ASSET AND STOCK PURCHASE AGREEMENT
BY AND AMONG
TRIUMVIRATE ENVIRONMENTAL, INC.
AND
GS ENVIRO SERVICES, INC.,
ENVIRO-SAFE CORPORATION AND
ENVIRO-SAFE CORPORATION (NE)
March 31, 2008
Table of Contents
ARTICLE I.........................................................................................................1
1.1 Definitions..........................................................................................1
1.2 Other Defined Terms..................................................................................7
ARTICLE II........................................................................................................8
2.1 Purchase of Assets...................................................................................8
2.2 Retained Assets......................................................................................9
2.3 Liabilities.........................................................................................10
ARTICLE III......................................................................................................11
ARTICLE IV.......................................................................................................11
4.1 Purchase Price......................................................................................11
4.2 Use of Proceeds.....................................................................................11
4.3 Allocation of Purchase Price........................................................................11
4.4 Adjustment to Asset Purchase Price..................................................................12
ARTICLE V........................................................................................................13
ARTICLE VI.......................................................................................................14
6.1 Organization and Qualification......................................................................14
6.2 Authority; No Violation.............................................................................14
6.3 Authorized and Outstanding Stock....................................................................15
6.4 Subsidiaries........................................................................................15
6.5 SEC Filings; Financial Statements...................................................................15
6.6 Absence of Undisclosed Liabilities..................................................................16
6.7 Absence of Certain Changes..........................................................................17
6.8 Title, Sufficiency and Condition of the Purchased Assets; Enviro-Safe (NE) Stock....................18
6.9 Real Estate.........................................................................................18
6.10 Accounts Receivable.................................................................................19
6.11 Inventories.........................................................................................20
6.12 Intellectual Property...............................................................................20
6.13 Trade Secrets and Customer Lists....................................................................20
6.14 Contracts...........................................................................................21
6.15 Customers...........................................................................................22
6.16 Compliance with Laws................................................................................22
6.17 Taxes...............................................................................................23
6.18 Employee Benefit Plans.............................................................................24
6.19 Environmental Matters...............................................................................25
6.20 Employees...........................................................................................27
6.21 Litigation..........................................................................................27
6.22 Insurance...........................................................................................27
6.23 Brokers.............................................................................................28
6.24 Burdensome Agreements...............................................................................28
6.25 Records and Books...................................................................................28
6.26 Transactions with Interested Persons................................................................28
6.27 No Corrupt Practices................................................................................28
6.28 Disclosure of Material Information..................................................................28
ARTICLE VII......................................................................................................29
7.1 Organization and Qualification......................................................................29
7.2 Authority; No Violation.............................................................................29
7.3 Required Filings and Consents.......................................................................29
7.4 Brokers.............................................................................................29
ARTICLE VIII.....................................................................................................29
8.1 Covenants of each Company and Parent................................................................29
8.2 Covenants of the Buyer..............................................................................35
8.3 Covenants of the Parent, Company and Buyer..........................................................36
ARTICLE IX.......................................................................................................36
9.1 Conditions to Obligations of the Buyer..............................................................36
9.2 Conditions to Obligations of the Company and Parent.................................................39
ARTICLE X........................................................................................................40
10.1 Termination of Agreement............................................................................40
10.2 Effect of Termination and Right to Proceed..........................................................41
ARTICLE XI.......................................................................................................41
11.1 Survival of Representations and Warranties..........................................................42
11.2 Indemnification by the Enviro-Safe and Parent.......................................................42
11.3 Indemnification by the Buyer........................................................................43
11.4 Notice and Opportunity to Defend....................................................................43
11.5 Limitations on Certain Indemnification Obligations..................................................45
11.6 Treatment of Indemnification Payments...............................................................46
ARTICLE XII......................................................................................................46
12.1 Tax Indemnity.......................................................................................46
12.2 Tax Returns.........................................................................................47
12.3 Cooperation, Audits; Tax Claims.....................................................................48
12.4 Tax Sharing Agreements..............................................................................48
12.5 Intentionally Omitted...............................................................................48
12.6 2008 Estimated Taxes................................................................................49
ARTICLE XIII.....................................................................................................49
13.1 Fees and Expenses...................................................................................49
13.2 Notices.............................................................................................49
13.3 Successors and Assigns..............................................................................50
13.4 Counterparts; Descriptive Headings; Variations in Pronouns..........................................50
13.5 Severability; Entire Agreement......................................................................50
13.6 Further Assurances..................................................................................50
13.7 Attorneys' Fees.....................................................................................51
13.8 Course of Dealing...................................................................................51
13.9 GOVERNING LAW.......................................................................................51
13.10 WAIVER OF JURY TRIAL................................................................................51
51
ASSET AND STOCK PURCHASE AGREEMENT
Asset and Stock Purchase Agreement (the "Agreement"), dated as of March 31,
2008, by and among Triumvirate Environmental, Inc., a Massachusetts corporation
("TEI" and together with one or more wholly-owned subsidiaries of TEI, "Buyer");
GS Enviro Services, Inc., a Delaware corporation ("Parent"), Enviro-Safe
Corporation, a Massachusetts corporation and a wholly-owned subsidiary of Parent
("Enviro-Safe"); and Enviro-Safe Corporation (NE), a Massachusetts corporation
and a wholly-owned subsidiary of Parent ("Enviro-Safe (NE)"; and, at times,
collectively with Enviro-Safe, the "Companies" and individually a "Company").
Parent owns 100% of the capital stock of Enviro-Safe and Enviro-Safe (NE),
each of which is an environmental management companies providing services to a
client base located in the Northeast region of the United States. Such services
and business include the provision of industrial waste, transportation,
distribution, recycling and disposal services; field services for its clients,
including remedial, industrial cleaning and other related services at their
respective sites and facilities; and the operation of a licensed transfer,
storage and disposal business at ▇▇▇▇▇▇ Street, Lowell, Massachusetts
(collectively, the "Business").
This Agreement sets forth the terms and conditions upon which Buyer will
(i) purchase from Enviro-Safe, and Enviro-Safe will sell to Buyer, substantially
all the assets of Enviro-Safe (other than the Retained Assets, as hereinafter
defined) including all such assets used by Enviro-Safe in the Business; and (ii)
purchase from Parent 100% of the issued and outstanding capital stock of
Enviro-Safe (NE), for the consideration provided herein.
In consideration of the foregoing, the mutual representations, warranties
and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties to
this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For the purposes of this Agreement, all capitalized words
or expressions used in this Agreement (including the Schedules and Exhibits
annexed hereto) shall have the meanings specified in this Article I, unless
otherwise defined herein (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Affiliate" means (i) in the case of an individual, the members of the
immediate family (including the individual's spouse and the parents, siblings
and children of the individual and/or the individual's spouse) and any Business
Entity that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, any of the
foregoing individuals, or (ii) in the case of a Business Entity, another
Business Entity or a person that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Business Entity.
"Acquired Assets" means collectively the Purchased Assets and the
Enviro-Safe Assets.
"Business Day" means any day, excluding Saturday, Sunday and any other day
on which commercial banks in Boston, Massachusetts, are authorized or required
by law to close.
"Business Entity" means any corporation, partnership, limited liability
company, trust or other domestic or foreign form of business association or
organization.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, and the regulations thereunder, and court
decisions in respect thereof, all as the same shall be in effect at the time.
"Charter" means the Certificate of Incorporation, Articles of
Incorporation or Organization or other organizational document of a corporation
or limited liability company or other Business Entity, as amended and restated
through the date hereof.
"Claim" means an action, suit, proceeding, hearing, investigation,
litigation, charge, complaint, claim or demand.
"Code" means the Internal Revenue Code of 1986, and the regulations
thereunder, published Internal Revenue Service rulings, and court decisions in
respect thereof, all as the same shall be in effect at the time.
"Compliance" or words similar meaning shall mean adherence, in all material
respects, to any and all Legal Requirements.
"Current Assets" means as of the Closing Date the sum, calculated in
accordance with GAAP on a combined basis, of the Companies' (i) cash and cash
equivalents, (ii) restricted cash, (iii) marketable securities, (iv) trade and
other accounts receivable, (v) inventories, (vi) prepaid expenses, and (vii)
other current assets (other than any balance in deferred income taxes or income
taxes receivable, Inter-Company Accounts and/or outstanding accounts receivable
of either Company greater than 120 days old as of a date sixty (60) days after
the Closing Date.
"Current Liabilities" means as of the Closing Date the sum, calculated in
accordance with GAAP on a combined basis, of the Companies' liabilities (other
than (i) accrued income taxes, (ii) any balance in deferred income taxes payable
or income tax receivable, (iii) Inter-Company Accounts, and (iv) reserves for
onsite or offsite clean-up or any other environmental liabilities), including
any accrued compensation payable, and obligations under capital equipment leases
and the current portion of the Vehicle Loans.
"Environmental Action" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, request for information, proceeding, Lien, notice of
Lien, consent order or consent agreement relating in any way to any
Environmental Law or any Environmental Permit, including, without limitation,
(a) any claim by any governmental or regulatory authority for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to any
Environmental Law and (b) any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials, damage to the environment or alleged injury
or threat of injury to human health or safety from pollution or other
environmental degradation.
"Environmental Law" means as applicable to the Business or the Companies,
any federal, state and local laws, statutes, ordinances, rules, regulations and
the like, as well as common law, relating to protection of human health or the
environment, relating to Hazardous Substances, relating to liability for or
costs of Remediation or prevention of Releases of Hazardous Substances or
relating to liability for or costs of other actual or future danger to human
health or the environment or relating to any wrongful death, personal injury or
property damage that is caused by or related to the presence, growth,
proliferation, reproduction, dispersal, or contact with any biological organism
or portion thereof, including molds or other fungi, bacteria or other
microorganisms or any etiologic agents or materials. The term "Environmental
Law" includes the following statutes, as amended, and in effect from time to
time up to the Closing Date, and any regulations promulgated pursuant thereto,
and any state or local statutes, ordinances, rules, regulations and the like
addressing similar issues: Massachusetts General Laws, Chapter 21E; the
Massachusetts Contingency Plan, 310 CMR 40.000 et seq; Massachusetts General
Laws, Chapter 21C, the Hazardous Waste Management Act and its implementing
regulations 310 CMR 30.00, et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating
to underground Storage Tanks); the Solid Waste Disposal Act; the Clean Water
Act; the Clean Air Act; the Toxic Substances Control Act; and any similar state
and local laws or by-laws, the rules, regulations and interpretations
thereunder, all as the same shall be in effect from time to time.
"Environmental Permit" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"Enviro-Safe (NE) Assets" means all assets, contracts and rights, real or
personal, tangible or intangible, owned, used by or accruing to the benefit of
Enviro-Safe (NE), and including all such assets, contracts and rights reflected
on the Individual Financial Statements of Enviro-Safe (NE) referred to in
Section 6.5(d) below.
"ERISA" means the Employee Retirement Income Security Act of 1974, and any
similar or successor federal statute, and the rules, regulations and
interpretations thereunder, all as the same shall be in effect at the time.
"ERISA Affiliate" means, for purposes of Title IV of ERISA, any trade or
business, whether or not incorporated, that together with Parent or either
Company, would be deemed to be a "single employer" within the meaning of Section
4001 of ERISA, and, for purposes of the Code, any member of any group that,
together with Parent or either Company, is treated as a "single employer" for
purposes of Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" shall mean any federal, state, regional, local or
foreign government, or any political subdivision of any of the foregoing, or any
court, agency or other entity, body, organization or group, exercising any
executive, legislative, judicial, quasi-judicial, regulatory or administrative
function of government.
"GS CleanTech" means GS CleanTech Corporation, a Delaware corporation.
"Hazardous Materials" includes but is not limited to any and all substances
or materials (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials or extremely hazardous wastes and regulated under any Environmental
Laws, including but not limited to petroleum and petroleum products, asbestos
and asbestos-containing materials, chlorinated solvents; polychlorinated
biphenyls, lead, lead-based paints, radon, radioactive materials, flammables and
explosives.
"Indebtedness" means all obligations, contingent or otherwise, whether
current or long-term, which in accordance with GAAP would be classified upon the
obligor's balance sheet as liabilities (other than deferred taxes) and shall
also include capitalized leases, guaranties, endorsements (other than for
collection in the ordinary course of business) or other arrangements whereby
responsibility is assumed for the obligations of others, including any agreement
to purchase or otherwise acquire the obligations of others or any agreement,
contingent or otherwise, to furnish funds for the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
"Independent Accountants" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or any successor
thereto or such other firm of independent accountants as are agreed upon by
Buyer and Parent.
"Inter-Company Accounts" means certain inter-company balances among Parent
and the Companies, and Parent and any other Affiliate of Parent, including,
without limitation, inter-company loans, accounts receivables and accounts
payable as of the Closing Date.
"IRS" means the Internal Revenue Service and any similar or successor
agency of the federal government administering the Code.
"Knowledge" or words of similar meaning shall mean, with respect to Parent
or a Company, (i) information ascertainable by a review of Parent's and each
Company's books and records and (ii) the actual knowledge of ▇▇▇▇▇ ▇. ▇▇▇▇▇,
after due diligence and inquiry of management of Parent and each Company, each
of whom has made reasonable and appropriate due inquiry.
"Lien" means, with respect to any asset, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim by a third party, title defect or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against assignor), any
filing of any financing statement as debtor under the Uniform Commercial Code or
comparable law of any jurisdiction and any agreement to give or make any of the
foregoing.
"Material Adverse Effect" means a material adverse impact or effect on (a)
the business, operations, assets, liabilities, condition or prospects (financial
or otherwise) of either of the Companies or the Companies and Parent as a whole,
(b) the ability of the Companies and/or Parent to perform their respective
obligations under any of the Purchase Documents, (c) the validity or
enforceability of any of the Purchase Documents or (d) the rights and remedies
of the Buyer under any of the Purchase Documents, provided, however, that any
such impact or effect les than $15,000 individually or less than $40,000 in the
aggregate for all such events, circumstances or other matters shall not be
considered a Material Adverse Effect.
"Necessary Permits" means all licenses, permits, Environmental Permits,
franchises, orders, approvals, accreditations, written waivers and other
governmental and other authorizations as are necessary in order to enable the
Companies (prior to Closing) and Buyer (after Closing) to continue to own,
operate and conduct the Business as currently conducted and proposed to be
conducted and to occupy and use their real and personal properties without
incurring any material liability.
"Net Working Capital" means the difference between the Current Assets and
Current Liabilities of the Companies, determined on a combined basis.
"Officer's Certificate" means a certificate signed in the name of a
corporation, partnership, association, trust or limited liability company by its
President, Chief Executive Officer, Treasurer, Chief Financial Officer, or, if
so specified, the Clerk, Secretary or officer appointed to execute on behalf of
the partnership, association, trust or limited liability company, acting in his
or her official capacity.
"Person" means any individual, firm, partnership, association, trust,
corporation, limited liability company, governmental body or other entity.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor
thereto.
"Predecessor" means any Person, if any, whose status and activities could
give rise to a claim against Buyer, Parent or a Company as successor in interest
to such Person.
"Purchase Documents" means this Agreement, the ▇▇▇▇ of Sale, the Assignment
Documents, the Stock Assignment and any other certificate, document, instrument,
stock power, or agreement executed in connection therewith.
"Release" means any release, issuance, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment or into or out of
any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground water, or property other than in compliance
with all Environmental Laws and Permits.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, with respect to any Person (a) any corporation,
association or other entity of which at least a majority in interest of the
outstanding capital stock or other Equity Securities having by the terms thereof
voting power under ordinary circumstances to elect a majority of the directors,
managers or trustees thereof, irrespective of whether or not at the time capital
stock or other equity securities of any other class or classes of such
corporation, association or other entity shall have or might have power by
reason of the happening of any contingency, is at the time, directly or
indirectly, owned or controlled by such Person, or (b) any entity (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly
at the date of determination thereof, has at least majority ownership interest.
For purposes of this Agreement, a Subsidiary of a Company shall include the
direct and indirect Subsidiaries of such Company.
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security, 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.
"Vehicle Loans" means the Companies' obligations under certain outstanding
loans incurred to finance certain motor vehicles, which loans are secured by
such motor vehicles.
"written," "in writing" or words of similar import includes any written
materials, emails or any other forms of written documentation or communication
(including any electronic form).
"YAGI" means YA Global Investments, LP.
"YAGI Debenture" means the Parent's $2,000,000 Convertible Debenture issued
to YAGI, dated January 11, 2008.
"YAGI/GS CleanTech Obligations" means any and all liabilities and
obligations of Parent or any Company to YAGI and/or GS CleanTech, including, but
not limited to, those liabilities and obligations entered into between Parent,
YAGI and GS CleanTech, and affiliated entities in January 2008, as described in
Parent's Form 8-K, dated January 25, 2008, and the following agreements attached
as exhibits thereto: a Stock Purchase Agreement by and between GS CleanTech and
Parent; the YAGI Debenture; a Global Guaranty Agreement, dated January 11, 2008
by and among Parent, GS CleanTech, YAGI and certain other entities named
therein; a Letter Agreement, dated January 11, 2008, between Parent and YAGI;
and an Amended and Restated Forbearance Agreement, among GS CleanTech, YAGI
certain other entities named therein; and any and all security agreements,
pledges, and other contractual agreements or obligations of the Parent or either
Company to or with YAGI, GS CleanTech and/or any Affiliate of YAGI or GS
CleanTech.
1.2 Other Defined Terms. For purposes of this Agreement, the following
terms have the respective meanings set forth in the section opposite each term:
Term .................. Section
---- -------
Agreed Amount.............. 11.4(b)
Agreement.................. Preamble
Allocation Schedules....... 4.2
Asset Payment.............. 4.1
Assignment Agreement....... 9.1(h)
Assignment Documents....... 9.1(h)
Assumed Liabilities........ 2.3
Basket Amount.............. 11.5(a)
▇▇▇▇ of Sale............... 9.1(h)
Business .................. Preamble
Buyer .................. Preamble
Buyer Indemnitees.......... 11.2
Buyer Losses............... 11.2
Cap .................. 1.5(b)
Cash Purchase Price........ 4.1
Claim Notice............... 1.4(a)
Claimed Amount............. 11.4(a)
Closing .................. 5.0
Closing Balance Sheets..... 4.3(b)
Closing Date............... 5.0
Closing Memorandum......... 9.1(u)
Closing Net Working Capital 4.3(b)
Company .................. Preamble
Company Indemnitees........ 11.3
Company Intellectual Property 6.12
Company Losses............. 11.3
Contested Amount........... 11.4(c)
Default .................. 6.14
Disclosure Schedules....... 6.0
EPA .................. 6.19
Employment Agreement....... 9.1(r)
Enviro-Safe ............... Preamble
Enviro-Safe (NE)........... Preamble
Enviro-Safe (NE) Stock..... 3.0
Estimated Net Working Capital 4.4(a)
Extensions ................ 8.1(q)
Hired Employee............. 8.2(a)
Indemnifying Party......... 11.4(a)
Indemnitees................ 11.3
Individual Financial Statements 6.5(d)
Large Customers............ 6.15
Large Suppliers............ 6.15
Legal Requirements......... 6.16
Notice of Disagreement..... 4.4(b)
Parent .................. Preamble
Parent Common Stock........ 6.2
Parent SEC Reports......... 6.5(a)
Parent Stockholder Approval 6.2
PCBs .................. 6.19
Plan .................. 6.18
Pre-Closing Tax Period..... 12.1(a)
Proposed Transaction....... 8.1(g)(A)
Purchased Assets........... 2.1
Response Notice............ 11.4(b)
Restricted Parties......... 8.1(f)
Restricted Period.......... 8.1(f)
Retained Assets............ 2.2
Retained Liabilities....... 2.3
SEC .................. 6.5(a)
Statement.................. 8.1(n)
Stock Assignment........... 9.1(n)
Stock Payment.............. 4.1
Straddle Period............ 12.1(b)
Surviving Representations and Warranties 11.1
Tax Claim.................. 12.3(b)
TEI .................. Preamble
ARTICLE II
PURCHASE AND SALE OF ASSETS OF ENVIRO-SAFE
2.1 Purchase of Assets. Upon the terms and subject to the conditions
contained in this Agreement, at the Closing, Enviro-Safe shall sell, assign,
transfer and convey to Buyer, and Buyer shall purchase, acquire and accept from
Enviro-Safe, all of Enviro-Safe's assets of every kind and description (the
"Purchased Assets") (other than those assets defined as "Retained Assets," as
such term is defined in Section 2.2 below). The Purchased Assets include,
without limitation, the following assets and properties of Enviro-Safe:
(a)......all machinery, equipment, processing equipment, computers,
fixtures, furniture and leasehold improvements and all motor vehicles and
all other tangible assets, including, without limitation those listed on
Schedule 2.1(a) hereto;
(b)......all inventories wherever located, including raw materials,
goods consigned to vendors or subcontractors, work in process, finished
goods and goods in transit
(c)......all trade and other accounts receivable (other than
Inter-Company Accounts);
(d)......all contracts, including contracts for the purchase of
materials, supplies and services and the sale of products and services,
real estate leases, equipment leases and licenses of Enviro-Safe, and any
other contract rights of Enviro-Safe, including without limitation, those
listed on Schedule 2.1(d) attached hereto (other than any that constitute
Retained Liabilities);
(e)......all books, records and other data, in written form, except
minute and stock record books, journals, ledgers and books of original
entry;
(f)......all goodwill, dealer and customer lists and all other sales
and marketing information, and all know-how, technology, drawings,
engineering specifications, bills of materials, software and other
intangible assets of Enviro-Safe;
(g)......all of Enviro-Safe's interest in patents, patent
applications, proprietary designs, copyrights, trade names (including the
name "Enviro-Safe" and all variants thereof), servicemarks, trademarks and
trademark applications, in each case together with the goodwill appurtenant
thereto, all federal, state, local and foreign registrations thereof, if
applicable, all common law rights thereto, and all claims or causes of
action for infringement thereof;
(h)......all permits (including, without limitation, all Environmental
Permits) licenses, orders, ratings and approvals of all federal, state,
local or foreign governmental or regulatory authorities or industrial
bodies which are held by Enviro-Safe, to the extent the same are
transferable;
(i)......all computer software, files, records and related
documentation;
(j)......all prepaid expenses as of the Closing Date;
(k)......all customer accounts and backlog as of the Closing Date;
(l) all marketable securities, deposits and other non-current assets;
(m)......all cash and cash equivalents and restricted cash of
Enviro-Safe as of the Closing Date; and
(n)......except for Retained Assets described in Section 2.2 below,
all other items of property, real or personal, tangible or intangible,
including without limitation all securities, corporate names, restrictive
and negative covenant agreements with employees and others, owned, used by
or accruing to the benefit of Enviro-Safe.
2.2 Retained Assets. Enviro-Safe will retain ownership only of the
following assets and contracts (collectively, the "Retained Assets"):
(a).....Enviro-Safe's minute and stock record books, journals, ledgers
and books of original entry;
(b)......Enviro-Safe's rights under this Agreement;
(c)......All accounts receivable of Enviro-Safe that are either (i)
written off from Enviro-Safe's books and records as of the Closing Date, or
(ii) more than 120 days past due as of a date sixty (60) days after the
Closing Date, provided that in either case any such accounts receivable are
excluded in calculating the Closing Net Working Capital; and
(d)......those specific assets and contracts identified on Schedule
2.2 attached hereto, and any other assets or contracts Buyer elects to
exclude at or prior to Closing; Schedule 2.2 may be supplemented or
modified by Buyer at or prior to Closing (to reflect any such additional
excluded assets or contracts determined in the course of Buyer's due
diligence or arising after the date of this Agreement).
2.3......Liabilities. Effective on and after the Closing Date, Buyer shall
assume and agree to pay, perform and discharge, as additional payment for the
purchase of the Purchased Assets, the following obligations and liabilities of
Enviro-Safe's and which will be expressly assumed by the Buyer at the Closing
(collectively, the "Assumed Liabilities"):
(a)......trade accounts payable of a fixed amount arising in the
ordinary course of business, which are unpaid as of the Closing Date;
(b)......accrued expenses (exclusive of Inter-Company Accounts,
accrued Taxes and reserves for environmental clean up costs and other
environmental liabilities) of a fixed amount arising in the ordinary course
of business, which are unpaid as of the Closing Date;
(c)......all of Enviro-Safe's obligations under those certain
contracts, equipment leases and real estate leases, set forth on Schedule
2.3(c) attached hereto (as updated by Buyer at or prior to Closing), to the
extent such obligations are by the terms of such contracts required to be
performed or paid at the Closing Date and relate to the Purchased Assets;
(d)......accrued compensation of Hired Employees of a fixed amount as
of the Closing Date; and
(e)......Vehicle Loans not to exceed $500,000 in the aggregate.
Notwithstanding the foregoing, Buyer shall not assume or agree to perform, pay
or discharge, and Enviro-Safe and Parent, jointly and severally, shall remain
unconditionally liable for, and shall pay and perform, all other obligations,
liabilities and commitments, existing or contingent, of Parent and Enviro-Safe,
including, without limitation, (i) any and all liabilities of Enviro-Safe with
respect to the Retained Assets; (ii) any and all liabilities with respect to any
federal, state or local Taxes required to be paid by Enviro-Safe or Parent or
with respect to the Purchased Assets or the Business conducted by Enviro-Safe
for any period ending on or before the Closing Date, or arising as a result of
the closing of the transactions contemplated hereby or any transactions with
YAGI or GS CleanTech; (iii) any and all liabilities arising out of the
termination of Enviro-Safe's insurance policies, employee benefit pension and
profit sharing plans and severance obligations; (iv) any and all liabilities
incurred by Enviro-Safe or Parent in connection with the negotiation, execution
or performance of this Agreement (including, without limitation, all legal,
accounting, brokers' finders and other professional fees and expenses); (v)
Inter-Company Accounts; and (vi) all obligations and liabilities for onsite and
offsite contamination; (vii) the YAGI/GS CleanTech Obligations; (vii) the
litigation listed on Schedule 6.21), and any claims, liabilities or judgments
entered thereunder and any litigation reported in the Parent SEC Report; and (x)
any and all other liabilities of Enviro-Safe or Parent that are incurred and
arise subsequent to the Closing Date (collectively, the "Retained Liabilities").
ARTICLE III
PURCHASE AND SALE OF ENVIRO-SAFE (NE) STOCK
Upon the terms and subject to the conditions set forth in the Agreement and
on the basis of the representations, warranties, covenants, agreements,
undertaking and obligations contained herein, at the Closing, Parent agrees to
sell to Buyer and Buyer agrees to purchase from Parent all of the issued and
outstanding shares of Enviro-Safe (NE) capital stock (the "Enviro-Safe (NE)
Stock"), free and clear of any and all Liens, for the consideration set forth in
Section 4.1 hereof, such that subsequent to the Closing Date, Buyer shall own
100% of all of the Enviro-Safe (NE) Stock.
ARTICLE IV
PURCHASE PRICE; ALLOCATION
4.1 Purchase Price. The aggregate "Purchase Price" for the Enviro-Safe
(NE) Stock and the Purchased Assets shall be $5,000,000, which shall be
allocated for the purchase of the Enviro-Safe (NE) Stock (the "Stock Payment")
and for the purchase of the Purchased Assets (the "Asset Payment") in the
amounts set forth in Schedule 4.1, subject to adjustments as provided in this
Agreement (the "Cash Purchase Price"), plus, for the Purchased Assets, Buyer's
assumption of the Assumed Liabilities. At Closing, Buyer shall pay the Cash
Purchase Price to Parent by wire transfer of immediately available federal funds
and assume the Assumed Liabilities.
4.2 Use of Proceeds. At Closing, Parent and Enviro-Safe will apply the Cash
Purchase Price (x) to pay and satisfy in full, and to obtain discharges of, all
Liens securing the following: (i) all YAGI/CleanTech Obligations; (ii) all
indebtedness of Parent and/or the Companies to TD BankNorth and (iii) all other
outstanding debentures of Parent; and (y) to pay any accrued and unpaid Tax
liabilities as of the Closing Date.
4.3......Allocation of Purchase Price.
(a)......Buyer and Parent shall agree on an allocation of the Purchase
Price to be set forth on Schedule 4.3(a) attached hereto on or before April
30, 2008. If Buyer and Parent are not able to agree upon the allocation of
the Purchase Price by April 30, 2008, Buyer and Parent shall submit the
allocation to the Independent Accountant for resolution. The report and
determination of the Independent Accountant shall be binding for purposes
of this Agreement and the costs and expenses thereof shall be borne equally
by Buyer and Parent.
(b)......The Purchase Price shall be allocated among the Purchased
Assets and the Enviro-Safe (NE) Assets in accordance with their respective
fair market values and in compliance with Section 1060 of the Code.
(c)......Buyer and Parent shall file all Tax Returns (including
amended Tax Returns and claims for refunds) in a manner consistent with the
Allocation Schedule, as adjusted, and shall not take any position
inconsistent with the allocations set forth in the Allocation Schedule, as
adjusted, except as otherwise required by law; provided, however, that the
Tax basis in the Acquired Assets may exceed the total amount allocated in
order to reflect Buyer's capitalized transaction costs not included in the
Purchase Price or the Assumed Liabilities and Parent's amount realized may
be less than the total amount allocated in order to reflect Parent's
transaction costs.
4.4 Adjustment to Asset Purchase Price.
(a)......Estimated Net Working Capital. Not more than ten (10) days
prior to the Closing Date, Parent and the Companies shall prepare and
deliver to Buyer an estimate of the Net Working Capital as of the Closing
Date (the "Estimated Net Working Capital"). In the event that the Estimated
Net Working Capital is equal to or less than $500,000, then Parent shall
cause a sufficient amount of the Companies' account payables to be paid in
full at or prior to the Closing such that at Closing the Estimated Net
Working Capital will not be less than $500,000. At Closing Parent shall
provide Buyer with documented evidence of the payment of such accounts
payable pursuant to the foregoing sentence.
(b)......Closing Net Working Capital. Within sixty (60) days following
the Closing Date, Buyer shall deliver to Parent combined and combining
balance sheets of the Companies (in their final and binding form, the
"Closing Balance Sheets") as of the Closing Date and a supplemental
schedule setting forth the Net Working Capital of the Companies as of the
Closing Date, determined in a manner consistent with the provisions of the
Agreement (the "Closing Net Working Capital"). The Closing Balance Sheets
and determination of Closing Net Working Capital shall include all known
adjustments required in a year-end closing of the books and shall be
prepared in accordance with GAAP consistent with past practices. Parent and
Enviro-Safe shall cooperate with Buyer as reasonably requested in
connection with the preparation of the Closing Balance Sheets and the
determination of the Closing Net Working Capital. The determination of the
Closing Balance Sheets and the Closing Net Working Capital shall become
final and binding upon the parties ten (10) days following Parent's receipt
thereof, unless Parent shall give written notice of its disagreement (a
"Notice of Disagreement") to Buyer prior to such date. Any Notice of
Disagreement shall specify in reasonable detail the nature and dollar
amount of any disagreement so asserted. If a timely Notice of Disagreement
is received by Buyer, then the Closing Balance Sheets and the Closing Net
Working Capital (as revised in accordance with clause (x) or (y) below)
shall become final and binding upon the parties on the earliest of (x) the
date the parties resolve in writing any differences they have with respect
to the matters specified in the Notice of Disagreement or (y) the date all
matters in dispute are finally resolved by the Independent Accountant.
During the thirty (30) days following delivery of a Notice of Disagreement,
the parties shall seek in good faith to resolve in writing any differences
that they may have with respect to the matters specified in the Notice of
Disagreement. Following delivery of a Notice of Disagreement, Parent and
its agents and representatives shall be permitted to review Buyer's and its
representatives' working papers relating to the Notice of Disagreement. At
the end of the thirty (30)-day period referred to above, the parties shall
submit to the Independent Accountant for review and resolution of all
matters (but only such matters) which remain in dispute and which were
properly included in the Notice of Disagreement, and the Independent
Accountant shall make a final determination of the Closing Balance Sheets
and the Closing Net Working Capital, to the extent such amounts are in
dispute, in accordance with the guidelines and procedures set forth in this
Agreement. In resolving any matters in dispute, the Independent Accountant
may not assign a value to any item in dispute greater than the greatest
value for such item assigned by Buyer, on the one hand, or Enviro-Safe and
Parent, on the other hand, or less than the smallest value for such item
assigned by Buyer, on the one hand, or Parent, on the other hand. The
Independent Accountant's determination will be based solely on
presentations made by Buyer and Parent in accordance with the guidelines
and procedures set forth in this Agreement (i.e., not on the basis of an
independent review). The determination of the Closing Balance Sheets and
the Net Working Capital shall become final and binding on the parties on
the date the Independent Accountant delivers its final resolution in
writing to the parties (which final resolution shall be delivered not more
than forty-five (45) days following submission of such disputed matters).
The fees and expenses of the Independent Accountant, in making the final
determination of the Closing Balance Sheets and the Closing Net Working
Capital, shall be shared equally by Buyer and the Parent.
(c)......Post-Closing Adjustment. If the Closing Net Working Capital
is greater than $0.00, then the Purchase Price shall be increased by such
excess on a dollar for dollar basis. In the event the Closing Net Working
Capital is less than $0.00, then the Purchase Price shall be decreased by
such deficiency on a dollar for dollar basis. Any adjustment to the
Purchase Price shall be made within three (3) Business Days after the
determination of the Closing Net Working Capital becomes final and binding
on the parties, by wire transfer to Buyer or Parent, as the case may be, in
immediately available funds of the amount of such difference. Buyer shall
be entitled to offset and deduct from any payment due Parent under this
Section 4.4(c) any amounts due Buyer under any other provision of this
Agreement or any other Purchase Document, including any amounts for which
Buyer is entitled to indemnification under Articles XI and XII below.
ARTICLE V
CLOSING
The closing of the transactions described herein (the "Closing") shall take
place at 10:00 a.m., Eastern time, on a date to be specified by Parent, Buyer
and the Companies, which shall be no later than the fifth Business Day after
satisfaction or waiver of the conditions set forth in Article IX (other than
delivery of items to be delivered at the Closing and other than satisfaction of
those conditions that by their nature are to be satisfied at the Closing, it
being understood that the occurrence of the Closing shall remain subject to the
delivery of such items and the satisfaction or waiver of such conditions at the
Closing), at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, The Prudential
Tower, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place
or time as the parties hereto may mutually agree. The date and time at which the
Closing actually occurs is hereinafter referred to as the "Closing Date."
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND PARENT
Each Company and Parent, jointly and severally, hereby represents and
warrants to the Buyer as of the date hereof, that the statements contained in
this Article VI are true and correct as the date hereof and the Closing Date,
except as set forth in the Disclosure Schedules attached hereto (the "Disclosure
Schedules"). The Disclosure Schedules shall be arranged by Schedules
corresponding to the numbered and lettered sections and subsections contained in
this Article VI, and the disclosures in any section or subsections of the
Disclosure Schedules shall qualify other sections and subsections in this
Article VI only to the extent it is readily apparent from a reading of the
disclosure that such disclosure is applicable to such other sections and
subsections.
6.1 Organization and Qualification. Each of the Companies and Parent
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation. Each of the Companies and Parent has
full power and authority to own, use and lease its properties and to conduct its
business as such properties are owned, used or leased and as such business is
currently conducted and as it is proposed to be conducted. The copies of each
Company's Charter and By-Laws, as amended to date, certified by its Secretary
and delivered to the Buyer's counsel prior to the Closing, are true, complete
and correct. The Parent and each Company is qualified to do business as a
foreign corporation and is in good standing in the jurisdictions listed on
Schedule 6.1, which include all jurisdictions in which it owns or leases
property or maintains inventories or where the conduct of its business would
require such qualification, except where such failure to qualify would not be
expected to result in a Material Adverse Effect.
6.2 Authority; No Violation. Each Company and Parent has all requisite
corporate power and authority to enter into this Agreement, including, without
limitation, Parent Stockholder Approval, to carry out the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by each Company and Parent has been duly and validly authorized and approved by
all necessary corporate action, including Parent Stockholder Approval, and
Parent has provided Buyer an Officer's Certificate evidencing such approvals.
This Agreement constitutes the legal and binding obligation of each of the
Companies and Parent, enforceable against each in accordance with its terms,
except that the enforceability hereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding may be brought. The affirmative vote by, or written consent of, the
holders of a majority of the issued and outstanding common stock of Parent
("Parent Common Stock") on the record date for a meeting of Parent's
stockholders or for written consents executed by Parent's stockholders, are the
only votes or consents of the holders of any classes or series of Parent's
capital stock or other securities necessary for the approval of this Agreement
and the transactions contemplated hereby ("Parent Stockholder Approval"). The
entering into of this Agreement by each of the Companies and Parent does not,
and the consummation by each of the Company and Parent of the transactions
contemplated hereby, including, without limitation, the transfer of the
Purchased Assets to the Buyer by Enviro-Safe, and the sale and assignment of the
Enviro-Safe (NE) stock from Parent to Buyer, will not violate the provisions of
(a) any applicable federal, state, local or foreign laws; (b) each entity's
Charter or by-laws; or (c) any provision of, or result in a default or
acceleration of any obligation under, or result in any change in the rights or
obligations of Parent or either Company or under, any Lien, contract, agreement,
license, lease, instrument, indenture, order, arbitration award, judgment, or
decree to which Parent or either Company is a party or by which any of them is
bound, or to which any property of Parent or either Company is subject.
6.3 Authorized and Outstanding Stock. The authorized and issued capital
stock of each Company is set forth on Schedule 6.3 attached hereto. Enviro-Safe
(NE) does not have any treasury stock. Parent is the sole record and beneficial
owner of all of the Enviro-Safe (NE) Stock, and none of the shares of
Enviro-Safe (NE) Stock are subject to, or were issued in violation of, any
purchase option, call option, right of first refusal or preemptive right,
subscription right or any similar right. All of the shares of Enviro-Safe (NE)
Stock were duly authorized, and are fully paid and no assessable. There are no
options, warrants or other agreements or rights to purchase any shares of
capital stock or other securities of Enviro-Safe (NE) authorized, issued or
outstanding, nor is Enviro-Safe (NE) obligated in any other manner to issue any
shares of its capital stock or other securities, or any options, warrants or
other rights to acquire such securities. There are no voting trusts, voting
commitments, proxies or other agreements or understandings to which the Parent
or Enviro-Safe (NE) is a party with respect to the voting of capital stock of
Enviro-Safe (NE) or the disposition by Parent of the Enviro-Safe (NE) Stock.
6.4 Subsidiaries. Neither Company has any Subsidiaries.
6.5 SEC Filings; Financial Statements
(a) .... Parent or its predecessors in interest have filed all
registration statements, forms, reports and other documents required to be
filed by Parent with the Securities Exchange Commission (the "SEC") over
the past five (5) years. All such registration statements, forms, reports
and other documents (including those that Parent may file after the date
hereof until the Closing) are referred to herein as the "Parent SEC
Reports." The Parent SEC Reports (i) were or will be filed on a timely
basis or within applicable extension periods; (ii) at the time filed,
complied, or will comply when filed, as to form in all material respects
with the applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Parent SEC Reports; and (iii) did not or will
not at the time they were or are filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated in
such Parent SEC Reports or necessary in order to make the statements in
such Parent SEC Reports, in the light of the circumstances under which they
were made, not misleading, except to the extent corrected prior to the date
of this Agreement by a subsequently filed Parent SEC Report. Neither of the
Companies is subject to the reporting requirements of Section 13(a) or
Section 15(d) of the Exchange Act.
(b) .....Each of the consolidated financial statements (including, in
each case, any related notes and schedules) contained or to be contained in
the Parent SEC Reports at the time filed (i) complied or will comply as to
form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, (ii)
were or will be prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the
notes to such financial statements or, in the case of unaudited statements,
as permitted by the SEC on Form 10-Q or Form 8-K under the Exchange Act)
and (iii) fairly presented or will fairly present in all material respects
the consolidated financial position of Parent and the Companies as of the
dates indicated and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments.
(c)......Parent maintains disclosure controls and procedures required
by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure controls
and procedures are effective to ensure that all material information
concerning Parent is made known on a timely basis to the individuals
responsible for the preparation of the Parent's filings with the SEC and
other public disclosure documents. Parent is in compliance in all material
respects with the applicable listing and other rules and regulations with
the stock market or exchange on which shares of Parent Common Stock are
listed for trading and does not anticipate that shares of Parent Common
Stock will be delisted by such stock market or exchange in the foreseeable
future. Parent has not received any notice, other than as already publicly
disclosed, regarding the possible delisting of shares of Parent Common
Stock from the securities exchange on which they are principally listed.
(d)......Attached hereto as Schedule 6.5(d) are the separate audited
consolidating financial statements of Parent and each Company as of
December 31, 2005, 2006 and 2007 and for the fiscal years then ended, and
their unaudited separate consolidating financial statements as at the end
of the months of January and February, 2008, and for the months then ended
(together with any additional financial statements provided by Parent to
Buyer pursuant to Section 8.1(t) below, collectively, the "Individual
Financial Statements"). Each of the Individual Financial Statements
complies and will comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto (ii) were and will be prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved and (iii) fairly presents and will fairly present in all material
respects the financial positions of each such entity as at the dates
indicated and the results of its operation and cash flow for the periods
indicated, except that unaudited interim financial statements were or are
subject to normal recurring year end adjustments.
6.6......Absence of Undisclosed Liabilities. Except as set forth in the
Parent SEC Reports filed within twelve (12) months of the date hereof and in
Schedule 6.6 attached hereto, there are no liabilities of Parent or either
Company, whether accrued, absolute, contingent or otherwise (including, without
limitation, liabilities as guarantor or otherwise with respect to obligations of
any other Person, or liabilities for Taxes due or then accrued or to become
due), except for liabilities which have arisen in the ordinary course of
business of such Company since December 31, 2007.
6.7......Absence of Certain Changes. Except as otherwise disclosed in
Schedule 6.7 attached hereto or in any Parent SEC Report filed prior to the date
of execution of this Agreement, since December 31, 2007 there has not been,
except as would not reasonably be expected to have a Material Adverse Effect on
Parent:
(a)......any change in the business, operations, assets, liabilities,
or conditions (financial or otherwise) of Parent or any Company, that, by
itself or in conjunction with all other such changes, not arising in the
ordinary course of business that involves more than $25,000;
(b)......any obligation or liability incurred by Parent or a Company,
other than obligations and liabilities incurred in the ordinary course of
business for an amount not more than $10,000 in each case or $25,000 in the
aggregate;
(c)......any Lien placed on any of assets of Parent or a Company
(including, without limitation, the Purchased Assets) which remains in
existence on the date hereof;
(d)......any contingent liabilities incurred by Parent or a Company
with respect to the obligations of any other Person that would result in a
Material Adverse Effect;
(e)......any purchase, sale, lease, assignment, transfer or other
disposition, or any agreement or other arrangement for the purchase, sale,
lease, assignment, transfer or other disposition, of any part of Parent's
or a Company's properties or assets, other than purchases for and sales
from inventory for fair consideration in the ordinary course of business,
except for fixed assets purchased or other capital expenditures made in
amounts not exceeding $10,000 for any single item and $25,000 in the
aggregate for all such items;
(f)......any damage, destruction or loss to property or assets,
whether or not covered by insurance having a Material Adverse Effect;
(g)......any labor trouble or claim of unfair labor practices
involving a Company; any material change in the employment contracts of or
compensation payable or to become payable by a Company to any of its officers,
directors or employees or any bonus payment or arrangement made to or with any
of such officers, directors or employees or any change in coverage or benefits
available under any Plan described in Section 6.18;
(h)......any change with respect to a Company's management or
supervisory personnel;
(i)......any material obligation or liability incurred by Parent or a
Company with respect to any loan, advance or commitment to lend by any
bank, financial institution or institutional lender to any of the officers,
directors, employees or stockholders of a Company or to any other Person;
or any material loans or advances made by the Company to any officers,
directors, employees or stockholders of a Company, except for normal
compensation, professional fees and expense allowances payable to officers
and directors;
(j)......any contracts, licenses, leases or agreements entered into by
a Company which are outside the ordinary course of business or which
obligate a Company for more than $10,000 in any one case or more than
$25,000 in the aggregate;
(k)......any recapitalization or reorganization;
(l)......any amendment or other change (or any authorization to make
such an amendment or change) to the Parent's or a Company's Charter or
by-laws, except as required in connection with the consummation of the
transactions contemplated hereby;
(m)......any postponement or delay in payment of any accounts payable
or other liability of a Company except in the ordinary course of business
consistent with prior practices;
(n)......any cancellation, waiver, compromise or release of any right
or claim either involving more than $50,000 or outside the ordinary course
of business consistent with prior practices; or
(o)......any cancellation, termination, modification, or acceleration
by any party to any contract, license, lease or agreement involving more
than $50,000 to which any of a Company is a party or by which it is bound;
or
(p)......any other occurrence, action, failure to act or transaction
involving a Company that could reasonably be expected to have a Material
Adverse Effect on either Company, other than transactions in the ordinary
course of business consistent with prior practices.
6.8......Title, Sufficiency and Condition of the Acquired Assets;
Enviro-Safe (NE) Stock. Except as set forth on Schedule 6.8 attached hereto,
each Company has good and marketable title to, or a valid leasehold interest in,
all of its assets, free and clear of all liens and free of any material
infractions or material non-compliance with applicable laws. Parent has good and
marketable title to the Enviro-Safe (NE) Stock, free and clear of all Liens, and
free of any material infractions or non-compliance with applicable laws. The
sale and delivery of the Purchased Assets and the Enviro-Safe (NE) Stock to
Buyer pursuant hereto shall vest in Buyer good and marketable title thereto,
free and clear of any and all Liens, other than as disclosed in Schedule 6.8
hereto or as may be created by Buyer. Each Company owns or leases all real,
personal, tangible and intangible property and assets necessary for the conduct
of the Business as are presently conducted and as proposed to be conducted by
it, and all such property and assets are included in the Acquired Assets. All
tangible properties and assets owned or leased by each Company, (including,
without limitation, the Acquired Assets) are in good operating condition and
repair, ordinary wear and tear excepted.
6.9...... Real Estate.
(a)......
(i) Schedule 6.9(a) attached hereto lists and describes
briefly the real property owned by Enviro-Safe (NE). With respect
to each such real property owned by Enviro-Safe (NE): (i) there
are no pending or, to the Knowledge of Parent and Enviro-Safe
(NE), threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property; (ii) the legal
description for the parcel contained in the deed thereof provided
to Buyer describes such parcel fully and adequately; (iii) to the
Knowledge of Parent and Enviro-Safe (NE), the buildings and
improvements thereon are located within the boundary lines of the
described parcels of land, are prior existing non-conforming
structures and as such are not in violation of applicable zoning
and building laws and ordinances, and do not encroach on any
easement which may burden the land in any manner that materially
impairs or interferes with its current use or violates any
applicable Necessary Permit; (iv) to the Knowledge of Parent and
each Company, the use thereof for the Business is in Compliance
with all building, zoning and other applicable laws and (iv), to
the Knowledge of Parent and Enviro-Safe (NE), the land does not
serve any adjoining property for any purpose inconsistent with
the use of the land. Enviro-Safe (NE) has good, clear record and
marketable title to all such real property owned by it, free and
clear of all Liens and encumbrances that could materially or
adversely interfere with the use thereof for the conduct of the
Business as now conducted or as required for Compliance with all
Necessary Permits applicable to such real property.
(ii) Enviro-Safe does not own any real property.
(b)......Schedule 6.9(b) lists and describes all real property leased
or subleased to each Company. With respect to each such lease and sublease:
(i) correct and complete copies thereof have been delivered to the Buyer;
(ii) the lease or sublease is legal, valid binding, enforceable, and in
full force and effect and will continue to be so on identical terms
following the consummation of the transactions contemplated hereby; and
(iii) no party to the lease or sublease is in breach or default thereunder.
Each Company has good and marketable leasehold interests in, and enjoys
peaceful and quiet possession of, all of the real property described in
each lease and sublease set forth on Schedule 6.9(b), there are no pending
disputes thereunder, and, to the Knowledge of each of the Companies and
Parent, they have not received any written notices of default or
cancellation thereof. All necessary government approvals required of each
Company as tenant with respect to such leased property have been obtained,
all necessary filings or registrations therefore have been made, and there
have not been, to the Knowledge of each Company and Parent, any written
notices of cancellation thereof and there are no outstanding disputes
thereunder. To the Knowledge of each Company and Parent, the owner or
lessor of each such leased property has all necessary governmental
approvals required of it to own and operate such leased property. Each
Company has performed all obligations required to be performed by it under
such leases and all of such leased or subleased real property, and all
equipment and fixtures on or serving such leased or subleased real
property, are in good operating condition and repair, ordinary wear and
tear excepted.
(c)......No work has been performed or is in progress at, and no
materials have been furnished to, any of the Companies' leased or owned
real property by or on behalf of Parent or either Company which will not be
paid for as of the Closing Date and therefore might give rise to Liens
against such property or any portion thereof.
6.10.....Accounts Receivable. All of the accounts receivable of each
Company are properly reflected on its books and records and are, subject to the
allowances for doubtful accounts set forth therein, valid and enforceable
claims, and subject to no set-off or counterclaim and are collectible in such
amounts in the ordinary course of business. No Company has any accounts
receivable or loans or notes receivable from any Affiliates or from any of its
officers, directors, consultants, employees, agents or stockholders, except as
set forth on Schedule 6.10 respectively.
6.11.....Inventories. All of the inventories of each Company can be used or
consumed in the ordinary course of business as now conducted. Since December 31,
2007, except as set forth on Schedule 6.11, there has been no change in the
amount of such inventory of each Company except for changes as a result of the
material purchase and sale of, adjustment to, or consumption of inventory in the
ordinary course of business consistent with prior practice, including, but not
limited to, established seasonal patterns.
6.12.....Intellectual Property. All patents, patent applications,
proprietary designs, copyrights, software, trade names, servicemarks, trademarks
and trademark applications which are owned by or licensed to each Company are
listed in Schedule 6.12 attached hereto (collectively, "Company Intellectual
Property"). To each Company's and Parent's Knowledge, none of the Company
Intellectual Property violates or will violate any license or infringes or will
infringe any intellectual property rights of any other party. Other than with
respect to commercially available software products under standard end-user
object code license agreements, there are no outstanding options, licenses,
agreements, claims, encumbrances or shared ownership interests of any kind
relating to the Company Intellectual Property, nor is each Company bound by or a
party to any options, licenses or agreements of any kind with respect to the
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any other Person.
Neither Company has received any communications alleging that such Company has
violated or, by conducting the Business, would violate any of the patents,
trademarks, service marks, tradenames, copyrights, trade secrets, mask works or
other proprietary rights or processes of any other Person. Except as set forth
on Schedule 6.12 (which matters do not in the aggregate have a Material Adverse
Effect), each Company has obtained and possesses valid licenses to use all of
the software programs present on the computers and other software-enabled
electronic devices that it owns or leases or that it has otherwise provided to
its employees for their use in connection with the Business and which are part
of the Acquired Assets. The Company Intellectual Property constitutes all of the
intellectual property that is material to the conduct of the Business as now
conducted or proposed to be conducted. All software used by each Company is used
in accordance with all applicable contracts or licenses. Each Company has paid
all amounts required to be paid in connection with all software used by such
Company.
6.13.....Trade Secrets and Customer Lists. Except as disclosed on Schedule
6.13, each Company has the right to use, free and clear of any Claims or rights
of any other Person, all trade secrets and customer lists required for or used
in the development or marketing of all services and products being sold by it,
and all of such trade secrets and customer lists of Enviro-Safe shall be
transferred to Buyer as part of the Purchased Assets. Any material payments
required to be made by either Company or Parent for the use of such trade
secrets or customer lists are described in Schedule 6.13 attached hereto. To the
Knowledge of each Company and Parent, neither Company is making an unlawful or
wrongful use of any confidential information or trade secrets of any other
Person, including without limitation any former employer of any present or past
employee of either Company. Except as described on Schedule 6.13, no officer,
director or employee of either Company is a party to any non-competition or
confidentiality agreement with any Person other than such Company.
6.14.....Contracts. Except for contracts, commitments, leases, licenses,
Plans and agreements described in Schedule 6.7, 6.14 or 6.18 attached hereto,
each Company is not a party to or subject to any written, and to the Knowledge
of Parent and each Company, any oral:
(a)......plan or contract regarding or providing for bonuses,
pensions, options, stock purchases, deferred compensation, severance
benefits retirement payments, profit sharing, stock appreciation,
collective bargaining or the like, or any contract or agreement with any
labor union;
(b)......employment or consulting contract or contract for personal
services not terminable at will by such Company without penalty to such
Company;
(c)......contract or agreement for the purchase of any commodity,
product, material, supplies, equipment or other personal property, or for
the receipt of any service, other than purchase orders entered into in the
ordinary course of business for less than $10,000 each and which in the
aggregate do not exceed $50,000;
(d)......contract or agreement for the purchase or lease of any fixed
asset, whether or not such purchase or lease is in the ordinary course of
business, for a price in excess of $10,000;
(e)......contract or agreement with any sales agent, distributor of
products of such Company;
(f)......contract or agreement concerning a partnership or joint
venture with one or more Persons;
(g)......confidentiality agreement or any non-competition agreement or
other contract or agreement containing covenants limiting such Company's
freedom to compete in any line of business or in any location or with any
Person;
(h)......license agreement (as licensor or licensee) (other than
shrink-wrap licenses);
(i)......contract or agreement with either a stockholder or any
present or former officer, director, consultant, agent or stockholder of
such Company or with any Affiliate of any of them;
(j)......loan agreement, indenture, note, bond, debenture or any other
document or agreement evidencing a capitalized lease obligation or
Indebtedness to any Person;
(k)......agreement of guaranty, indemnification, or other similar
commitment with respect to the obligations or liabilities of any other
Person (other than lawful indemnification provisions contained in the
Charters and by-laws of such Company; or
(l)......agreement under which the consequences of a default or
termination would have a Material Adverse Effect.
Copies of all written contracts, commitments, plans, leases, licenses and
agreements have been provided or will be made available to Buyer not later than
April 1, 2008, and all such copies are true, correct and complete and have been
subject to no amendment, extension or other modification as of the date hereof,
except such as are described in any of Schedules 6.7, 6.14 or 6.18. Except as
listed and described in Schedule 6.14, to the Knowledge of each Company and
Parent, neither Parent, any Company or any other Person, is in default under any
such contract, commitment, plan, lease, license or agreement described in
Schedule 6.14 (a "Default" being defined for purposes hereof as an actual
default or event of default or the existence of any fact or circumstance which
would, upon receipt of notice or passage of time, constitute a default). Except
as set forth in Schedule 6.14, to the Knowledge of Parent and each Company, no
consent, permit, license, authorization or approval form, or filing or
registration with, or the giving of notice to, any public body or authority, or
other person or entity (including, without limitation, any party to any real
property lease, capital lease, agreement or contract), is required to be
obtained or made in connection with the execution, delivery and performance by
Parent or the Company of this Agreement or any other agreement, document
instrument or certificate to be delivered by or on behalf of Parent or the
Company in connection therewith.
6.15.....Customers. Schedule 6.15 attached hereto sets forth (i) the twenty
(20) largest customers of each Company (determined by gross revenue) for the
period from January 1, 2005 to December 31, 2007 (together with ▇▇▇▇▇'▇
Greenhouses, Inc., the "Large Customers") and (ii) the ten (10) largest
suppliers of each Company (the "Large Suppliers") during such period. Except as
set forth on Schedule 6.15, none of the Large Customers or Large Suppliers have
canceled or otherwise terminated, or, to the Knowledge of each Company and
Parent threatened to cancel or otherwise terminate, their relationship with the
Company or given Parent or any Company written notice of its intent to decrease
materially its usage or purchase of the services or products of any Company.
Since December 31, 2007, the Companies have not transferred or assigned all or
any portion of the services provided to any Large Customer to any of their
Affiliates or any third party.
6.16.....Necessary Permits; Compliance with Laws.
(a)......Except as disclosed in Schedule 6.16 and except where the
failure to have such Necessary Permit does not individually or in the
aggregate constitute a Material Adverse Effect, each Company has all
Necessary Permits, and is in Compliance with any and all recordkeeping,
sampling, assessment, monitoring and document filing requirements of the
same. With respect to each Necessary Permit, (i) the name of the holder of
such Necessary Permit; (ii) the date of registration; (iii) the expiration
date; and (iv) the registration number is set forth on Schedule 6.16(a)
attached hereto. No registration, filing, application, notice, transfer,
consent, approval, order, qualification, waiver or other action of any kind
is required by virtue of the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby to effect the
transfer to the Buyer of such Necessary Permits that are transferable under
applicable law, except as set forth on Schedule 6.16. Each Company is in
Compliance with the terms and conditions of all Necessary Permits.
(b)......Except as set forth on Schedule 6.16, or in Section 6.19
below as to Environmental Matters, each Company has conducted and is
conducting the Business in Compliance with applicable federal, state, local
and foreign laws, statutes, ordinances, regulations, rules or orders or
other requirements of any governmental, regulatory or administrative agency
or authority or court or other tribunal relating to it (including, but not
limited to, any law, statute, ordinance, regulation, rule, order or
requirement relating to securities, properties, business, products,
advertising, zoning, sales or employment practices, immigration, terms and
conditions of employment, wages and hours, safety, occupational safety,
health or welfare conditions relating to premises occupied, product safety
and liability or civil rights) ("Legal Requirement"). To the Knowledge of
Parent and each Company, no Company is charged with or under investigation
with respect to, any possible material violation of any applicable Legal
Requirement relating to any of the foregoing in connection with the
Business. Each Company, each Company has filed all reports required to be
filed with any federal, state or local governmental, regulatory or
administrative agency or authority, except where the failure to do so
individually or in the aggregate would not have a Material Adverse Effect.
6.17.....Taxes.
(a)......Parent and each Company 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 Parent or any Company have been paid (whether
or not shown on any Tax Return). Neither Parent nor any Company currently
is the beneficiary of any extension of time within which to file any Tax
Return. No Claim has ever been made by an authority in a jurisdiction where
Parent or either Company does not file Tax Returns that it is or may be
subject to the imposition of any Tax by that jurisdiction. Each Company has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee. Neither of the
Companies nor Parent is aware of any dispute or Claim concerning any
liability for Taxes of Parent or either Company. Neither Parent nor any
Company has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency.
(b)......Parent has furnished to Buyer true and complete copies of (i)
all Tax Returns of Parent and each Company, including any such Tax Returns
filed or included in any consolidated Tax Returns of any other Affiliate of
Parent, and (ii) all written communications relating to any such Tax
Returns or to any deficiency or claim proposed and/or asserted with respect
thereto, irrespective of the outcome of such matter. There are no pending
audits of any such Tax Returns.
(c) Except as set forth in Schedule 3.17(c), neither Parent nor either
Company (i) is or has ever been a partner in a partnership or an owner of
an interest in an entity classified or treated as a partnership for federal
income Tax purposes, (ii) has executed or filed with the Internal Revenue
Service any consent to have the provisions of Section 341(f) of the Code
apply to it, (iii) is not subject to Section 999 of the Code, (iv) is a
passive foreign investment company as defined in Section 1296(a) of the
Code, (v) is a party to an agreement relating to the sharing, allocation,
or payment of, or indemnity for, Taxes, (vi) has been a United States real
property holding corporation within the meaning of Section 897(c)(1)(A)(ii)
of the Code, (vii) has any liability for the Taxes of any Person or
Business Entity under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), including as a transferee or
successor, by contract, or otherwise, and (viii) has made any payments, is
obligated to make any payments, or is party to any agreement that could
obligate it to make any payments, including as a result of the transactions
completed by this Agreement, that may be treated as an "excess parachute
payment" under Section 280G of the Code or taxable under Section 409A of
the Code.
6.18.....Employee Benefit Plans. Schedule 6.18 attached hereto lists and
identifies each:
(i) "Employee Pension Benefit Plan" (as such term is defined in
Section 3(2) of ERISA) of a Company or which such Company contributes to or
participates in, which is not a Multiemployer Plan;
(ii) "Multiemployer Plan" (as such term is defined in Section 3(37) of
4001(a)(3) of ERISA) of a Company or which such Company contributes to or
participates in;
(iii) "Employee Welfare Benefit Plan" (as such term is defined in
Section 3(3) of ERISA) of the Company or which the Company contributes to
or participates in; and
(iv) Stock purchase, option, or bonus plan, deferred compensation,
severance pay, incentive, merit or performance bonus, vacation, sick pay or
leave, fringe benefit plan, policy, or arrangement, or payroll practice,
which is maintained or contributed to by a Company or any ERISA Affiliate,
or under which such Company or any ERISA Affiliate has any liability or
contingent liability (individually a "Plan" and collectively, the "Plans").
Each Plan which is intended to be "qualified" under Section 401(a) of the
Code is and has been at all times so qualified or, in the case of a terminated
plan, was so qualified throughout its existence, and each trust maintained
thereunder is and has been at all times exempt from taxation under Section
501(a) of the Code, or in the case of a terminated trust, was so exempt
throughout its existence. There have been no amendments to any such Plans which
are not the subject of a determination letter issued with respect thereto by the
Internal Revenue Service. To the Knowledge of each of the Companies and Parent,
no event has occurred that will or could give rise to disqualification of any
such Plan under the Code. No event has occurred that will or could subject any
such Plan to tax under Section 511 of the Code. No Plan has incurred any
"accumulated funding deficiency" (as described in Section 302 of ERISA or
Section 412 of the Code), whether or not waived, nor has there been any failure
to make by its due date a required installment under Section 302(e) of ERISA or
Section 412(m) of the Code with respect to any Plan.
No Plan listed in Schedule 6.18 is subject to Title IV of ERISA, except as
otherwise set forth on Schedule 6.18. No Plan listed in Schedule 6.18 is a
Multiemployer Plan. Except as listed in Schedule 6.18, each Welfare Benefit Plan
has been funded exclusively through the purchase of insurance contracts under
which there are no retroactive rate adjustments or loss sharing arrangements.
Each Plan complies and has been administered in form and operation with all
requirements of law and regulation applicable thereto, the failure of which
would have a Material Adverse Effect. Each Company and its ERISA Affiliates have
performed all of their obligations under all such Plans. There have been no acts
or omissions which have given rise to, or which could give rise to, any penalty,
tax, or fine under Sections 409, 502(c), or 502(i) of ERISA, or Sections 4975 or
4976 of the Code, for which a Company or any ERISA Affiliate may be liable. None
of the assets of any Plan are invested in any employer securities, employer real
property, or any annuity contracts. All contributions required with respect to
any Plan for all periods ending prior to the Closing (including periods from the
first day of the current plan year to the Closing) will be timely made prior to
the Closing by the Company or the ERISA Affiliates. Except as set forth on
Schedule 6.18, neither the Company nor its ERISA Affiliates has any liability
arising directly or indirectly in connection with any failure of the Company or
any ERISA Affiliate to comply with Section 4980B of the Code or Part 6 of
Subtitle B of Title I of ERISA or any applicable state law ("COBRA"). All
required reports and descriptions of each Plan (including IRS Form 5500 Annual
Reports, Summary Annual Reports, and Summary Plan Descriptions) have been timely
filed and distributed. Except as set forth on Schedule 6.18, no Company or any
ERISA Affiliate has any plan or commitment to establish any additional Plans or
to amend any existing Plan. Except as set forth on Schedule 6.18, no Plan
provides benefits, including without limitation death, medical, or severance
benefits, with respect to current or former employees, officers, or directors
(or their beneficiaries) beyond their retirement or other termination of service
other than (i) coverage for benefits mandated by applicable law, (ii) death
benefits or retirement benefits under an Employee Pension Benefit Plan, (iii)
deferred compensation benefits properly accrued as liabilities on the Financial
Statements, or (iv) benefits the full cost of which is borne by the current or
former employee, officer, or director or his beneficiaries. There are no
actions, suits, or claims (other than routine claims for benefits made in the
ordinary course of plan administration for which plan administrative review
procedures have not been exhausted) pending or, to the Knowledge of each of the
Companies and Parent, threatened involving any Plans or the assets of such
Plans, and, to the Knowledge of the Company and Parent, no facts exist which
could give rise to any such action, suit, or claim. For each Plan, a true and
complete copy of each of the following documents have been delivered to the
Buyer: (i) Plan document and all amendments thereto; (ii) most recent Summary
Plan Description (together with each Summary of Material Modifications required
under ERISA); (iii) IRS Form 5500 Annual Report, if required under ERISA, for
the two most recent plan years, together with all schedules, financial
statements, and opinions of independent accountants; (iv) the actuarial report,
if required under ERISA, for the two most recent plan years; (v) Form PBGC-1, if
required under ERISA, for the two most recent plan years; (vi) if the Plan is
funded through a trust or any third-party funding vehicle (including a voluntary
employee benefit association under Section 501(c)(9) of the Code, or a "multiple
employer welfare arrangement" described in Section 3(40) of ERISA), the trust or
other funding agreement, all amendments thereto, and the latest financial
statements thereof for the two most recent plan years; and (vii) the most recent
determination letter received from the Internal Revenue Service with respect to
each Plan that is intended to be qualified under Section 401 of the Code.
6.19.....Environmental Matters. To the Knowledge of Parent and each
Company, except as disclosed on Schedule 6.19, the use and operation by each
Company and, to the Knowledge of each of the Companies and Parent, by all
Predecessors, of all facilities and properties used in the Business has been,
and will be on the Closing Date, in Compliance with all Environmental Laws. No
Environmental Action has been filed, commenced, or, to the Knowledge of each
Company and Parent, threatened in writing with or against any of them alleging
any failure so to comply. Each Company has received all Environmental Permits
required to allow each of them to conduct its operations and the Business, such
Environmental Permits are valid and in effect, and each Company is in Compliance
with such Environmental Permits, except as individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect. Except as
set forth on Schedule 6.19, during the last five (5) years to the Knowledge of
each Company and Parent, no Company has ever sent or arranged for the
transportation of Hazardous Materials to a site, or owned or operated a site,
which, pursuant to CERCLA or any similar state law, has been placed or is
proposed (by the United States Environmental Protection Agency ("EPA") or
similar state authority) to be placed, on the "National Priorities List," as in
effect as of the Closing Date, of hazardous waste sites or any similar state
list. Except as set forth on Schedule 6.19, during the last five (5) years,
neither Company has received notice from any Person, (i) that it has been
identified by the EPA or similar state authority as a potentially responsible
party under CERCLA or any comparable State law with respect to a site listed or
proposed to be listed on the "National Priorities List," as in effect as of the
Closing Date, of hazardous waste sites or any similar state list; (ii) that any
Hazardous Materials which the Company has generated, transported, or disposed of
has been found at any site at which a Person has conducted, is in the process of
conducting or has ordered that a Company conduct a remedial investigation,
removal, or other response action pursuant to any Environmental Law; or (iii)
that such Company is or shall be a named party to any Environmental Action
arising out of any Person's incurrence of costs, expenses, losses, or damages of
any kind whatsoever in connection with the release of Hazardous Materials. To
the Knowledge of Parent and each Company, no Predecessor has received within the
last five (5) years any written notice of alleged, actual or potential
responsibility for, or any inquiry or investigation regarding, a Release or
threat of Release of any Hazardous Materials at any location nor did any
Predecessor receive any notice of any other claim, demand, or action by any
Person alleging any actual or threatened injury or damage arising from or
relating to the presence, Release or threat of Release of any Hazardous
Materials. Except as disclosed in Schedule 6.19, there are no underground fuel
or other storage tanks located at any of the facilities of either Company. All
such tanks disclosed in Schedule 6.19, together with all appurtenant piping,
valve, and related facilities, are, except as disclosed in Schedule 6.19,
structurally sound, are not currently and have not in the past been leaking or
releasing their contents into the soil or groundwater, and are in Compliance
with all applicable registration, testing, monitoring, containment, and
corrosion protection requirements. Except as disclosed in Schedule 6.19, (i)
there have been no unpermitted Releases of Hazardous Materials on, upon, into,
under or from the real estate or other assets of any Company; and, (ii) to the
Knowledge of each Company and Parent, there have been no Releases on, upon,
from, under, or into any real property in the vicinity of the real estate owned,
leased, occupied or operated by either Company or other assets of either Company
which, through the soil, groundwater, or surface water, may have come to be
located on, upon, or under such real estate or other assets. Without in any way
limiting the generality of the foregoing, there is, to the Knowledge of each
Company and Parent, at the present time no asbestos contained in or forming part
of any building, building component, structure, or office space owned or leased
by either Company; and, to the Knowledge of each Company and Parent, no
polychlorinated biphenyls ("PCBs") are presently used or stored at any property
owned or leased by either Company. Each Company owes no deductibles, fees,
fines, levies or assessments associated with the existence or validity of its
Environmental Permits; is to the Knowledge of Parent and each Company in
Compliance with any and all deadlines for the filing of any reports, notices,
summaries, assessments or forms required by its Environmental Permits or any
Environmental Laws; and to the Knowledge of Parent and each Company is in
Compliance with any and all recordkeeping, monitoring, assessing, reporting and
document filing requirements of its Environmental Permits or any Environmental
Laws. Solely by the execution of this Agreement and the consummation of the
transactions contemplated hereby, the real property or other assets of either
Company will not be subject to any applicable environmental clean-up
responsibility law or environmental restrictive transfer law or regulation which
would have a Material Adverse Effect. There are no Environmental Permits,
outstanding notices of violation, certificates of operation or assessments
pertaining to the environmental Compliance or conditions of any facility owned,
occupied or leased by a Company known to the Companies and Parent, other than
those set forth on Schedule 6.19.
6.20.....Employees. Schedule 6.20 attached hereto sets forth a true and
complete list of all of the employees of each Company including each such
employee's job title, remuneration and duration of employment period. Each
Company is not a party to, and none of its employees is subject to, any
collective bargaining agreement or other union contract, other than as disclosed
in Schedule 6.20. Each Company is in Compliance with applicable federal, state
and local laws affecting labor, employment and employment practices, including
terms and conditions of employment and wages and hours, and there are, and have
been during the past three (3) years, no outstanding complaints against the
Company pending or, to the Knowledge of each of the Companies and Parent,
threatened before the National Labor Relations Board or any similar state or
local agency, except as set forth on Schedule 6.20. Each Company enjoys good
relations with its employees and there is no pending or, to the Knowledge of
each Company and Parent, threatened work stoppage or slowdown or effort to
organize any of its employees, and there has been no such work stoppage or
slowdown or, to the Knowledge of each Company and Parent, effort to organize
during the past three (3) years. Neither Company is obligated to pay any
employees any severance, retention, change of control or similar payments upon
or as a result of Closing of the transactions contemplated by this Agreement, or
upon any termination of their employment at any time on or after Closing.
6.21.....Litigation. Except as disclosed on Schedule 6.21 attached hereto,
(a) there is no Claim pending or, to the Knowledge of each Company and Parent,
threatened by, against, affecting or regarding the Acquired Assets, the
Business, either Company or Parent at law or in equity, before any federal,
state, local or foreign court or any other governmental or administrative agency
or tribunal or any arbitrator or arbitration panel, and (b) there are no
judgments, orders, rulings, charges, decrees, injunctions, notices of violation
or other mandates against or affecting the Acquired Assets, the Business, either
Company or Parent with respect to the Business or the properties and assets of
either Company.
6.22.....Insurance. Schedule 6.22 attached hereto sets forth a summary of
all insurance policies (including policies providing property, casualty,
liability, and workers' compensation coverage, benefits or coverage for any Plan
described in Section 6.18, and bond and surety arrangements) to which either
Company have been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past five (5) years and specifies the insurer,
the amount of coverage, type of insurance, expiration date, and any retroactive
premium adjustments or other loss sharing arrangements. Each insurance policy to
which a Company is a party or a named insured is valid, binding, enforceable,
and in full force and effect. Neither Company has received any notice, and to
the Knowledge of each Company and Parent, is aware, of any threatened
termination of, any insurance policy set forth on Schedule 6.22.
6.23.....Brokers. Except as disclosed in Schedule 6.23 attached hereto,
neither of the Companies, Parent, or anyone acting on their behalf, has engaged,
retained, or incurred any liability to any broker, investment banker, finder or
agent or has agreed to pay any brokerage fees, commissions, finder's fees or
other fees with respect to the sale of the Purchased Assets and/or the
Enviro-Safe (NE) Stock, this Agreement or the transactions contemplated hereby.
6.24.....Burdensome Orders. Neither Parent nor any Company is subject to or
bound by any judgment, decree or order which has or would have a Material
Adverse Effect.
6.25.....Records and Books. The minute books of each Company have
previously been made available to Buyer or will be made available to Buyer not
later than April 1, 2008, which will accurately record all corporate action
taken by the stockholders and boards of directors and committees thereof from
the dates of their organization through the date of delivery thereof to Buyer.
6.26.....Transactions with Interested Persons. Except as set forth on
Schedule 6.26 attached hereto, no officer, supervisory employee or director of
either Company owns directly or indirectly, either individually or jointly, any
material interest in, or serves as an officer or director of, any customer,
competitor or supplier of Parent or the Companies, or any organization which has
a material contract or arrangement with Parent or the Companies, except that
Parent owns all of the issued and outstanding stock of each Company and certain
executive officers and directors of Parent are officers and directors of each
Company.
6.27..... No Corrupt Practices. To the Knowledge of each Company and
Parent, no director, officer, agent, employee of Parent or either Company, in
each case when acting on behalf of the Parent or such Company, has used any
corporate or other funds for unlawful contributions, payments or made any
unlawful expenditures relating to political activity, to government officials or
others or established or maintained any unlawful or unrecorded funds with
respect to the Business. To the Knowledge of each Company and Parent, no
director, officer, agent, employee of the Parent or either Company, stockholder
or other Person, in each case when acting on behalf of Parent or either Company,
has accepted or received any unlawful contributions, payments, gifts or
expenditures with respect to the Business.
6.28.....Disclosure of Material Information. Neither this Agreement
(including the Schedules and Exhibits hereto), the SEC Reports nor any document,
certificate or instrument furnished in connection therewith contains, with
respect to a Company or Parent, any untrue statement of a material fact or omits
to state a material fact necessary to made the statements therein not
misleading. Neither any Company nor Parent has Knowledge of any fact which has
or would reasonably be expected in the future to result in a Material Adverse
Effect and which has not been set forth in this Agreement or in any other
document delivered in connection herewith.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Enviro-Safe and Parent as of the
date hereof and the Closing Date as follows:
7.1......Organization and Qualification. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts, with full power and authority to own, use or
lease its properties and to conduct its business as such properties are owned,
used or leased and as such business is conducted.
7.2......Authority; No Violation. The Buyer has the requisite corporate
power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Buyer has been duly and validly authorized and approved by all
necessary corporate action on the part of Buyer and this Agreement constitutes
the legal and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except that the enforceability hereof may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding may be brought. Assuming the accuracy of the
representations and warranties of the Companies and Parent hereunder, the
entering into of this Agreement by Buyer does not, and the consummation by Buyer
of the transactions contemplated hereby will not, violate the provisions of (a)
any applicable laws of the United States or any other state or jurisdiction in
which Buyer does business, (b) the Charter or by-laws of Buyer, or (c) any
provision of, or result in a default or acceleration of any obligation under, or
result in any change in the rights or obligations of Buyer under, any Lien,
contract, agreement, license, lease, instrument, indenture, order, arbitration
award, judgment, or decree to which Buyer is a party or by which it is bound, or
to which any property of the Buyer is subject.
7.3......Required Filings and Consents. The execution and delivery of this
Agreement by Buyer does not, and the performance of Buyer's obligations
hereunder will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority, except as set
forth in Section 9.1(e) below with respect to receipt of any Necessary Permits
or other approvals.
7.4......Brokers. Except for Equities Securities Partners, Buyer has not
retained the services of any broker or finder in connection with this Agreement
or the transactions contemplated by this Agreement.
ARTICLE VIII
COVENANTS
8.1......Covenants of each Company and Parent. Each Company and Parent each
shall keep, perform and fully discharge the following covenants and agreements:
(a)......Interim Conduct of Business. From the date hereof until the
Closing, each Company and Parent shall operate the Business as a going
concern consistent with prior practice and in the ordinary course of
business (except as may be authorized pursuant to this Agreement or as set
forth on Schedule 8.1(a) hereto). Without limiting the generality of the
foregoing, from the date hereof until the Closing, except for transactions
contemplated by this Agreement or expressly approved in writing by the
Buyer, neither Parent nor any Company shall:
(i) enter into or amend any employment, bonus, severance, or
retirement contract or arrangement (including any Plan as described in
Section 6.18), or materially increase any salary or other form of
compensation payable or to become payable to any current or former
employee, officer, or director, other than in the ordinary course of
business consistent with prior practice;
(ii) purchase any assets or real estate or any interest therein
other than in the ordinary course of business;
(iii) merge or consolidate with or agree to merge or consolidate
with, or purchase or agree to purchase all or substantially all of the
assets of, acquire securities of or otherwise acquire any Person;
(iv) sell, lease, transfer or otherwise dispose of or agree to
sell, transfer, lease or otherwise dispose of any of its assets,
properties, rights or claims, whether tangible or intangible having an
aggregate book value in excess of $50,000, except in the ordinary
course of business consistent with prior practice;
(v) incur any long-term indebtedness which will not be repaid in
full at Closing, or any other liability, guaranty or obligation (fixed
or contingent), other than in the ordinary course of business
consistent with prior practice;
(vi) place or permit to be placed any Lien on any of the Acquired
Assets or properties, other than statutory Liens arising in the
ordinary course of business;
(vii) change its accounting practices and/or procedures;
(viii) accelerate receivables or delay or postpone payment of any
accounts payable or other liability, except in the ordinary course of
business consistent with prior practice;
(ix) transfer any assets to Parent or any Affiliate or Subsidiary
of Parent;
(x) agree to a material change or add to the terms and conditions
of any Necessary Permit without the prior written approval of Buyer;
(xi) transfer any customer account to any third party; or
(xii) abandon any part of the Business that would result in a
Material Adverse Effect.
(b)......Access. Parent and each Company shall, upon reasonable
notice, give the Buyer and its representatives full and free access to all
properties, assets, books, contracts, commitments and records of Parent and
each Company during reasonable business hours and shall promptly furnish
the Buyer with all financial and operating data and other information as to
the history, ownership, Affiliates, business, operations, properties,
assets, liabilities, or condition (financial or otherwise) and prospects of
the Companies as Buyer may from time to time reasonably request.
(c)......Regulatory Approvals. Each Company and Parent shall use all
reasonable efforts to file, as soon as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed
with any federal, state or local governmental regulatory or administrative
agency or authority with respect to the transactions contemplated by this
Agreement, and to submit promptly any information requested by any such
governmental agency or authority to the extent that Buyer and Parent
jointly determine it is reasonable and prudent to do so. Without limiting
the generality of the foregoing, Parent, each Company and Buyer shall,
promptly after the date of this Agreement, prepare and file any and all
notifications and certifications required under the applicable federal and
state Environmental Law and state Tax and bulk transfer or similar state
statutes. From and after the date hereof, Parent and the Companies will (i)
obtain all necessary Governmental Approvals for their performance of the
transactions contemplated by this Agreement, and (ii) as applicable will
use their best efforts to obtain and transfer to Buyer all of the Necessary
Permits and all other permits, licenses, and leases which are associated
with the Business as presently conducted, to the extent the same are by
their terms transferable. Parent and Buyer shall consult and cooperate with
one another, and consider in good faith the views of one another, in
connection with any analysis, appearance, presentation, memorandum, brief,
argument, opinion or proposal made or submitted in connection with any
governmental filing. In addition, except as may be prohibited by any
federal, state or local governmental agency or authority or by any Legal
Requirement, each of Parent, Companies and Buyer agrees to permit
authorized representatives of the other party to be present at each meeting
or conference relating to any such legal proceeding and to have access to
and be consulted in connection with any document, opinion or proposal made
or submitted to any federal, state or local governmental agency or
authority in connection with any such legal proceeding.
(d)......Retained Liabilities. Following the Closing, Enviro-Safe and
Parent jointly and severally agree to pay, perform and fully discharge all
of the Retained Liabilities as they come due.
(e)......Satisfaction of Conditions. Each Company and Parent shall use
their best efforts to accomplish the satisfaction of the conditions
precedent to Closing contained in Section 9.1 herein on or prior to the
Closing Date.
(f)......Non-Solicitation of Employees and Customers; Non-Competition.
(i) Non-Solicitation of Employees. For the period beginning
on the Closing Date and ending on the date three (3) years after
the Closing Date (the "Restricted Period"), each of Parent and
Enviro-Safe shall not, and shall not permit any of their
respective Affiliates (collectively, the "Restricted Parties" and
individually, a "Restricted Party"), for its own benefit or for
the benefit of any Person other than Buyer: (x) to solicit, or
assist any Person other than Buyer to solicit, any then present
officer, director, executive or employee of a Company to leave
his employment; or (y) to hire or cause to be hired, or engage as
a partner, contractor, subcontractor, employee or consultant, any
then present officer, director, executive or employee of either
Company.
(ii) Non-Solicitation of Customers. During the Restricted
Period, each Restricted Party shall not solicit or encourage any
of the customers of the Companies to terminate, curtail or
otherwise limit their business relationships with Enviro-Safe
(NE) and/or Buyer, or otherwise direct or divert or attempt to
direct or divert any customer to any other entity or interfere
with any business relationship between Enviro-Safe (NE) and/or
Buyer and such customer.
(iii) Non-Competition. During the Restricted Period, each
Restricted Party shall not, directly or indirectly, for its own
account or as an agent, employee, officer, director, trustee,
consultant, partner, stockholder or equity owner of any Business
Entity (except for the ownership of securities constituting less
than two percent (2%) of any class of securities of a public
company), or as a member of any Business Entity or otherwise
engage, or attempt to engage, in New York or New England in the
Business or in any other business activities which are
competitive with the Business or any other business activities
engaged in by Buyer or any of its Affiliates as of the Closing
Date in New York or New England.
(iv) Acknowledgements. Parent and Enviro-Safe acknowledge
that: the above covenants in this Section 8.1(f) are manifestly
reasonable on their face. The parties expressly agree that the
restrictions set forth in this Section 8.1(f) have been designed
to be reasonable and no greater than is required for the
protection of Buyer and are a significant element of the
consideration hereunder. If the final judgment of a court of
competent jurisdiction declares that any term or provision of
this Section 8.1(f) is invalid or unenforceable, the parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope or
duration of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable
and that comes closest to expressing the intention of the invalid
or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time
within which the judgment may be appealed.
(g)......No Solicitation, Confidentiality, Etc. Prior to the
termination of this Agreement pursuant to Article X hereof, neither of the
Companies or Parent nor any of their respective agents, representatives,
employees, officers and/or directors will (i) solicit or negotiate with
respect to any inquiries or proposals relating to (x) the possible direct
or indirect acquisition of any equity security of either Company, all or a
portion of the Acquired Assets or the Business or (y) any merger,
consolidation, joint venture or business combination with Parent or either
Company (each a "Proposed Transaction"), or (ii) discuss or disclose either
this Agreement or other confidential information pertaining to the Parent
or either Company or any Proposed Transaction with any Person (except as
may be required by law or except as may be required in connection with the
transactions contemplated by this Agreement to Affiliates, officers,
directors, shareholders, employees and agents of Parent and the Companies,
or to stockholders of Parent to obtain Parent Stockholder Approval) without
the prior written approval of the Buyer. After the Closing, upon the
receipt of a written request from Buyer, Parent will promptly request each
Person that has executed, within twelve (12) months prior to the date of
this Agreement, a confidentiality, standstill or similar agreement in
connection with its consideration of a possible acquisition transaction to
return or destroy all confidential information heretofore furnished to such
Person by or on behalf of the Company and Parent, and provide the Buyer of
written evidence of the same.
(h)......Accuracy of Representations and Warranties. Without the prior
written consent of the Buyer, neither the Companies nor Parent will take
any action from the date hereof to the Closing Date, whether by an officer,
director or stockholder of Parent, the Companies or otherwise, that would
cause any representation or warranty of the Companies or Parent contained
in this Agreement to become untrue or cause the breach of any agreement
hereof or covenant contained herein. The Companies and Parent will promptly
bring to the attention of Buyer any facts which come to their attention
regarding any act or event that might have a Material Adverse Effect or
that would cause any of the representations and warranties of the Companies
or Parent to be untrue or materially misleading in any respect, but in no
event such notification shall not excuse any omission from or breach of any
representation, warranty, covenant or agreement disclosed in such
notification.
(i)......Books and Records. For a period of six (6) years
commencing on the Closing Date, or for such longer period as may be
required by applicable law, Enviro-Safe and Parent shall make all such
books and records not included as part of the Acquired Assets
available for inspection and copying by the Buyer and its
representatives during regular business hours upon two (2) Business
Days' prior notice.
(j)......WARN Act. Parent and Enviro-Safe shall be responsible for any
notice required under or liability associated with the Worker Adjustment
and Retraining Notification Act (29 U.S.C. ss.ss.2101-2109), COBRA group
health plan continuation coverage (29 U.S.C. ▇▇.▇▇. 601-608 and 26 U.S.C.
ss.4980B) and any applicable state or local plant closing, mass layoff,
relocation, or severance, or continuation coverage laws associated with the
employees of the Company which takes place or arises on or before the
Closing Date, and Buyer shall be responsible for any such notice or
liability associated with any Hired Employee by Buyer on or after the
Closing Date which takes place or arises after the Closing Date.
(k)......Change of Name. On the Closing Date, Enviro-Safe will amend
its Articles of Organization to change its name to a name that does not
include the words "Enviro-Safe", and at the request of Buyer will deliver a
written consent, in form acceptable to Buyer, to enable Buyer or any
subsidiary of Buyer to use such name as part of its legal name or as
"d/b/a" of Buyer.
(l).....Further Assurances. Each of the Companies and Parent shall,
from time to time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as shall
be necessary, or otherwise reasonably requested by Buyer to confirm and
assure the rights and obligations provided for in this Agreement and render
effective the consummation of the transactions contemplated hereby.
(m)......Compliance with State Tax and Bulk Transfer Requirements.
Prior to Closing, Parent and Enviro-Safe shall comply with all of the
requirements imposed on a transferor under any applicable state Tax or bulk
sales or transfer laws such that the transfer of the Purchased Assets to
the Buyer and the Enviro-Safe (NE) Stock will be effective against all
taxing authorities and creditors of Parent and the Companies and free and
clear of any liability for Taxes or any lien, charge or encumbrance arising
under said laws.
(n) Information Statement. As promptly as practicable after the
execution of this Agreement but no later than ten (10) days thereafter,
Parent, subject to Buyer's prior review, shall file with the SEC an
Information Statement in accordance with the Exchange Act with respect to
this Agreement, the transactions contemplated by this Agreement and the
Parent Stockholder Approval thereof (the "Statement"). Parent shall respond
to any comments of the SEC or its staff as promptly as possible and shall
cause the Statement to be mailed to its shareholders not later than two (2)
Business Days after the resolution of any such comments. Parent shall
notify Buyer promptly upon the receipt of any comments from the SEC or its
staff or any other government officials and of any request by the SEC or
its staff or any other government officials for amendments or supplements
to the Statement and shall supply Buyer with copies of all correspondence
between the Parent or any of their respective representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the
other hand, with respect to the Statement. Parent shall use commercially
reasonable efforts to cause all documents that it is responsible for filing
with the SEC or other regulatory authorities under this Section 8.1(o) to
comply with all applicable laws, rules and regulations. Parent shall
provide Buyer with copies of any and all amendments or supplements thereto
prior to filing and shall afford Buyer a reasonable period of time to
review and comment thereon. Whenever any event occurs that is required to
be set forth in an amendment or supplement to the Statement, Parent or the
Buyer, as the case may be, shall promptly inform the other of such
occurrence and cooperate in filing with the SEC or its staff or any other
government officials, and/or mailing to shareholders of Parent, such
amendment or supplement.
(o)......Taxes. Parent will file, or cause to be filed, all federal
and state income and excise Tax Returns due for Parent and the Companies
for the calendar year ended December 31, 2007, and pay all Taxes shown as
due thereon, not later than April 30, 2008.
(p)......Disclosure Schedules. Parent shall complete and provide to
Buyer, not later than April 15, 2008, a final and complete version of all
of the Disclosure Schedules that are referenced in this Agreement, which
final version of the Disclosure Schedules will be subject to the review and
acceptance of Buyer as to both the form and scope of the disclosures set
forth therein and as to any underlying information, agreements, exceptions
or other matters referenced therein.
(q)......YAGI/GS CleanTech Extensions. Parent and the Companies shall
request, not later than five (5) Business Days after the execution of this
Agreement, and thereafter use commercially reasonable efforts to obtain,
extensions (in form and substance reasonably acceptable to Buyer) by no
later than April 15, 2008 from each of YAGI and GS CleanTech, as applicable
(collectively, the "Extensions"), pursuant to which (i) YAGI will agree to
extend the dates set forth in Sections 1 and 3 of that certain Letter
Agreement dated January 11, 2008 regarding "Agreement Regarding Global
Guaranty Agreement and Related Documents" from May 10, 2008 to July 31,
2008; and (ii) GS CleanTech will agree to extend (X) the date set forth in
Section 2(a) of the Stock Purchase Agreement dated as of January 11, 2008
between GS CleanTech and Parent until July 31, 2008, and (Y) the date on
which the Proxy granted to Parent's Board of Directors to vote the
6,266,667 shares of Parent Common Stock (which constitute the "Second
Tranche" under said Section 2(a)) will cease to be irrevocable until the
close of business on July 31, 2008.
(r)......Individual Financial Statements. From and after the date
hereof through Closing, Parent will, within twenty (20) days after the end
of each of its fiscal months, deliver to Buyer copies of the Individual
Financial Statements for and as of the end of such months.
8.2......Covenants of Buyer. Buyer hereby agrees to keep, perform and fully
discharge the following covenants and agreements:
(a)......Employees. Buyer may, at its sole and absolute discretion,
after consultation with Parent, offer employment to qualified employees of
Enviro-Safe as of the Closing Date. Such employees who accept the offer of
employment (each a "Hired Employee") will be employed by Buyer upon such
terms and conditions as Buyer and such Hired Employee may agree, it being
understood and agreed that Buyer shall not be responsible for any
post-Closing obligations and any accrued liabilities of Enviro-Safe to
former or current employees not hired by Buyer. Enviro-Safe shall retain,
assume, bear and discharge all liabilities for any and all claims incurred
or made by Hired Employees and their dependents and beneficiaries under any
Plan. Buyer agrees that Hired Employees will receive full credit for
service with Enviro-Safe for purposes of determining eligibility and
vesting under Plans of Buyer or its Affiliates. As of the Closing Date,
each Hired Employee shall cease participation in any and all Plans of
Enviro-Safe.
(b)......Necessary Permits and Approvals. Buyer shall cooperate with
Parent and the Companies and use commercially reasonable efforts to obtain
any and all Necessary Permits required to be obtained by it in conjunction
with its performance of the transactions contemplated by this Agreement and
in order for it to continue to own and operate the Business from and after
the Closing.
(c)......Satisfactory Conditions. Buyers shall comply with all of the
conditions of Section 9.2 and accomplish to the satisfaction of Parent of
the conditions precedent to Closing contained in Section 9.2 below on or
prior to the Closing Date.
(d)......Further Assurances. Buyer shall, from time to time, execute
and deliver such additional instruments, documents, conveyances or
assurances and take such other actions as shall be necessary, or otherwise
reasonably requested by Parent and each Company to confirm and assure the
rights and obligations provided for in this Agreement and render effective
the consummation of the transactions contemplated hereby.
8.3......Covenants of Parent, the Companies and Buyer.
(a)......Confidentiality; Access to Information. Each party agrees to
maintain in confidence any information that has been identified as
non-public information and received from the other party, and to use such
non-public information only for purposes of consummating the transactions
contemplated by this Agreement. Such confidentiality obligations will not
apply to (a) information which was known to the one party or their
respective agents prior to receipt from the other party; (b) information
which is or becomes generally known; (c) information acquired by a party or
their respective agents from a third party who was not bound to an
obligation of confidentiality; and (d) disclosure required by law. In the
event this Agreement is terminated in accordance with the terms of this
Agreement, each party (x) will return, destroy or cause to be returned or
destroyed to the other all documents and other material obtained from the
other in connection with the transactions contemplated by this Agreement,
and (y) will use commercially reasonable efforts to delete from its
computer systems all documents and other material obtained from the other
in connection with the transactions contemplated by this Agreement.
(b)......Public Statements. Buyer and Parent agree to cooperate, both
prior to and after the Closing, in issuing any press releases or otherwise
making public statements or filings with respect to the transactions
contemplated by this Agreement (including any statements to employees of
the Companies) and no press release or other public statements shall be
issued without the joint consent of Buyer and Parent; provided, however
that Parent may make required filings with the SEC and issue press releases
or make public statements, without Buyer's consent, to the extent Parent's
counsel advises that it is required by law or the rules of the Pink Sheets,
as applicable to Parent, so long as Parent gives Buyer a reasonable
opportunity to review and comment on such filing, press release or public
statement before its filing or release.
ARTICLE IX
CLOSING CONDITIONS
9.1......Conditions to Obligations of Buyer. The obligations of Buyer
to consummate this Agreement and the transactions contemplated hereby are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a)......Representations, Warranties and Covenants. Each of the
representations and warranties of each Company and Parent contained in this
Agreement shall remain true and correct at the Closing Date as fully as if
made on the Closing Date; each Company and Parent shall have performed, on
or before the Closing Date, all of their respective obligations under this
Agreement and the other Purchase Documents which by the terms thereof are
to be performed on or before the Closing Date; and each Company and Parent
shall have delivered to Buyer an Officer's Certificate dated the Closing
Date.
(b)......No Pending Action. No legislation, order, rule, ruling or
regulation shall have been enacted or made by or on behalf of any
governmental body, department or agency, and no legislation shall have been
voted affirmatively in either House of Congress or in the legislature of
any state, and no investigation by any Governmental Authority shall have
been commenced or threatened in writing, and no action, suit, investigation
or proceeding shall have been commenced before, and no decision shall have
been rendered by, any court or other Governmental Authority or arbitrator,
which, in any such case, in the reasonable judgment of the Buyer could
adversely affect, restrain, prevent or rescind the transactions
contemplated by this Agreement (including, without limitation, the purchase
and sale of the Assets and the Enviro-Safe (NE) stock) or result in a
Material Adverse Effect.
(c)......Purchase Permitted by Applicable Laws; Legal Investment.
Buyer's purchase of and payment for the Purchased Assets and the
Enviro-Safe (NE) Stock (a) shall not be prohibited by any applicable law or
governmental order, rule, ruling, regulation, release or interpretation,
(b) shall not subject Buyer to any penalty, Tax, liability or, in Buyer's
reasonable judgment, any other onerous condition under or pursuant to any
applicable law, statute, ordinance, regulation or rule, (c) shall not
constitute a fraudulent or voidable conveyance under any applicable law and
(d) shall be permitted by all applicable laws, statutes, ordinances,
regulations and rules of the jurisdictions to which Buyer is subject.
(d)......Proceedings Satisfactory. All proceedings taken in connection
with the purchase and sale of the Acquired Assets and the Enviro-Safe (NE)
Stock, all of the other Purchase Documents and all documents and papers
relating thereto, shall be in form and substance reasonably satisfactory to
Buyer. Buyer and its counsel shall have received copies of such documents
and papers as each of Buyer or its counsel may reasonably request in
connection therewith, all in form and substance reasonably satisfactory to
Buyer. Any Purchase Document, any Schedule or Exhibit to this Agreement and
any other document, agreement or certificate contemplated by this
Agreement, not approved by Buyer in writing as to form and substance on the
date this Agreement is executed, shall be reasonably satisfactory in form
and substance to Buyer.
(e)......Consents - Permits. Buyer, Parent and each Company, as
applicable, shall have received (and there shall be in full force and
effect) all material consents, approvals, licenses, permits, orders and
other authorizations of, and shall have made (and there shall be in full
force and effect) all such filings, registrations, qualifications and
declarations with, any Person pursuant to any applicable law, statute,
ordinance regulation or rule or pursuant to any agreement, order or decree
to which Buyer, Parent or either Company is a party or to which it is
subject, in connection with the transactions contemplated by this
Agreement.
(f)......Corporate Documents. Each Company and Parent shall have
delivered to Buyer:
(i) An Officer's Certificate of its Secretary certifying (x) the
incumbency and genuineness of signatures of all officers of the
entity, as the case may be, executing this Agreement, any document
delivered by the entity at the Closing and any other document,
instrument or agreement executed in connection herewith, (y) the truth
and correctness of resolutions of the entity authorizing the entry by
the entity into this Agreement and the transactions contemplated
hereby and (z) the truth, correctness and completeness of the by-laws
of the Company;
(ii) the Charter of the entity certified as of a recent date by
the state of its incorporation; and
(iii) certificates of corporate and tax good standing and legal
existence of the entity as of a recent date from the state of its
incorporation and the state(s) in which it is qualified to do
business.
(g)......Transfer of Purchased Assets. All of the Purchased Assets
shall have been effectively sold, transferred, conveyed and assigned and
delivered to Buyer or remain with Enviro-Safe (NE) and shall be, in all
events, free and clear of all Liens.
(h)......▇▇▇▇ of Sale. Enviro-Safe shall have executed the ▇▇▇▇ of
Sale in the form attached hereto as Exhibit A (the "▇▇▇▇ of Sale") and the
Assignment Agreement in the form attached hereto as Exhibit B (the
"Assignment Agreement") and such other deeds, conveyances, certificates of
title, assignments, assurances and other instruments and documents as Buyer
may reasonably request in order to effect the sale, conveyance, and
transfer of the Acquired Assets from Enviro-Safe to Buyer ("Assignment
Documents").
(i)......Approvals; Transfer of Necessary Permits. All of the material
Necessary Permits (including, without limitation, any Environmental Permit)
shall have been transferred to or obtained by Buyer on or before the
Closing Date.
(j)......Opinion of Counsel. Buyer shall have received favorable
opinions of one or more counsel to Parent and the Companies, each of whom
shall be reasonably acceptable to Buyer, dated the Closing Date, and
satisfactory in form and substance to Buyer and its counsel.
(k)......Due Diligence. Buyer shall have successfully completed and
been satisfied in its sole discretion with its due diligence investigation
of each Company and the Business.
(l)......No Material Adverse Effect. Prior to the Closing Date, there
shall have been no Material Adverse Effect and there shall not have been
any events, circumstances or developments which, with the passage of time,
might reasonable be expected to be a Material Adverse Effect, all as
determined in the sole discretion of the Buyer.
(m)......Shares of Enviro-Safe (NE) Stock. Parent shall have delivered
to Buyer the certificate(s) representing all the shares of Enviro-Safe (NE)
Stock, duly endorsed and assigned for transfer by Parent, or accompanied by
stock powers duly executed by Parent ("Stock Assignment"), and such
transfer shall have been accepted by Enviro-Safe (NE) for transfer on its
books.
(n) Termination of Plans. Each Company shall have terminated each of
the Plans on terms satisfactory to Buyer, and shall have provided evidence
satisfactory to Buyer to ensure that no employee has any further rights
under such Plans and that all liabilities of the Company under such Plans
are fully extinguished at no cost, and with no liability to the Buyer.
(o) Tax Returns. Parent shall have prepared and timely filed any and
all Tax Returns and amendments thereto required to be filed by or for
Parent and each of the Companies for all taxable periods ending on or
before the Closing Date and provide copies of all such filed Tax Returns to
Buyer.
(p) Resignations. Parent shall have delivered such resignations of
officers and Directors of Enviro-Safe (NE) as shall have been requested by
Buyer.
(q)......Employment Agreement. Buyer and ▇▇▇▇▇ ▇. ▇▇▇▇▇ shall have
entered into an Employment Agreement reflecting the terms set forth on
Exhibit C attached hereto (the "Employment Agreement").
(r)......YA Global/GS CleanTech Obligations. Parent and the Companies
shall have paid and satisfied in full all YAGI/GS CleanTech Obligations (at
or prior to Closing), and obtained full and complete terminations,
discharges and written releases (in form and substance reasonably
acceptable to Buyer) of (i) all YAGI/GS CleanTech Obligations of the
Companies, including without limitation, the Debenture and any guaranties
by the Companies in favor of YAGI, (ii) all Liens on or pledges of the
assets or stock of the Companies to YAGI and/or GS CleanTech and (iii) any
other liabilities or obligations of the Companies to YAGI and GS CleanTech.
(s)......Extensions. Parent shall have obtained the Extensions not
later than April 15, 2008.
(t)......Working Capital. In accordance with Section 4.4(a) above, at
Closing the Estimate Net Working Capital shall not be less than $500,000.
(u)......Inter-Company Accounts. Prior to Closing, all Inter-Company
Accounts owing by Enviro-Safe (NE) to Parent, Enviro-Safe or any of their
Affiliates, and all Inter-Company Accounts due to Enviro-Safe (NE) from
Parent, Enviro-Safe or any of their Affiliates, shall either be paid or
satisfied in full, or released, discharged or terminated pursuant to
written agreements satisfactory in form and substance to Buyer.
(v)......Closing Memorandum. Parent and Enviro-Safe shall have
executed and delivered a Closing Memorandum (as to matters agreed to at
Closing and any transition related matters agreed to by Buyer and Parent at
or prior to Closing) (the "Closing Memorandum").
(w)......Notice to Stockholders. Parent shall have sent or given the
Statement to its Stockholders, as provided in Section 8.1(n) above, at
least twenty (20) days prior to Closing Date.
9.2......Conditions to Obligations of the Companies and the Parent The
obligations of the Companies and Parent to consummate this Agreement and the
transactions contemplated hereby are subject to the fulfillment, prior to or at
the Closing, of the following conditions precedent:
(a)......Representations, Warranties and Covenants. Each of the
representations and warranties of Buyer in this Agreement shall remain true
and correct at the Closing Date, and the Buyer shall, on or before the
Closing Date, have performed all of their obligations under this Agreement
and the other Purchase Documents which by the terms thereof are to be
performed by it on or before the Closing Date; and Buyer shall have
delivered an Officer's Certificate to the Company dated the Closing Date to
such effect.
(b)......No Pending Action. No legislation, order, rule, ruling or
regulation shall have been enacted or made by or on behalf of any
governmental body, department or agency, and no legislation shall have been
voted affirmatively in either House of Congress or in the legislature of
any state, and no investigation by any Governmental Authority shall have
been commenced or threatened in writing, and no action, suit, investigation
or proceeding shall have been commenced before, and no decision shall have
been rendered by, any court or other Governmental Authority or arbitrator,
which, in any such case, was not known by a Company or Parent on the date
hereof or which could adversely affect, restrain, prevent or rescind the
transactions contemplated by this Agreement (including, without limitation,
the purchase and sale of the Purchased Assets and the Enviro-Safe (NE)
stock) or result in a Material Adverse Effect.
(c)......Purchase Permitted by Applicable Laws. Enviro-Safe's and
Parent's sale of the Purchased Assets and the Enviro-Safe (NE) Stock to
Buyer shall not be prohibited by any applicable law or governmental order,
rule, ruling, regulation, release or interpretation.
(d)......Payment of Purchase Price. The Buyer shall have delivered,
via wire transfer to Parent and/or Enviro-Safe, the Cash Purchase Price to
the Company and assumed the Assumed Liabilities.
(e)......Employment Agreement. Buyer shall have executed and delivered
the Employment Agreement.
(f)......Extension. YAGI and GS CleanTech shall have executed and
delivered the Extensions.
(g)......Completion of Diligence. Buyer shall have delivered Parent
written notice of completion of its due diligence (except as otherwise set
forth in such notice to Parent) not later than June 30, 2008, provided that
the delivery of such notice shall not waive Buyer's right to continue to
monitor the Business, to obtain access as provided in Section 8.1(b), or to
continue to perform due diligence as to any matters or events identified in
such notice or arising on or after the date thereof.
ARTICLE X
TERMINATION
10.1.....Termination of Agreement. This Agreement and the transactions
contemplated hereby may (at the option of the party having the right to do so)
be terminated at any time on or prior to the Closing Date:
(a)....Mutual Consent. By mutual written consent of Buyer and Parent;
(b)....Court Order. By Buyer or Parent if any court of competent
jurisdiction shall have issued an order pursuant to the request of a third
party restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement;
(c)....Failure to Close by July 31, 2008. By Buyer or Parent if the
transactions contemplated hereby shall not have been consummated on or
before July 31, 2008, provided, however, that such right to terminate this
Agreement shall not be available to any party whose failure to fulfill any
of its covenants or obligations in this Agreement has been the cause of, or
resulted in, the failure of the transactions contemplated hereby to be
consummated on or before such date;
(d)....Termination by Parent. By Parent and upon notice to Buyer at
any time prior to July 31, 2008 if (i) a condition to the performance of a
Company or Parent set forth in Section 9.1 hereof shall not be fulfilled at
the time specified for the fulfillment thereof, (ii) a default under or a
breach of this Agreement shall be made by Buyer that is not cured to the
reasonable satisfaction of Parent within ten (10) days of notification
thereof or (iii) any representation or warranty set forth in this Agreement
or in any instrument delivered by Buyer pursuant hereto shall be false or
misleading; or
(e)....Termination by Buyer. By Buyer by notice to Parent at any time
prior to July 31, 2008 if (i) a condition to the performance of Buyer set
forth in Section 9.1 hereof shall not be fulfilled at the time specified
for the fulfillment thereof, (ii) a default under or a breach of this
Agreement shall be made by either Company or Parent that is not cured to
the reasonable satisfaction of Buyer within ten (10) days of notification
thereof, or (iii) any representation or warranty set forth in this
Agreement or in any instrument delivered by either Company or Parent
pursuant hereto shall be false or misleading.
10.2.....Effect of Termination and Right to Proceed. If this Agreement is
terminated pursuant to Section 10.1, all further obligations of the parties
under this Agreement shall terminate; provided, however, that: (a) the breaching
party shall not be relieved of any obligation or liability arising from any
inaccuracy in, or prior breach by such party of, any representation, warranty,
covenant or other provision of this Agreement and (b) the parties shall, in all
events, remain bound by and continue to be subject to the provisions set forth
in Sections 10.2 and Article XIII. In addition, anything in this Agreement to
the contrary notwithstanding, if any of conditions to obligations specified in
Section 9.1 hereof have not been satisfied, Buyer, in addition to any other
rights which it may have, shall have the right to waive its rights to have such
conditions satisfied and elect to proceed with the transactions contemplated
hereby and, if any of the conditions to the obligations of the Companies and
Parent specified in Section 9.2 hereof have not been satisfied, the Companies
and Parent in addition to any other rights which may be available to them, shall
have the right to waive their rights to have such conditions satisfied and elect
to proceed with the transactions contemplated hereby.
ARTICLE XI
INDEMNIFICATION
11.1 Survival of Representations and Warranties. Each and every
representation and warranty set forth in this Agreement shall survive until the
first anniversary of the Closing Date except with respect to (a) the
representations and warranties set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.8,
7.1, 7.2 and 7.4 which shall survive the Closing until thirty (30) days after
the expiration of the applicable statute of limitations (and any extensions
thereof) (collectively, the "Surviving Representations and Warranties") and (b)
the representations and warranties as to Taxes in Section 6.17 which are
addressed in Article XII. From and after the applicable period of survival with
respect to such respective representations and warranties of Buyer, the
Companies and Parent, neither of the Companies nor the Parent, or any Affiliate
of Buyer, a Companies or Parent shall have any liability whatsoever with respect
to any such representation or warranty, except for claims for fraud or
intentional misrepresentation. If, at any time prior to the expiration of the
survival period set forth above with respect to any particular representation or
warranty of a party, an Indemnitee (as such term is defined herein) delivers to
an Indemnifying Party (as such term is defined herein) a written notice alleging
the existence of an inaccuracy in or a breach of such representation or warranty
(and setting forth in reasonable detail the basis for such Indemnitee's belief
that such an inaccuracy or breach may exist) and asserting a claim for Losses
(as such term is defined herein) based on such alleged inaccuracy or breach,
then the representation or warranty underlying the claim asserted in such notice
and all related indemnity obligations under this Article XI related thereto
shall survive. The representations, warranties, covenants and obligations of
each party, and the rights and remedies that may be exercised by an Indemnitee
shall not be limited or otherwise affected by or as a result of any information
furnished to, or any investigation made by or knowledge of, any of such party or
any of its Affiliates, agents and/or representatives. This Section 11.1 shall
have no effect upon any other obligation of the parties hereto, whether to be
performed before or after the Closing Date.
11.2 Indemnification by Enviro-Safe and Parent. Enviro-Safe and Parent
shall, jointly and severally, indemnify, defend and hold the Buyer, and from and
after the Closing, Enviro-Safe (NE), and their respective officers, directors,
consultants, employees, owners, agents, representatives and Affiliates
(collectively the "Buyer Indemnitees"), harmless from and against any and all
damages, losses, obligations, deficiencies, liabilities, claims, encumbrances,
penalties, costs, and expenses, including reasonable attorneys' fees and costs
("Buyer Losses"), in connection with any Buyer Loss which any Buyer Indemnitee
may suffer or incur, resulting from, related to or arising out of any of the
following: (i) any misrepresentation or breach of a representation or warranty
by Parent or either Company, (ii) any breach or nonfulfillment by Parent or
either Company of any of their agreements or covenants set forth in this
Agreement or in any Purchase Document to which any of them is a party; (iii) any
matter disclosed on Schedule 6.21; (iv) any of the Retained Assets or Retained
Liabilities; (v) fraud or intentional misrepresentation on the part of either
Company and Parent, in accordance with the provisions set forth therein; (vi)
any failure of Parent or either Company to have complied with any applicable
bulk sales law, state Tax law, Tax lien waiver or similar statutes or
regulations in connection with this Agreement or the transactions contemplated
by this Agreement (other than with respect to any Assumed Liabilities); (vii)
any liabilities or obligations of Parent, including any liabilities or
obligations to any of its creditors, stockholders or any other Persons, Business
Entities or Governmental Authorities; (viii) any federal or state fraudulent
transfer statutes; or (ix) any liabilities of Enviro-Safe (NE) for Inter-Company
Accounts or any other liabilities not reflected on the Closing Balance Sheet of
Enviro-Safe (NE); and (x) any and all actions, suits, investigations,
proceedings, demands, assessments, audits, judgments and claims arising out of
any of the foregoing. Notwithstanding the foregoing, (i) a Buyer Indemnitee
shall not be precluded from taking any further action, at law or equity,
including by offset and deduction from any amounts due under this Agreement or
any other Purchase Document, subsequent to the Closing for any loss, damage or
expenses sustained by Buyer as a result of any breach of this Agreement and (ii)
indemnification with regard to certain Tax matters (including any
misrepresentation or breach of any of the representations and warranties in
Section 6.17) are set forth in Article XII below.
11.3 Indemnification by the Buyer. The Buyer shall indemnify, defend and
hold the Parent and Enviro-Safe, and their respective officers, directors,
consultants, employees, owners, agents and Affiliates (collectively, the
"Company Indemnitees," and at times together with the Buyer Indemnitees,
"Indemnitees"), harmless from and against any and all damages, losses,
obligations, deficiencies, liabilities, claims, encumbrances, penalties, costs,
and expenses, including reasonable attorneys' fees and costs ("Company Losses,"
and at times together with Buyer Losses, "Losses"), in connection with any
Company Loss which the Company Indemnitee may suffer or incur, resulting from,
related to or arising out of any of the following: (i) any misrepresentation or
breach of a representation or warranty by Buyer, (ii) any breach or
nonfulfillment by Buyer of any of its agreement and covenants set forth in this
Agreement; (iii) fraud or intentional misrepresentation on the part of Buyer;
(iv) any Claims related to Buyer's ownership or use of the Purchased Assets
arising and accruing after the Closing Date; or (v) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments and claims
arising out of any of the foregoing.
Notwithstanding the foregoing, a Company Indemnitee shall not be precluded
from taking any further action, at law or in equity, subsequent to the Closing
for any loss, damage or expenses sustained by said Company Indemnitees as a
result of any breach of this Agreement.
11.4 Notice and Opportunity to Defend.
(a) If an Indemnitee has incurred or suffered Losses or may incur any
such Losses for which it is entitled to indemnification under this Article
XI, such Indemnitee shall, as promptly as practicable thereafter (but,
subject to the last sentence in Section 11.4(b) below, not later than
thirty (30) days with respect to any third party claim), and in all events
prior to the expiration of the representation, warranty, covenant or
agreement to which such claim relates, give written notice of such claim (a
"Claim Notice") to Parent or the Buyer (as the case may be) (the
"Indemnifying Party"). Each Claim Notice shall state the amount of claimed
Losses (the "Claimed Amount"), if known, and the factual background and
basis for such claim in reasonably sufficient detail so as to enable the
Indemnifying Party to understand and respond to the Claim Notice as
provided in Section 11.4(b) below.
(b) Except as set forth in clause (iv) herein, within twenty (20) days
after delivery of a Claim Notice, the Indemnifying Party shall provide to
the Indemnitee a written response (the "Response Notice") in which the
Indemnifying Party shall: (i) agree that all of the Claimed Amount is owed
to the Indemnitee, (ii) agree that part, but not all, of the Claimed Amount
(the "Agreed Amount") is owed to the Indemnitee, (iii) contest that any of
the Claimed Amount is owed to the Indemnitee, or (iv) request additional
information that the Indemnifying Party believes in good faith it needs to
respond to the Claim Notice, which request must be made within ten (10)
days after the Indemnifying Party's receipt of the Claim Notice. In the
event the Indemnifying Party requests further information pursuant to the
foregoing clause (iv), the Indemnitee shall provide the additional
information, if any, within ten (10) Business Days, and the Indemnifying
Party shall then respond as provided in the foregoing clauses (i), (ii) or
(iii) within ten (10) days after receipt of such additional information or
notice from the Indemnitee that no further information exists. The
Indemnifying Party may contest the payment of all or a portion of the
Claimed Amount only based upon a good faith belief that all or such portion
of the Claimed Amount does not constitute Losses for which the Indemnitee
is entitled to indemnification under this Article XI. If no Response Notice
is delivered by the Indemnifying Party within such twenty (20) day period,
the Indemnifying Party shall be deemed to have agreed that all of the
Claimed Amount is owed to the Indemnitee; provided, however, that the
failure to adhere strictly to the timing provided in this Section 11.4
shall not be a waiver of any indemnification claim or defense, except to
the extent such failure causes prejudice to the other party.
(c) If the Indemnifying Party in the Response Notice agrees (or is
deemed to have agreed) that all of the Claimed Amount is owed to the
Indemnitee, the Indemnifying Party shall promptly (and in any event within
five (5) Business Days) pay the Claimed Amount to the Indemnitee. If the
Indemnifying Party in the Response Notice agrees that part, but not all, of
the Claimed Amount is owed to the Indemnitee, the Indemnifying Party shall
promptly (and in any event within five (5) Business Days) pay to the
Indemnitee, directly, an amount equal to the Agreed Amount set forth in
such Response Notice. Acceptance by the Indemnitee of part payment of any
Claimed Amount shall be without waiver to that Indemnitee's right to claim
and the Indemnifying Party's obligation to pay the balance of any such
Claimed Amount that is due the Indemnitee. If the Indemnifying Party in the
Response Notice contests all or part of the Claimed Amount (the "Contested
Amount"), the Indemnifying Party and the Indemnitee shall proceed in good
faith to negotiate a resolution of such dispute and, if not resolved
through negotiations within twenty (20) days, either may commence a lawsuit
or other appropriate proceeding in a court of competent jurisdiction.
(d) The Indemnitee shall give prompt written notification to the
Indemnifying Party of the commencement of any action, suit or proceeding
relating to a third party claim for which indemnification pursuant to this
Article XI may be sought; provided, however, that no delay on the part of
the Indemnitee in notifying the Indemnifying Party shall relieve the
Indemnifying Party of any liability for Losses hereunder except to the
extent of any Loss or material prejudice caused by or arising out of such
delay. Within five (5) days after delivery of such notification, the
Indemnifying Party may, upon written notice thereof to the Indemnitee,
assume control of the defense of such action, suit or proceeding with
counsel reasonably satisfactory to the Indemnitee, provided: (i) the
Indemnifying Party acknowledges in writing to the Indemnitee that any
damages, fines, costs or other liabilities that may be assessed against the
Indemnitee in connection with such action, suit or proceeding constitute
Losses for which the Indemnitee shall be entitled to indemnification
pursuant to this Article XI, (ii) the third party seeks monetary damages
only, and (iii) an adverse resolution of the third party's claim would not
have a material adverse effect on the goodwill or the reputation of the
Indemnitee or the business, operations or future conduct of the Indemnitee.
If the Indemnifying Party does not so assume control of such defense, the
Indemnitee shall control such defense. If the Indemnifying Party assumes
the defense notwithstanding the satisfaction of the foregoing conditions,
the Indemnitee may object in writing within three (3) Business Days, and in
the event of such objection the parties shall negotiate in good faith which
party will control the defense. In the absence of agreement as to which
party controls the defense within three (3) Business Days from the
Indemnifying Party's receipt of an objection, the Indemnitee shall assume
control of the defense. The party not controlling such defense may
participate therein at its own expense; provided that if the Indemnifying
Party assumes control of such defense and the Indemnitee reasonably
concludes that the Indemnifying Party and the Indemnitee have conflicting
interests or different defenses available with respect to such action, suit
or proceeding, the reasonable fees and expenses of counsel to the
Indemnitee shall be considered "Losses" for purposes of this Agreement,
whether or not the Indemnitee prevails in such action, suit or proceeding.
The party controlling such defense shall keep the other party advised of
the status of such action, suit or proceeding and the defense thereof and
shall consider in good faith recommendations made by the other party with
respect thereto. Except as provided in Section 11.4(e) below, the
Indemnitee shall not agree to any settlement of such action, suit or
proceeding without the prior written consent of the Indemnifying Party,
which shall not be unreasonably withheld, conditioned or delayed. The
Indemnifying Party shall not agree to any settlement of or the entry of a
judgment in any action, suit or proceeding without the prior written
consent of the Indemnitee, which shall not be unreasonably withheld,
conditioned or delayed (it being understood that it is reasonable to
withhold, condition or delay such consent if, among other things, the
settlement or the entry of a judgment (A) lacks a complete release of the
Indemnitee for all liability with respect thereto or (B) imposes any
liability or obligation on the Indemnitee).
(e)......If a third party asserts that an Indemnitee is liable to such
third party for a monetary or other obligation which may constitute or
result in Losses for which such Indemnitee may be entitled to
indemnification pursuant to this Article XI, and such Indemnitee reasonably
determines that it has a valid business reason to fulfill such obligation,
then (i) such Indemnitee shall be entitled to satisfy such obligation,
without prior notice to or consent from the Indemnifying Party, (ii) such
Indemnitee may make a claim for indemnification pursuant to this Article
XI, and (iii) the Indemnifying Party shall reimburse the Indemnitee for any
such Losses for which it is entitled to indemnification pursuant to this
Article XI.
11.5 Limitations on Certain Indemnification Obligations.
(a)......Basket. The Buyer Indemnitees shall not assert any
indemnification claim under Section 11.2(i) (other than with respect to any
of the Surviving Representations and Warranties), and Enviro-Safe and
Parent shall have no obligation to indemnify therefor, until the aggregate
amount of all claims for Buyer Losses by the Buyer Indemnitees exceeds
$50,000 (the "Basket Amount"), in which event the Enviro-Safe and Parent
will be responsible for all amounts and the liabilities, including, without
limitation, the Basket Amount, subject to the Cap.
(b)......Cap. Except for claims based on fraud, intentional
misrepresentation or on breach of any of the Surviving Representations and
Warranties, Enviro-Safe and Parent liability for any Buyer Losses arising
pursuant to Section 11.2(i) shall not exceed $1,000,000 in the aggregate
(the "Cap").
(c)......Other Remedies. Notwithstanding anything to the contrary
contained in this Agreement, nothing in this Agreement shall preclude an
Indemnitee from seeking injunctive relief or specific performance with
respect to any covenant, agreement or obligation of an Indemnifying Party
contained in this Agreement. Nothing shall limit any remedy of an
Indemnitee for fraud, willful breach, intentional misrepresentation or
willful misconduct on the part of the an Indemnifying Party in connection
with this Agreement.
(d) .....Determination of Losses. If an Indemnitee proceeds with the
defense of any claim all fees and expenses, including attorney's fees,
relating to the defense of such Claim and/or the enforcement of its rights
hereunder shall be deemed to be Losses for which such Indemnitee is
entitled to indemnification hereunder whether or not the Indemnitee
prevails in any such action, suit or proceeding. For purposes of this
Article XI, "breach" shall be deemed to include any action, demand or claim
by a third party against an Indemnitee which, if true, would give rise to a
breach of a covenant, agreement, representation or warranty by an
Indemnifying Party. For purpose of this Article XI, Losses for breach of
any representation, warranty or covenant contained in this Agreement shall
be determined without giving effect to any qualification or limitation
contained in such representation, warranty or covenant as to "Material
Adverse Effect."
(e)......Enviro-Energy Corp. The Buyer Indemnitees shall not assert
any indemnification claim against Enviro-Energy Corp., a wholly-owned
subsidiary of Parent, except to the extent that any portion of the Purchase
Price is or shall be used by Parent, directly or indirectly, to fund any of
the operations of such entity.
11.6 Treatment of Indemnification Payments. The Companies, Parent and Buyer
agree to treat (and cause their Affiliates to treat) any payments received
pursuant to Article XI as adjustments to the Purchase Price for all Tax
purposes, to the maximum extent permitted by applicable law.
ARTICLE XII
TAX MATTERS
12.1 Tax Indemnity.
(a)......Parent shall pay and indemnify and hold harmless Buyer and
each Affiliate of Buyer, including Enviro-Safe (NE), from and against: (i)
all Taxes (or the nonpayment thereof) of the Companies for any period
ending on or before the Closing Date (a "Pre-Closing Tax Period") and any
pre-Closing Straddle Period; (ii) any and all Taxes of Parent or any
Affiliate of Parent or any other Business Entity or other Person imposed on
Enviro-Safe (NE) or on Buyer, as a transferee or successor, by contract or
pursuant to any law, rule or regulation, which Taxes relate to their
conduct of business or any other event or transaction occurring on or
before the Closing Date or as a result of the closing of the transactions
contemplated by this Agreement; (iii) any Tax incurred or suffered by
Enviro-Safe (NE) , Buyer or any of their Affiliates arising out of a breach
of any representation or warranty in Section 6.17, or any covenant or
agreement contained in this Article XII; and (iv) all Claims arising out of
or incident to the imposition, assessment or assertion of any Tax described
in clauses (i), (ii) and (iii) above. Notwithstanding anything in this
Agreement to the contrary, all matters relating to Taxes will be governed
by this Article XII and no provision of Article XI will limit, modify or
offset the rights or obligations of the parties hereunder.
(b)......For purposes of this Agreement, the portion of Tax, with
respect to the income, property or operations of Enviro-Safe (NE) that is
attributable to any Tax period that begins on or before the Closing Date
and ends after the Closing Date (a "Straddle Period") will be apportioned
between the period of the Straddle Period that extends before the Closing
Date through the Closing Date and the period of the Straddle Period that
extends from the day after the Closing Date to the end of the Straddle
Period in accordance with this Section 12.1(b). The portion of such Tax
attributable to the pre-Closing Straddle Period will be deemed equal to the
amount that would be payable if the Straddle Period ended on and included
the Closing Date. The portion of Tax attributable to a Post-Closing
Straddle Period will be calculated in a corresponding manner.
(c)......Any amount paid pursuant to this Section 12.1 will be treated
as an adjustment to the Purchase Price, unless otherwise required by law.
(d)......Any indemnity payment to be made pursuant to this Section
12.1 must be paid by wire transfer of immediately available funds no later
than ten (10) days after Buyer makes written demand upon Parent therefor.
(e)......The indemnification provisions in this Section 12.1
(including on account of a misrepresentation or breach of any of the
representations and warranties in Section 6.17) are in addition to the
indemnity provision of Section 11.2 and will survive the Closing until
thirty (30) days after the expiration of the applicable statute of
limitations.
12.2 Tax Returns.
(a)......Parent shall prepare, or caused to be prepared, and timely
file, all original Tax Returns of the Companies and Parent that are due
with respect to any Pre-Closing Tax Period that have not yet been filed, on
a basis consistent with past practice, except to the extent required by
applicable law, and shall timely pay, or cause to be timely paid, all Taxes
shown as due and owing on such Tax Returns. Parent shall allow Buyer at
least twenty (20) days in which to review such Pre-Closing Tax Period Tax
Returns, prior to their filing and shall provide to Buyer such information
that is reasonably requested by Buyer to confirm Parent's adherence to past
practice. If Buyer, within twenty (20) days after delivery of such Tax
Return, notifies the Parent in writing that it objects to any items in such
Tax Return, the disputed items shall be resolved pursuant to Section
12.2(c). If Buyer does not respond within twenty (20) days, Buyer shall not
be entitled to object to any item in such Tax Return, and Parent shall file
such Tax Return. The cost of preparing such Tax Returns shall be borne by
Parent.
(b) If the Parent on the one hand, and Buyer, on the other, disagree
as to the treatment of any item on any Tax Return described in Section
12.2(a) hereof, Parent and Buyer shall promptly consult each other in an
effort to resolve such dispute in good faith. If any such point of
disagreement cannot be resolved in ten (10) days of the date of
consultation, the Independent Accountant shall resolve any remaining
disagreements. The determination of the Independent Accountant shall be
final, conclusive and binding on the parties. The costs, fees and expenses
of the Independent Accountant shall be borne equally by Buyer, on the one
hand, and Parent, on the other. Nothing in this Agreement shall prevent the
timely filing of a Tax Return by the preparing party. However, the
preparing party shall file an amended Tax Return to reflect resolution of
the items in dispute by the parties or the Independent Accountant, as the
case may be.
(c)...... All transfer, documentary, sales, use, stamp, registration,
value added and other such Taxes and fees (including any penalties and
interest) imposed in connection with this Agreement will be borne by
Parent.
12.3 Cooperation; Audits; Tax Claims..
(a)......In connection with the preparation of Tax Returns, audit
examinations, and any administrative or judicial proceedings relating to
the Tax liabilities imposed on Enviro-Safe (NE), Buyer, on the one hand,
and Parent, on the other hand, shall cooperate fully with each other,
including, without limitation, the furnishing or making available during
normal business hours of records, personnel (as reasonably required), books
of account, powers of attorney or other materials necessary or helpful for
the preparation of such Tax Returns, the conduct of audit examinations or
the defense of claims by any Governmental Authority as to the imposition of
Taxes.
(b)......Notification. If a claim shall be made by any Taxing
authority, which, if successful, might result in an indemnity payment to
the indemnified parties pursuant to this Article XII, the indemnified
parties shall notify any Indemnifying Parties reasonably promptly of such
claim (a "Tax Claim"); provided, however, that the failure to give such
notice shall not affect the Indemnifying Parties' obligations hereunder,
except to the extent the Indemnifying Parties have actually been prejudiced
as a result of such failure.
(c)......Control of Proceedings. The Indemnifying Party shall control
all proceedings taken in connection with any Tax Claim for which such
Indemnifying Party is liable under this Article XII and may make all
decisions in connection with such Tax Claim; provided, however, that the
Indemnified Parties and their counsel or tax accountant shall have the
right, solely at the Indemnified Parties' own expense, to participate in
the prosecution or defense of such Tax Claim.
12.4 Tax Sharing Agreements. All Tax sharing agreements or similar
agreements with respect to or involving Enviro-Safe (NE) shall be terminated as
of the Closing Date and, after the Closing Date, Enviro-Safe (NE) shall not be
bound thereby nor have any liability thereunder.
12.5 Intentionally Omitted. .
12.6 2008 Estimated Taxes. Within forty-five (45) days after the Closing
Date, Parent shall make estimated tax payments to the IRS and all applicable
state taxing authorities sufficient to cover any and all Taxes expected to be
due and owing by Parent and the Companies to such taxing authorities for the
Pre-Closing Tax Period or related to any event or transaction contemplated by
this Agreement, and the satisfaction of any YAGI/GS CleanTech Obligations, and
Parent shall provide Buyer with copies of any and all filings made in connection
with such estimated payments.
ARTICLE XIII
MISCELLANEOUS
13.1 Fees and Expenses. Each of the parties hereto will pay and discharge
its own expenses and fees in connection with the negotiation of and entry into
this Agreement and the consummation of the transactions contemplated hereby.
13.2 Notices. All notices, requests, demands, consents and communications
necessary or required under this Agreement or any other Purchase Document shall
be made in the manner specified, or, if not specified, shall be delivered by
hand or sent by registered or certified mail, return receipt requested, or by
telecopy (receipt confirmed) to:
if to the Buyer:
Triumvirate Environmental, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Facsimile Transmission Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
The Prudential Tower
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C./▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile Transmission Number: (▇▇▇) ▇▇▇-▇▇▇▇
if to Enviro-Safe and Parent:
GS Enviro Services, Inc.
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Facsimile Transmission Number: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, P.C.
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile Transmission Number: ▇▇▇-▇▇▇-▇▇▇▇
All such notices, requests, demands, consents and other communications
shall be deemed to have been duly given or sent two (2) days following the date
on which mailed, or on the date on which delivered by hand or by facsimile
transmission (receipt confirmed), as the case may be, and addressed as
aforesaid.
13.3 Successors and Assigns. All covenants and agreements set forth in this
Agreement and made by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the successors and assigns of such party, whether or not
so expressed, except that the Company and the Parent may not assign or transfer
any of their respective rights or obligations under this Agreement without the
consent in writing of the Buyer. TEI may assign its rights and obligations
hereunder to one or more Affiliates of TEI.
13.4 Counterparts; Descriptive Headings; Variations in Pronouns. This
Agreement may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which together shall constitute one
and the same instrument, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart. The headings
of the sections and paragraphs of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the identity of the Person or Persons
may require.
13.5 Severability; Entire Agreement. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason in any jurisdiction, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions hereof
shall not be in any way impaired or affected, it being intended that each of the
parties' rights and privileges shall be enforceable to the fullest extent
permitted by law, and any such invalidity, illegality and unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. To the fullest extent permitted by law, the parties
hereby waive any provision of any law, statute, ordinance, rule or regulation
which might render any provision hereof invalid, illegal or unenforceable. This
Agreement, including the Schedules and Exhibits referred to herein, is complete,
and all promises, representations, understandings, warranties and agreements
with reference to the subject matter hereof, and all inducements to the making
of this Agreement relied upon by any of the parties hereto, have been expressed
herein or in said Schedules or Exhibits. This Agreement may not be amended
except by an instrument in writing signed on behalf of each Company, the Buyer
and Parent.
13.6 Further Assurances. Both before and after the Closing Date, each party
will cooperate in good faith with the other parties, will take all appropriate
action and execute any agreement, instrument or other writing of any kind which
may be reasonably necessary or advisable to carry out and confirm the
transactions contemplated by this Agreement.
13.7 Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement or the other Purchase Documents, except as provided
in Articles XI and XII, each party shall pay for its own attorneys' fees and
costs.
13.8 Course of Dealing. No course of dealing and no delay on the part of
any party hereto in exercising any right, power, or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. The failure of any of the parties to this Agreement
to require the performance of a term or obligation under this Agreement or the
waiver by any of the parties to this Agreement of any breach hereunder shall not
prevent subsequent enforcement of such term or obligation or be deemed a waiver
of any subsequent breach hereunder. No single or partial exercise of any rights,
powers or remedies conferred by this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
13.9 GOVERNING LAW.. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE CHOICE OF LAW RULES THEREOF).
13.10 WAIVER OF JURY TRIAL. EACH OF THE BUYER, EACH COMPANY AND PARENT
HEREBY EXPRESSLY WAIVES ITS OR HIS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OTHER
PURCHASE DOCUMENT, THE ACQUIRED ASSETS, THE ENVIRO-SAFE (NE) STOCK OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT. EACH
COMPANY, PARENT AND BUYER ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH
BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY PARTY. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH COMPANY, PARENT, AND
THE BUYER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH
ITS OR HIS LEGAL COUNSEL; AND THAT EACH VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE AND MAY
ONLY BE MODIFIED IN AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, ANY OTHER PURCHASE DOCUMENT OR THE SHARES. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT
A JURY) BY THE COURT.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF the parties hereto have executed this Agreement under seal as
of the date first set forth above.
ATTEST: BUYER:
TRIUMVIRATE ENVIRONMENTAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President
ATTEST: . PARENT:
GS ENVIRO SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and CEO
THE COMPANIES:
ATTEST: ENVIRO-SAFE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and CEO
ATTEST: ENVIRO-SAFE CORPORATION (NE)
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and CEO