book value of the Acquired Assets calculated
in accordance with GAAP was not less than $900,000 as of June 30, 1997.
3.2.8 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since
the Most Recent Fiscal Year End, there has not been any adverse change in the
Business, other business, financial condition, operations, results of
operations, or future prospects of any of the Seller and its Subsidiaries.
Without limiting the generality of the foregoing, since that date:
(i) none of the Seller and its Subsidiaries has sold, leased,
transferred, pledged or assigned any of its assets, tangible or
intangible, other than for a fair consideration in the Ordinary Course
of Business;
(ii) none of the Seller and its Subsidiaries has entered into
(or issued), accelerated, terminated, modified, or canceled any
agreement, contract, lease, note, bond, debt security or license either
involving more than $5,000 or outside the Ordinary Course of Business;
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(iii) none of the Seller and its Subsidiaries has made any
capital expenditure (or series of related capital expenditures) either
involving more than $5,000 or outside the Ordinary Course of Business;
(iv) none of the Seller and its Subsidiaries has delayed or
postponed the payment of accounts payable and other Liabilities outside
the Ordinary Course of Business;
(v) none of the Seller and its Subsidiaries has canceled,
compromised, waived, or released any right or claim (or series of
related rights and claims) either involving more than $5,000 or outside
the Ordinary Course of Business;
(vi) none of the Seller and its Subsidiaries has issued,
sold, disposed of or granted any rights to purchase any of its capital
stock, or declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in
kind), or redeemed, purchased, or otherwise acquired any of its capital
stock;
(vii) none of the Seller and its Subsidiaries has experienced
any damage, destruction, or loss (whether or not covered by insurance)
to its property;
(viii) none of the Seller and its Subsidiaries has made any
loan to, or entered into any other transaction with, any of its
directors, officers, and employees outside the Ordinary Course of
Business;
(ix) none of the Seller and its Subsidiaries has (a) entered
into any employment contract or collective bargaining agreement,
written or oral, or modified the terms of any existing such contract or
agreement; (b) granted any increase in the base compensation of any of
its directors, officers, and employees (or made any other change in
employment terms for such persons) outside the Ordinary Course of
Business; or (c) adopted, amended, modified, or terminated any Employee
Benefit Plan;
(x) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving any of the Seller and its Subsidiaries;
and
(xi) none of the Seller and its Subsidiaries has committed
to any of the foregoing.
3.2.9 UNDISCLOSED LIABILITIES. To the best of the Seller's and
the Seller Stockholders' knowledge, information and belief, and without any
independent investigation, none of the Seller and its Subsidiaries has any
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability), except for (i) Liabilities set forth
on the face of the Most Recent Balance Sheet (rather than in any notes thereto)
and (ii) Liabilities which have arisen after the Most Recent Fiscal Month End in
the Ordinary Course of Business (none of which results from, arises out
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of, relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of law). Each Seller
Stockholder further represents and warrants that A. Xxxxxx Xxxxxxx, Xx. has been
a full time employee of the Seller for at least the past 35 years, that A.
Xxxxxx Xxxxxxx, III has been a full time employee of the Seller for at least the
past 9 years, and that throughout their periods of employment with Seller each
has been continuously, actively and fully involved in the day to day management
and operations of the Seller and its Subsidiaries.
3.2.10 LEGAL COMPLIANCE. To the best of the Seller's and the
Seller Stockholders' knowledge, information and belief, and without any
independent investigation, each of the Seller, its Subsidiaries, and their
respective predecessors and Affiliates has complied with all applicable laws
(including rules, statutes, regulations, codes, permits, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local and other applicable governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply.
3.2.11 TAX MATTERS. Each of the Seller and its Subsidiaries
has filed all Tax Returns that it was required to file. All such Tax Returns
were correct and complete in all respects. All Taxes owed by any of the Seller
and its Subsidiaries (whether or not shown on any Tax Return) have been paid. No
claim has ever been made by an authority in a jurisdiction where any of the
Seller and its Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. Each of the Seller and its
Subsidiaries has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party. No Seller Stockholder
or director or officer (or employee responsible for Tax matters) of any of the
Seller and its Subsidiaries expects any authority to assess any additional Taxes
for any period for which Tax Returns have been filed. There is no dispute or
claim concerning any Tax Liability of any of the Seller and its Subsidiaries
either (A) claimed or raised by any authority in writing or (B) as to which any
of the Seller Stockholders and the directors and officers (and employees
responsible for Tax matters) of the Seller and its Subsidiaries has Knowledge
based upon personal contact with any agent of such authority. Section 3.2.11 of
the Disclosure Schedule lists all federal, state, local, and other applicable
income Tax Returns filed with respect to any of the Seller and its Subsidiaries
for taxable periods ended on or after December 31, 1995, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that currently
are the subject of audit. The Seller has delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by any of the Seller
and its Subsidiaries since December 31, 1995. The unpaid Taxes of the Seller and
its Subsidiaries (A) did not, as of the Most Recent Fiscal Month End, exceed the
reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the Most Recent Balance Sheet (rather than in any notes thereto)
and (B) do not exceed that reserve as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Seller
and its Subsidiaries in filing their Tax Returns.
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3.2.12 REAL PROPERTY.
(i) Section 3.2.12(i) of the Disclosure Schedule lists and
describes briefly all real property that any of the Seller and its
Subsidiaries owns. With respect to each such parcel of owned real
property:
(A) the identified owner has good and marketable
title to the parcel of real property, free and clear of any
Security Interest, easement, covenant, or other restriction,
except for installments of special assessments not yet
delinquent and recorded easements, covenants, and other
restrictions which do not impair the current use, occupancy,
or value, or the marketability of title, of the property
subject thereto;
(B) there are no pending or threatened condemnation
proceedings, lawsuits, or administrative actions relating to
the property or other matters affecting adversely the current
use, occupancy, or value thereof;
(C) the legal description for the parcel contained in
the deed thereof describes such parcel fully and adequately,
the buildings and improvements are located within the boundary
lines of the described parcels of land, are not in violation
of applicable setback requirements, zoning laws, and
ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted non-conforming
use" or "permitted non-conforming structure" classifications),
and do not encroach on any easement which may burden the land,
the land does not serve any adjoining property for any purpose
inconsistent with the use of the land, and the property is not
located within any flood plain or subject to any similar type
restriction for which any permits or licenses necessary to the
use thereof have not been obtained;
(D) all facilities have received all approvals of
governmental authorities (including licenses and permits)
required in connection with the ownership or operation thereof
and have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(E) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to
any Person or Persons the right of use or occupancy of any
portion of the parcel of real property;
(F) there are no outstanding options or rights of
first refusal to purchase the parcel of real property, or any
portion thereof or interest therein;
(G) there are no Persons (other than the Seller and
its Subsidiaries) in possession of the parcel of real
property, other than tenants under any leases disclosed in
Section 3.2.12(i) of the Disclosure Schedule who are in
possession of space to which they are entitled;
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(H) all facilities located on the parcel of real
property are supplied with utilities and other services
necessary for the operation of such facilities, including gas,
electricity, water, telephone, sanitary sewer, and storm
sewer, all of which services are adequate in accordance with
all applicable laws, ordinances, rules, and regulations and
are provided via public roads or via permanent, irrevocable,
appurtenant easements benefitting the parcel of real property;
(I) each parcel of real property abuts on and has
direct vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant easement
benefitting the parcel of real property, and access to the
property is provided by paved public right-of-way with
adequate curb cuts available;
(J) no Hazardous Material is present in, on or under
such real property at any time prior to the Closing Date,
including any land and the improvements, ground water and
surface water thereof, except in accordance with applicable
laws and regulations; and
(K) there are and have been no storage tanks located
on or under such property.
(ii) Section 3.2.12(ii) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to or not owned
but otherwise used by any of the Seller and its Subsidiaries. The
Seller has delivered to the Buyer correct and complete copies of the
leases and subleases listed in Section 3.2.12(ii) of the Disclosure
Schedule (as amended to date). With respect to each lease and sublease
listed in the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby (including the assignments and assumptions
referred to in Article 2 above);
(C) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse
of time, would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(D) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
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(E) with respect to each sublease, the
representations and warranties set forth in subsections (A)
through (D) above are true and correct with respect to the
underlying lease;
(F) none of the Seller and its Subsidiaries has
assigned, transferred, conveyed, mortgaged, deeded in trust,
or encumbered any interest in the leasehold or subleasehold;
(G) all facilities leased or subleased thereunder
have received all approvals of governmental authorities
(including licenses and permits) required in connection with
the operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;
(H) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities;
(I) no Hazardous Material is present in, on or under
such real property at any time prior to the Closing Date,
including any land and the improvements, ground water and
surface water thereof, except in accordance with applicable
laws and regulations; and
(J) there are and have been no storage tanks located
on or under such property.
With respect to each such property used by but not owned by, leased to
or subleased to any of the Seller or its Subsidiaries, Section 3.2.12
of the Disclosure Schedule states the nature and terms of the
relationship pursuant to which such property is used.
3.2.13 TANGIBLE ASSETS. The Seller and its Subsidiaries own or
lease all buildings, machinery, equipment, and other tangible assets necessary
for the conduct of the Business and their other businesses as presently
conducted and as presently proposed to be conducted. Each such tangible asset is
free from defects (patent and latent), has been maintained in accordance with
normal industry practice, is in good operating condition and repair (subject to
normal wear and tear), is suitable for the purposes for which it presently is
used and presently is proposed to be used, and is sufficient to use in the
Business as conducted during the preceding twelve (12) months. There are no
defects in the Acquired Assets which affect the plumbing, electrical, sewer,
ventilating or air conditioning systems thereof.
3.2.14 CONTRACTS. Section 3.2.14 of the Disclosure Schedule
lists all contracts and other agreements to which any of the Seller and its
Subsidiaries is a party, including, but not limited to:
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(i) any agreement or arrangement for free or discounted
liquid waste services;
(ii) any agreement which cannot be canceled by the Seller or
its Subsidiaries without penalty by giving no more than thirty (30)
days notice of cancellation; and
(iii) any agreement for the use by the Seller or its
Subsidiaries of any waste disposal site or facility, including the term
of such agreement and the consideration to be paid by the Seller or its
Subsidiaries for the use of such site or facility.
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement listed in Section 3.2.14 of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions of
each oral agreement referred to in 3.2.14 of the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Article 2 above); (C)
no party thereto is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (D) no
party thereto has repudiated any provision of the agreement. Except as set forth
in Section 3.2.14 of the Disclosure Schedule, each of the Seller's agreements
which is a waste disposal agreement has a term which will not expire until at
least one (1) year after the Closing.
3.2.15 POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed by or on behalf of any of the Seller and its Subsidiaries.
3.2.16 INSURANCE. Section 3.2.16 of the Disclosure Schedule
includes certificates of insurance with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which any of the
Seller and its Subsidiaries has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past 2 years. With respect to
each such insurance policy: (A) the policy is legal, valid, binding,
enforceable, and in full force and effect; (B) the policy will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Article 2 above); (C)
neither any of the Seller and its Subsidiaries nor any other party to the policy
is in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (D) no party to the policy
has repudiated any provision thereof. Each of the Seller and its Subsidiaries
has been covered during the past 2 years by insurance in scope and amount
customary and reasonable for the Business and the other businesses in which it
has engaged during the aforementioned period. Section 3.2.16 of the Disclosure
Schedule describes any self-insurance arrangements affecting any of the Seller
and its Subsidiaries, as well as any pending claims with respect to insurance
coverage owned by the Seller or its Subsidiaries, including amounts held in
reserve by the Seller or its Subsidiaries in connection with any such claim.
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3.2.17 LITIGATION. Section 3.2.17 of the Disclosure Schedule
sets forth each instance in which any of the Seller and its Subsidiaries (i) is
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) is a party or is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 3.2.17 of the Disclosure
Schedule could result in any adverse change in the Business, the other business,
financial condition, operations, results of operations, or future prospects of
any of the Seller and its Subsidiaries. None of the Seller Stockholders and the
directors and officers (and employees with responsibility for litigation
matters) of the Seller and its Subsidiaries has any reason to believe that any
such action, suit, proceeding, hearing, or investigation may be brought or
threatened against any of the Seller and its Subsidiaries.
3.2.18 SERVICE WARRANTY. Each service provided or delivered
by any of the Seller and its Subsidiaries has been in conformity with all
applicable contractual commitments and all express and implied warranties, and
none of the Seller and its Subsidiaries has any Liability (and there is no Basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against any of them giving rise to any
Liability) for damages in connection therewith, subject only to the reserve for
service warranty claims set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Seller
and its Subsidiaries. Provided, however, that with respect to five-year service
contract warrranties issued by the Seller for new systems installed by the
Seller, the Buyer shall accept responsibility for warranty claims thereunder but
only to the extent such warranty claims do not exceed (i) a total of $200 under
any particular service contract, or (ii) $2,000 in the aggregate, whichever
amount is lesser. No service provided or delivered by any of the Seller and its
Subsidiaries is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale. Section 3.2.18 of the
Disclosure Schedule includes copies of the standard terms and conditions of sale
for each of the Seller and its Subsidiaries (containing applicable guaranty,
warranty, and indemnity provisions).
3.2.19 SERVICE LIABILITY. To the best of the Seller's and the
Seller Stockholders' knowledge, information and belief, and without any
independent investigation, none of the Seller and its Subsidiaries has any
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) arising out of any injury to
individuals or property as a result of the use of any service provided or
delivered by any of the Seller and its Subsidiaries.
3.2.20 EMPLOYEES AND CONTRACTORS. No executive, key employee,
group of employees, or independent contractor has any plans to terminate
employment with any of the Seller and its Subsidiaries or with the Buyer if the
Buyer has made known to the Seller its intention to employ or engage such person
or persons. None of the Seller and its Subsidiaries is a party to or bound by
any collective bargaining agreement, nor has any of them experienced any
strikes,
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grievances, claims of unfair labor practices, or other collective bargaining
disputes. None of the Seller and its Subsidiaries has committed any unfair labor
practice or taken an action which would give rise to a claim under any federal
or state law restricting discrimination in employment. None of the Seller
Stockholders and the directors and officers (and employees with responsibility
for employment matters) of the Seller and its Subsidiaries has any Knowledge of
any organizational effort presently being made or threatened by or on behalf of
any labor union with respect to employees of any of the Seller and its
Subsidiaries.
3.2.21 EMPLOYEE BENEFITS. Section 3.2.21 of the Disclosure
Schedule lists each Employee Benefit Plan that any of the Seller and its
Subsidiaries maintains or to which any of the Seller and its Subsidiaries
contributes or has any obligation to contribute. Each such Employee Benefit Plan
(and each related trust, insurance contract, or fund) complies in form and in
operation in all respects with the applicable requirements of ERISA, the Code
and other applicable laws.
3.2.22 GUARANTIES. None of the Seller and its Subsidiaries is
a guarantor or otherwise is liable or responsible for any Liability or
obligation (including indebtedness) of any other Person.
3.2.23 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) To the best of the Seller's and the Seller Stockholders'
knowledge, information and belief, without any independent
investigation, the Seller, its Subsidiaries and their respective
predecessors and Affiliates have complied with all Environmental,
Health, and Safety Requirements. No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to
comply;
(ii) To the best of the Seller's and the Seller Stockholders'
knowledge, information and belief, without any independent
investigation, each of the Seller and each of its Subsidiaries has no
Liability (and none of their respective predecessors and Affiliates
have handled or disposed of any substance, arranged for the disposal of
any substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or facility
in any manner that could form the Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against the Seller, giving rise to any Liability) for
damage to any site, location, or body of water (surface or subsurface),
for any illness of or personal injury to any employee or other
individual, or for any reason under any Environmental, Health and
Safety Requirements, except in compliance with all applicable
Environmental, Health and Safety Requirements;
(iii) All properties and equipment used in the Seller's
Business and its Subsidiaries' businesses, and their respective
predecessors' and Affiliates' businesses, have been free of Extremely
Hazardous Substances; and, except as set forth on Section 3.2.23(iii)
of the Disclosure Schedule, to the best of the Seller's and the Seller
Stockholders' knowledge,
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information and belief, without any independent investigation, all
properties and equipment used in the Seller's Business and its
Subsidiaries' businesses, and their respective predecessors' and
Affiliates' businesses, have been free of Hazardous Materials;
(iv) Section 3.2.23(iv) of the Disclosure Schedule sets forth
all licenses, permits, clearances and consents with respect to
environmental and waste management matters (hereinafter collectively
referred to as the "Environmental Permits") currently held by the
Seller and any of its Subsidiaries, and for each such Environmental
Permit, accurately describes the expiration and/or renewal date
thereof. Such Environmental Permits constitute the only permits
necessary for the continued conduct of the Seller's Business and its
Subsidiaries' businesses, and the waste management activities and other
businesses of the Seller and its Subsidiaries as such activities and
businesses are currently being conducted. To the best of the Seller's
and the Seller Stockholders' knowledge, information and belief, without
investigation, the Seller and its Subsidiaries have complied with all
applicable covenants and conditions of the Environmental Permits. There
is no action, proceeding, permit revocation, permit amendment, writ,
injunction, claim or investigation pending or, to the best of the
Seller's and the Seller Stockholders' knowledge, information and
belief, without investigation, threatened, concerning or relating to
the Environmental Permits or the Hazardous Materials activities of the
Seller or its Subsidiaries, including, but not limited to, the
treatment, storage or disposal of Hazardous Materials or liquid or
solid waste materials which have been handled by the Seller, its
Subsidiaries, or their respective predecessors or Affiliates;
(v) To the best of the Seller's and the Seller Stockholders'
knowledge, information and belief, without investigation, each of the
Seller and each of its Subsidiaries has not transported, stored,
treated or disposed, nor has it allowed or arranged for any third
person to transport, store, treat or dispose of, waste to or at any
location other than a site lawfully permitted to receive such waste for
such purposes. To the best of the Seller's and the Seller Stockholders'
knowledge, information and belief, without investigation, each of the
Seller and each of its Subsidiaries has not transported, stored,
treated or disposed of, nor has it allowed or arranged for any third
person to transport, store, treat or dispose of, (1) any Hazardous
Materials or Extremely Hazardous Substances, or (2) any other waste to
or at any location designated for remedial action pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act,
as from time to time amended, or any similar federal or state statute
assigning responsibility for the cost of investigating or remediating
releases of contaminants into the environment;
(vi) Section 3.2.23(vi) of the Disclosure Schedule is a
complete and accurate list of (a) locations (identified by name,
address, owner/operator, type of facility and type of waste) to which
the Seller and/or any of its Subsidiaries has, at any time in the past
10 years, transported, or caused to be transported, allowed or arranged
for any third party to transport, any type of waste material, generated
by the Seller, the Subsidiaries, or customers of the Seller or any of
its Subsidiaries, for storage (other than at a customer's facility),
treatment,
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burning, recycling or disposal, and (b) storage (other than at a
customer's facility), treatment, burning, recycling or disposal
activities which the Seller and/or any of its Subsidiaries has
undertaken, at any time during the past 10 years, at locations then or
presently owned or occupied by the Seller and/or any of its
Subsidiaries (such list to include property address, nature of the
Seller's and/or Subsidiaries' interest in property, nature of the
activity conducted at such location, type and form or waste, estimated
volume of waste disposal on or in ground, and period of time the
activity was conducted);
(vii) Neither the Seller nor any of its Subsidiaries has
received notification (including requests for information directed to
the Seller, any of its Subsidiaries or any Seller Stockholder) from any
governmental agency or any other person asserting that any of the
Seller or any of its Subsidiaries is or may be a "potentially
responsible person" or otherwise liable with respect to a remediation
or the payment of response costs at a waste storage treatment or
disposal action facility, pursuant to the provisions of the
Comprehensive Environmental Response, Compensation and Liability Act,
as from time to time amended, or any similar federal or state statute
assigning responsibility for the costs of investigating or remediating
releases of contaminants into the environment.
3.2.24 CERTAIN BUSINESS RELATIONSHIPS WITH THE SELLER AND ITS
SUBSIDIARIES. Except as set forth on Section 3.2.24 of the Disclosure Schedule,
none of the Seller Stockholders and their Affiliates has been involved in any
business arrangement or relationship with any of the Seller and its Subsidiaries
within the past 12 months, and none of the Seller Stockholders and their
Affiliates owns or leases any asset, tangible or intangible, which is used in
the Business of the Seller and the business of its Subsidiaries. Except as set
forth on Section 3.2.24 of the Disclosure Schedule, neither the Seller nor any
Seller Stockholder owns or has any interest in a Person (other than the Seller
and its Subsidiaries) conducting a waste management business.
3.2.25 INVESTMENT. The Seller and each of the Seller
Stockholders (i) understands that the SanTi Stock has not been, and will not be,
registered under the Securities Act, or under any state securities laws, and is
being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (ii) understands that the Seller
is acquiring the SanTi Stock solely for its own account for investment purposes,
and not with a view to the distribution thereof, (iii) is a sophisticated
investor with knowledge and experience in business and financial matters, (iv)
has received certain information concerning the Buyer and SanTi and has had the
opportunity to obtain additional information as desired in order to evaluate the
merits and the risks inherent in holding the SanTi Stock, (v) is able to bear
the economic risk and lack of liquidity inherent in holding the SanTi Stock, and
(vi) is an Accredited Investor for the reasons set forth on Section 3.2.25 of
the Disclosure Schedule.
3.2.26 OWNERSHIP AND ASSIGNABILITY OF ACCOUNTS. To the extent
that an ownership right can exist in the Accounts, the Seller is and will be at
the Closing Date, the lawful owner of all of the Accounts, and all such Accounts
will be at the Closing Date free and clear of all claims, liens, mortgages,
pledges, encumbrances and security interests of every kind, including, but not
limited
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to financing arrangements (including receivables financing). At the Closing Date
there will be no outstanding rights of any kind to acquire from either the
Seller or the Seller Stockholders, either separately or jointly, any interest
whatsoever, whether current or future, in the Accounts, held by any Person other
than Buyer. Except for those Accounts expressly set forth in Section 3.2.26 of
the Disclosure Schedule, all Accounts are or will be at the Closing Date freely
assignable by the Seller, and such assignment, transfer and delivery thereof to
the Buyer of all of the Accounts will not constitute or result in a breach,
violation or default of any agreements relating to such Accounts, and such
agreements and Accounts shall remain in full force and effect as if there had
been no assignment, transfer or delivery.
3.2.27 REVENUE AND MAJOR ACCOUNTS. The average Monthly Gross
Charges of the Seller for the Accounts for the calendar months of January
through November, 1997 derived solely from servicing the Accounts (determined on
an accrual basis with annual, semiannual, quarterly and bi-monthly payments
prorated on a monthly basis) are at least $311,000. Section 3.2.27 of the
Disclosure Schedule contains a listing of all of the Accounts, and the Gross
Monthly Charges of such Accounts for the calendar months of January through
November, 1997. Unless otherwise noted on Section 3.2.27 of the Disclosure
Schedule, all of such Accounts remain currently active, there has not been a
decline in the aggregate monthly billing level of such Accounts over the 12
calendar month period immediately preceding the date hereof, all such Accounts
are paid currently, and during the 12 calendar month period immediately
preceding the date hereof, the Seller has not lost any customer that generated
more than ten percent (10%) of the Seller's gross revenues in any of the
Seller's past fiscal periods. The Seller and the Seller Stockholders further
represent and warrant that during the 270 day period immediately following the
Closing, the average monthly gross charges for the Accounts shall not be less
than $290,000. To the extent that the average monthly gross charges for the
Accounts are less than $290,000, the Parties agree that the Buyer shall be
deemed to have suffered a Loss in an amount equal to the product of said
deficiency and the factor 12.38, and that the Buyer shall be entitled to
indemnity from the Seller in the amount of such Loss or to offset the amount of
said Loss against the portion of the Purchase Price withheld by the Buyer
pursuant to Section 2.3 hereof. Notwithstanding the above, (a) the total
indemnification liability of the Seller and the Seller Stockholders under this
Agreement for the breach of the representations and warranties contained in this
Section 3.2.27 shall be capped at and not exceed the portion of the Purchase
Price withheld by the Buyer pursuant to Section 2.3 hereof; and (b) all payments
by the Seller and/or the Seller Stockholders of their respective indemnification
obligations that may arise from the breach of the representations and warranties
contained in this Section 3.2.27 shall be paid equally in cash and SanTi Stock.
3.2.28 POSSESSION OF FRANCHISES, LICENSES, ETC. The Seller and
each of the Subsidiaries possesses all certificates, licenses, permits and other
authorizations from governmental political subdivisions or regulatory
authorities that are necessary for (a) the ownership, maintenance and operation
of the Business and the other businesses conducted by them, (b) the operation,
use and ownership of the Acquired Assets and (c) the servicing of the Accounts.
Neither the Seller nor any Subsidiary is in any way whatsoever in violation of
such franchises, certificates, licenses, permits and other authorizations.
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3.2.29 THIRD PARTY RELATIONSHIPS. Each of the Seller and the
Subsidiaries enjoys good working relationships in accordance with past practices
with all suppliers, subcontractors and other Persons necessary or appropriate
for the normal operation of the Business and the businesses of the Subsidiaries.
The consummation of the subject transaction will not result in any injury to or
disruption of such relationships, and the Buyer will not incur any costs or
expenses in order to continue such relationships as they had been maintained
previous to the Closing.
3.2.30 ACQUISITION QUESTIONNAIRE. All statements and
representations contained in that certain December 2, 1997 Acquisition
Questionnaire (by reference made an integral part hereof) initialed by the
Seller Stockholders and tendered by the Seller to the Buyer is true and correct
in all material respects.
3.2.31 DISCLOSURE. The representations and warranties
contained in this Article 3 do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained in this Article 3 not misleading.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the statements
contained in this Article 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article 4), except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Article 4.
4.1 ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
4.2 AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally, or by the exercise of judicial discretion
in accordance with general equitable principles.
4.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Article 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any Person the right to
accelerate, terminate, modify, or cancel, or require any notice under
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any agreement, contract, lease, license, instrument, or other arrangement to
which the Buyer is a party or by which it is bound or to which any of its assets
is subject. The Buyer does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in Article 2 above).
4.4 BROKERS' FEES. The Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
ARTICLE 5. PRECLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.1 GENERAL. Each of the Parties will use its best efforts to take all
actions and to do all things necessary, proper or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Article 6 below).
5.2 NOTICES AND CONSENTS. The Seller will give (and will cause each of
its Subsidiaries to give) any notices to third parties, and the Seller will
obtain (and will cause each of its Subsidiaries to obtain) any third party
consents, that the Buyer may request in connection with the matters referred to
in Section 3.2.3 above and the consummation of the transactions described
herein. Each of the Parties will (and the Seller will cause each of its
Subsidiaries to) give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters referred to
in Sections 3.2.3 and 4.3 above.
5.3 OPERATION OF BUSINESS. The Seller will not (and will not cause or
permit any of its Subsidiaries to) engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, the Seller will not (and will not
cause or permit any of its Subsidiaries to) (i) declare, set aside, or pay any
dividend or make any distribution with respect to its capital stock or redeem,
purchase, or otherwise acquire any of its capital stock, or (ii) otherwise
engage in any practice, take any action, or enter into any transaction of the
sort described in Section 3.2.8 above.
5.4 PRESERVATION OF BUSINESS. The Seller will keep (and will cause each
of its Subsidiaries to keep) its Business and other businesses and properties
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.
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5.5 FULL ACCESS. Each of the Seller and the Buyer will permit (and will
cause each of its respective Subsidiaries to permit) representatives of the
Buyer and the Seller, as applicable, to have full access to all premises,
properties, personnel, books, records (including Tax records), contracts, and
documents of or pertaining to each of the Seller and Buyer, as applicable, and
its respective Subsidiaries.
5.6 NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice
to the other Party of any material adverse development causing a breach of any
of its own representations and warranties in Articles 3 and 4 above. No
disclosure by any Party pursuant to this Section 5.6, however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
5.7 EXCLUSIVITY. The Seller will not (and the Seller will not cause or
permit any of its Subsidiaries to) (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets, of any of the Seller and its Subsidiaries (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Seller will notify
and inform the Buyer immediately if any Person makes any proposal, offer,
inquiry, or contact with respect to any of the foregoing.
ARTICLE 6. CONDITIONS TO OBLIGATIONS TO CLOSE
6.1 CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Article
3 above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) the Seller shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing,
including but not limited to those set forth in Articles 2 and 5 above;
(iii) the Seller and its Subsidiaries shall have procured all
of the third party consents specified in Section 5.2 above, and the
Buyer shall have approved of all of the matters reflected thereby;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or
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charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation,
(C) affect adversely the right of the Buyer to own the Acquired Assets,
to operate the Business , and to control the Seller's Subsidiaries, or
(D) affect adversely the right of any of the Seller's Subsidiaries to
own its assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above
in Section 6.1(i)-(iv) is satisfied in all respects;
(vi) the Seller, its Subsidiaries, and the Buyer shall have
received all authorizations, consents, and approvals of governments and
governmental agencies referred to in Articles 3 and 4 above;
(vii) the relevant Persons shall have entered into, executed
and delivered the Noncompetition Agreements, Employment Agreements,
Releases and the other agreements referred to in Article 2 above, and
the same shall be in full force and effect;
(viii) the Buyer shall have received from counsel to the
Seller an opinion in form and substance as set forth in Exhibit G
attached hereto, addressed to the Buyer, and dated as of the Closing
Date;
(ix) the Buyer shall have received copies, certified by the
duly qualified and acting Secretary or Assistant Secretary of the
Seller, of resolutions adopted by the board of directors of the Seller
and the shareholders of the Seller approving this Agreement and the
consummation of the transactions contemplated hereby.
(x) SanTi shall have entered into a Shareholders Agreement
with the Seller or the Seller's assignee who will be the registered
owner of the SanTi Stock, which Shareholders Agreement contains terms
and conditions satisfactory to SanTi;
(xi) the Buyer (which shall promptly apply for the transfer
of the permits and licenses described below) shall have received
documentation satisfactory to the Buyer effecting the transfer to the
Buyer of any and all permits and licenses used by the Seller or its
Subsidiaries in the operation of the Business and the businesses of the
Subsidiaries; provided, however, that if the Seller does not effect
such transfer to the Buyer at the Closing, the Seller shall effect such
transfer to the Buyer within 120 days after the Closing, and at the
Closing, the Seller shall execute and deliver to the Buyer
documentation necessary or appropriate in the opinion of the Buyer to
cause the Buyer to be the sole beneficiary of all rights under such
permits and licenses during said 120 day period, subject to the Buyer's
promptly making the required applications;
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(xii) the Seller shall have delivered to the Buyer
documentation satisfactory to the Buyer effecting a binder in favor of
the Buyer of the insurance coverage of the Seller described in Section
3.2.16 hereof, to be effective for at least thirty (30) days,
commencing at the time of the Closing;
(xiii) the Seller shall have delivered to the Buyer
documentation satisfactory to the Buyer effecting a transfer to the
buyer of all of the capital stock of Nutrecon; and
(xiv) all actions to be taken by the Seller in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be satisfactory in
form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 6.1 if it executes a
writing so stating at or prior to the Closing.
6.2 CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Article
4 above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing,
including but not limited to those set forth in Articles 2 and 5 above;
(iii) no action, suit, or proceeding shall be pending before
any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated
by this Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions specified above
in Section 6.2(i)-(iii) is satisfied in all respects;
(v) the relevant Persons shall have entered into, executed
and delivered the Noncompetition Agreements, Employment Agreements,
Releases and the other agreements referred to in Article 2 above, and
the same shall be in full force and effect; and
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(vi) the Seller shall have received from counsel to the Buyer
an opinion in form and substance as set forth in Exhibit H attached
hereto, addressed to the Seller and dated as of the Closing Date;
The Seller may waive any condition specified in this Section 6.2 if it executes
a writing so stating at or prior to the Closing.
ARTICLE 7. TERMINATION
7.1 TERMINATION OF AGREEMENT. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller on or before the Closing Date if the Buyer is not
satisfied with the results of its continuing business, legal, and
accounting due diligence regarding the Seller and its Subsidiaries;
(iii) the Seller may terminate this Agreement by giving
written notice to the Buyer on or before the Closing Date if the Seller
is not satisfied with the results of its continuing business, legal,
and accounting due diligence regarding the Buyer and SanTi;
(iv) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (A) in the event
the Seller or any Seller Stockholder has breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, the Buyer has notified the Seller or the Seller Stockholder,
as the case may be, of the breach, and the breach has continued without
cure for a period of 10 days after the notice of breach or (B) if the
Closing shall not have occurred on or before January 31, 1998, by
reason of the failure of any condition precedent under Section 6.1
hereof (unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant contained in this
Agreement); and
(v) the Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (A) in the
event the Buyer has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the
Seller has notified the Buyer of the breach, and the breach has
continued without cure for a period of 10 days after the notice of
breach or (B) if the Closing shall not have occurred on or before
January 31, 1998, by reason of the failure of any condition precedent
under Section 6.2 hereof (unless the failure results primarily from the
Seller itself breaching any representation, warranty, or covenant
contained in this Agreement).
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7.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 7.1 above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
ARTICLE 8. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, agreements, covenants and obligations made or undertaken by the
Seller and each Seller Stockholder in this Agreement are, whether specified as
such or not, the joint and several representations, warranties, agreements,
covenants and obligations of all of the Seller and the Seller Stockholders,
unless otherwise specifically indicated to the contrary herein with respect to a
particular representation, warranty, agreement, covenant or obligation; are
material, have been relied upon by the Buyer, shall survive the Closing
hereunder, and shall not merge in the performance of any obligation by any
Party; and, as to the representations and warranties, shall terminate or expire
on the fifth (5th) anniversary of the Closing Date, provided that such
representations and warranties shall not terminate or expire, but shall
continue, during the pendency of any suit, action, claim or other proceeding
brought in respect of such representations and warranties prior to the
termination or expiration of such five (5) year period. Notwithstanding the
above, all representations and warranties made by the Seller and each Seller
Stockholder in this Agreement that in any manner relate to (1) Tax matters, (2)
environmental matters, and (3) title matters, or as to the terms and performance
of this Agreement (collectively, the "Special Matters"), or any of the
foregoing, shall terminate or expire only upon the termination or expiration of
all applicable statutes of limitation. All representations, warranties,
agreements, covenants and obligations made or undertaken by the Buyer in this
Agreement shall survive the Closing hereunder, and shall not merge in the
performance of any obligation by any Party; and, as to the representations and
warranties, shall terminate or expire on the fifth (5th) anniversary of the
Closing Date, provided that such representations and warranties shall not
terminate or expire, but shall continue, during the pendency of any suit,
action, claim or other proceeding brought in respect of such representations and
warranties prior to the termination or expiration of such five (5) year period.
8.2 OBLIGATION OF THE SELLER AND THE SELLER STOCKHOLDERS TO INDEMNIFY.
Subject to the limitations contained in this Article 8, the Seller and the
Seller Stockholders, jointly and severally, shall defend, indemnify and hold the
Buyer and its shareholders, officers, directors, employees, counsel, agents,
Affiliates and assigns (collectively, the "Buyer Indemnitees") harmless from and
against any and all Losses asserted against, imposed upon or incurred by the
Buyer Indemnitees, or any of them, by reason of or resulting from, arising out
of, based upon or otherwise in respect of:
(i) any inaccuracy in any representation or warranty made by
the Seller or any Seller Stockholder pursuant to this Agreement or the
Disclosure Schedule;
(ii) any breach of any covenant or agreement made or to be
performed by the Seller or any Seller Stockholder pursuant to this
Agreement;
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(iii) any claim by any broker, finder or other Person employed
or allegedly employed by the Seller or any Seller Stockholder in
connection with the transactions contemplated by this Agreement;
(iv) any Liability or Loss resulting from, arising out of,
based upon or otherwise in respect of any violation or alleged
violation of any Environmental, Health and Safety Requirements related
to the Acquired Assets, or the presence of any Hazardous Materials or
Extremely Hazardous Substances on the Acquired Assets, that occurred at
any time prior to Closing;
(v) the Parties' failure to comply with any of the bulk
sales laws and any other similar laws in any applicable jurisdiction in respect
of the transactions contemplated by this Agreement, and any action brought or
levy made as a result thereof; and/or
(vi) any Liability or obligation of the Seller or any of the
Seller Stockholders, or in any manner related to the Business, the
Acquired Assets or the Excluded Assets, other than the Assumed
Liabilities.
8.3 OBLIGATION OF THE BUYER TO INDEMNIFY. Subject to the limitations
contained in this Article 8, the Buyer shall defend, indemnify and hold the
Seller and its officers, directors, partners, employees, counsel, agents,
Affiliates and assigns (collectively, the "Seller Indemnitees") harmless from
and against any and all Losses asserted against, imposed upon or incurred by the
Seller Indemnitees, or any of them, by reason of or resulting from, arising out
of, based upon or otherwise in respect of:
(i) any inaccuracy in any representation or warranty made by
the Buyer pursuant to this Agreement or the Disclosure Schedule;
(ii) any breach of any covenant or agreement made or to be
performed by the Buyer pursuant this Agreement;
(iii) any claim by any broker, finder or other Person employed
or allegedly employed by the Buyer in connection with the transactions
contemplated by this Agreement; and/or
(iv) any Assumed Liability.
8.4 MATTERS INVOLVING THIRD PARTIES.
8.4.1 If any third party shall notify any Person that is
entitled to seek indemnification pursuant to Sections 8.2 or 8.3 hereof (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other Person (the
"Indemnifying Party") under this Article 8, then the Indemnified Party shall
promptly notify the Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying the Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is prejudiced.
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8.4.2 The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (a) the Indemnifying
Party notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against all
Losses the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of or caused by the Third Party Claim, (b) the Indemnifying
Party provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (c) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (d) settlement of, or an
adverse judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Indemnified Party, and (e) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
8.4.3 So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 8.4.2 above, (a) the
Indemnified Party may retain separate co-counsel at its cost and expense and
participate in the defense of the Third Party Claim, (b) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (c) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
8.4.4 In the event any of the conditions in Section 8.4.2
above is or becomes unsatisfied, however, (a) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, the Indemnifying Party in connection therewith), (b) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (c) the Indemnifying Party will
remain responsible for any and all Losses the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of or caused by the
Third Party Claim to the fullest extent provided in this Article 8.
8.5 LIMITATION ON INDEMNIFICATION. The determination of the amount of
any Loss for which indemnification may be claimed under this Article 8 shall
take into account and be offset by any tax benefit or benefit under any policy
of insurance derived, accrued or received by the Indemnified Party as a result
thereof. No Person otherwise entitled to indemnification under this Agreement
shall be indemnified pursuant to this Agreement to the extent that such Person's
Losses are increased or extended by the gross negligence, willful misconduct,
violation of law or bad faith of such Person.
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8.6 INDEMNIFICATION PAYMENTS. An Indemnifying Party shall pay to the
Indemnified Party the full amount of any and all Losses (other than Losses
resulting from a Third Party Claim) for which it is required to indemnify the
Indemnified Party under this Article 8 within ten (10) days after its receipt of
notice thereof from the Indemnified Party, and the full amount of any and all
Losses resulting from a Third Party Claim within ten (10) days after final
settlement or adjudication thereof; and in each case, thereafter the amount of
any such Loss shall bear interest at the Applicable Rate. After complying with
the provisions of Section 8.4 hereof with respect to any Loss that results from
a Third Party Claim (if applicable), the Buyer shall be entitled to offset from
any payments due the Seller or any of the Seller Stockholders as part of the
Purchase Price or otherwise (including but not limited to the SanTi Stock), the
full amount of any and all Losses (whether or not resulting from a Third Party
Claim) for which the Seller or any Seller Stockholder is required to indemnify
any Buyer Indemnitee pursuant to Section 8.2 hereof, and the Buyer shall not be
liable for any amounts so offset.
8.7 OTHER RIGHTS AND REMEDIES NOT AFFECTED. The indemnification rights
of the Parties and other Persons under this Article 8 are independent of and in
addition to such other rights and remedies that the Parties and such other
Persons may have at law or in equity or otherwise for any misrepresentation,
breach of warranty or failure to fulfill any agreement or covenant hereunder on
the part of any Party hereto, including, without limitation, the right to
offset, seek specific performance, rescission or restitution, none of which
rights or remedies shall be adversely affected or diminished hereby.
ARTICLE 9. MISCELLANEOUS
9.1 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
Parties.
9.2 COMPLIANCE WITH BULK SALES LAWS. The Parties hereby waive
compliance by the Buyer and the Seller with the bulk sales law and any other
similar laws in any applicable jurisdiction in respect of the transactions
contemplated by this Agreement.
9.3 TAXES. The Buyer shall pay all federal, state and local sales, use
and other transfer taxes (other than Seller's income taxes), if any, due as a
result of the purchase, sale or transfer of the Acquired Assets in accordance
herewith, whether such Taxes are imposed by law on the Seller or the Buyer. The
Seller shall pay all of its federal, state and local income taxes, if any, due
as a result of the purchase, sale or transfer of the Acquired Assets in
accordance herewith.
9.4 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be (i) delivered by hand, (ii) mailed by
United States registered or certified mail, return receipt requested, first
class postage prepaid and properly addressed, or (iii) sent by national
overnight courier service to the Parties or their assignees, addressed as
follows:
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To the Seller and/or any Seller Stockholder:
Mr. A. Xxxxxx Xxxxxxx, Xx.
c/o Ferrero Wastewater Management, Inc.
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxxxx 00000-0000
Mr. A. Xxxxxx Xxxxxxx, Xx.
000 Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Mr. A. Xxxxxx Xxxxxxx, III
c/o Ferrero Wastewater Management, Inc.
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxxxx 00000-0000
Mr. A. Xxxxxx Xxxxxxx, III
00 Xxxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxxxx 00000
with copies in each case to:
Xxxx X. Xxxx, Esquire
Timoney, Knox, Xxxxxx & Xxxxx, LLP
000 Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
To the Buyer:
Mr. Rock Xxxxx, President
SanTi Group, Inc.
0000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
with copies in each case to:
Xxxxxx X. Xxxxxx, Xx.
Chorey, Taylor & Xxxx, A Professional Corporation
Suite 1700, The Lenox Building
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
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All notices, requests, instructions or documents given to any Party in
accordance with this Section 9.4 shall be deemed to have been given (i) on the
date of receipt if delivered by hand or overnight courier service, or (ii) on
the date five (5) business days after depositing with the United States Postal
Service if mailed by United States registered or certified mail, return receipt
requested, first class postage prepaid and properly addressed. Any Party may
change its address specified for notices herein by designating a new address by
notice in accordance with this Section 9.4.
9.5 ENTIRE AGREEMENT. All Exhibits and Schedules (including the
Disclosure Schedule) referred to herein, and the agreements evidenced by
Exhibits, are intended to be, and hereby are, specifically incorporated into and
made a part of this Agreement. This Agreement constitutes the entire agreement
among the Parties relating to the subject matter hereof and supersedes all prior
and contemporaneous negotiations, writings and agreements relating to the
subject matter of this Agreement.
9.6 MODIFICATIONS, AMENDMENTS AND WAIVERS. The Parties may, by mutual
written agreement and in no other manner, modify or amend the terms of this
Agreement. The failure or delay of any Party at any time or times to require the
performance of any provision of this Agreement shall in no manner affect its
right to enforce that provision. No single or partial waiver by any Party of any
condition of this Agreement, or the breach of any term, agreement or covenant
of, or the inaccuracy of any representation or warranty in, this Agreement,
whether by conduct or otherwise, in any one or more instances shall be construed
or deemed to be a further or continuing waiver of any such condition, breach or
inaccuracy or a waiver of any other condition, breach or inaccuracy.
9.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the Parties, and their
respective successors and permitted assigns. This Agreement may not be assigned
by any Party without the prior written consent of the other Parties, except that
the Buyer may assign this Agreement and its rights and obligations hereunder to
one or more of its Affiliates, or to any of its lenders as collateral security.
9.8 GOVERNING LAW. This Agreement shall be controlled, construed and
enforced in accordance with the substantive laws of the Commonwealth of
Pennsylvania, without regard to any laws related to choice or conflicts of laws.
9.9 SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be adversely affected or impaired thereby. The Parties
shall endeavor in good faith to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
practicable to that of the invalid, illegal or unenforceable provisions.
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9.10 ATTORNEYS' FEES AND EXPENSES. In any Litigation arising out of,
under or in connection with this Agreement in which one Party prevails over
another Party, the reasonable attorneys' fees and expenses incurred by the
prevailing Party in connection with such Litigation shall be paid for or
reimbursed by the opposing Party or Parties in such Litigation.
9.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and any Party may execute any such counterpart, each of which when
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
9.12 INTERPRETATIONS. No Party shall be considered the draftsman, and
no uncertainty or ambiguity herein shall be construed or resolved against any
Party because that Party is alleged to be the draftsman. On the contrary, this
Agreement has been reviewed, negotiated and accepted by all Parties and their
attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and intentions
of all Parties.
9.13 NO BENEFIT TO OTHERS. The representation, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
Parties and, in the case of Article 8 hereof, the other Indemnified Parties, and
their respective heirs, executors, administrators, legal representatives,
successors and assigns, and they shall not be construed as conferring any rights
on any other Persons.
9.14 CONSTRUCTION. Nothing in any Schedule (including the Disclosure
Schedule) attached hereto shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Schedule identifies the
exception with particularity and describes the relevant facts in detail (and in
terms of Liabilities, quantifies the amount thereof with specificity). Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein, unless the representation
or warranty has to do with the existence of the document or other item itself.
The Parties intend that each representation, warranty and covenant contained
herein shall have independent significance. If any Party has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty or covenant.
9.15 EXPENSES. Except as otherwise provided herein, each of the Parties
and the Seller's Subsidiaries will bear his, her or its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. The Seller agrees that neither the
Seller nor any of its Subsidiaries has paid or will pay any of the costs and
expenses prior to the Closing of the Seller, such Subsidiary or the Seller
Stockholders (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions
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contemplated hereby. The Seller also agrees that it has not paid any amount to
any third party, and will not pay any amount to any third party until after the
Closing, with respect to any of the costs and expenses of the Seller and the
Seller Stockholders (including any of their legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby.
9.16 FURTHER ASSURANCES. From time to time, at any Party's request and
without further consideration (unless the requesting Party is entitled to
indemnity therefor as provided herein), the other Parties will execute and
deliver to the requesting Party such documents and take such other action as
such Party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
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IN WITNESS WHEREOF, the Parties have executed this Agreement under seal
effective as of the date first above written.
SELLER:
FERRERO WASTEWATER MANAGEMENT, INC.
By: /s/ A Xxxxxx Xxxxxxx, Xx.
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[CORPORATE SEAL]
XXXXX STOCKHOLDERS:
/s/ A. XXXXXX XXXXXXX XX.
----------------------------------[SEAL]
Name : A. XXXXXX XXXXXXX XX.
/s/ A. XXXXXX XXXXXXX III
----------------------------------[SEAL]
Name: A. XXXXXX XXXXXXX III
BUYER:
SANTI GROUP OF PENNSYLVANIA, INC.
By: /s/ Xxxxx XxXxxxx
-------------------------------------
Name:
-----------------------------------
Title: Treasurer
----------------------------------
[CORPORATE SEAL]
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EXHIBIT A
NONCOMPETITION AGREEMENT
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EXHIBIT B
EMPLOYMENT AGREEMENT
39
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EXHIBIT C
EMPLOYMENT AGREEMENT
40
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EXHIBIT D
RELEASE
41
42
EXHIBIT E
XXXX OF SALE
42
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EXHIBIT F
FINANCIAL STATEMENTS
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EXHIBIT G
FORM OF LEGAL OPINION (SELLER'S COUNSEL)
Waived by all parties
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EXHIBIT H
FORM OF LEGAL OPINION (BUYER'S COUNSEL)
Waived by all parties
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SCHEDULE 1
EXCLUDED ACCOUNTS
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SCHEDULE 2
EXCLUDED ASSETS
All Cash of the Seller
All accounts receivable of the Seller
All assets of the Seller constituting, adversely affected by, or directly
related to the handling of Hazardous Materials or Extremely Hazardous Substances
1993 Jeep Station Wagon VIN 0X0X000X0XX000000
1990 Jeep Limited VIN 0X0XX00X0XX000000
1994 Jeep Grand Laredo VIN 0X0XX00X0XX000000
1993 Buick Station Wagon VIN 0X0XX00X0XX000000
1997 Jeep Wrangler VIN 0X0XX00X0XX000000
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SCHEDULE 3
PERSONS TO EXECUTE EMPLOYMENT AGREEMENTS
A. Xxxxxx Xxxxxxx, Xx.
A. Xxxxxx Xxxxxxx, III
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