EXHIBIT 10.19
PURCHASE AGREEMENT WITH LAMINAIRE CORPORATION
PURCHASE AGREEMENT
AGREEMENT made as of the 9th day of October, 1997, by and among
Thermo-Xxxxx Environmental Corp., a corporation duly organized, validly existing
and in good standing under and by virtue of the laws of the State of Delaware,
with executive offices at 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
(hereinafter referred to as the "Buyer"), and Xxxxx, LLC, a limited liability
company, duly organized and validly existing under and by virtue of the laws of
the State of New Jersey (hereinafter referred to as the "Seller").
INTRODUCTION
A. The Seller owns one hundred percent (100%) of the presently issued and
outstanding shares of capital stock (hereinafter referred to as the "Company
Stock") of Laminaire Corporation, a corporation duly organized, validly existing
and in good standing under and by virtue of the laws of the State of New Jersey,
with executive offices at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000
(the "Company").
B. The Seller is willing to sell the Company Stock to Buyer, and Buyer is
willing to purchase the Company Stock from Seller. The agreed purchase price is
Three Million ($3,000,000) Dollars for 100% of the Company Stock as valued as of
September 30, 1996, exclusive of three automobiles. The exact selling price is
to be adjusted to reflect the difference between the shareholders equity shown
in the financial statements of September 30, 1996 and the last day of the month
ending prior to the month of the closing date, which shall be no later than
October 31, 1997.
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The terms of the sale will be for One Million ($1,000,000) Dollars in cash, Two
Million Two Hundred Thousand ($2,200,000) Dollars in a first convertible
promissory note, and the adjusted balance in a second short term promissory
note, subject to the terms and conditions of this agreement and payable on March
31, 1998.
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SCHEDULES AND EXHIBITS
SCHEDULES
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1(b) Shares of Laminaire
2(b) Financial Statements
2(b)(2) Material Adverse Changes
2(d) Tax Returns
2(e) Property
2(f) Inventory
2(g) Contracts
2(g)(5) Insurance
2(g)(6) Banks
2(g)(7) Interested Transactions
2(g)(8) Defaults
2(g)(9) Accounts Receivable
2(i) Employee Relations
2(k) Litigation
2(l) Patents
2(m) Trademarks
2(p) Loans
2(r) Environmental Protection
5(c) Employees Continuing in Employment
EXHIBITS
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A First Note
B Second Note
C Third Note
D Laminaire Guaranty
E Security Agreement and UCC-1
F General Release
G Laminaire Mortgage and Security Agreement and UCC-1
H Xxxxxxx X. Xxxxx Employment Agreement
I Xxxxxxx Xxxxx Employment Agreement
J Xxxxxx X. Xxxxxx Employment Agreement
K Xxxx Xxxxxxxxxx Employment Agreement
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NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the sufficiency of which is hereby acknowledged, the parties
intending to be legally bound hereby do hereby agree as follows:
1. Purchase of Stock and Consideration.
(a) Purchase and Sale of Stock. In reliance on the representations and
warranties, and subject to the terms and conditions hereinafter set forth, the
Seller shall sell and deliver to Buyer, and the Buyer shall purchase and take
delivery from Seller, on the Closing Date (as hereinafter defined), all of the
Company Stock owned by the Seller. Each certificate representing the Company
Stock shall be duly endorsed for transfer or accompanied by an appropriate
instrument of transfer duly executed.
(b) Purchase Price and Terms of Payment.
(1) The Purchase Price for the Company Stock shall be Three Million
Dollars ($3,000,000), adjusted to reflect the difference between the
Stockholders' Equity of the Company shown in the financial statements of
September 30, 1996 and the last day of the month ending prior to the month
of the closing, calculated and agreed to no later than December 31, 1997.
(2) The purchase price shall be payable as follows, (i) $1,000,000 in
cash, (ii) convertible promissory note in the aggregate principal amount of
$2,200,000, which note shall bear interest at the rate of ten percent per
anum (the "First Note"), in the form of Exhibit A attached hereto, and
(iii) a promissory note in the principal amount of the difference between
(a) the Stockholders' Equity (as hereinafter defined) of Laminaire as of
the last day of the month prior to closing minus $200,000 minus (b) the
Stockholders' Equity of Laminaire as of September 30, 1996 (the "Second
Note") payable in the form of the note, which note shall bear interest at
the rate of
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fifteen percent per annum, attached hereto as Exhibit B. In the event that
the adjustment as determined in accordance with clause (iii) is less than
$0, then the principal amount of the First Note shall be reduced by such
amount. The term "Stockholders' Equity" shall mean as of the time of any
determination thereof, the net worth of Laminaire, all as determined by the
Company in accordance with generally accepted accounting principles. The
cash portion of the purchase price shall be paid by certified or bank
cashier's check or wire transfer on the closing date (the "Closing Date")
to the order of the Seller. The First Note and Second Note shall also be
delivered by Buyer on the Closing Date and the Second Note shall be amended
as to the amount not later than December 31, 1997..
(c) Security Interest. The Buyer's obligations under the First Note
and the Second Note shall be secured by separate security interests in the
real property and all tangible and intangible personal property including,
inventory and accounts receivables of the Buyer and of the Company
(including their respective subsidiaries), including the inventory and
accounts receivable owned by the Buyer and the Company during the period
between the Closing and the satisfaction of the Buyer's obligations under
the First Note, as set forth in the Security Agreements and mortgage
annexed hereto as Exhibits E and G. Such security interests shall be first
in priority, upon the satisfaction of all of the Company's obligations to
Corestates New Jersey National Bank (the "Bank") pursuant to a loan
agreement dated as of July 17, 1996 (the "Loan Agreement") on the Closing
Date, except such security interest will be second in priority, only with
respect to Buyer's accounts receivable granted to the holders of a
convertible debenture in the original principal amount of $550,000 issued
in connection with the transactions contemplated by this Agreement and to a
certificate of deposit held by Bank of New York in the principal amount of
$375,000.
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(d) Third Note. At Closing, Buyer shall deliver a promissory note in
the aggregate principal amount of $90,479.27, which note shall bear
interest at the rate of fifteen percent per anum (the "Third Note"), in the
form of Exhibit C attached hereto, payable to Xxxxxxx X. Xxxxx.
(e) Laminaire Guarantee. The Company shall deliver a guaranty of the
Buyer's obligations under the First Note, the Second Note and the Third
Note, in the form of Exhibit D attached hereto.
2. Representations and Warranties of the Company and the Seller. The
Company and the Seller jointly and severally represent, warrant and agree as
follows:
(a) Corporate.
(1) The Company is a corporation duly organized, validly existing and
in good standing under and by virtue of the laws of the State of New
Jersey. The Company is not qualified to do business as a foreign
corporation in any other states and is not required to so qualify.
(2) The Company has the power to own its property and to carry on its
business as and where such are now conducted. The Company does not have any
equity interest in any other corporation, partnership, joint venture or
association or control, directly or indirectly, of any other entity, except
for its wholly-owned subsidiary, Cleanaire Industries, Inc.
(3) The authorized capital stock of the Company (the "Company Capital
Stock") consists of 2500 shares of voting common stock, no par value per
share, of which all are issued and outstanding. The issued and outstanding
shares of the Company's voting common stock are as stated in Schedule 1(b)
(the "Company's Outstanding Capital Stock"). The Seller owns, beneficially
and of record, all of the shares of the Company's Outstanding Capital
Stock, free and
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clear of all liens, claims, charges, security interests and encumbrances
("Free and Clear Title"). The Company's Outstanding Capital Stock are held
in its treasury. The Company's Outstanding Capital Stock has been duly
authorized and validly issued and is fully paid and nonassessable; with no
liability on the part of the holders thereof. There are no preemptive
rights on the part of any holder of any class of securities of the Company
and no options, warrants, conversion or other rights, agreements or
commitments of any kind obligating the Company, contingently or otherwise,
to issue or sell any shares of its capital stock of any class or any
securities convertible into or exchangeable for any such shares and no
authorization therefor has been given.
(4) The copy of the Articles of Incorporation certified by the
Secretary of the State of New Jersey on or about September 24, 1997 as
being a true and current copy of the Articles of Incorporation, the
By-Laws, and lists of officers and directors of the Company previously
delivered by the Seller to Buyer, are true and correct copies as of the
date hereof.
(5) This Agreement has been duly executed and delivered by the Seller
and constitutes the legal, valid and binding obligation of the Seller,
enforceable in accordance with its terms, except as may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or laws affecting the
rights and remedies of creditors generally, and (ii) the availability of
the remedy of specific performance, injunctive relief or other equitable
relief, whether applicable applied by a court of law or equity, including
the exercise of judicial discretion in accordance with general principles
of equity.
(b) Financial.
(1) The audited balance sheets of the Company as of December 31, 1995
and 1996, the related audited statement of earnings for the years ended
December 31, 1995 and
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1996, and the unaudited balance sheet as of August 31, 1997 and the related
unaudited statement of earnings for the eight months then ended prepared by
the Company, labeled Schedule "2(b)" and previously delivered to Buyer, are
complete and correct and present fairly the financial condition of the
Company as of December 31, 1995 and 1996 and August 31, 1997, and the
results of its operations for the periods then ended in conformity with
generally accepted accounting principles applied on a basis consistent with
that of the preceding periods.
(2) Since August 31, 1997, except as specified in Schedule 2(b)(2),
the business of the Company has been carried on in the ordinary course in
substantially the same manner as prior to that date, and the Company has
not:
(i) undergone any material adverse change in the financial
condition or in the operations or the business of the Company from
that shown on the unaudited financial statements as of August 31, 1997
referred to in subsection (b)(1) of this Section 2, including, but not
limited to, any reduction in excess of $10,000 in the Company's cash
or cash equivalents;
(ii) any damages, destruction or loss, whether covered by
insurance or not, which materially and adversely affect the business,
property or assets of the Company;
(iii) made any declaration, setting aside or payment of any
dividend, or any distribution with respect to the capital stock of the
Company or any direct or indirect redemption, purchase or other
acquisition by the Company of any such stock;
(iv) made any increase in the compensation payable or to become
payable by the Company to directors, officers or employees other than
as mandated by law
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with respect to minimum wages, or in the payment of any bonus, or in
any insurance, pension or other benefit plan, payment or arrangement
made to, for or with any of such officers, employees or agents;
(v) changed any accounting principles applicable to the books and
records of the Company or reduced its reserves or allowances; or
(vi) encountered any other event or condition of any character,
not in the ordinary course of business, that materially and adversely
affect the results of operations or business or financial condition of
the Company.
(c) Undisclosed Liabilities.
The Company has no liabilities or obligations, either accrued, absolute,
contingent or otherwise, except:
(1) to the extent reflected or reserved against in the financial
statements referred to in subsection (b)(1) of this Section 2, and not
heretofore paid or discharged;
(2) to the extent specifically set forth in any of the Schedules
delivered to Buyer or elsewhere in this Agreement; and
(3) those incurred in or as a result of the normal and ordinary course
of business since August 31, 1997, all of which have been consistent with
past practices and none of which in the aggregate are material and adverse.
(d) Tax Returns.
Except as otherwise described on attached Schedule 2(d):
(1) The Company has filed with the appropriate governmental agencies
all the returns required to be filed by it or with respect to its business
and has paid, or made provision for the payment of, all taxes as well as
penalties and interest related thereto, if any, which
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have or may become due pursuant to said returns, except taxes which have
not yet accrued or otherwise become due or for which adequate provision has
been made on the books of the Company.
(2) None of such returns has been examined and settled, and no waivers
of statutes of limitation have been given or requested.
(3) All such returns and reports have been prepared on the same basis
as those of previous years, and all federal, state, city and foreign
income, profits, franchise, sales, use, occupation, property, excise or
other taxes due in connection with the Company's business has been fully
paid or accrued or adequately reserved for in the financial statements
referred to in subsection (b)(1) of this Section 2 of the Agreement.
(4) No deficiency or assessment with respect to or proposed adjustment
of the Company's Federal, state, county or local taxes are pending or, to
the best of the Company's knowledge, threatened. There are no tax liens,
whether imposed by any Federal, state, county or local taxing authority,
outstanding against the assets, properties or businesses of the Company.
(e) Title to Property.
(1) A list of all real and personal property owned by the Company is
set forth on Schedule 2(e) attached hereto (hereinafter referred to as the
"Assets"). The Company owns all right, title and interest in and to all of
its respective properties and assets, including intangibles, free and clear
of all mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever, except as set forth in Schedule 2(e) previously delivered to
Buyer; and has taken all steps necessary or otherwise required to perfect
and protect its rights in and to their respective properties
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and assets, including intangibles. The parties acknowledge that three
automobiles were transferred to Xxxxxxx Xxxxx or his designees prior to the
Closing (the "Automobiles").
(2) The Company does not lease any real or personal property as
lessee, except as set forth in Schedule 2(g), attached hereto. Each of
these leases (the "Leases") are in good standing, valid, binding, and in
full force and effect and have not been modified. The Company is not in
default under any of the Leases and the Company has not received any notice
of its default under any of the leases and Company has not given any notice
of any and there is no default by any other party under any of the Leases,
nor has any event occurred which, with notice or the passage of time, or
both, would constitute a default by any other party under any of the
Leases. Except as set forth on Schedule 2(g), the Company's rights in the
property covered under the Leases (including any improvements and
appurtenances thereto) are paramount to the rights of any other person or
entity other than the landlords under the leases. The Company has received
no notices other than periodic rent, common area maintenance and other
operating expense bills from the landlord under each lease and as included
in the Company's lease files made available for Buyer's review.
(3) Except as set forth on Schedule 2(g), all personal property in
which the Company has an ownership or leasehold interest, or which the
Company has in its possession, are in all material respects in good
operating condition and repair and in all material respects conform to all
applicable laws, including without limitation building and zoning laws,
statutes, ordinances or regulations and no notice of any violation of such
matters relating to the business, property or assets of the Company has
been received by the Company. Except as set forth on Schedule 2(e), none of
the premises owned or leased by the Company are in need of maintenance
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or repairs except for reasonable wear and tear and ordinary routine
maintenance and repairs that are not material in nature or cost.
(4) Neither the whole nor any portion of any of the Assets has been
condemned or otherwise taken by a public authority, nor does the Seller
know or have any reasonable grounds to believe that any such condemnation
or taking is threatened or contemplated.
(5) Seller has delivered to Buyer an appraisal report issued by an
appraiser acceptable to Buyer and dated in 1996 which concludes that the
land and real property located at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxx
Xxxxxx have a current value of not less than $2,150,000.
(f) Inventories. The inventories of the Company existing on the Closing
Date consist of items of a quality and quantity usable or saleable in the normal
course of its business, subject to usability and salability exceptions described
on attached Schedule 2(f) which are consistent with past business experience.
The inventories being paid for by Buyer in accordance with this Agreement on the
Closing Date will consist of a quantity usable or saleable within one hundred
eighty (180) days following the Closing Date on the assumption the business of
the Company continues to operate and the values at which such inventories are
carried reflect the normal inventory valuation policy of the Company with all
inventories valued at the lower of cost or market, with costs determined on a
first-in, first-out basis. The present inventories of the Company are maintained
at levels that are consistent with past practices to this point of the fiscal
year. Schedule "2(f)" (previously delivered to Buyer) sets forth the actual
inventory for the business as of September 30, 1997.
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(g) Contracts and Commitments.
Except as set forth on attached Schedule 2(g):
(1) The Company has no written or oral contracts or commitments (other
than in the normal course of business) involving a consideration in excess
of $5,000.
(2) There are no claims under any service warranties, whether express
or implied, by the customers of the Company.
(3) The Company has not given any revocable or irrevocable power of
attorney to any person, firm or corporation for any purpose whatsoever.
(4) The Company is not restricted by agreement from carrying on its
business anywhere in the United States.
(5) Set forth in Schedule 2(g)(5), previously delivered to Buyer, are
insurance policies and bonds in force with respect to the Company and the
date on which such policies were to be in force and the date on which such
policies expire.
(6) Set forth in Schedule 2(g)(6) previously delivered to Buyer are
the names and locations of all banks in which the Company has accounts and
the names of persons authorized to sign checks, drafts or other instruments
drawn thereon.
(7) Except as set forth on Schedule 2(g)(7), previously delivered to
Buyer, no director, officer, employee or stockholder of the Company, or
member of the family of any such person, or any corporation, partnership,
trust or other entity in which any such person, or any member of the family
of any such person, has a substantial interest or is an officer, director,
trustee, partner or holder of more than 5% of the outstanding capital stock
thereof, in an entity who is a competitor, customer, supplier or other,
entity, who, during the past 12 months has been a party
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to any transaction with the Company, including any contract, agreement or
other arrangement providing for the employment of, furnishing of services
by, rental of real or personal property from or otherwise requiring
payments to any such person or firm. For the purposes hereof, a spouse,
lineal descendant, parent, brother or sister of any Seller shall be deemed
to be a member of the family of such Seller.
(8) The Company is not in default, nor is there any known basis for
any claim of default, under any contracts or commitments made or
obligations owed by it. The Company has no present expectation or intention
of not fully performing all its obligations under each such lease, contract
or other agreement, and the Company has no knowledge of any breach or
anticipated breach by the other party to any contract or commitment to
which the Company is a party. To the best of Seller's knowledge, no consent
or approval of any third party is required with respect to such contract in
order to avoid a default thereunder by reason of the transactions
contemplated by this Agreement, except as set forth on Schedule 2(g)(8).
(9) Except as disclosed on Schedule 2(g)(9), all accounts receivable
of the Company reflected in the aging of receivables as of September 30,
1997 (attached as part of Schedule 2(b), except those collected since such
date, and such additional accounts receivable as are reflected on the books
of the Company on the date hereof, net of applicable reserves set forth on
such books, are collectible. Schedule 2(g)(9) previously delivered to Buyer
is an aging Schedule with respect to such accounts receivable, as of the
date thereof.
(h) Disclosure. No representation or warranty by the Company or the Seller
in this Agreement, nor any statement, certificate or Schedule furnished, or to
be furnished, by or on behalf of the Company or the Seller pursuant to this
Agreement, nor any document or
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certificate delivered to Buyer pursuant to this Agreement, contains or shall
contain any untrue statement of a material fact, or omits, or shall omit to
state a material fact necessary to make the statements contained therein not
materially misleading.
(i) Employee Relations.
(1) The Seller has heretofore furnished to Buyer a true and complete
payroll roster (Schedule 2(i)) of all employees of the Company as of
September 26, 1997 showing the rate of pay for each such person entitled to
receive compensation from the Company, and the gross payments made to each
such person for the periods set forth above. No increases in such salaries,
other than as set forth on Schedule 2(i), or the increase in federal
minimum wage, has been given since September 30, 1997.
(2) (i) The Company is not a party to any collective bargaining
agreement covering or relating to any of its employees except as set forth
in Schedule 2(i), previously delivered to Buyer. The Company is not
required to recognize and have not received a written demand for
recognition by any collective bargaining representative.
(ii) The Company is not a party to any contract with any of its
employees, agents, consultants, officers, salesmen, sales
representatives, distributors or dealers that is not cancelable by the
Company without penalty or premium on not more than thirty days'
notice, except as set forth in Schedule 2(i) attached hereto; and
(iii) The Company has not promulgated any policy or entered into
any agreements relating to the payment of severance pay to employees
whose employment is terminated or suspended, voluntarily or otherwise.
(3) Except as set forth in the schedules attached hereto:
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(i) The Company has complied in all material respects with all
applicable laws, rules or regulations relating to employment,
including those relating to wages, hours, collective bargaining and
the withholding and payment of taxes and contributions, and (ii) the
Company has complied in all material respects with the National Labor
Relations Act, as amended, Title VII of the Civil Rights Act of 1964,
as amended, the Occupational Safety and Health Act, Executive Order
11246, the regulations under such acts and all other Federal and state
laws applicable to the Company relating to the employment of labor,
including any provisions thereof relating to discrimination or
harassment. The Company has, and will have at the Closing Date,
withheld all amounts required by law or agreement to be withheld from
the wages or salaries of its employees and there are no arrearage of
wages, payments under any pension or insurance plan or any other
benefit, or any tax or penalty for failure to comply with the
foregoing owed by all of them with respect to employees which are not
either accrued or adequately reserved for in the financial statements
referred to in Subsection 2(b)(i) of this Agreement. There are no
material controversies pending or threatened, between the Company and
any of its employees or any labor unions or other collective
bargaining agents representing or purporting to represent its
employees.
(4) The Company has not promulgated any profit-sharing, retirement,
stock purchase, deferred compensation or other similar plan providing
benefits for its employees and the Company has not announced the
prospective promulgation thereof except as set forth in Schedule 2(i).
There is no unfunded past service credit liability or any other liability
with respect to any such plans other than as set forth on Schedule 2(i). No
reportable event as defined in Title IV of the Employee Retirement Income
Security Act of 1974, as amended by the Multi
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employer Pension Plan Amendments Act of 1980, has occurred with respect to
any such plan subject to the minimum funding requirement of Section 412 of
the Internal Revenue Code.
(j) No Breach of Statute or Contract. Neither the execution and delivery of
this Agreement, nor compliance with the terms and provisions of this Agreement
on the part of the Company or the Seller, will (i) violate any statute, license,
or regulation of any governmental authority, domestic or foreign, or (ii) will
result in the default by the Company or any of the Seller of any judgment,
order, writ, decree, rule or regulation of any court or administrative agency,
or (iii) will breach, conflict with, or result in a breach of any of the terms,
conditions or provisions of any material agreement or instrument to which either
the Company or the Seller is a party, or by which any of them is or may be
bound, or (iv) constitute a default thereunder, or (v) result in the creation or
imposition of any claim, lien, charge or encumbrance of any nature whatsoever
upon, or (vi) give to others any claim, interest or rights, including rights of
termination or cancellation in, or with respect to, any of their property,
assets, contracts, licenses or businesses.
The conduct of the Company's business does not violate any law or
regulation applicable to such business. The Company has complied with all laws,
rules, regulations and orders applicable to its business, operations,
properties, assets, products and services, and the Company has all necessary
permits, licenses and other authorizations required to conduct its business as
conducted and as proposed to be conducted. There is no existing law, rule,
regulation or order, and the Company is not aware of any proposed law, rule,
regulation or order, whether Federal or state, which would prohibit or
materially restrict the Company from, or otherwise materially adversely affect
the Company in, conducting its business in any jurisdiction in which it is now
conducting business, except that the consummation of the transactions
contemplated by this Agreement may
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constitute a default in any contract in which the Company has represented that a
majority of its common stock is owned by "individuals eligible for minority set
aside contracts".
(k) No Litigation. Except as set forth in Schedule 2(k) previously
delivered to Buyer, there is no suit, action or legal, administrative,
arbitration or other proceeding or governmental investigation, or any change in
the zoning or building ordinances affecting the real property or leasehold
interests of the Company, pending or threatened against the Company. The Company
has not received any opinion or memorandum or legal advice from legal counsel to
the effect that it is exposed, from a legal standpoint, to any liability or
disadvantage which may be material to its business, financial condition,
operations, property or affairs. Each of the Company and its subsidiaries is not
in default with respect to any order, writ, injunction or decree known to or
served upon the Company or its subsidiaries of any court or of any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign. There is no action or suit by
the Company or its subsidiaries pending or threatened against others.
(l) Patents and Trademarks. Schedule 2(l) and 2(m) previously delivered to
Buyer correctly sets forth a list of all letters patent, patent applications,
inventions upon which patent applications have not yet been filed, trade names,
trademarks, trademark registrations and applications, copyrights, copyright
registrations and applications, both domestic and foreign, presently owned,
possessed, used or held by the Company and, except for licenses from the Buyer
or unless otherwise indicated in such Schedule, the Company owns the entire
right, title and interest in and to the same. Such Schedule also correctly sets
forth all patents, patent applications, inventions upon which patent
applications have not yet been filed, trade names, trademarks, trademark
registration and applications, and licenses, both domestic and foreign, which
materially in any way
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relate to the business of the Company, and which are owned or controlled by any
director, officer, stockholder or employee of the Company. Such Schedule also
correctly sets forth a list of all licenses granted to the Company by others,
except by the Buyer, and to others by the Company. All letters patent, patent
applications, trade names, trademark registrations and applications, copyrights,
copyright registrations and applications, and grants of licenses set forth in
such Schedule are subject to no pending or threatened challenge, except as set
forth in said Schedule. The conduct of the Company's business as heretofore
carried on is free from any infringement by it of patents, trademarks, trade
name rights, copyrights or publication rights of others, except as set forth in
said Schedule and no notice of any infringement has been received by the
Company.
(m) Trademark Indemnification. Except as set forth in Schedule 2(m), the
Company has not given any indemnification for trademark or copyright
infringement as to any equipment, materials or supplies manufactured, produced,
used or sold by it or with respect to services rendered by it.
(n) Absence of Undisclosed Liabilities. The Company has no material
liabilities of any nature, whether accrued, absolute, contingent or otherwise
(including without limitation any affirmative obligations under its Leases and
liabilities as guarantor or otherwise not disclosed to the Buyer pursuant to
this Agreement with respect to obligations of others, or liabilities for taxes
due or accrued or to become due in each case to the extent not disclosed to the
Buyer pursuant to this Agreement).
(o) Insurance. The Company holds policies in the amounts and for the
coverage set forth on Schedule 2(g)(5), previously delivered to Buyer, which
coverage is consistent with Company's past business practices and covering all
of the insurance required to be maintained
19
by it and which is customary for businesses similar to the Company. There are
currently no claims pending against the Company under any insurance policies
currently in effect and covering the property, business or employees of the
Company, there has been no lapse of coverage as a result of the termination of
any policy and all premiums with respect to the policies maintained by the
Company due and payable through the date hereof have been paid by the Company,
or on behalf of the Company.
(p) Loans and Advances. Except as set forth on Schedule 2(p), previously
delivered to Buyer, the Company does not have any outstanding loans or advances
to any person and is not obligated to make any such loans or advances, except,
in each case, for advances to employees of the Company in respect of
reimbursable business expenses anticipated to be incurred by it in connection
with its performance of services for the Company.
(q) Environmental Protection.
(1) Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
(i) "Environmental Law" means any federal, state, provincial,
foreign, or local statute, law, rule, regulation, ordinance, code or
policy having the force of law relating to pollution or protection of
the environment or natural resources, existing as of the Closing Date,
including, without limitation: the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss.9601 et seq.
("CERCLA"); the Superfund Amendments and Reauthorization Act, Public
Law 99-499, 100 Stat. 1613); Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. ss.6901, et seq.; the National Environmental
Policy Act, 42 U.S.C. ss.4321; the Safe Drinking Water Act, 42 U.S.C.
ss.300f et seq.; the Toxic Substances Control Act ("TSCA"),
20
15 U.S.C. ss.2601 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. ss.136, et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. ss.1801; the Federal Water Pollution
Control Act, 33 U.S.C. ss.1251 et seq.; the Occupational Safety and
Health Act, 29 U.S.C. ss.651 et seq.; and counterpart state and local
laws; and any regulations or orders adopted thereunder.
(ii) "Governmental Agency" means any agency of the United States
Government, any state, or political subdivision thereof, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of a government with jurisdiction over the
matter in question.
(iii) "Pre-Closing Environmental Condition" means the presence of
a Regulated Substance used in the ordinary course of Company's
operations) on or in environmental media at a property (including the
presence in surface water, groundwater, soils or subsurface strata, or
air) as of the Closing Date, including the subsequent migration of any
such Regulated Substance. (Pre-Closing Environmental Condition does
not include the mere presence of substances at the property, such as
parts of building materials or equipment.)
(iv) "Regulated Substance" means any pollutant, contaminant,
hazardous substance, hazardous material, toxic substance, toxic
pollutant, solid waste, municipal waste, industrial waste, or
hazardous waste, that is defined as such and is subject to regulation
under any applicable Environmental Law, including, but not limited to
asbestos.
(v) "Release" shall mean the spilling, leaking, pumping, pouring,
emitting, discharging, injecting, escaping, leaching, dumping or
disposal of any Regulated Substance into surface water, groundwater,
soil, the land surface or subsurface, or ambient air.
21
(vi) "Required by Law" means an action that is specifically
mandated by an injunction, order, consent order, permit or license
condition, or other legally-binding document issued by a government
agency, or that is specifically mandated by a statute or by an
applicable regulation or standard issued by a Governmental Agency.
(vii) "Response" or "Response Actions" means any action taken in
the investigation, removal, confinement, remediation or cleanup of a
Release or any Environmental Condition. "Response" and "Response
Actions" include, without limitation, any action which constitutes a
"removal" action or "remedial action" as defined by Section 101 of
CERCLA 42 U.S.C. ss.6901(23) and (24), or the New Jersey Industrial
Sites Recovery Act.
(viii) "Third Party" means a person or entity other than Buyer,
Buyer's officers, directors, shareholders, or employees.
(2) Except as set forth in Schedule 2(r):
(i) The Company has obtained or applied for all permits, licenses
and other governmental approvals (collectively, "Governmental
Approvals") which are required to be obtained by it as of the Closing
Date under applicable Environmental Laws for the operation of the
Company's business and the ownership and use of all properties owned
or leased by the Company, the absence of which would have a material
adverse effect on such business. To the best knowledge of the Company
and seller, the sale of the Company Stock will not cause the
termination or lapse of any such Governmental Approvals, and such
Governmental Approvals are either transferrable to Buyer or, upon
appropriate application, may be reissued in Buyer's name.
(ii) The Company is in compliance in all material respects with
all applicable Environmental Laws, the terms and conditions of all
Governmental Approvals
22
issued to the Company, and the terms of any orders, decrees, or
judgments issued to the Company under such Environmental Laws.
(iii) The Company has not received written notice of any claim
from any Governmental Agency or any third party that the Company, the
Company's Business, or any property owned or leased by the Company are
in violation of any applicable Environmental Law, or any written
notification to the effect that the Company is or may be liable for
damages, Response or other liabilities relating to the Release or
threatened Release of any Regulated Substance at any property
currently or previously owned or operated by the Company or at any
other side.
(iv) There are no past or present conditions, circumstances,
activities, practices, incidents, or actions, or the existence of any
Pre-Closing Environmental Condition at any property owned, leased or
operated by the Company, which under any Environmental Law currently
in effect (a) would interfere with or prevent continued compliance
with applicable Environmental Law; (b) would impose or could
reasonably be expected to impose liability for a Response, damages or
other claims under Environmental Law; (c) could have a material
adverse effect on the value of the property, the Company or the
Company's Business; or (d) could reasonably be expected to result in
the imposition of a lien on the property of the Company.
(v) Except for permitted discharges to sanitary or septic systems
and air emissions conducted in compliance with applicable
Environmental Laws, the Company has not disposed, discharged or
Released into the environment at any property owned, leased or
operated by the Company any "hazardous waste," "hazardous substances"
or "toxic substances" (as those terms are defined under applicable
Environmental Law. The property owned,
23
leased or operated by the Company was not used prior to the Company's
ownership, lease or operations, for the disposal of hazardous waste or
hazardous substances.
(3) Seller has delivered to Buyer a report which confirms that
the land and building located at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxx,
Xxx Xxxxxx contain no asbestos, hazardous materials or other Regulated
Substance.
(r) Investment Representation:
(i) Seller represents that it is acquiring the First Note and the
shares of Common Stock issuable upon conversion of the First Note
(collectively, the "Securities") for its own account for investment
only and not with a view towards distribution or resale, and agrees
not to sell, transfer, pledge, hypothecate or otherwise dispose of, or
offer to dispose of, the Securities unless the Securities have been
registered under the Securities Act of 1933 (the "Act") and applicable
state securities laws or such registration is not required in the
opinion of counsel for the Seller reasonably acceptable to the Seller.
Any routine sale of the Securities may require compliance with some
exemption under the Act prior to resale. Notwithstanding anything
contained herein to the contrary, the Seller shall be entitled to
registration rights with respect to such shares of Common Stock as set
forth in the First Note. Seller understands that certificates for the
Securities issued pursuant to this Agreement shall bear the following
legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE,
TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER
SUCH ACT OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
SELLER THAT AN EXEMPTION FROM REGISTRATION FOR SUCH SALE, OFFER,
TRANSFER, HYPOTHECATION OR OTHER ASSIGNMENT IS AVAILABLE UNDER
SUCH ACT."
24
(ii) Seller represents that (i) it is subscribing for the
Securities after having made adequate investigation of the business,
finances and prospects of Buyer, (ii) they have been furnished any
information and materials relating to the business, finances and
operation of Buyer and information and materials relating to the offer
and sale of the Securities which he has requested, including, but not
limited to the filings by Buyer under the Securities Exchange Act of
1934, and they have been given an opportunity to make any further
inquiries desired of the management and any other personnel of the
Buyer as received satisfactory responses to such inquiries. Seller
understands that the Buyer is offering Convertible Debentures in the
original principal amount of up to $3,000,000 prior to the Closing
Date in order to finance the acquisition of the Shares and for working
capital.
3. Representations and Warranties of Buyer. Buyer represents and warrants
as follows:
(a) Organization, Power and Qualification. Buyer is a corporation duly
organized and validly existing, and is in good standing, under the laws of its
jurisdiction of incorporation or organization, has the power and authority to
own its property and to carry on its business as now being conducted and
hereafter proposed to be conducted and is duly qualified and is in good standing
as a foreign corporation or partnership, and authorized to do business, in all
jurisdictions in which the character of its properties and assets or the nature
of its business as now being conducted requires such qualification or
authorization.
(b) Ability to Carry Out the Agreement, Etc. Buyer is not subject to or
bound by any provision of any certificate or articles of incorporation or
by-laws, or to the best of Buyer's knowledge any mortgage, deed of trust, lease,
note, bond, indenture, other instrument or agreement, license, permit, trust,
custodianship, other restriction, or any applicable provision of any
25
law, statute, rule, regulation, judgment, order, writ, injunction or decree of
any court, governmental body, administrative agency or arbitrator which could
prevent or be violated by or under which there would be a default as a result
of, nor, is the consent of any person which has not been obtained required for
the execution, delivery and performance by the Buyer under this Agreement, or
any agreements, contemplated hereunder.
(c) Validity of Agreement, Authority, Etc. The execution and delivery of,
and performance by Buyer and the Company of its obligations under this Agreement
and the other documents contemplated or referenced under this Agreement
(collectively, the "Transaction Documents"), have been duly authorized by all
necessary action of Buyer and the Company. This Agreement has been, and each
other Transaction Document has been, or will be at the Closing Date, duly
executed and delivered by Buyer and the Company and (assuming valid execution
and delivery by the other party) the Transaction Documents are, or will be at
the Closing Date, the valid and binding obligation of it, enforceable in
accordance with their terms, except as may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or laws affecting the rights and remedies
of creditors generally, and (ii) the availability of the remedy of specific
performance, injunctive relief or other equitable relief, whether applicable
applied by a court of law or equity, including the exercise of judicial
discretion in accordance with general principles of equity.
(d) Litigation. There are no judicial or administrative actions, suits,
proceedings or investigations pending, or threatened, which question the
validity of or conflict with the terms of this Agreement or of any action taken
or to be taken pursuant to or in connection with the provisions of this
Agreement, nor does any basis exist for any such action, suit, proceeding or
investigation.
26
4. Conduct of the Business of the Company Pending the Closing Date. From
and after the date of this Agreement and until the Closing Date:
(a) Full Access. Buyer and its authorized representatives shall have full
access, during normal business hours, to all properties, books, records,
contracts and documents of the Company, and the Company shall furnish or cause
to be furnished to Buyer and its authorized representatives all information with
respect to the affairs and business of the Company as Buyer may request.
(b) Carry On In Regular Course. The Company shall carry on its business
diligently and substantially in the same manner as heretofore and shall not make
or institute any unusual or novel methods of trade, purchase, sale, lease,
management, accounting or operation.
(c) Contracts and Commitments. The Company shall not enter into any
contract or commitment or engage in any transaction not in the usual and
ordinary course of its business and consistent with past practices without the
prior written consent of the Buyer.
(d) Indebtedness. The Company will not create any indebtedness, other than
that incurred in the usual and ordinary course of business, that incurred
pursuant to existing contracts disclosed in the Schedules attached hereto, that
incurred pursuant to commitments permitted hereby, and that reasonably incurred
in doing the acts and things contemplated by this Agreement.
(e) Investments. The Company will not make any investments, loans, advances
or contributions to any other person, corporation, partnership, joint venture or
association; provided, however, that the Company may invest in United States
government obligations, certificates of deposit and commercial paper rated a-1
by Standard & Poor's Corporation or P-1 by Xxxxx'x.
27
(f) Dividends and Distributions. The Company will not declare or pay any
dividend or make any distribution with respect to its capital stock, or directly
or indirectly redeem, purchase or otherwise acquired any of its capital stock or
issue or in any way dispose of any shares of its capital stock or any rights
therein or thereto.
(g) Amendment of Charter. The Company will not amend its Certificates of
Incorporation or By-Laws or make any change in the authorized or unissued
capital stock or its officers or directors without the prior written consent of
Buyer.
(h) Insurance. All property, real and personal, owned or leased by the
Company will be insured by reputable insurance companies against all insurable
risks normally insured against by companies conducting a business the same as,
or similar to, the business conducted by the Company, and all property shall be
used, operated and maintained in a normal businesslike manner.
(i) Preservation of Organization and Employees. The Company will use its
best efforts (without making any commitments on behalf of Buyer) to preserve its
business organization intact, to keep available to Buyer its key officers and
employees, and to preserve for Buyer the present relationships of the Company
and its suppliers and others having business relations with it The Company will
not change its present relationships with its employees as set forth in Schedule
5(c) hereof. The Company will not make any material payments or advances to any
shareholder, officer, director or affiliate or family member of the Company or
any shareholder, officer or director of the Company outside of the normal course
of business and consistent with existing salaries.
28
(j) No Default. The Company shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a breach of any contract,
lease commitment or obligation by it.
(k) Compliance with Laws. The Company and the Seller will duly comply with
all applicable laws as may be required for the valid and effective transfer of
the Company Stock as contemplated by this Agreement.
(l) Tax Returns. The Company will prepare and file all state, federal and
other tax returns, and amendments thereto required to be filed between the date
of this Agreement and the Closing Date. Buyer shall have a reasonable
opportunity to review all such returns, and amendments thereto, prior to their
being filed.
(m) Sale of Capital Assets. As of the Closing Date, the Company will not
have sold or disposed of any capital assets with an original cost in excess of
$5,000 without the prior written consent of Buyer or capital assets in the
aggregate with an original cost of $10,000 without the prior written consent of
Buyer.
(n) Information to be Furnished. The Company and the Seller will furnish or
make available to Buyer all the information concerning the Company required for
inclusion in any statement or application made by Buyer to any governmental body
in connection with the transaction contemplated by this Agreement, and the
Company and the Seller represent and warrant that all such information furnished
to Buyer for such applications or statements shall be true and correct in all
respects without omission of any material fact required to be stated to make any
such information not misleading.
29
5. Survival of Representations and Warranties. All representations,
warranties, and agreements of the Seller, the Company and Buyer contained herein
(including all schedules and exhibits hereto) or in any document, statement,
certificate or other instrument referred to herein or delivered hereunder in
connection with the transactions contemplated hereby shall survive the Closing.
6. Conditions Precedent to Buyer's Obligations. Each and every obligation
of Buyer to be performed on the Closing Date or thereafter, as the case may be,
shall be subject to the satisfaction prior thereto of the following conditions:
(a) Representations and Warranties True at the Closing Date. The
representations and warranties made by the Company and the Seller in this
Agreement or given on their behalf hereunder shall be true on and as of the
Closing Date with the same effect as through such representations and warranties
had been made or given on and as of the Closing Date.
(b) No Adverse Change. The business, assets and properties of the Company
shall not have been materially and adversely affected in any way as a result of
fire, explosion, earthquake, disaster, accident, labor trouble or dispute, any
action by the United States or any other governmental authority, flood, drought,
embargo, riot, civil disturbance, uprising, activity of armed forces or act of
God or public enemy.
(c) Compliance with Agreement. The Company shall have performed and
complied with all of its obligations under this Agreement which are to be
performed or complied with by it prior to or on the Closing Date.
(d) Employees Continuing in Employment. Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxx,
and Xxxxxx X. Xxxxxx, pursuant to written Employment Agreements, attached hereto
as
30
Exhibits H, I and J shall have agreed to continue their employment with the
Company after the Closing Date.
(e) Certificate of Fulfillment of Conditions. There shall be delivered to
Buyer a certificate of the Company certifying in such detail as Buyer may
specify the fulfillment of conditions set forth in subsections (a), (b), (c) and
(d) of this Section 6.
(f) Opinion of Counsel for Seller. Buyer shall have received a written
opinion of counsel of Seller dated as of the Closing Date, addressed to Buyer in
form and substance to the effect that (1) the Company is a corporation duly
organized, validly existing and in good standing under and by virtue of the laws
of the State of New Jersey; (2) that the Company has no subsidiaries (except for
Cleanaire Industries, Inc.) and the Company is entitled to own or lease its
property; (3) counsel, without making any independent inquiry, does not know of
any pending litigation other than that set forth on Schedule 2(k) to which the
Company is a party or any threatened litigation against the Company; (4) the
Seller owns and holds all of the outstanding shares of the Company's Stock free
and clear of any liens, charges, encumbrances, restrictive agreements and
assessments and have full power and authority to sell, assign, transfer, convey
and deliver to Buyer said Company Stock as contemplated by this Agreement; (5)
the shares of Company Stock are not subject to any restrictions on
transferability and upon transfer and delivery of said shares of Company Stock
to Buyer as contemplated by this Agreement, Buyer will receive good and absolute
title thereto free from any liens, charges, encumbrances, restrictive
agreements, equities, claims and restrictions whatsoever; and (6) this Agreement
is a valid and binding obligation of the Seller enforceable in accordance with
its terms.
31
(g) Certificates of Good Standing. The Seller shall have delivered to Buyer
a certificate issued by appropriate governmental authorizes evidencing the good
standing of the Company as of a date or not more than thirty (30) days prior to
the Closing Date as a corporation of the state of its incorporation and in each
state where it is qualified to do business.
(h) Proceedings and Instruments Satisfactory. All proceedings, corporate or
other, to be taken in connection with the transaction contemplated by this
Agreement, and all documents incident thereto, shall be satisfactory in form and
substance to Buyer, and the Company shall have made available to Buyer for
examination the originals or true and correct copies of all records and
documents relating to the business and affairs of the Company, which Buyer may
request in connection with said transaction. The Company and the Seller shall
have complied with all statutory requirements for the valid consummation by the
Company or the Seller of the transaction contemplated by this Agreement.
(i) No Litigation. No investigation, suit, action or other proceeding shall
be threatened or pending before any court or governmental agency which in the
opinion of Buyer's counsel is likely to result in the restraint, prohibition or
the obtaining of damages or other relief in connection with this Agreement or
the consummation of the transactions contemplated hereby, or in connection with
any claim against the Company, not disclosed by the Schedules attached hereto.
(j) All Documents. All documents required by Section 10(a) of this
Agreement shall have been delivered to the Buyer.
(k) Interim Financial Statements. The Company shall have delivered to
Buyer, prior to the Closing Date, financial statements as of August 31, 1997 and
for the eight month period then ended, which financial statements shall include
a balance sheet and income
32
statement, be prepared in conformity with generally accepted accounting
principles applied on a basis consistent with those used during the preceding
three years and shall reflect assets, liabilities and operating results
substantially consistent with the corresponding amounts reflected in the
Company's financial statements as of June 30, 1997 and for the six months then
ended.
(l) Title. Upon satisfaction of the Company's obligations to
Corestates National Bank and the EDA, the Company shall own its real
property free and clear of any liens and encumbrances.
7. Conditions Precedent to the Seller Obligations. Each and every
obligation of the Seller to be performed on the Closing Date shall be subject to
the satisfaction prior thereto of the following conditions:
(a) Representations and Warranties True at the Closing Date. Buyer's
representations and warranties contained in this Agreement shall be true at and
as of the Closing Date as though such representations and warranties were made
at and as of the Closing Date.
(b) Compliance with Agreement. Buyer shall have performed and complied with
its obligations under this Agreement which are to be performed or complied with
prior to or on the Closing Date.
(c) All Documents. All documents required by Section 10(b) of this
Agreement shall have been delivered to the Seller.
(d) Employees Continuing in Employment. Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxx,
Xxxxxx X. Xxxxxx and Xxxx Xxxxxxxxxx shall have been offered employment
agreements executed by the Company (in the form of Exhibits H, I, J and K) to
continue their employment with the Company after the Closing Date.
33
(e) Opinion of Counsel for Buyer. Seller shall have received a written
opinion of counsel of Buyer dated as of the Closing Date, addressed to Seller in
form and substance to the effect that (1) the Buyer is a corporation duly
organized, validly existing and in good standing under and by virtue of the laws
of the State of Delaware; (2) that the Buyer has no subsidiaries, and the Buyer
is entitled to own or lease its property; (3) counsel, without making any
independent inquiry, does not know of any pending litigation to which the Buyer
is a party or any threatened litigation against the Buyer; and (4) this
Agreement is a valid and binding obligation of the Buyer enforceable in
accordance with its terms including, but not limited to, obligation to register
shares under Note 1, and (5) the guaranty, mortgage and security agreement
executed by the Company are binding and valid obligations of the Company and
have been duly executed and delivered pursuant to proper corporate
authorization.
(f) Certificates of Good Standing. The Buyer shall have delivered to Seller
a certificate issued by appropriate governmental authorizes evidencing the good
standing of the Buyer as of a date or not more than thirty (30) days prior to
the Closing Date as a corporation of the state of its incorporation and in each
state where it is qualified to do business.
(g) Proceedings and Instruments Satisfactory. All proceedings, corporate or
other, to be taken in connection with the transaction contemplated by this
Agreement, and all documents incident thereto, shall be satisfactory in form and
substance to Seller, and the Buyer shall have made available to Seller for
examination the originals or true and correct copies of all records and
documents relating to the business and affairs of the Buyer, which Seller may
request in connection with said transaction. The Buyer shall have complied with
all statutory requirements for
34
the valid consummation by the Buyer or the Buyer of the transaction contemplated
by this Agreement.
(h) No Litigation. No investigation, suit, action or other proceeding shall
be threatened or pending before any court or governmental agency which in the
opinion of Seller's counsel is likely to result in the restraint, prohibition or
the obtaining of damages or other relief in connection with this Agreement or
the consummation of the transactions contemplated hereby, or in connection with
any claim against the Buyer, not disclosed by the Schedules attached hereto.
(i) Corestates. The Buyer shall have supplied the funds to the Company and
the Company shall have satisfied all of its obligations to Corestates National
Bank and the EDA with respect to the mortgages of any real property owned by the
Company and the Company shall own such real property free an clear of any liens
and encumbrances.
(j) Receipt of Funds. Receipt by the Seller, Buyer and Corestates National
Bank of a minimum of $2,300,000 for payment of the cash portion of the purchase
price, satisfaction of the Company's obligations to Corestates National Bank and
EDA and funds for working capital of Laminaire.
8. Indemnification and Resolution of Disputes.
(a) Indemnification by Seller and Buyer. Seller shall indemnify and hold
harmless Buyer, and shall reimburse Buyer for, any loss, liability, claim,
damage, expense (including, but not limited to, reasonable cost of investigation
and defense and reasonable attorneys' fees) or diminution of value
(collectively, "Damages") arising from or in connection with (a) any inaccuracy
in any of the representations and warranties of Seller pursuant to this
Agreement or in any certificate delivered by the Seller pursuant to this
Agreement, or any actions, omissions or states of facts
35
inconsistent with any such representation or warranty, or (b) any failure by the
Seller to perform or comply with any provision of this Agreement. Buyer shall
indemnify and hold harmless Seller, and shall reimburse Seller for any Damages
arising from (a) any inaccuracy in any of the representations and warranties of
Buyer in this Agreement or in any certificate delivered by the Buyers pursuant
to this Agreement, or any actions, omissions or states of facts inconsistent
with any such representation or warranty, or (b) any failure by the Buyer to
perform or comply with any provision of this Agreement. In no event shall the
indemnity exceed the purchase price or apply to any claims made by Buyer more
than five years after the Closing Date.
(b) Procedure for Indemnification. Promptly after receipt by an indemnified
party under Section 7(a) above, of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such section, give notice to the
indemnifying party of the commencement thereof, but the failure so to notify the
indemnifying party shall not receive it of any liability that it may have to any
indemnified party except to the extent the defense of such action by the
indemnifying party is prejudiced thereby. In case any such action shall be
brought against an indemnified party and it shall give notice to the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, to assume
the defense thereof with counsel reasonable satisfactory to such indemnified
party and, after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party under such section for any fees of other
counsel or any other expenses, in each case subsequently incurred by such
indemnified party in connection with the defense thereof, other than reasonable
costs of investigation, If an indemnifying party assume the defense of
36
such an action, (a) no compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's consent (which shall not be
unreasonable withheld) unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any person which is not fully
remedied by the payment referred to in clause (ii) and no adverse effect on any
other claims that may be made against the indemnified party and (ii) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party, (b) the indemnifying party shall have no liability with respect to any
compromise or settlement thereof effected without its consent (which shall not
be reasonably withheld) and (c) the indemnified party will reasonable cooperate
with the indemnifying party in the defense of such action. If notice is given to
an indemnifying party of the commencement of any action and it does not, within
15 days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense thereof, the
indemnifying party shall be bound by any determination made in such action or
any compromise or settlement thereof effected by the indemnified party.
Notwithstanding the foregoing, if an indemnified party determined in good faith
that there is a reasonable probability that an action may materially and
adversely affect it or its affiliated other than as a result of monetary
damages, such indemnified party may, by notice to the indemnifying party, assume
the exclusive right to defend, compromise or settle such action, but the
indemnifying party shall not be bound by any determination of an action so
defended or any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld).
(c) Set-Off. Buyer shall have the right to deduct any amounts which become
due under Section 7 from its obligations under First Note or Second Note.
37
(d) Indemnification Threshold. The Buyer's right to indemnification under
this Section 8 does not arise until and unless the Damages exceed $35,000
without giving effect to the three Automobiles as previously distributed.
9. Termination and Abandonment. This Agreement may be terminated and the
sale provided for by this Agreement may be abandoned without liability on the
part of any party to the other, on or before the Closing Date:
(a) by mutual consent of Buyer and the Seller;
(b) by Buyer
(1) if an examination of the Company by Buyer, or its authorized
representatives, shows that since August 31, 1997, there has been a material and
adverse change in the financial condition of the Company or the results of its
operations from that shown in the financial statements referred to in subsection
(b)(1) of Section 2, or shows that such financial statements do not completely,
truly and correctly reflect and fairly present the financial conditions and
results of operations of the Company in all material respects; or
(2) if any of the events or conditions specified in subsection (b)(2)
of Section 2 have occurred; or
(3) if any of the conditions provided for in Section 6 of this
Agreement have not been met and have not been waived by Buyer in writing;
(c) by the Seller
38
(1) if any of the conditions of Section 7 of this Agreement have not
been met and have not been waived in writing by the Seller; or
(2) if the Closing does not occur on or before October 31, 1997. In
the event of termination and abandonment by any party, as above provided in
this Section 9, prompt written notice shall be given to the other party.
10. Closing Date. The closing with respect to the transactions contemplated
hereunder shall take place at the offices of XxXxxxxxxx & Xxxxx, LLP, 260
Madison Avenue, New York, New York, at 10:00 a.m. local time on October 16,
1997, or at such earlier date as may be set by Buyer, on at least two (2) days'
prior written notice to the Seller. Buyer may, at its option, delay the Closing
Date until two business days after the closing of its pending private placement,
but no later than October 31, 1997, upon written notice to the Company. Such
date (or such earlier date) is hereinafter referred to as the "Closing Date".
At the Closing,
(a) The Seller shall deliver to Buyer the following:
(1) a certificate of fulfillment of conditions signed by the President
and Treasurer of the Company, referred to in subsection (e) of Section 6
hereof;
(2) the opinion of counsel for the Company, described in subsection
(f) of Section 6 hereof;
(3) a certificate of good standing referred to in subsection (g) of
Section 6 hereof;
(4) certificates representing all of the Company Stock as set forth in
Section 1(a) hereof;
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(5) a general release executed by the Seller and the members of Seller
in favor of the Company, in the form attached hereto and labeled Exhibit F;
(6) Employment Agreements executed by Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxx,
Xxxxxx X. Xxxxxx and Xxxx Xxxxxxxxxx.
(7) Certificate of Incumbency;
(8) such other and further documents, instruments and certificates not
inconsistent with the provisions of this Agreement, executed by Seller as
Buyer shall reasonably require to carry out and effectuate the purposes and
terms of this Agreement.
(b) Buyer shall deliver to the Seller the following:
(1) the sum of One Million Dollars ($1,000,000) by certified or bank
cashier's check or wire transfer to the order of the Seller;
(2) The First Note executed by the Buyer;
(3) the Second Note executed by the Buyer;
(4) the Laminaire Guaranty, Mortgage, UCC-1 and corporate resolutions;
(5) the Security Agreement, UCC-1;
(6) corporate resolutions of Buyer authorizing this transaction;
(7) Certificate of Incumbency of Buyer's officers and of the Company
officers;
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(8) a release of Xxxxxxx and Xxxxx Xxxxx of their guaranty of the Loan
Agreement executed by the Bank and payment of all of the Company's
obligations to the Bank and EDA;
(9) the Third Note executed by the Buyer.
11. Operation of the Buyer and Company after the Closing Date. Buyer
covenants as follows:
(a) Separate Books and Records. Buyer shall cause the Company to maintain
separate records for the operation of the Company's business.
(b) Board of Directors. Buyer shall cause Xxxxxxx X. Xxxxx to be elected to
the Board of Directors of Buyer for a period of a minimum of one year after the
Closing Date, in the event that Xx. Xxxxx elects to serve on such Board or such
other period as the First Note is outstanding.
(c) Tax Returns. The Company shall not file any amended tax return to any
prior year's return which could cause additional tax liability to members of the
LLC except as required by the Internal Revenue Service or if any of the
Company's prior year's returns were prepared in error. No amended return shall
be amended or filed without prior notice to and consent of Seller.
12. Brokerage. The Seller represent and warrant that they have not engaged
the services of any broker or finder hereunder, and agree to indemnify and hold
the Buyer harmless against any claim for brokers' or finders' fees or
compensation in connection with the transactions herein provided for by any
person, firm or corporation claiming a right to the same because engaged by the
Seller. Buyer represents and warrants to the Seller that it has not engaged the
services of any
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broker or finder in connection with the transactions herein provided for and
agrees to indemnify and hold harmless Seller against any claims for brokers' or
finders' fees or compensation in connection with the transactions herein
provided for by any other person, firm or corporation claiming a right to the
same because engaged by Buyer or its subsidiaries.
13. Restriction on Negotiation. The Seller agrees that until the earlier of
(a) the Closing Date or (b) October 31, 1997, neither the Company nor the Seller
will sign any agreement or have any negotiations regarding the sale of the
Company or any of its assets.
14 Miscellaneous.
(a) Nature and Survival of Representations. All statements contained in any
certificate, instrument, schedule or document delivered by or on behalf of any
of the parties pursuant to this Agreement and the transactions contemplated
hereby shall be deemed representations and warranties by the respective parties
hereunder. All representations and warranties made by the parties each to each
other in this Agreement or pursuant hereto shall survive, except to the extent
waived in writing by the parties hereto, the consummation of the transactions
contemplated by this Agreement, notwithstanding any investigation heretofore or
hereafter made by any of them or on behalf of any of them. Each Schedule
delivered in accordance with this Agreement shall be deemed to include and refer
to every other Schedule hereto.
(b) Entire Agreement. This Agreement, together with the Exhibits and
Schedules delivered pursuant to this Agreement, sets forth the entire agreement
and understanding between the parties as to the subject matter hereof, and
merges and supersedes all prior discussions, agreements and understandings of
every and any nature between them, and no party shall be bound by any condition,
definition, warranty, or representation, other than expressly set forth or
provided
42
for in this Agreement, or as may be, on or subsequent to the date hereof, set
forth in writing and signed by the party to be bound thereby. This Agreement may
not be changed or modified, except by agreement in writing, signed by all of the
parties hereto.
(c) Parties in Interest. All the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors in interest of the respective parties hereto.
(d) Laws Governing. This Agreement shall be construed and interpreted
according to the law of the State of New Jersey as applied to contracts executed
and performed in the State of New Jersey.
(e) Assignment. This Agreement shall not be assigned by the Seller or
Buyer.
(f) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand, or overnight courier, telecopied or mailed, certified or
registered mail, with first-class postage page, (a) if to the Seller at 000
Xxxxxxxxx Xxxx, Xxxxxx, Xxx Xxxxxx 00000, or the Company, 000 Xxxx Xxxxxxxxx
Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000, or to such other person and place as the
Seller shall furnish to Buyer in writing, with a copy to Xxxxx X. Xxxxxx, Xxxxxx
& Xxxxxx, XX Xxx 0000, Xxxx Xxxxxxxxx, XX 00000; and, (b) if to Buyer, 000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, or to such other person and place
as Buyer shall furnish to the Seller in writing with a copy to Xxxxxx X.
Xxxxxxxx, Esq., XxXxxxxxxx & Xxxxx, LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. All notices shall be deemed given upon receipt.
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(g) Further Instruments. The Seller will, on the Closing Date or such other
date as Buyer may request, without cost or expense to Buyer, execute and deliver
or cause to be executed and delivered to Buyer such other action as Buyer may
reasonably request to more effectively consummate the transactions contemplated
by this Agreement and confirm and assure Buyer title thereto.
(h) Counterparts. This Agreement may be executed simultaneously in two (2)
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(i) Headings. The headings in the sections of this Agreement are inserted
for convenience only and shall not constitute a part hereof.
(j) Expenses. Buyers, on one hand, and Seller and Company on the other
hand, shall bear their own respective expenses, including professional fees,
incurred in connection with this Agreement and the Transaction Documents, it
being understood that the Company's legal fees shall be paid by Seller.
(k) Transfer Taxes. Except as specifically provided below, Seller shall pay
any state or local sales, transfer or like taxes, including but not limited to
real estate transfer taxes, payable in connection with the transactions
contemplated pursuant to this Agreement, it being understood that each Seller is
solely responsible for his or her personal income tax obligations arising from
the sale of his or her stock as contemplated hereunder.
(l) Mail. Buyer and company agree that from and after the Closing Date all
mail addressed to the Seller shall be sent to Xxxxxxx X. Xxxxx as agent for the
Seller.
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(m) Confidentiality. Each party shall maintain the existence of this
Agreement and the other Transaction Documents, and the terms and conditions
described therein ("Confidential Information") strictly confidential. No party
may disclose any Confidential Information to any third party (other than to its
legal, accounting or financial advisors) without the prior consent of the other
party. Any press release will be subject to the prior consent of the parties.
The parties acknowledge that any press release or other disclosure required to
be made by Buyer in order for it to comply with any federal or state securities
laws shall not be subject to Seller's prior review.
(n) Books and Records; Inventory; Further Assurances. The parties
acknowledge and agree that Seller may retain (but keep confidential) copies of
business records of the Company as are reasonably necessary to Seller in
connection with (x) the preparation of Seller's tax returns or other filings
prepared by Seller, (y) Seller's performance of its obligations hereunder, and
(z) Seller's continuing businesses. After the Closing, each party shall provide
to the other party any reasonably requested copies of any contracts, agreements,
commitments, books, records, files or other data not provided to such party at
the time of the Closing that such party may reasonably require in connection
with (i) the preparation of such party's tax returns or other filings prepared
by such party, (ii) such party's performance of its obligations hereunder, (iii)
such party's continuing businesses, or (iv) any litigation, tax audit or
threatened litigation relating to such party's continuing or former businesses,
provided that such party shall reimburse the party providing copies for all
reasonable costs incurred in connection with the provision thereof.
(o) Severability. If any provision of this Agreement is held by any court
of competent jurisdiction to be illegal, invalid or unenforceable, such
provision shall be of no force
45
and effect, but the illegality, invalidity or unenforceability shall have no
effect upon and shall not impair the enforceability of any other provision of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THERMO-XXXXX ENVIRONMENTAL CORP.
By: Xxx Xxxxx, President
-----------------------------
Name:
Title:
XXXXX, LLC
---------------------------------
By: Xxxxxxx X. Xxxxx, President
-----------------------------
Name:
Title:
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