EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of this 1st day of May,
1997, by and among
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual residing at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇▇"),
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual residing at ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ("ORLANDO"),
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual residing at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇▇"),
THE ESTATE OF ▇▇▇▇▇▇▇ DELBROCCOLO, SR., with an address c/o Farrell, Fritz,
Caemmerer, Cleary, ▇▇▇▇▇▇▇▇ and Armentano, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("DELBROCCOLO ESTATE"), and
STERICYCLE, INC., a Delaware corporation with its principal office at ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ "Purchaser").
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, and DELBROCCOLO ESTATE are sometimes individually
referred to hereinafter as a "Seller" and collectively referred to hereinafter
as the "Sellers".
Witnesseth:
Whereas:
A. Sellers are collectively the owners of all of the issued and
outstanding shares of capital stock of ENVIRONMENTAL CONTROL CO., INC.,
a New York corporation ("ECCO"); and
B. Purchaser has agreed to purchase all the issued and outstanding stock
of ECCO from the Sellers, and the Sellers have agreed to sell all of
the issued and outstanding stock of ECCO to Purchaser, on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual benefits to be derived from
this Agreement and of the representations, warranties, conditions and promises
hereinafter contained, the parties hereby agree as follows:
1. DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, the following terms
shall have the following meanings:
(a) "AFFILIATE" shall mean any Person which either directly or
indirectly controls, is controlled by or is under common control with, a
specified Person.
(b) "AGREEMENT" shall refer to this Stock Purchase Agreement and the
Schedules and Exhibits attached hereto, as amended or modified in the manner
provided in this Stock Purchase Agreement. The terms "herein", "hereof",
"hereunder" and like terms shall be taken as referring to this Agreement in its
entirety and shall not be limited to any particular provision of this Agreement
unless the context in which such terms are used indicates a contrary intention.
(c) "ANNUAL REVENUES" shall mean the gross billed revenues of ECCO as
set forth in the unaudited financial statements of ECCO, as prepared internally,
consistent with past practice of ECCO prior to the Closing Date (as hereinafter
defined).
(d) "CODE" shall mean tile Internal Revenue Code of 1986, as amended.
(e) "ERISA" shall mean the Employee Retirement Income Act of 1974, as
amended, and the regulations promulgated thereunder.
(f) "GOVERNMENTAL ENTITY" shall mean any national or federal
government, any state, regional, local or other political subdivision thereof
and any person or entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
(g) "IRS" shall mean the Internal Revenue Service or any successor
agency.
(h) "NOTE" or "NOTES" shall mean the promissory notes to the Sellers
in the form annexed hereto as EXHIBIT "A".
(i) "PERSON" shall mean an individual, corporation, limited liability
company, joint venture, trust or unincorporated association, government or any
department or agency thereof, or any other entity.
(j) "PURCHASE PRICE" shall mean the aggregate purchase price of Six
Million Three Hundred Thousand ($6,300,000) Dollars payable in the manner set
forth in Paragraph 2.2 for the purchase of the Stock hereunder.
(k) "PURCHASER'S REPORTS" shall mean those documents listed on
SCHEDULE 1.1.
(l) "RECEIVABLES" shall have the meaning set forth in Paragraph 4.14.
(m) "STOCK" shall mean all of the shares of the issued and
outstanding common stock, no par value, of ECCO.
(n) "SUBSIDIARY" shall mean any Person in which a specified Person,
directly, or indirectly, owns fifty percent (50%) or more of the voting
securities or interests or general partnership interests, and any Subsidiary of
a Subsidiary.
(o) "1933 ACT" shall mean the Securities Act of 1933, as amended, and
the regulations promulgated thereunder.
(p) "TAXES" shall mean all federal, state and local income, excise,
accumulated earnings, personal holding company, payroll, F.I.C.A., unemployment,
withholding, franchise, real property, personal property, intangible, sales,
payroll, disability and other taxes.
(q) "TRANSFER STATION" shall mean the medical waste transfer station
operated by ECCO at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇.
2. TERMS OF TRANSACTION
2.1 PURCHASE AND SALE. On the terms and subject to the conditions of this
Agreement, at the Closing, the Sellers shall sell, assign and transfer the Stock
to Purchaser free and clear of all liens, encumbrances, claims, charges,
assessments, restrictions and rights in favor of any Person.
2.2 PURCHASE PRICE. The aggregate Purchase Price for the Stock is Six
Million Three Hundred Thousand ($6,300,000) Dollars, which shall be payable
at Closing, as follows:
(a) an aggregate of Three Million ($3,000,000) Dollars, in cash less
an adjustment for the Holdback Amount (as defined in Paragraph 2.2(c)) and, by
wire transfer to an account designated by each of the Sellers in accordance with
their respective pro rata share of the cash purchase price as set forth on
SCHEDULE 2.2, as hereinafter adjusted in Paragraph 2.6;
(b) an aggregate of Two Million Three Hundred Thousand ($2,300,000)
Dollars by delivery to each of the Sellers of a Note substantially in the form
annexed hereto as EXHIBIT "A". The Notes shall be secured by an irrevocable
letter of credit (the "Letter of Credit") substantially in the form annexed
hereto as EXHIBIT "B". Each such Note shall be in a principal amount
representing each respective Seller's pro rata share of the Note portion of the
Purchase Price set forth on SCHEDULE 2.2;
(c) an aggregate of One Hundred Seventy Five Thousand ($175,000.00)
Dollars in cash (the "HOLDBACK AMOUNT") will be retained by Purchaser and paid
to the Sellers, on a pro rata basis, or retained by the Purchaser as determined
in accordance with Paragraph 2.6(d);
(d) such number of shares of the Purchaser's restricted common stock
(the "Purchaser's Stock") having an aggregate fair market value of One Million
($1,000,000) Dollars. The number of shares of Purchaser's Stock to be so issued
shall be computed on the basis of the average of the daily closing prices for
the Purchaser's common stock on The NASDAQ Stock Market, Inc. ("NASDAQ") for the
thirty (30) consecutive business days for which NASDAQ was open for trading
immediately preceding the Closing Date.
A certification (the "PURCHASER'S CERTIFICATION") by an officer of the
Purchaser, setting forth the number of shares of the Purchaser's Stock to be
issued as set forth above, shall be delivered at the Closing to the Sellers. The
Purchaser's Certification will include a copy of the related instructions to the
Purchaser's transfer agent (the "TRANSFER AGENT") directing the prompt issuance
and delivery of the Purchaser's Stock within five (5) business days following
the Closing to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, as pledgeholder (the "PLEDGEHOLDER"),
to be held pursuant to the terms of the Stock Pledge Agreement annexed hereto as
EXHIBIT "C". Certificates representing the number of shares of the Purchaser's
Stock set forth in the Purchaser's Certification shall be issued in an amount
representing each Seller's pro rata share of the portion of the Purchase Price
represented by the Purchaser's Stock as set forth on SCHEDULE 2.2.
2.3 EMPLOYEE BONUS. At the Closing, Purchaser shall pay Five Hundred
Thousand ($500,000) Dollars, by wire transfer payable to ▇▇▇▇▇▇▇, representing
an employment bonus in connection with his employment by the Purchaser following
the Closing, it being understood and agreed that the payment of the foregoing
amount shall not be forfeitable by ▇▇▇▇▇▇▇ for any reason whatsoever, nor does
it constitute any commitment or obligation on the part of (a) ▇▇▇▇▇▇▇ to be
employed or continue employment with ECCO, or (b) ECCO to employ or continue the
employment of ▇▇▇▇▇▇▇.
2.4 LEASE OF THE TRANSFER STATION. On the Closing Date, Purchaser shall
cause ECCO to enter into (a) a lease (the "TRANSFER STATION LEASE") for the real
property on which the medical waste Transfer Station is currently operated by
ECCO (the "REAL PROPERTY") with Boston Post Partners, LLC, the affiliate of
▇▇▇▇▇▇▇ which owns the Real Property (the "LANDLORD"), (b) a Purchase Option
granting Purchaser the right to purchase the Real Property (the "PURCHASE
OPTION"), (c) a Memorandum of Lease to be recorded with the Register of Deeds on
the Closing Date (the "MEMORANDUM OF LEASE") and (d) a Memorandum of Purchase
Option to be recorded with the Register of Deeds on the Closing Date (the
"MEMORANDUM OF PURCHASE OPTION"). The Transfer Station Lease, the Purchase
Option, the Memorandum of Lease and the Memorandum of Purchase Option shall be
substantially in the forms annexed hereto as EXHIBITS "D", "E", "F" AND "G"
respectively.
2.5 EMPLOYMENT OF ▇▇▇▇▇▇▇. On the Closing Date, Purchaser shall retain
▇▇▇▇▇▇▇ as the President of ECCO, on such terms and conditions as shall be
mutually agreeable to the parties. The employment of ▇▇▇▇▇▇▇ shall be at his
current compensation, and will include all of the benefits and the car allowance
currently provided as set forth on SCHEDULE 4.21, and shall be on an "at will"
basis. In connection with such employment, at the Closing ▇▇▇▇▇▇▇ will enter
into the Restrictive Covenant Agreement with the Purchaser and ECCO in the form
annexed hereto as EXHIBIT "H".
2.6 CLOSING ADJUSTMENTS. On the Closing Date, all items of ECCO's revenues
and expenses that have accrued up to the Closing Date shall be adjusted and
apportioned by adjustment of the cash portion of the Purchase Price in the
following manner:
(a)(i) The Sellers shall deliver a Schedule 2.6 of ECCO's
obligations to third parties, computed and dated as close as
practicable to the Closing Date (the "EXISTING OBLIGATIONS"),
which shall set forth all unpaid costs and expenses incurred
by ECCO, computed on the accrual basis, up to the Closing
Date. The Existing Obligations shall be deducted by Purchaser
from the cash portion of the Purchase Price that is payable
at the Closing. The Existing Obligations shall include, but
not be limited to, all trade debt incurred prior to the
Closing Date for goods or services, rent, all taxes and
similar charges and interest and penalties thereon (including
real estate and personal property taxes and special
assessments, franchise and income taxes, unemployment taxes,
sales and use taxes, and water and sewer charges), insurance
premiums, utilities (water, gas, sewer, telephone and
electricity), judgments, fines, penalties, tickets, costs and
expenses from municipal governments, employee wages, vacation
benefits and other benefits.
(ii) The term "Existing Obligations" shall include (1) accrued
interest, penalties and other charges payable on any and all of
ECCO's bank debt (regardless of whether or not it is secured by
ECCO's rolling stock or other assets), and (2) the amount
required to satisfy in full all of ECCO's term loans, working
capital loans, credit lines and other loans and obligations to
any Person (other than those loans which are secured by liens on
ECCO's trucks, other rolling stock and reusable containers).
(iii) "EXISTING OBLIGATIONS" shall be (I) reduced by ECCO's prepaid
expenses, if any, related to the payment of premiums on its
general liability insurance policy, umbrella policy and
automobile policy, Workmen's Compensation Insurance and New
Jersey prepaid permit fees (but excluding any other prepaid
expenses) to the extent applicable to periods after the Closing
Date, (2) increased by the disposal cost of the waste in the
Transfer Station on the Closing Date, which amount shall be set
forth as a separate line item on the Schedule of Existing
Obligations, and (3) increased or decreased, as appropriate, for
such other items as the parties deem appropriate as set forth on
the Schedule 2.6 at the Closing Date.
(b) The Sellers shall deliver a Schedule 2.6 of ECCO's accounts
receivable dated as of the Closing Date (less any sales or other taxes) (the
"EXISTING ACCOUNTS RECEIVABLE"). The cash portion of the Purchase Price shall be
increased by the Existing Accounts Receivable.
(c) "NET ACCOUNTS RECEIVABLE", as used herein, shall mean the Existing
Accounts Receivable less the Existing Obligations, increased or decreased, as
applicable, pursuant to Paragraph 2.6(a)(iii) above. At the Closing, the
Purchase Price shall be reduced five and one half percent (5.5%) of the Net
Accounts Receivable. The parties hereto acknowledge and agree that the 5.5%
adjustment has been made to allow the Sellers and the Purchaser to share the
benefit of the spread between the maximum Federal personal income rate
applicable to capital gains (28%) and that applicable to ordinary income (39%).
If the capital gains tax is reduced in 1997 and is applicable to the sale of the
Stock, then Sellers shall pay to Purchaser, on a pro rata basis, an amount
("EXTRA TAX SAVINGS") equal to 50% of the excess of the product of (1) the Net
Accounts Receivable, and (2) the difference between the capital gains tax rate
in effect on the date hereof and such reduced capital gains tax rate.
Sellers shall pay the Extra Tax Savings to Purchaser within thirty (30) days
after Purchaser gives them written notice of the amount due, which notice will
be given after final adoption of any tax legislation giving rise to such Extra
Tax Savings. If Sellers do not pay such amount to Purchaser when due pursuant to
this paragraph, Purchaser may reduce the next payments due under the Notes or
any other payments due to Sellers by the amount so due from each Seller, as
applicable.
(d) Adjustments
(i) During the 120 day period following the Closing Date, ECCO will
use reasonable efforts to collect all Existing Accounts
Receivable in the ordinary course of ECCO's business, consistent
with past practice of ECCO. If and to the extent that any
Existing Accounts Receivable have not been collected by ECCO
within one hundred and twenty (120) days following the Closing,
then the Purchaser shall notify the Sellers within one hundred
fifty (150) days after the Closing Date that a portion of the
Existing Accounts Receivable remains uncollected (the
"UNCOLLECTED ACCOUNTS RECEIVABLE").
(ii) On the date that is one hundred twenty days after the Closing
Date, Purchaser shall also notify Sellers, of any additional
Existing Obligations that existed on the Closing Date but which
were not listed on the estimated Schedule provided by Sellers at
the Closing pursuant to Paragraph 2.6(a)(i) (the "ADDITIONAL
OBLIGATIONS").
(iii) If Purchaser does not receive any written objection from Sellers
to the amount of the Uncollected Accounts Receivable and
Additional Obligations within ten (10) days after Purchaser gives
them such notices, then Purchaser may retain the Holdback Amount
to the extent of the Uncollected Accounts Receivable and
Additional Obligations; in which event, within 180 days after the
Closing Date, Purchaser shall pay to Sellers an amount equal to
the excess of the Holdback Amount, if any, remaining after
payment to Purchaser of the Uncollected Accounts Receivable and
Additional Obligations; such payment to be made to the Sellers on
a pro rata basis in accordance with the percentages set forth in
SCHEDULE 2.2.
(iv) If any dispute arises as to the determination the amount of
Uncollected Accounts Receivable and or Additional Obligations,
such disputes shall (1) be resolved in accordance with the
provisions of Paragraph 2.8 (b) hereof and (2) Purchaser's
obligation to release the Holdback Amount, or any excess Holdback
Amount, shall not occur until thirty (30) days following the
final determination of the Disputed Items in accordance with
Paragraph 2.8(b).
(v) If and to the extent the Uncollected Accounts Receivable and
Additional Obligations exceed the Holdback Amount, then the
Sellers shall pay Purchaser an amount equal to such excess within
thirty (30) days of written demand therefore, subject to the
notice and objection procedures set forth in this Paragraph
2.6(d). In addition to any other remedies that may be available
to it, if the Purchaser fails to receive payment from the Sellers
of such excess Uncollected Accounts Receivable and Additional
Obligations within such thirty (30) day period, then Purchaser
may offset such unpaid amount against payments thereafter
becoming due and payable pursuant to the Notes. The obligation of
Sellers to pay Purchaser the excess Uncollected Accounts
Receivables and Additional Obligations is an adjustment to the
Purchase Price as set forth herein and shall not be included in
the indemnification and "Basket" provisions set forth in
Paragraph 10 hereinafter.
(e) If and to the extent that either any Seller or Purchaser fails to
pay any amount pursuant to this Paragraph 2.6(d) when the same is due and
payable pursuant to this Paragraph, then such past due amount shall accrue
interest from the due date therefore, and if a party collects such amounts
through resort to legal process, then he or it shall be entitled to have its
legal fees and court costs paid by the defaulting party.
(f) Simultaneously with the payment to Purchaser of the amount of the
Uncollected Accounts Receivable and Additional Obligations, either by deduction
from the Holdback Amount and/or payment by Sellers, the remaining Uncollected
Accounts Receivable and all rights thereunder shall be conveyed to the Sellers
free and clear of any liens, interests or encumbrances in favor of third
parties.
2.7 SUBCHAPTER S ELECTION. ECCO's tax election under Subchapter S of the
Code will terminate as of the Closing Date. Within ninety (90) days after the
Closing Date, Sellers shall cause the outside firm of certified public
accountants retained by ECCO prior to the Closing to prepare and file short year
federal, state and local income, franchise and other tax and information returns
for ECCO for the period January 1, 1997 through the Closing Date. ECCO's income
taxes shall be computed based on the exact method, rather than on the pro rata
method, of computation. Sellers shall pay any income and other taxes that are
payable by ECCO pursuant to such tax returns to the extent that Sellers and
Purchaser did not adjust for such accrued taxes at or in connection with the
Closing. Sellers shall pay the fees charged by the accountants for preparing all
such tax and information returns. Purchaser shall give the Sellers and their
accountants reasonable access to the books and records of ECCO for pre-Closing
Date periods for the purpose of preparing the tax and information returns
described in this Paragraph 2.7.
2.8 (a) REVENUE SHORTFALL.
If the Final Annual Revenues (as hereinafter defined) of ECCO
determined as provided herein for the twelve (12) calendar month period
immediately following the Closing (the "Adjustment Period") are less than
[INFORMATION OMITTED; FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] Dollars, then the Purchase Price shall be reduced by an amount equal
to the shortfall (the "Revenue Shortfall"). Purchaser shall recover the Revenue
Shortfall from Sellers in the following manner:
(i) First, Sellers shall deliver to the Purchaser for cancellation,
that number of shares of the Purchaser's Stock having a value
(computed in accordance with the provisions of this Paragraph
2.8(a)(i)) equal to the Revenue Shortfall. For the purposes of
this Paragraph 2.8, the "value" of the Purchaser's Stock shall be
computed on the basis of the average of the daily closing prices
for the Purchaser's common stock on NASDAQ for the thirty (30)
consecutive business days on which NASDAQ was open for trading
immediately preceding the first anniversary of the Closing Date.
The Revenue Shortfall reductions in the Purchaser's Stock shall
be applied pro rata to each of the Sellers to reduce their shares
of the Purchaser's Stock;
(ii) Second, if the Revenue Shortfall exceeds the aggregate value (as
computed pursuant to Paragraph 2.8(a)(i)) of the Purchaser's
Stock held by the Pledgeholder, the principal amount of the Notes
shall be reduced by the balance of the Revenue Shortfall. The
outstanding principal amounts of the Notes shall be reduced on a
pro rata basis, and the annual payments due under the Notes shall
be recalculated over the balance of the term of the Notes; and
(iii) Third, if the Revenue Shortfall exceeds the value (as computed
pursuant to Paragraph 2.8(a)(i)) of the Purchaser's Stock and the
Notes, then the balance of the Revenue Shortfall shall be the
joint and several obligation of the Sellers, which shall be due
and payable by Sellers to Purchaser within ten (10) days after a
written request therefor from Purchaser.
(b) As soon as practicable following the close of each calendar quarter
during the Adjustment Period, the Purchaser shall deliver to the Sellers a
reasonably detailed calculation of the Annual Revenues as of the end of such
period, prepared by the Purchaser's internal accountants. Such information shall
be deemed preliminary and not final and be delivered for information purposes
only and neither party shall be estopped from adopting a position contrary to
such information as a result of its participation in the preparation of the
information or because of its failure to object to the data disclosed. As soon
as practicable but in no event later than 60 calendar days after the expiration
of the Adjustment Period, the Purchaser shall deliver to the Sellers a
reasonably detailed calculation of the Annual Revenues (the "REPORT") prepared
by the Purchaser's internal accountants. The Purchaser shall provide to the
Sellers access to all work papers, records and personnel reasonably necessary
for the Sellers to verify the Report. If, within 60 calendar days after the date
of the Purchaser's delivery of the Report, the Sellers, or any of them, shall
have any disagreement with respect thereto, then the Sellers, or any of them,
shall give written notice ("OBJECTION NOTICE") to Purchaser within such 60
calendar day period, specifying such disagreement and the basis therefor. The
failure by the Sellers, or any of them, to express their disagreement within
such 60 calendar day period will constitute Sellers' acceptance of the Report
and the calculation of Annual Revenues reflected therein shall constitute the
"FINAL ANNUAL REVENUES". If the Purchaser and the Sellers are unable to resolve
any disagreement among them within 30 calendar days after the Sellers give
notice of such disagreement, the items in dispute (collectively, the "DISPUTED
ITEMS") will promptly, but in any event by the end of such 30 day period, be
referred for determination to a "big six" accounting firm to be selected jointly
by the Purchaser and the Sellers (the "ACCOUNTANTS"). If the parties cannot
agree on the selection of a "big six" accounting firm by the end of such 30 day
period, the accountants for the Purchaser and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Leben shall
jointly within 15 days thereafter select a "big six accounting firm to which
Disputed Items will be referred and such accounting firm shall be the
Accountants for purposes of this Paragraph. The Accountants shall, within 30
calendar days of the date on which a Disputed Item has been referred to them for
determination, (1) make a determination with respect to any item which has been
submitted by the parties hereto for determination by the Accountants, and (2)
based on the items not in dispute and on the Accountants' determination of the
Disputed Items, calculate the resultant Final Annual Revenues. Such
determination and calculation will be (i) in writing, (ii) promptly furnished to
each of the parties hereto after the Disputed Items have been referred to the
Accountants, (iii) made in accordance with this Agreement and (iv) conclusive
and binding upon each of the parties hereto. In connection with their
determination of the Disputed Items, the Accountants will be entitled to review
the work papers, trial balances and similar materials prepared by the Purchaser
in connection with the preparation of the Report, and any books and records
related thereto. The Sellers shall pay the professional fees and expenses of the
Accountants, unless the Final Annual Revenues as determined by the Accountants
equals or exceeds 120% of the Annual Revenues as presented by the Purchaser, in
which event, the Purchaser shall pay 100% of the professional fees and expenses
of the Accountants.
(c) The Purchaser agrees that the following provisions of this
Paragraph 2.8(c) shall remain in effect during the Adjustment Period. The
Purchaser shall operate ECCO as a separate and distinct profit center and shall
maintain separate books of account and other financial records for ECCO. ▇▇▇▇▇▇▇
will have sole authority over and responsibility for running the day-to-day
operations of ECCO. ▇▇▇▇▇▇▇ shall operate ECCO in a manner that is consistent
with ECCO's past practices and with a view toward maintaining the revenues and
profitability of ECCO. Such responsibilities shall include, but shall not be
limited to:
(i) hiring and firing of personnel (including, but not limited to,
the hiring of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, so long as his compensation and
benefits shall not exceed the compensation and benefits paid to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ by ECCO prior to the Closing);
(ii) compensation of employees, including the determination of
commissions, fringe benefits, and car allowances, all subject to
the past practices of ECCO, and other policies relating to the
day-to-day operation of ECCO;
(iii) entering into any written agreement to retain any employee,
agent, consultant or professional advisor, provided however, (1)
no such agreement may exceed a maximum term of one year and/or
require a maximum payment in excess of Sixty Five Thousand
($65,000) Dollars (unless to replace an existing employee, in
which case the maximum amount is limited to the salary and
benefits of the replaced employee) and (2) any such agreements
must be consistent with the prior salary and hiring practices of
ECCO, unless ECCO obtains the prior written approval of
Purchaser;
(iv) determining and setting the prices and terms and conditions of
services to ECCO's customers, including, but not limited to,
decreases and increases with respect thereto, discounts and
penalties;
(v) selecting all vendors and suppliers and the pricing terms and
conditions in connection therewith (except however, that all
transactions with any affiliate of ▇▇▇▇▇▇▇, any other Seller or
ECCO are subject to the prior approval of the Purchaser);
(vi) determining all advertising and promotional expenditures;
(vii) determining whether to enter into, amend or terminate any
agreement with any customer;
(viii) overseeing the payment and discharge, when due and payable,
of all taxes, assessments and government charges imposed upon
ECCO's properties or upon the income or profits therefrom (in
each case before the same becomes delinquent and before
penalties accrue thereon) and all claims for labor, materials
or supplies which if unpaid might by law become a lien upon
any of its property, unless and to the extent that the same
are being contested in good faith and by appropriate
proceedings and adequate reserves (as determined in
accordance with GAAP) have been set aside on its books with
respect thereto;
(ix) insuring compliance with all applicable laws, rules and
regulations of all governmental authorities; and
(x) obtaining and continuing in force, with good responsible
insurance companies, adequate insurance covering risks of such
types and in such amounts as have been maintained by ECCO
consistent with the past practice of ECCO.
Notwithstanding anything set forth herein above, ▇▇▇▇▇▇▇ shall not pay any
liabilities or obligations of ECCO for pre-Closing date periods without the
express written consent of the Purchaser unless adjustments and prorations were
made for such liabilities or obligations in connection with the Closing pursuant
to Paragraph 2.6.
(d) Purchaser acknowledges and agrees that if at any time during the
Adjustment Period the cash flow of ECCO is inadequate to pay ECCO's operating
expenses and to enable ▇▇▇▇▇▇▇ to properly discharge his duties hereunder, then
Purchaser shall make sufficient funds available to ECCO to enable it to meet
such cash flow obligations in a timely manner.
(e) Without limiting the foregoing, the Purchaser shall take such
action during the Adjustment Period as shall be necessary to assure that ECCO
shall not (without the prior written consent of ▇▇▇▇▇▇▇):
(i) authorize, issue or sell, or enter into any agreement providing
for the authorization, issuance (contingent or otherwise) or sale
of any interest in ECCO, its equity securities, or notes or
obligations containing equity features, including, without
limitation, any security, note or obligation (1) convertible into
or exchangeable for equity securities, or (2) issued in
connection with the issuance of ECCO equity securities if in
either case the result of such issuance or sale would result in
change in control of ECCO;
(ii) merge or consolidate with any person or sell all or substantially
all of its assets to another person, or make any acquisition,
series of related acquisitions of the stock, assets or property
of another person or change ECCO's name;
(iii) liquidate, dissolve, recapitalize or reorganize in any form of
transaction;
(iv) increase the salary or other compensation pr benefits (including
car allowances) of any officer, agent or employee of ECCO, or
decrease the salary or other compensation or benefits (including
car allowances) of any officer, agent or employee or promote or
demote or change the duties or responsibilities of any such
officer, employee or agent;
(v) raise the prices of services to the customers of ECCO or effect
any decreases in prices or otherwise enter into, amend or
terminate any agreement with any customer;
(vi) establish any subsidiary or joint venture or become a partner of
any partnership or a member of any limited liability company or
make any investment in any other person or entity;
(vii) change its accounting methods and practices from those reflected
in the Financial Statements, including, but not limited to,
changes in its billing and collections procedures, which changes
would have any impact on procedures affecting ▇▇▇▇▇▇▇▇, accounts
receivable or revenues of ECCO which would impact Annual
Revenues;
(viii) grant any lien or encumbrance on any of its assets other than
(1) liens to secure the purchase of capital equipment; or (2)
liens on ECCO's accounts receivable;
(ix) relocate its principal executive offices from the existing
premises, or enter into leases for additional premises, or
maintain ECCO's books and records other than at the current
premises;
(x) retain or enter into any agreement (oral or written) to retain
any employee, agent, consultant or professional advisor;
(xi) enter into any transaction with any Affiliate of ECCO;
(xii) change the sales territories, vehicle fleet, equipment, customer
pick-up Schedules, make any changes to or consolidate any
customer routes, package supplies, disposal facilities, uniforms,
work Schedules, business forms or otherwise operate ECCO's
business other than in a manner consistent with the historical
operations of ECCO.
(f) If, during the Adjustment Period, Purchaser or any of its
Affiliates (other than ECCO), directly or indirectly, (1) acquires, or retains
any investment in, any person or entity which competes, directly or indirectly,
with the business of ECCO in the States of New York, New Jersey or Connecticut,
or (2) solicits any current or hereafter existing customer of ECCO for any
medical waste business, and any such business acquisition or customer
solicitation results in the loss of any existing customers of ECCO to Purchaser
or such Affiliate of Purchaser (whether by termination of such customer's
existing arrangement with ECCO or by such customer's failure to renew its
existing contract with ECCO), then ECCO's Final Annual Revenues shall be
adjusted to include the revenues which ECCO would otherwise have received from
such customer during the Adjustment Period calculated based on the tonnage rate
that would have been charged by ECCO and the actual tonnage serviced by
Purchaser or its Affiliate during the Adjustment Period from the medical waste
business that it conducts with such customers in an area serviced by ECCO.
(g) The parties hereto agree that the rights of ▇▇▇▇▇▇▇ and the
obligations of Purchaser and ECCO set forth in Paragraphs 2.8(c), (d), (e) and
(f) shall be in effect solely during the Adjustment Period. The Adjustment
Period and such rights and obligations shall terminate on the earliest to occur
of:
(i) the last day of the Adjustment Period;
(ii) the date on which Purchaser gives ▇▇▇▇▇▇▇ written notice of the
Purchaser's election to terminate the Adjustment Period;
(iii) if Purchaser or ECCO gives ▇▇▇▇▇▇▇ written notice terminating
▇▇▇▇▇▇▇'▇ employment by ECCO; or
(iv) if ▇▇▇▇▇▇▇ gives the Purchaser written notice of the Purchaser's
material breach of this Agreement, and such breach is not cured
within fifteen (15) days following receipt of such notice.
(h) If ECCO or Purchaser terminates, without cause, ▇▇▇▇▇▇▇'▇
employment with ECCO prior to the end of the Adjustment Period, or if ▇▇▇▇▇▇▇
shall terminate his employment with ECCO as a result of a breach by the
Purchaser as set forth in Paragraph 2.8(g)(iv), then the Adjustment Period shall
terminate and the adjustment to the Purchase Price for a Revenue Shortfall
contemplated in this Paragraph 2.8 shall be void and of no further force and
effect and the Pledged Stock will be released pursuant to the Stock Pledge
Agreement.
Notwithstanding the foregoing, if ▇▇▇▇▇▇▇ shall die or become disabled, and
ECCO and/or the Purchaser offers to retain ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to operate ECCO on
substantially the same terms and conditions as ▇▇▇▇▇▇▇ for the remainder of the
Adjustment Period, then whether or not Alutto accepts such position, the
requirement to adjust the Purchase Price for a Revenue Shortfall as set forth in
Paragraph 2.8 shall remain in full force and effect (and the Pledged Stock shall
remain subject to the Stock Pledge Agreement). In addition, if ▇▇▇▇▇▇▇
voluntarily terminates his employment with ECCO (other than pursuant to
Paragraph 2.8(g)(iv)), or if the Company shall terminate ▇▇▇▇▇▇▇'▇ employment
for "cause" (as hereinafter defined), then the requirement to adjust the
Purchase Price for a Revenue Shortfall as set forth in Paragraph 2.8 shall
remain in full force and effect (and the Pledged Stock shall remain subject to
the Stock Pledge Agreement).
If ▇▇▇▇▇▇▇'▇ employment shall terminate as a result of his death or
disability and ECCO or Purchaser do not offer to retain Alutto to replace
▇▇▇▇▇▇▇ during the remainder of the Adjustment Period, then the Adjustment
Period shall terminate and the adjustment to the Purchase Price contemplated by
this Paragraph 2.8 shall be void and of no further force and effect and the
Pledged Stock will be released pursuant to the Stock Pledge Agreement.
(i) For purposes hereof, "cause" shall mean (i) the breach by ▇▇▇▇▇▇▇
of any material provisions of this Agreement which causes harm to the Purchaser
or ECCO that is materially injurious and which breach is not cured to the
reasonable satisfaction of the Purchaser within (15) days from the date on which
written notice of such breach is given by the board of directors of the
Purchaser to ▇▇▇▇▇▇▇; or (ii) a determination by the board of directors of the
Purchaser that ▇▇▇▇▇▇▇ has intentionally engaged in acts of fraud, theft,
embezzlement or other similar intentional acts of dishonesty against ECCO or the
Purchaser in connection with his employment; or (iii) ▇▇▇▇▇▇▇'▇ conviction of a
felony.
(j) For purposes hereof, "disabled" shall mean the inability of ▇▇▇▇▇▇▇
to perform his duties hereunder for a period of sixty (60) days in any 90 day
period.
(k) Any reference to ▇▇▇▇▇▇▇ in Paragraph 2.8 shall include ▇▇▇▇▇▇▇
▇▇▇▇▇▇, as his successor, if applicable.
3. CLOSING
3.1 CLOSING. The Closing shall consist of the delivery to Purchaser by the
Sellers of the documents described in Paragraph 3.3(a), the delivery to Sellers
by Purchaser of the Purchase Price and documents described in Paragraph 3.3(b),
and the delivery by Purchaser and Sellers of any other documents which any of
them are required to deliver at the Closing pursuant to this Agreement. The
Closing of the transactions contemplated in this Agreement shall not be deemed
to have occurred unless and until such documents and consideration have been
delivered by the parties, and none of these items shall be deemed to have been
delivered unless and until all of them have been actually delivered. At the
Closing, Sellers shall place Purchaser in control and possession of the business
engaged in by ECCO.
3.2 DATE AND PLACE. The purchase and sale of the Stock, the consummation
of the related transactions described in this Agreement, and the delivery of the
documents, instruments and agreements as required by this Agreement shall take
place at the offices of Sellers' attorneys, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, EAB Plaza,
Uniondale, New York 11556-0111, on or about May 5, 1997, at a time mutually
agreeable to the parties, or at such other time, date and place as the parties
to this Agreement may agree upon. Said date and hour of Closing is referred to
as the "Closing" in this Agreement. The "Closing Date" shall mean May 1, 1997.
3.3 CLOSING DOCUMENTS.
(a) At the Closing, Sellers shall execute and deliver, or cause to be
executed and delivered, the following to Purchaser:
(i) Certificates evidencing the Stock which shall have been properly
endorsed for transfer or accompanied by duly executed stock
powers, in either case executed in blank in favor of Purchaser,
as Purchaser may have directed prior to the Closing, with
signatures notarized;
(ii) The Stock Pledge Agreement duly executed by each of the Sellers
and dated the Closing Date;
(iii) The Restrictive Covenant Agreement duly executed by ▇▇▇▇▇▇▇ and
dated the Closing Date;
(iv) The Transfer Station Lease, the Purchase Option, the Memorandum
of Lease and the Memorandum of Purchase Option, each duly
executed by the Landlord and dated the Closing Date;
(v) All consents or approvals required from any Governmental Entity
or other Person to enable Sellers to consummate the transactions
contemplated by this Agreement, as set forth on SCHEDULE 9.5;
(vi) A certificate from the Secretary of State of New York dated not
more than ten (10) days prior to the Closing Date, as to the
legal existence and good standing of ECCO under the laws of such
state;
(vii) A certificate from the Secretary of State of New Jersey dated not
more than ten (10) days prior to the Closing Date, as to the
legal existence and good standing of ECCO as a foreign
corporation under the laws of such state;
(viii) The original minute books and stock record books of ECCO, to
the extent available; all original promissory notes,
agreements, instruments, certificates of title and other
documents, files and records of ECCO (all of which will be
deemed delivered at the office of ECCO);
(ix) The closing certificate referred to in Paragraph 8.4 herein, duly
executed by the Sellers and dated the Closing Date;
(x) The resignations of all of the directors and officers of ECCO,
duly executed by each such Person and dated the Closing Date;
(xi) Stock powers, executed by each Seller, in blank, for his shares
of Purchaser's Stock, which stock powers will be delivered to
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP to be held pursuant to the terms of the
Stock Pledge Agreement;
(xii) General Releases executed by each Seller in the form annexed
hereto as EXHIBIT "I" dated the Closing Date;
(xiii) The Escrow Agreement executed by each Seller in the form
annexed hereto as EXHIBIT "M" dated the Closing Date;
(xiv) The Authorization of Sellers' Agent, executed by each Seller in
the form annexed hereto as EXHIBIT "N" dated the Closing Date;
(xv) The Schedules of Existing Obligations and Existing Accounts
Receivable referred to in Paragraph 2.6, dated as close to the
Closing Date as practicable with a certification from each Seller
and the chief financial officer or the President of ECCO to the
best knowledge of such certifying person that such statement is
true, complete and correct and presents fairly the information
contained therein; and
(xvi) On behalf of the Delbroccolo Estate, letters testamentary, New
York State Tax Lien Waivers and an affidavit from the Executrix
of the Delbroccolo Estate to the effect that, at the time of his
death, ▇▇▇▇▇▇▇ Delbroccolo, Sr. was a domiciliary of the State of
New York.
(b) On the Closing Date, Purchaser shall deliver the following to the
Sellers:
(i) The wire transfer representing the cash portion of the Purchase
Price payable to each Seller, in the respective amounts set forth
on SCHEDULE 2.2 hereto;
(ii) The Notes, duly executed by Purchaser and dated the Closing Date;
(iii) The Letter of Credit;
(iv) A wire transfer in the amount of Five Hundred Thousand ($500,000)
Dollars payable to ▇▇▇▇▇▇▇;
(v) The Purchaser's Certification setting forth the number of shares
of Purchaser's Stock to be issued to the Seller as set forth in
Paragraph 2.2(c) herein above, along with a copy of the related
instructions to the Transfer Agent directing the issuance of the
Purchaser's Stock to the Sellers;
(vi) The Stock Pledge Agreement duly executed by Purchaser and the
Pledgeholder and dated the Closing Date;
(vii) The Restrictive Covenant Agreement duly executed by Purchaser and
dated the Closing Date;
(viii) The Transfer Station Lease, the Purchase Option, the
Memorandum of Lease and the Memorandum of Purchase Option,
each duly executed by ECCO, or the Purchaser, as tenant, and
dated the Closing Date;
(ix) All consents or approvals required from any governmental entity
or other person to enable Purchaser to consummate the
transactions contemplated by this Agreement, as set forth on
SCHEDULE 8.6;
(x) A certificate from the Secretary of State of Delaware, as to the
legal existence and good standing of Purchaser under the laws of
such state;
(xi) The Closing certificate referred to in Paragraph 9.4 herein, duly
executed by Purchaser and dated the Closing Date;
(xii) General Releases by ECCO of the Sellers in the form annexed
hereto as EXHIBIT "J" dated the Closing Date;
(xiii) The Escrow Agreement executed by Purchaser and dated the
Closing Date;
(xiv) Duly adopted resolutions of the Board of Directors of Purchaser,
certified by the secretary of Purchaser, and dated the Closing
Date, (1) authorizing and approving the execution and delivery of
this Agreement on behalf of Purchaser, and the performance by
Purchaser of the transactions contemplated in this Agreement in
accordance with its terms, and (2) authorizing and approving all
other necessary and proper corporate actions to enable Purchaser
to comply with the terms of this Agreement; and
(xv) A Secretary's Certificate of the officers of Purchaser, including
specimen signatures of those officers who are empowered to
execute this Agreement and the other documents required by this
Agreement, certified on the Closing Date by the secretary of
Purchaser.
4. REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Purchaser to enter into this Agreement and to consummate
the transactions contemplated hereby, each Seller represents and warrants to,
and agrees with, Purchaser (except with respect to the representations in
Paragraphs 4.2, 4.3 and 4.11, which each Seller makes only as to himself) that
each of the following statements are true on the date of this Agreement and will
be true on the Closing Date:
4.1 ORGANIZATION.
(a) ECCO is a corporation duly incorporated and organized under the
laws of the State of New York and is validly existing and in good standing under
the laws of such state with all requisite corporate power and authority to own,
operate or lease its properties and to carry on its business as now being
conducted. ECCO is duly qualified and licensed to do or transact business, and
is in good standing as a foreign corporation, in each jurisdiction in which the
character of the properties owned by it or the nature of the activities
conducted by it make such qualification or licensing necessary except where the
failure to be so qualified would not have a material adverse effect on the
business of ECCO; each such jurisdiction is listed on SCHEDULE 4.1.
(b) The minute books contain true and correct copies of ECCO's
Certificate of Incorporation, By Laws and all amendments thereto. The stock
certificate books of ECCO reflect accurately all transactions in the capital
stock of all classes.
4.2 DUE EXECUTION. This Agreement and each document, certificate and
agreement executed by each Seller in connection with this Agreement has been
duly and validly executed and delivered by each such Seller and, assuming due
execution and delivery by Purchaser, is a valid and binding obligation of each
such Seller enforceable against each Seller in accordance with its terms, except
to the extent enforceability may be limited by applicable insolvency,
bankruptcy, reorganization or similar laws affecting the enforcement of
creditor's rights generally.
4.3 OWNERSHIP OF THE STOCK. All of the Stock is owned by the Sellers in
the amounts set forth opposite their respective names on SCHEDULE 4.3, free and
clear of all liens, encumbrances, claims, charges, assessments, restrictions and
rights in favor of any Person except as contemplated hereby and except as set
forth in SCHEDULE 4.3. Except as set forth on SCHEDULE 4.3, there are no
restrictions with respect to the transferability of the Stock to Purchaser in
accordance with the terms of this Agreement, and upon and as a result of
transfer of the Stock to Purchaser by the Sellers, Purchaser will receive good
title to the Stock, free and clear of all liens, encumbrances, claims, charges,
assessments and restrictions.
4.4 CAPITAL STOCK.
(a) CAPITALIZATION. The authorized capital stock of ECCO consists of
200 shares of common stock, no par value, of which 118.14 shares are issued and
outstanding.
(b) DUE AUTHORIZATION. All of the Stock has been duly and validly
authorized and issued and is fully paid and non-assessable. None of the Stock
has been offered, sold, issued or acquired in violation of any preemptive,
subscription or other rights to purchase or acquire such securities or in
violation of the 1933 Act or the securities laws or any other applicable laws or
regulations of any jurisdiction.
(c) RIGHTS TO ACQUIRE SECURITIES. Except as contemplated hereby and as
set forth on SCHEDULE 4.4, there are no outstanding rights, warrants, options,
subscriptions, agreements or commitments giving any Person any current or future
right to require ECCO to sell or issue any capital stock or other securities or
any agreement or arrangement restricting the right of ECCO to issue or sell any
capital stock or other securities.
(d) ECCO INVESTMENTS. Except for those matters described and those
Persons named on SCHEDULE 4.4, ECCO does not (i) own any shares of any capital
stock of any corporation, membership interests in any limited liability company
or any interest as a general partner or joint venturer in any general or limited
partnership or joint venture, and (ii) have any other investment (debt or
equity) or commitments to make such investments in any Person.
4.5 PERMITS, LICENSES. ETC.
(a) SCHEDULE 4.5 is an accurate list and summary description of all
material permits, licenses, orders, approvals, variances, franchises,
certificates, owned or held by ECCO in connection with the operation of its
business, including those required under Environmental Laws (as defined in
EXHIBIT "L"), all of which are valid, in good standing and in full force and
effect. Except as set forth on SCHEDULE 4.5, no other permits, licenses, orders,
approvals, variances or franchises material to the business are required under
applicable federal, state or local laws or regulations for the operation of the
business as presently conducted by ECCO.
(b) SCHEDULE 4.5 sets forth an accurate list of all trademarks,
tradenames, patents, patent applications and copyrights owned or held by ECCO or
used by ECCO in connection with the operation of its business. Except as set
forth on SCHEDULE 4.5 ECCO (i) has the right to use all of the foregoing and
(ii) no proceedings have been instituted or claims made which challenge the
rights of ECCO in respect thereto or the validity thereof.
(c) Sellers have made available to Purchaser all materials, records,
notifications, and reports in ECCO's possession or control pertaining to such
permits, licenses and approvals.
4.6 COMPLIANCE WITH LAWS. To the best knowledge of each Seller, except as
set forth on SCHEDULE 4.6, ECCO has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in, all applicable Federal, state and local statutes, ordinances, permits,
licenses, orders, approvals, variances, laws, rules and regulations (except
Environmental Laws it being agreed that the only representation with respect to
Environmental Laws is set forth at Paragraph 4.17), and is not in violation of
any of the foregoing and has incurred no liability under the foregoing which
might materially and adversely affect the business, operations, properties, or
assets of ECCO.
4.7 LEASES. SCHEDULE 4.7 hereto sets forth a brief description of all
leases ("Leases") pursuant to which ECCO (i) leases any real property or
improvements thereon from any Person, (ii) leases any equipment (including
office equipment, motor vehicles, computers, telephone or otherwise) or other
personal property from any Person, or (iii) leases any property of any kind to
any Person. ECCO is not, and to the knowledge of each Seller, no other party to
any Lease is, in material default under or in breach of any of the provisions of
any Lease.
4.8 FINANCIAL STATEMENTS. Attached as EXHIBIT "K" is a copy of each of the
following:
(a) the audited balance sheets of ECCO for the years ended December 31,
1995, and December 31, 1996, and the related statements of operations and
changes in financial position for the years ended on such dates;
(b) the unaudited balance sheet of ECCO as of March 31, 1997 and the
related statement of operations and changes in financial position for the three
(3) month period ended on such date.
The items set forth in EXHIBIT "K" shall collectively be referred to as the
"Financial Statements". The Financial Statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis in accordance with ECCO's past practices throughout the periods indicated,
are true, correct and complete and present fairly in all material respects the
financial position of, and results of operation for, ECCO for the periods
indicated in such Financial Statements.
4.9 TAXES.
(a) All federal, state and local Tax returns and Tax reports required
to be filed by ECCO have been properly completed and filed in a timely manner
with the appropriate governmental agencies in all jurisdictions in which such
returns and reports are required to be filed, and ECCO has not requested any
extension of time within which to file any such returns or reports which have
not since been filed. All Taxes (including interest and penalties) due from ECCO
have been fully paid. Except as set forth in SCHEDULE 4.9, no notice has been
received by any Seller or ECCO that (i) issues have been raised by the IRS or
any other taxing authority in connection with any of the returns or reports
referred to above; (ii) any waivers or extensions of statutes of limitation have
been agreed to in connection with a tax examination by any Governmental Entity
with respect to ECCO; or (iii) any Tax return or report of ECCO has been or is
being examined by any Governmental Entity for any period or has been noticed for
examination.
(b) Copies of ECCO's federal, state and local income (or franchise) Tax
returns for the last five tax years (or such shorter period if ECCO has filed
tax returns for less than five years) have been delivered to Purchaser. SCHEDULE
4.9 lists each state in which ECCO has been filing returns for any Taxes.
4.10 CHANGES IN FINANCIAL CONDITION. Except as disclosed in SCHEDULE 4.10,
since December 31, 1996, there has been no material adverse change or
development or prospective or threatened material adverse change or development,
in or affecting the business, capitalization, financial condition, properties or
prospects of ECCO other than those arising from tile normal and regular conduct
of ECCO's business. No material loss, damage or destruction of any of the
properties of ECCO (whether or not covered by insurance) has occurred since said
date or is, to the best knowledge of each Seller, threatened or known to any of
the Sellers to be probable. As used in this Agreement, the term "business"
refers to the business of ECCO and includes any one or more significant aspects
of such business, including, by way of example and not limitation, costs (of
labor or other services, materials or sales), sales force, licenses, branch
offices and other properties, sales volume, sales mix, profit margins, customers
or continuing ability to effect sales as in the past.
4.11 NO DEFAULT. Except as set forth on SCHEDULE 4.11, neither the
execution and delivery of this Agreement by the Sellers, nor tile consummation
of the transactions described in this Agreement by the Sellers, nor the
performance by the Sellers of their respective obligations under this Agreement
and the other agreements referred to in this Agreement, will:
(a) violate the terms or provisions of, require the consent of a party
to, conflict with, result in a default under, or result in any Person having any
rights of termination, cancellation, acceleration or any other rights which it
would not have had were it not for this Agreement, under any of the terms,
conditions or provisions of:
(i) the charter, bylaws, or other governing agreements of ECCO;
(ii) any judgment, order, injunction, decree, law, regulation or
ruling of any court or of any governmental authority, domestic or
foreign, to which any of the Sellers or ECCO is subject; or
(iii) any material agreement, contract or commitment to which any of
the Sellers or ECCO is a party or by which any of their
respective assets may be bound; or
(b) result in the creation or imposition of (or the obligation to
create or impose) any lien, charge or encumbrance upon any of the property or
assets of any of the Sellers or ECCO pursuant to the terms of any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which any of
the Sellers or ECCO is a party or by which any of them may be bound.
4.12 ABSENCE OF UNDISCLOSED LIABILITIES. Except for those matters disclosed
on SCHEDULE 4.12 or set forth on the Financial Statements, ECCO has no debt,
liability or obligation of any kind, whether accrued, absolute, known or
unknown, contingent or otherwise (including, without limitation, any liability
or obligation on account of Taxes or any governmental charges or penalty,
interest or fines and accrued operating, maintenance and employment expenses).
Except as disclosed on SCHEDULE 4.12, ECCO has not guaranteed the payment or
collection of, or pledged any of its assets to secure payment of, any
unsatisfied indebtedness or other obligation of any Person. The provisions of
this Paragraph 4.12 shall not apply to liabilities arising from unknown
Environmental Liabilities.
4.13 ASSETS OF ECCO. SCHEDULE 4.13 sets forth by site location a list of
all furniture, equipment, motor vehicles and all other tangible personal
property with a value in excess of Seven Hundred Fifty ($750) Dollars that is
owned or used by ECCO in connection with its business (the "Personal Property").
The property listed in SCHEDULE 4.13 constitutes all the tangible personal
property necessary for the conduct by ECCO of its business as now conducted. All
property owned by ECCO is in good operating condition and repair, normal wear
and tear excepted.
4.14 ACCOUNTS RECEIVABLE. SCHEDULE 4.14 identifies all accounts, notes and
other receivables (collectively the "RECEIVABLES") of ECCO as of the Closing
Date, and accurately sets forth the face amount of each such Receivable, the
balance uncollected thereon and whether the same is current or delinquent, and
if delinquent, the extent of such delinquency and a description of the
collateral, if any, securing each such Receivable; the Receivables of ECCO are
valid obligations that arose out of transactions in the ordinary course of
ECCO's business, and are not subject to dispute, set off, or counterclaim.
4.15 TITLE TO ASSETS. Except set forth on SCHEDULE 4.15, ECCO owns and has
good and marketable title to, or a valid leasehold interest in, all of tile
Personal Property and Receivables and such Personal Property and Receivables are
free and clear of restrictions on, or conditions to, transfer or assignment, and
are free and clear of all mortgages, liens, pledges, charges, encumbrances,
claims, easements, security interests, covenants, restrictions and other
interests in favor of any Person.
4.16 CONTRACTS.
(a) Except for the contracts, guarantees or commitments set forth in
SCHEDULE 4.16 (collectively the "CONTRACTS"), ECCO is not a party to: contracts
for the future purchase, sale or lease of goods, materials, supplies or
equipment which involve an annual payment of more than Five Thousand ($5,000)
Dollars; or any contract or commitment for or involving capital expenditures in
excess of Five Thousand ($5,000) Dollars in the aggregate; or any contract for a
period of more than one year from its date; or any contract or commitment for
the acquisition, leasing or sale of real estate or any interest therein; or any
financing arrangement involving the mortgaging, pledging or other hypothecation
of assets; or any sale, agency, dealer, distribution, management or other
similar contracts; or any contract with any Governmental Entity; or any
contract, arrangement or understanding pursuant to which it has assumed,
guaranteed, endorsed or otherwise become liable in connection with the
obligation of any Person; or any performance or surety bond; or any contract not
included in any of the foregoing which obligates ECCO for more that Five
Thousand ($5,000) Dollars and was not made in the ordinary and usual course of
ECCO's business as now conducted.
(b) Except as otherwise disclosed on SCHEDULE 4.16, each Contract is in
full force and effect there is, to the best knowledge of each Seller, no default
by any party obligated to ECCO pursuant thereto. ECCO is not in material default
under any agreement, contract or commitment to which ECCO is a party or by which
ECCO is bound, nor has any event occurred which, after the giving of notice or
the passage of time, or both, could constitute a default under any such
agreement, contract or commitment. The Sellers have delivered to Purchaser true
and complete copies of all of the Contracts.
4.17 ENVIRONMENTAL MATTERS. The representations and warranties contained in
EXHIBIT "L" with respect to environmental matters are true and correct.
4.18 DISTRIBUTIONS. Since December 31, 1996, ECCO has not, except as set
forth on SCHEDULE 4.18: (a) declared or paid any dividend or made any other
distribution in cash, stock or other property, or in respect of shares of its
outstanding capital stock, or purchased, redeemed or otherwise acquired or
disposed of any shares of its capital stock or any of its other securities; or
(b) paid or discharged any outstanding indebtedness except in the ordinary
course of business, consistent with past practice; or (c) made any expenditures
or disbursements of funds or commitments, or sold or disposed of, or created
liens, pledges, charges or encumbrances of any kind upon, any substantial amount
of its assets, other than in the ordinary course of business, consistent with
past practice.
4.19 ACTIONS. SUITS. ETC.
(a) SCHEDULE 4.19 lists all suits, actions and legal, administrative,
arbitration and other proceedings and governmental investigations, pending or,
to the best knowledge of each Seller, threatened, planned or probable, against,
by or affecting ECCO in any court or before any arbitrator or Governmental
Entity, domestic or foreign.
(b) Except as set forth in SCHEDULE 4.19, there are no judgments
unsatisfied against ECCO and no consent decrees to which any Seller or ECCO is
subject.
4.20 CUSTOMERS AND SUPPLIERS. Set forth on SCHEDULE 4.20 is a complete and
correct list for the year ended December 31, 1996 of: (a) the ten largest
customers of ECCO by account number and name and the amount for which each such
customer was invoiced, and (b) ten largest suppliers of ECCO and the amount such
suppliers were paid. Except as set forth on SCHEDULE 4.20, to the best knowledge
of each Seller, there has been no material adverse change in the business
relationship between ECCO and any such customer or any of its suppliers, and
said suppliers and customers have not provided ECCO with notice that they intend
to discontinue or alter their respective relationships with ECCO after the
Closing Date.
4.21 LABOR MATTERS.
(a) Except as set forth on SCHEDULE 4.21, there are no written or oral
contracts with, or commitment or liabilities to, any labor organization or
association of employees, or pending or contemplated negotiations with any such
organization or association, and, to the best knowledge of each Seller, no
attempt, plan or threat to organize the employees of ECCO is pending or, to the
best knowledge of each Seller, is threatened or contemplated; there are and have
been no strikes, lockouts or other work stoppages, picketing or labor disputes
in which ECCO or any of its premises were involved. ECCO is not engaged in any
unfair labor practice and, to the best knowledge of each Seller, has not had any
unfair labor practices claim lodged against it.
(b) Set forth on SCHEDULE 4.21 is a complete and correct list and
summary description of all other (i) employment, management, termination and
consulting agreements to which ECCO is a party or otherwise bound, and (ii)
compensation plans and arrangements; bonus and incentive plans and arrangements;
deferred compensation plans and arrangements; pension and retirement plans and
arrangements; profit-sharing and thrift plans and arrangements; stock purchase
and stock option plans and arrangements; hospitalization and other life, health
or disability insurance or reimbursement programs; holiday, sick leave,
severance, vacation, tuition reimbursement, personal loan policies and
arrangements; and other plans or arrangements providing for benefits for
employees' of ECCO. Said Schedule also lists the names and compensation of all
employees of ECCO for the last fiscal year (including bonuses and other
incentive compensation).
(c) Since January 1, 1996, except pursuant to any item listed on
SCHEDULE 4.21, ECCO has not paid any bonuses, premiums or other unusual payments
to its directors, officers, employees or other Persons.
4.22 ERISA.
(a) PLANS. SCHEDULE 4.21 lists each "EMPLOYEE PENSION BENEFIT PLAN"
(collectively called "ECCO PENSION PLANS" and severally called "ECCO PENSION
PLAN"), as such term is defined in Paragraph 3(1) of ERISA, which is maintained
by ECCO or to which it contributes or is obligated or required to contribute.
The ECCO Pension Plans and ECCO Welfare Plans are hereinafter sometimes
collectively referred to as the "PLANS" and severally referred to as a "PLAN".
(b) QUALIFICATION. Each ECCO Pension Plan and the trust (if any)
forming a part hereof has been determined by the IRS to be qualified under
Paragraph 401(a) of the Code, and is exempt from taxation under Paragraph 501(a)
of the Code, and, to the best knowledge of each Seller, nothing has occurred
since the date of such determination which would adversely affect such
qualification.
(c) PLAN DOCUMENTS. ECCO has heretofore delivered to Purchaser, true,
complete and correct copies of (i) the Plans, and all related trust agreements,
(ii) all written interpretations and summary plan descriptions relating thereto,
(iii) all IRS determination letters relating to the Plans, and (iv) the two most
recent actuarial evaluation reports which were prepared in connection with any
of the Plans.
(d) NO PROHIBITED TRANSACTIONS. Neither ECCO nor any of the Plans, nor
any trust created thereunder, nor, to the best knowledge of each Seller, any
trustee or administrator thereof, has engaged in a transaction which would
subject ECCO or any of the Plans to the tax on prohibited transactions imposed
by Paragraph 4975 of the Code or to a civil penalty assessed pursuant to
Paragraph 502(i) of ERISA.
(e) NO ACCUMULATED FUNDING DEFICIENCY. None of the ECCO Pension Plans
has incurred any "ACCUMULATED FUNDING DEFICIENCY", as such term is defined in
Paragraph 302 of ERISA and Paragraph 412 of tile Code, whether or not waived.
(f) TERMINATION, ETC. ECCO has not incurred, and, to the best
knowledge of each Seller, is not expected to incur, directly or indirectly, any
liability to the Pension Benefit Guaranty Corporation (the "PBGC") with respect
to any ECCO Pension Plan. The PBGC has not instituted proceedings to terminate
any ECCO Pension Plan, nor has it notified ECCO, either formally or informally,
of its intention to institute any such proceedings.
(g) REPORTABLE EVENTS. There have not been, with respect to any of the
Plans, any "reportable events", as such term is defined in Paragraph 4043(b) of
ERISA.
(h) MULTI-EMPLOYER PLANS. Except as set forth on SCHEDULE 4.21, ECCO
has never maintained or contributed to, or been obligated or required to
contribute to, a "MULTI-EMPLOYER PLAN", as such term is defined in Paragraph
3(37) of ERISA.
(i) CONTRIBUTIONS, BENEFITS. ECCO has paid in full all amounts which
were required to have been paid by it on or prior to the date hereof as
contributions to any of the ECCO Pension Plans. The current value of all accrued
benefits under each of the ECCO Pension Plans did not, as of the latest
valuation date thereof, exceed the then current value of the assets of such ECCO
Pension Plan allocable to such accrued benefits, based upon the actuarial
assumptions then being utilized with respect thereto.
(j) CLAIMS. No claims are pending, or to the best of the knowledge of
the Sellers, threatened against any of the Plans or any fiduciary thereof (other
than claims for benefits made in the ordinary course of ECCO's business).
4.23 INSURANCE. SCHEDULE 4.23 sets forth a true and correct list of all
policies of insurance in which ECCO is or was named as an insured party at any
time since January 1, 1994. SCHEDULE 4.23 specifies, with respect to each policy
listed thereon, the name of the insurer, risks insured against, limits of
coverage, deductible amount, date through which such policy has been paid,
whether such policy is in full force and effect, whether there are any pending
claims for payment under such policy, and whether there is a self insured
retention and/or retroactive rating provision with respect to any such policy.
4.24 BANK ACCOUNTS AND POWERS OF ATTORNEY. SCHEDULE 4.24 sets forth the
name and address of each bank in which ECCO has an account or safe deposit box,
the account number, account name and type of account, and the names of each
person authorized to draw thereon or who has access thereto as of the date of
this Agreement, and the names of all persons, if any, holding powers of attorney
from ECCO on the date hereof.
4.25 AGREEMENTS OR OBLIGATIONS TO SELLERS OR AFFILIATES.
(a) Except as set forth on SCHEDULE 4.25, there are no written or oral
agreements, arrangements or contracts between ECCO and any of the Sellers or
between ECCO and any of the Sellers' Affiliates.
(b) SCHEDULE 4.25 sets forth all obligations, loans or other financial
arrangements between ECCO and any of the Sellers and/or their respective
Affiliates. Except as otherwise set forth on SCHEDULE 4.25, all such
arrangements will be paid in full or otherwise satisfied and terminated on or
before the Closing Date; provided, however, that (i) ECCO's use of the Transfer
Station owned by Boston Post Partners will continue on the terms and conditions
contained in the Transfer Station Lease, and (ii) ECCO will continue to use the
services of Waste Management of New York after the Closing on terms comparable
to similar arrangements negotiated at arms length and on terms consistent with
the past practice of ECCO.
4.26 FULL DISCLOSURE. No representation or warranty made by any Seller in
this Agreement or in any written statement delivered pursuant to this Agreement
or in connection with the transactions contemplated by this Agreement, contains
as of the date hereof, or shall contain as of the Closing Date, any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading or to provide
Purchaser with complete and accurate information regarding ECCO. Copies of all
documents furnished to Purchaser connection with this Agreement are true and
complete in all respects. Except as disclosed on a Schedule, the Sellers do not
know of any fact relating to the business of ECCO which materially and adversely
affects or, so far as any Seller can now foresee, will materially and adversely
affect the business, prospects, operations or principal properties of ECCO or
the ability of any Seller to perform this Agreement.
4.27 FEES OR COMMISSIONS OF BROKERS. Neither ECCO nor any Seller has
retained or otherwise dealt with, or entered into any agreement or understanding
to compensate, any broker or finder in connection with the transactions
contemplated by this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to the Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser represents and
warrants to, and agrees with, the Sellers that each of the following statements
are true on the date of this Agreement and will be true on the Closing Date:
5.1 ORGANIZATION. Purchaser is a corporation duly incorporated and
organized under the laws of the State of Delaware and is validly existing and in
good standing under the laws of such state with all requisite corporate power
and authority to own, operate or lease its properties and to carry on its
business as now being conducted. Purchaser is duly qualified and licensed to do
or transact business, and is in good standing as a foreign corporation, in each
jurisdiction in which the character of the properties owned by it or the nature
of the activities conducted by it make such qualification or licensing
necessary.
5.2 DUE EXECUTION. This Agreement and each document, certificate and
agreement executed by Purchaser in connection with this Agreement have been duly
and validly executed and delivered by Purchaser and, assuming due execution and
delivery by the Sellers, is a valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms.
5.3 AUTHORIZATION. Neither the execution and delivery of this Agreement by
Purchaser, nor the consummation of the transaction described in this Agreement
by Purchaser, nor the performance by Purchaser of its obligations under this
Agreement and the other agreements referred to in this Agreement will:
(a) violate the terms or provisions of, require the consent of a party
to, conflict with, result in a default under, or result in any Person having any
rights of termination, cancellation, acceleration or any other rights which it
would not have had were it not for this Agreement, under any of the terms,
conditions or provisions of:
(i) the charter, bylaws, or other governing agreements of Purchaser;
(ii) any judgment, order, injunction, decree, law, regulation or
ruling of any court or of any governmental authority, domestic or
foreign, to which any of the Purchaser is subject; or
(iii) any agreement, contract or commitment to which Purchaser is a
party or by which any of their respective assets may be bound; or
(b) result in the creation or imposition of (or the obligation to
create or impose) any lien, charge or encumbrance upon any of the property or
assets of Purchaser pursuant to the terms of any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which Purchaser is a party or by
which it is bound; or
(c) require the consent or approval of any Person (other than
Governmental Entities).
5.4 ISSUANCE OF PURCHASER'S STOCK. When issued at the Closing, the
Purchaser's Stock will be duly and validly issued, and will be fully paid and
nonassessable. Except as set forth in this Agreement and on the Purchaser's
Stock, the Sellers will receive good title to the Purchaser's Stock, free and
clear of all liens, encumbrances, claims, charges and assessments, other that
those imposed by this Agreement and applicable securities laws.
5.5 FEES OR COMMISSIONS OF BROKERS. Purchaser has not retained or
otherwise dealt with, or entered into any agreement or understanding to
compensate any broker or finder in connection with the transactions contemplated
by this Agreement.
5.6 PURCHASER'S REPORTS. The Purchaser has delivered to the Sellers true,
correct and complete copies of the Purchaser's Reports, together with any
amendments thereto. The Purchaser's Reports, at the respective date of their
filing with the Securities and Exchange Commission, did not contain any untrue
statement of a material fact and did not fail to state any material fact
necessary in order to make any statement made therein, in the light of the
circumstances under which they were made, not misleading.
5.7 ABSENCE OF CERTAIN EVENTS. Except as may be disclosed in the
Purchaser's Reports, since March 27, 1997, there has not been any change in the
financial condition or the nature of the business or operations of the
Purchaser, which has had or which might have a material adverse effect on its
business, operations, assets, properties or prospects.
5.8 FULL DISCLOSURE. No representation or warranty made by the Purchaser
in this Agreement or in any document to be delivered by the Purchaser pursuant
hereto contains, or will contain, any untrue statement of a material fact or
fails, or will fail, to state any material fact necessary to make any statement
herein or therein not materially misleading.
6. INTENTIONALLY DELETED
7. OTHER AGREEMENTS
7.1 TRANSFER TAXES, EXPENSES AND PROFESSIONAL FEES.
Sellers agree to pay at the Closing all federal, state and local excise or
transfer taxes due on account of the transfer of the Stock to Purchaser. Whether
or not the transfer of the Stock and the other transactions contemplated by this
Agreement are consummated, each party agrees to pay its own expenses incurred in
connection with this Agreement, the transactions contemplated hereby, the
negotiations leading to the same and the preparations made for carrying the same
into effect. Sellers agree that any professional fees or other expenses
attributable to this transaction to be paid by ECCO shall be either (i) paid by
ECCO prior to the Closing; or (ii) adjusted for at the Closing as part of the
Existing Obligations of ECCO.
7.2 ACCESS. The Sellers shall take such actions as may be required to
assure that Purchaser, by its designated representatives, attorneys, auditors,
employees and agents, shall have the right to examine the books of account,
auditor's work papers, financial and corporate records, tax returns, properties
and other assets of ECCO, and to make copies of such records, reports and other
documents as Purchaser may reasonably request, at the Sellers' expense, and at
any time prior to the Closing Date on prior notice during business hours, and
Sellers agree further to cooperate with such Persons in conducting such
examination.
7.3 FURTHER ASSURANCES. Each party hereto shall execute and deliver any
and all further agreements, documents or instruments necessary to effectuate
this Agreement and the transactions referred to herein or contemplated hereby or
reasonably requested by the other party to perfect or evidence its rights
hereunder. Each party will use its best efforts to effect an orderly transfer of
control of the business of ECCO to Purchaser and to complete the transactions
contemplated by this Agreement as promptly as practicable, subject to Paragraph
3 hereof.
7.4 NOTIFICATION OF CHANGES. Each Seller shall promptly notify Purchaser
of any information which such Seller becomes aware of after the date of this
Agreement and on or before the Closing Date which would prevent the consummation
of the transactions contemplated by this Agreement, or would indicate a breach
of the representations, warranties or covenants made by any Seller in this
Agreement, or which relates to any matter which is the subject of the covenants,
representations or warranties made by any Seller in, or pursuant to, this
Agreement.
7.5 CONFIDENTIALITY.
(a) Each party to this Agreement understands that certain information
which it has been furnished and will be furnished in connection with this
transaction is confidential and proprietary and agrees that it will maintain the
confidentiality of such information, from and after the date hereof, and will
not, without the consent of the party furnishing such information, disclose it
to any Person (other than its directors, officers, employees, accountants,
attorneys and agents if required by any such Person in connection with the
performance by such Person of its duties for the Sellers, ECCO or Purchaser, as
the case may be) or use such information except in connection with the proposed
acquisition of the Stock. Information which is generally known about a party in
its industry through no fault of the other party, or which has been disclosed to
the other party by any Person who has a right to do so, shall not be deemed
confidential or proprietary information for these purposes. If a Closing does
not occur for any reason, each party agrees to promptly return to the other all
materials (and all copies thereof) which have been furnished to it regarding the
business and financial condition of the other party, including all financial
statements, reports, contracts, investor lists, accounts, records, tax returns,
data, plans, processes and trade secrets.
(b) Purchaser and the Sellers each recognize that any breach or
threatened breach of any of the provisions of Paragraph 7.6(a) may result in
damages to the Purchaser, ECCO or the Sellers, as the case may be, which are
incapable of calculation and that, in the event of such breach or threatened
breach, Purchaser or Sellers, as the case may be, shall be entitled to obtain
equitable relief by way of injunction, in addition to any other remedies which
such party may have at law.
7.6 TEMPORARY PERMITS. The parties hereto acknowledge and agree that, as
set forth in SCHEDULE 4.10 hereto, ECCO's permit to collect and transport
medical waste in New York City and the State of New Jersey are temporary and
subject to the approval of the applicable governmental and regulatory entities.
If such approvals are not received, and ECCO is unable to engage in the medical
waste business in New York City and/or New Jersey, then Stericycle shall cause
all such customer accounts located in New York City and/or New Jersey to
continue to be serviced on the same terms as conducted by ECCO. If Stericycle
does not or is unable to do so, then, for purposes of calculating the Annual
Revenues during the Adjustment Period, Annual Revenues shall include an amount
equal to the average of the revenues for the first five months of 1997 of any
such customers for which ECCO is no longer permitted to perform services,
multiplied by twelve.
In addition, if Stericycle's permits to collect and transport medical waste
in New York City or the State of New Jersey are revoked, expire or are not
granted, as applicable, for any reason, then ECCO shall cause all such customer
accounts of Stericycle located in New York City and/or New Jersey to continue to
be serviced on the same terms as conducted by Stericycle; provided however, that
no such accounts shall be included in the Annual Revenues of ECCO during the
Adjustment Period.
Following the Closing, ECCO will promptly file an Updated Disclosure
Statement with the New Jersey Department of Environmental Protection as set
forth in that certain Order dated April 30, 1997.
8. CONDITIONS TO PURCHASER'S OBLIGATIONS
Purchaser's obligations under this Agreement are subject to the fulfillment
or satisfaction on or before the Closing Date of each of the following
conditions (any one or more of which may be waived by Purchaser, but only in a
writing signed by Purchaser which references this Article 8 and Purchaser's
intention to waive such conditions):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Sellers in this Agreement or in any certificate, Schedule or
other document attached hereto, or delivered in connection with this Agreement,
shall be true and correct on the Closing Date with the same force and effect as
though such representations and warranties had been made on the Closing Date.
8.2 COMPLIANCE WITH CONDITIONS. The Sellers shall have performed and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Sellers on or before
the Closing Date.
8.3 ABSENCE OF LITIGATION OR INVESTIGATION. No action, suit or proceeding
before any court or Governmental Entity, which would affect the transactions
contemplated by this Agreement shall have been instituted or threatened on or
before the Closing Date, nor shall any governmental investigation have been
initiated which might reasonably be expected to lead to such a litigation or
proceeding.
8.4 CLOSING CERTIFICATE. At the Closing, the Sellers shall have delivered
to Purchaser a certificate, dated the Closing Date, and signed by each of the
Sellers certifying that the requirements of Paragraphs 8.1, 8.2 and 8.3 have
been satisfied, or if not satisfied in any respect, stating any discrepancies.
8.5 NO MATERIAL ADVERSE CHANGE. Since January 1, 1996, there shall have
been (a) no material adverse change in the financial condition, business (taken
as a whole), personnel or affairs of ECCO and (b) no loss (whether or not
insured) suffered by ECCO by reason of physical damage caused by fire,
earthquake, flood, wind, accident or other calamity which materially and
adversely affects the properties or business of ECCO.
8.6 REGULATORY APPROVALS. Purchaser shall have obtained the permits,
approvals, licenses, and other evidence of authority from all Governmental
Entities with jurisdiction over ECCO's business and the Transfer Station set
forth on SCHEDULE 8.6 that are required to enable Purchaser to own all of the
stock of ECCO and to operate ECCO's business and the Transfer Station in
accordance with its prior practices.
9. CONDITIONS TO SELLER'S OBLIGATIONS
The Sellers' obligations under this Agreement are subject to the fulfillment
or satisfaction on or before the Closing Date of each of the following
conditions (any one or more of which may be waived by the Sellers, but only in a
writing signed by all of the Sellers which references this Article 9 and the
Sellers' intention to waive such conditions):
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Purchaser in this Agreement or in any certificate, Schedule
or other document delivered pursuant to, or in connection with this Agreement,
shall be true and correct on the Closing Date with the same effect as though
such representations and warranties had been made on the Closing Date.
9.2 COMPLIANCE WITH CONDITIONS. Purchaser shall have performed and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Purchaser on or before
the Closing Date, including, but not limited to, delivery of all items set forth
at Paragraph 3.3(b)) hereof.
9.3 ABSENCE OF LITIGATION OR INVESTIGATION. No action, suit or proceeding
before any court or Governmental Entity, which would affect the transactions
contemplated by this Agreement, shall have been instituted or threatened on or
before the Closing Date, nor shall any governmental investigation have been
initiated which might reasonably be expected to lead to such a litigation or
proceeding.
9.4 CLOSING CERTIFICATE. At the Closing, Purchaser shall have delivered to
Sellers a certificate, dated the Closing Date, and signed by the President of
Purchaser certifying in such detail as Sellers may reasonably request that the
requirements of Paragraphs 9.1, 9.2 and 9.3 have been satisfied, or if not
satisfied in any respect, stating any discrepancies.
9.5 CONSENTS. The Sellers shall have obtained and delivered to Purchaser
any consents described on SCHEDULE 9.5.
9.6 GUARANTEES.
(a) In connection with the bank loans described in SCHEDULE 9.6 (the
"LOANS"), ECCO will use its best efforts prior to the Closing, and Purchaser
will provide ECCO with its full cooperation, to obtain the release of each
Seller from the guarantees executed by any such Seller in connection with such
Loans. If such releases are not obtained prior to the Closing, (i) Purchaser and
Sellers shall adjust for such Loans pursuant to Paragraph 2.6(a)(ii), (ii) ECCO
shall indemnify each such Seller in connection with such guarantees, (iii)
Purchaser shall post a cash escrow fund (the "Cash Escrow Fund") with the
Security Escrow Agent pursuant to the Escrow Agreement in the form annexed
hereto as EXHIBIT "M", in an amount equal to the outstanding guaranteed balance
of the Loans for which the Sellers have unreleased guarantees, and (iv) no later
than six months following the Closing, Purchaser and/or ECCO shall either (A)
repay such Loans in full or (B) obtain the lender's release of the Sellers from
the guarantees of such Loans.
(b) The Cash Escrow Fund shall be held by the Security Escrow Agent
subject to the terms and conditions of the Escrow Agreement. Notwithstanding the
foregoing, the Cash Escrow Fund shall be released to the lender or Purchaser, as
the case may be, under the following conditions:
(i) to Purchaser, upon receipt of evidence that (i) the loans have
been paid in full or (ii) that the Sellers have been released
from the guarantees on the terms set forth herein above; or
(ii) to the lender, upon delivery by Sellers to the Security Escrow
Agent of a "pay off letter" from each such lender with unreleased
Seller guarantees setting forth the total amount of the
guaranteed indebtedness due to the lender pursuant to the loans,
and upon making such payment to the lenders, the Security Escrow
Agent shall pay the balance, if any, of the Cash Escrow Fund to
the Purchaser.
10. SURVIVAL AND INDEMNIFICATION
10.1 DEFINITIONS. For purposes of this Article 10 only, the following
definitions shall apply:
(a) "CLAIM" shall mean any matter as to which an Indemnified Party is
entitled to be indemnified pursuant to Paragraph 10.3(a) or 10.3(b)).
(b) "INDEMNIFIED PARTY" shall mean any Person which is entitled to be
indemnified pursuant to Paragraph 10.3(a) or 10.3(b)).
(c) "INDEMNITOR" shall mean any Person which is obligated to indemnify
another Person pursuant to Paragraph 10.3(a) or 10.3(b)).
(d) "LOSS" shall mean:
(i) With respect to the Purchaser, the actual damage, loss, cost or
expense (including reasonable attorneys' fees and costs of
investigation incurred in defending against and/or settling such
damage, loss, cost or expense or claim therefor and any amounts
paid in settlement thereof) imposed on, or incurred by, ECCO or
Purchaser.
(ii) With respect to the Sellers, the actual damage, loss, cost or
expense (including reasonable attorneys' fees and costs or
investigation incurred in defending against and/or settling such
damage, loss, cost or expense or claim therefor and any amounts
paid in settlement thereof) imposed on, or incurred by, Sellers
or any of them.
(iii) For the purposes hereof, "LOSS" shall include, as to any amount
owing under this Agreement, interest at the rate of 18% per
annum, from the date such amount becomes due and owing to the
indemnified party until paid in full.
(e) "Third Party Claim" shall mean any claim asserted by any Person
("THIRD PARTY") which is not a party to this Agreement.
10.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations set
forth in Paragraphs 4.3 and 5.4 shall survive the Closing until the expiration
of the applicable statutes of limitation in connection with any claims arising
in connection therewith. The representations set forth in Paragraphs 4.2,
4.4(c), 4.9 and 4.17 shall survive the Closing until the expiration of the
applicable statutes of limitation in connection with any claims arising in
connection therewith. All other representations and warranties contained herein
or in any certificate delivered at or in connection with the Closing shall
survive until the expiration of eighteen (18) months following the Closing.
Notwithstanding the foregoing, the representations set forth in Paragraph 4.14
are governed by the provisions of Paragraph 2.6 and are not subject to the
indemnification or "Basket" provisions of this Paragraph 10. The parties hereto
shall be liable pursuant to the indemnification obligations set forth herein
only if a Claim is asserted in writing as set forth Paragraph 10.4 prior to the
end of the applicable survival period set forth in this Paragraph 10.2. Nothing
herein is intended to limit the rights of contribution, if any, among the
Sellers.
10.3 INDEMNIFICATION.
(a) INDEMNIFICATION BY SELLERS. Sellers jointly and severally agree to
indemnify Purchaser against, to hold Purchaser harmless from, and to reimburse
Purchaser on demand for, all Loss imposed on, or incurred by, Purchaser and/or
resulting from (i) a breach of any representation or warranty made by any Seller
in this Agreement or in any document or certificate signed by any Seller in
connection with this Agreement; or (ii) the failure by any of the Sellers to
comply with any agreement or covenant made by any Seller in this Agreement or
any document executed by any Sellers in connection herewith. Notwithstanding the
foregoing (1) no Seller shall be personally liable for any amount in excess of
such Seller's pro rata portion of the Purchase Price (as adjusted as provided
herein above pursuant to Paragraph 2.6 and 2.8) and (2) to the extent a Loss
arises out of or is based upon the representations set forth in Paragraph 4.2,
4.3, 4.11, or as a result of any Seller's breach of his personal obligations set
forth in Paragraphs 11 or 12, the obligation to indemnify Purchaser hereunder
shall not be joint as to all Sellers, but shall be solely the obligation of the
breaching Seller.
(b) INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify each
of the Sellers, against, to hold Sellers harmless from, and to reimburse Sellers
on demand for, all Loss imposed on, or incurred by, such Person resulting from
(i) a breach of any representation or warranty made by Purchaser in this
Agreement or in any document or certificate signed by Purchaser in connection
with this Agreement; or (ii) the failure by Purchaser or ECCO to comply with any
agreement or covenant made by Purchaser or ECCO in this Agreement or any
document executed by Purchaser in connection herewith.
(c) LIMITATIONS ON LIABILITY. The provisions of this Paragraph 10.3(c)
shall not be applicable to the Purchase Price adjustment described in Paragraph
2.8. Notwithstanding anything contained in this Agreement to the contrary
(excluding however any liability arising from the Purchase Price adjustment set
forth in Paragraph 2.8), the Sellers have no obligation to indemnify the
Purchaser hereunder unless and until such time as all Losses exceed, in the
aggregate Forty Thousand ($40,000) Dollars (the "BASKET"), at which time all
such Losses exceeding Forty Thousand ($40,000) Dollars may be asserted, it being
further understood and agreed that the first Forty Thousand ($40,000) Dollars of
Losses shall be excluded from the indemnification obligations of the Sellers
under this Agreement and shall be borne 100% by the Purchaser; provided,
nevertheless that if any Losses arise from a breach of Paragraph 4.17 regarding
Environmental Liabilities ("Environmental Losses"), then such Environmental
Losses shall be excluded from the indemnification obligations of the Sellers
under this Agreement until total Losses (including Environmental Losses)
aggregate $40,000 and additional Environmental Losses aggregate an additional
$60,000 at which time all excess Environmental Losses may be asserted against
Sellers pursuant to this Paragraph 10 up to the $6,300,000 limitation contained
herein. In addition, the obligations of the Sellers, collectively, to indemnify
hereunder, shall be limited to Six Million Three Hundred Thousand ($6,300,000)
Dollars in the aggregate so that no more than Six Million Three Hundred Thousand
($6,300,000) Dollars may be collected in the aggregate from the Sellers,
collectively, pursuant to this Agreement. Within thirty (30) days after final
resolution of any Loss asserted hereunder, the Sellers shall have the right, in
their discretion, to elect to pay such Loss by delivery to the Purchaser of the
Purchaser's Stock held by such Seller, cash or any combination thereof. If any
such Seller fails to exercise this option within such thirty (30) day period,
then Purchaser, in its discretion may pursue any remedy available to it. If and
to the extent that any such Loss is paid by delivery of Purchaser's Stock, then
for purposes of this Paragraph 10.3(c), Purchaser's Stock shall be valued at the
average daily closing price for the Purchaser's common stock on NASDAQ for the
thirty (30) consecutive business days on which NASDAQ was open for trading
immediately preceding the date on which the Loss is finally resolved.
10.4 CONDITIONS OF INDEMNIFICATION. The obligations and liabilities of the
Sellers under Paragraph 10.3(a), and of the Purchaser under Paragraph 10.3(b)
shall be subject to the following terms and conditions:
(a) CLAIM NOTICES. An Indemnified Party shall send a written notice
(the "CLAIM NOTICE") to the Indemnitor upon the occurrence of any event, or the
discovery of any facts by, or the commencement of any litigation or proceeding
against, the Indemnified Party which might give rise to a Claim. Each Claim
Notice shall be given as promptly as possible after the Indemnified Party has
actual notice of such event, state of facts, litigation or proceeding and it
appears reasonably probable that such event, state of facts, litigation or
proceeding might involve matters that would give rise to a Claim against an
Indemnitor; provided, however, that the failure to give notice of Claim promptly
shall not relieve any party from any liability that it would otherwise would
have pursuant to this Paragraph 10 except to the extent that any such delay
materially and adversely affects the Indemnitor's ability to defend such Claim.
Each Claim Notice shall specify, with particularity, the nature and, to the
extent ascertainable, the amount of the Claim and shall have attached to it any
written documents in the possession of the Indemnified Party which evidence the
facts upon which such Claim is based.
(b) DEFENSE OF THIRD PARTY CLAIMS.
(i) If a Third Party Claim is asserted against an Indemnified Party,
the Indemnitor may elect to undertake the defense of the Third
Party Claim at the Indemnitor's own expense with counsel selected
by the Indemnitor if the Indemnitor gives written notice of such
election to the Indemnified Party within ten (10) days after it
receives the Claim Notice and thereafter diligently provides such
defense, in which event the Indemnified Party shall not settle or
compromise such Third Party Claim without the prior consent of
the Indemnitor.
(ii) If the Indemnitor fails to advise the Indemnified Party that it
will undertake the defense of such Claim on behalf of the
Indemnified Party or, having assumed such defense, thereafter
fails to diligently and continuously pursue such defense, the
Indemnified Party may undertake the defense of such Claim with
its own counsel and may settle or compromise such Third Party
Claim in its sole discretion, all at the expense of the
Indemnitor.
(iii) Notwithstanding the forgoing, the Indemnitor may not assume the
defense of a Third Party Claim if (i) the named parties to such
action (including any impleaded parties) include the Indemnified
Party and the Indemnitor, and the representation of such parties
by the same counsel would be inappropriate under the applicable
standards of professional conduct due to actual or potential
conflicting interest between them, (ii) the counsel selected by
the Indemnitor has advised the Indemnified Party, in writing,
that representation of the Indemnified Party by such counsel
would likely involve representing differing interests (whether it
be a conflicting, inconsistent, diverse or other interest) which
could adversely affect either the judgment or loyalty of such
counsel to the Indemnified Party, or (iii) the Indemnified Party
or any of its Affiliates could be subject to criminal penalties
or injunctive relief as a result of such Third Party Claim. In
such circumstances, the Indemnified Party shall have the right to
defend the Third Party Claim and to employ counsel reasonably
acceptable to the Indemnitor at the expense of the Indemnitor;
provided however, that the Indemnified Party shall not settle or
compromise a claim for monetary damages arising under this
Paragraph 10.4(b)(iii) without the prior written consent of the
Indemnitor, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, in the event that a Claim arising
under this Paragraph l0.4(b)(iii) could subject the Indemnified
Party to criminal penalties or injunctive relief, then, in such
event the Indemnified Party shall have the right to settle or
compromise such claim without the consent of the Indemnitor.
(iv) If the Indemnitor assumes the defense of the Third Party Claim as
provided herein, and thereafter diligently and continuously
pursues the defense or settlement of such Third Party Claim, the
Indemnitor shall not be liable for any fees and expenses of
counsel for the Indemnified Party incurred thereafter in
connection with the Third Party Claim (except in the case of
actual or potential differing interests, as provided in the
preceding sentence).
(v) The party which is not the defending party shall have the right
to participate, at its own expense, in the defense of any action
or proceeding brought in connection with a Third Party Claim. Any
Third Party Claim will be deemed resolved by a final decision of
a court of competent jurisdiction (after all appeals have been
taken or the time for taking such appeals has expired), the final
decision of a board or panel of arbitrators, or a settlement
agreement with the Third Party.
(vi) The Indemnitor shall not settle or compromise any claim on a
basis which would impose a consent order, injunction or decree on
the Indemnified Party or any of its Affiliates, or which would
restrict the future activity of the Indemnified Party or any
Affiliate thereof, or which would impose criminal penalties on
the Indemnified Party or any Affiliate thereof, without the
consent of the Indemnified Party.
(c) DEFENSE OF NON THIRD PARTY CLAIM. All disputed Claims (other than
Claims based on Third Party Claims) will be resolved upon the negotiation and
written agreement of the Indemnitor and the Indemnified Party, or failing such
agreement, by a final decision of a court of competent jurisdiction or
arbitrator's order (after all appeals have been taken or the time for taking
such appeals has expired).
(d) COOPERATION. Each Indemnified Party shall use reasonable efforts
to cooperate fully with the Indemnitor in connection with the litigation,
contest, compromise and settlement of all Claims.
10.5 INSURANCE PROCEEDS. In determining the amount of Loss for which an
Indemnified Party is entitled, the Loss shall be reduced by any insurance
proceeds which are paid to such Indemnified Party with respect to the Loss for
which indemnification is sought. If Sellers pay Purchaser a payment which
satisfies Sellers' obligations under this Paragraph 10 with regard to a Loss for
which the Purchaser was entitled to indemnification in accordance with Paragraph
10 and, after such payment by Sellers, Purchaser receives insurance proceeds in
payment of the same Loss, Purchaser will reimburse the Sellers for the amount
the Sellers have paid up to, but not exceeding, the insurance proceeds received.
Purchaser shall assert the claim giving rise to any Loss for which they are
entitled to be indemnified under Paragraph 10, with the issuer of any applicable
insurance policy.
11. RESTRICTIVE COVENANT
11.1 RESTRICTIVE COVENANT. Provided that no Event of Default (as defined in
the Notes) has occurred pursuant to the Notes which remains uncured, during the
five year period commencing on the Closing Date, each Seller (excluding ▇▇▇▇▇▇▇,
who shall execute a separate Restrictive Covenant Agreement in the form annexed
hereto as EXHIBIT "H") agrees that he shall not:
(a) either directly or indirectly (whether as owner, principal, agent,
partner, officer, employee, independent contractor, consultant, stockholder, or
otherwise), engage or participate in or have any financial interest in any
entity which offers any service in competition with ECCO, or engage in any
business or activity engaged in by ECCO on the date of this Agreement in New
York, New Jersey or Connecticut. Notwithstanding the foregoing, Seller shall be
permitted to own not more than 2% of the issued and outstanding stock of any
publicly traded company.
(b) for himself or with or as an agent for any other person, firm,
corporation or entity, directly or indirectly, solicit, interfere with, endeavor
to entice away from, divert or attempt to divert or otherwise interfere with, or
disrupt the business relationship of the Purchaser or ECCO with, (i) any person
or entity who is a client, customer or business contact of ECCO, or (ii) any
potential clients, customers or business contacts with whom ECCO is actively
negotiating at the date of this Agreement.
(c) except for family members of any Seller, either directly or
indirectly, for himself or any other Person, solicit, induce, recruit, or cause
any person in the employ of ECCO or Purchaser to terminate his or her employment
for the purpose of joining, associating or becoming employed with any business
or activity which is in competition with any service offered, or any business or
activity engaged in by ECCO.
11.2 CONFIDENTIAL INFORMATION.
(a) Each Seller (excluding ▇▇▇▇▇▇▇ who will execute a separate
Restrictive Covenant Agreement) hereby agrees that he: (i) will keep
confidential and protect all Confidential Information (as hereinafter defined)
known to him or in his possession, (ii) will not disclose any Confidential
Information to any person or entity, except as may be required in the
performance by him of his duties as an employee of the Purchaser or ECCO, if
applicable, and (iii) will not use any Confidential Information except for the
exclusive benefit of the Purchaser or ECCO.
(b) For the purposes of this Agreement, the term "Confidential
Information" shall mean any information, data and other materials, including,
without limitation, contracts, customer lists, supplier lists, pricing
information, information relating to costs, marketing, selling, servicing,
technology, machinery or equipment, or in any way concerning the operation of
the Purchaser's or ECCO's business. The term Confidential Information does not
include any information which (i) at the time of disclosure is generally
available to the public (other than as a result of a disclosure directly or
indirectly by a Seller), or (ii) has been independently acquired or developed by
a third party not obligated to keep such information confidential.
(c) In the event that a Seller becomes legally compelled (by subpoena,
interrogatory or similar process) to disclose any of the Confidential
Information, such Seller shall provide the Purchaser with prompt written notice
of such event so that the Purchaser may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this Paragraph
11. In the event that such protective order or other remedy is not obtained and,
in the opinion of Purchaser's legal counsel, such an order or remedy cannot be
obtained, a Seller may disclose Confidential Information to the extent he is
legally compelled to do so, provided, however, that each Seller agrees that he
will furnish only that portion of the Confidential Information which is legally
required and will exercise his best efforts to obtain reliable assurances that
confidential treatment will be accorded to that portion of the Confidential
Information and other information which is being disclosed.
11.3 INJUNCTIVE RELIEF, ETC. The parties hereto hereby acknowledge and
agree that (a) Purchaser would be irreparably injured in the event of a breach
by any of the Sellers of their obligations under this Paragraph 11, (b) monetary
damages would not be an adequate remedy for any such breach, (c) Purchaser shall
be entitled to injunctive relief, in addition to any other remedy which it may
have, at law, in equity or otherwise, in the event of any such breach, and (d)
the existence of any claims which any of the Sellers have against Purchaser,
whether under this Agreement or otherwise, shall not be a defense to the
enforcement by Purchaser of any of its rights under this Paragraph 11.
11.4 SCOPE OF RESTRICTIONS. If is the intent of the parties hereto that the
restrictions contained in this Paragraph 11 hereof shall be enforced to the
fullest extent permissible under the laws and public policies of each
jurisdiction in which enforcement is sought, and each Seller hereby acknowledges
that said restrictions are reasonably necessary for the protection of Purchaser
and its interest in ECCO. Accordingly, if any one or more of the provisions of
this Paragraph 11 shall be adjudicated to be invalid or unenforceable for any
reason whatsoever, this Paragraph 11 shall be (only with respect to the
operation thereof in the particular jurisdiction in which such adjudication is
made) construed by limiting and reducing its scope to the extent required to
make it enforceable to the extent permissible.
12. INVESTMENT REPRESENTATIONS AND WARRANTIES OF SELLERS
12.1 NO REGISTRATION. Each Seller acknowledges that in reliance upon the
representations and warranties of each Seller contained in this Agreement, the
Purchaser's Stock will not be registered under the 1933 Act or the securities
laws of any state or other jurisdiction, at or prior to its issuance to Sellers.
12.2 INVESTMENT REPRESENTATIONS. Each Seller represents and warrants to
Purchaser, as to himself only, that:
(a) He is an "ACCREDITED INVESTOR" within the meaning of Rule 501(a)
under the ▇▇▇▇ ▇▇▇.
(b) He understands that the issuance by Purchaser of the Purchaser's
Stock will not be registered under the 1933 Act by reason of the utilization by
Purchaser of an exemption from registration pursuant to Paragraph 4(2) thereof
and Regulation D thereunder. Seller understands that the Purchaser's Stock may
only be disposed of pursuant to either (i) an effective registration statement
under the 1933 Act and applicable state securities laws, or (ii) an exemption
from the registration requirements of the 1933 Act and applicable state
securities laws. Purchaser has neither filed such a registration statement nor
agreed to do so and in the absence of such a registration statement or
exemption, Sellers may have to hold the Purchaser's Stock indefinitely and may
be unable to liquidate it in case of an emergency. Each Seller's financial
situation is such that he is able to bear the economic risks of an investment in
the Purchaser's Stock including the risks resulting from the limited
transferability of the Purchaser's Stock, and that such Seller has substantial
net worth.
(c) He will not sell, pledge, transfer or otherwise dispose or
hypothecate the Purchaser's Stock in violation of the Stock Pledge Agreement or
this Agreement and will sell such shares only in accordance with the terms of
this Agreement and applicable law.
(d) He recognizes that an investment in Purchaser as evidenced by
ownership of Purchaser's Stock involves significant risks and has taken full
cognizance of and understands all of the risk factors related to the acquisition
of the Purchaser's Stock.
(e) He has such knowledge and experience in financial and business
matters (particularly with respect to the business in which Purchaser is
engaged) as will enable him to utilize the information made available to him in
connection with the acquisition of the Purchaser's Stock in order to evaluate
the risk of the prospective investment and to make an informed investment
decision.
(f) He has had full access to and has reviewed the Purchaser's Reports.
He has been given the opportunity to ask questions of, and to receive answers
from, Purchaser's officers and employees concerning the terms and conditions of
an investment in Purchaser. He acknowledges that Purchaser has made all
documents, records and books pertaining to his investment in Purchaser available
for inspection by each Seller and his attorney, accountant and other agents. No
oral or written representations, warranties or statements have been made or
furnished to any Seller by Purchaser with respect to Purchaser which Sellers are
relying on.
(g) Seller is acquiring the Purchaser's Stock as principal for his own
account for investment and not with a view to resale or distribution in a manner
which would require registration under the 1933 Act. Seller does not now have
any reason to anticipate any change in his circumstances or any other particular
occasion or event which would cause Seller to need to sell the Purchaser's Stock
and understands that Purchaser is relying upon the truth and accuracy of the
Seller's representations and warranties in entering into this Agreement.
(h) Seller has been advised that no federal or state agency has made
any recommendation or endorsement or otherwise passed on the merits of any
investment in the Purchaser.
12.3 DELBROCCOLO ESTATE. Notwithstanding the foregoing, the parties hereto
acknowledge and agree that the Delbroccolo Estate may distribute the Purchaser's
Stock and the Note issued to the Delbroccolo Estate to the beneficiaries of the
Delbroccolo Estate or trusts for the benefit of such beneficiaries upon the
execution and delivery to Purchaser of:
(a) an investment representation letter executed by each such
transferee, to be prepared by Purchaser's counsel, containing substantially the
representations and warranties set forth in this Paragraph 12;
(b) a representation that each such transferee is at least 18 years of
age;
(c) an agreement that each such beneficiary is taking the Purchaser's
Stock and the Note subject to all rights of the Secured Party (as defined in the
Stock Pledge Agreement) in the Purchaser's Stock and the Note pursuant to the
Stock Pledge Agreement; and
(d) an acknowledgment from each transferee and the Delbroccolo Estate
that such transfer of the Purchaser's Stock and the Note shall not release the
Delbroccolo Estate, as transferor, from any of its obligations under any of this
Agreement or any other agreement executed in connection with this Agreement.
13. LETTER OF CREDIT
13.1 For so long as the Notes remain outstanding (and, as set forth in
Paragraph 13.3 hereinafter, for such additional period as is required to obtain
a final determination as to the validity of any asserted rights of offset of
Purchaser against any portion of the Notes), Purchaser shall maintain a Letter
of Credit in effect (including the timely renewal of the Letter of Credit (the
"LETTER OF CREDIT") upon its expiration in accordance with its terms) in an
amount at all times at least equal to the then outstanding aggregate principal
balance of the Notes (or, to the extent not fully drawn down as a result of any
asserted right of offset, the Letter of Credit shall be maintained in the amount
of any such asserted right of offset, if applicable, until such issue has been
finally resolved).
13.2 On the Closing, Purchaser shall deliver the hereinafter described
Letter of Credit to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ who will act as Sellers' Agent (the
"SELLERS' AGENT") pursuant to the terms of the Authorization of Sellers' Agent
annexed hereto as EXHIBIT "N".
13.3 The Letter of Credit shall (a) be issued by a bank, savings and loan
association or other financial institution, (b) name the Sellers' Agent as
beneficiary, (c) be in an amount not less than the outstanding aggregate
principal balance outstanding under the Notes from time to time, (d) be
irrevocable through its expiration date, and (e) be conditioned as to payment
only upon its presentment together with an affidavit ("SELLERS' AFFIDAVIT") of
the Sellers' Agent certifying (i) that Purchaser has either (aa) breached its
obligations under Paragraph 13.4, or (bb) that an Event of Default has occurred
under the Notes, or any of them, and has not been cured after notice and within
the applicable grace period provided in the Notes, (ii) that Sellers' Agent has
sent a notice of intent to request payment of the Letter of Credit to Purchaser
(the "ADDITIONAL NOTICE") and Purchaser has not cured the Event of Default
within ten (10) days after receipt of the Additional Notice, (iii) Purchaser has
not asserted any right of offset relating to any amount due pursuant to the
Notes, or, if such right of offset has been asserted, a statement of the amount
so asserted and (iv) the amount that Sellers are entitled to receive pursuant to
the terms of the Notes (as adjusted for any asserted right of offset by
Purchaser). The term "LETTER OF CREDIT" shall refer to the letter of credit
delivered by Purchaser on the Closing Date and any extension, renewal and
substitution therefor.
13.4 At least twenty (20) business days prior to the expiration date of the
Letter of Credit Purchaser shall deliver to the Sellers' Agent either an
extension of the then current Letter of Credit or a substitute letter of credit
which complies with the provisions of Paragraph 13.3. If Purchaser fails to
comply with its obligations pursuant to the immediately preceding sentence, and
fails to cure the same within five business days after notice from Sellers'
Agent, then, Sellers' Agent may present the Letter of Credit for payment
pursuant to the provisions of this Agreement.
13.5 Sellers shall reimburse Purchaser for the cost of maintaining the
Letter of Credit by paying Purchaser on the same day each year on which each
annual payment is due pursuant to the terms of the Notes until the Notes are
paid in full, an aggregate amount equal to 1-1/2% of the then outstanding
principal balance of the Letter of Credit in effect during the immediately
preceding twelve month period. Purchaser shall have the right to reduce the
payment of principal and interest that is otherwise due and payable under the
Notes on a pro rata basis in accordance with each Sellers' percentage ownership
interest as set forth in SCHEDULE 2.2 of this Agreement, each year by an amount
equal to the reimbursement that Sellers owe to Purchaser pursuant tho the
provisions of this Paragraph 13.5.
14. MISCELLANEOUS
14.1 NOTICES, ETC. Any notice, request, demand or other communication
given, or required to be given, pursuant to this Agreement shall be in writing
and shall either be personally delivered or sent by a reputable commercial
courier guaranteeing overnight delivery and shall be deemed to have been given
upon receipt if personally delivered, or, otherwise one (1) business clay after
it is delivered to such delivery service in either case addressed as follows:
If to Purchaser: STERICYCLE, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
and to: SIVE, PAGET & RIESEL, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
If to Sellers to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
THE ESTATE OF ▇▇▇▇▇▇▇ DELBROCCOLO, SR.
c/o Farrell, Fritz, Caemmerer, Cleary,
▇▇▇▇▇▇▇▇ and Armentano
EAB ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Any party may, by giving notice to the other parties in the manner set
forth above, change the address to which notices shall be sent to it,
provided that any such change of address shall be effective three (3) days
after it is given. If a reputable commercial courier guaranteeing overnight
delivery does not service the area to which notice is required to be given,
notice to such area shall be given by registered or certified mail, return
receipt requested, and shall be deemed given three days after the same is
deposited in an official U.S. mail depository, postage and other charges
prepaid, enclosed in a properly addressed and sealed wrapper.
14.2 AMENDMENTS AND WAIVERS. The provisions of this Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a written instrument executed by an authorized officer of the
party against which enforcement of the amendment, modification or waiver is
sought. No waiver of the breach of any provision of this Agreement shall be
deemed or construed to be a waiver of other or subsequent breaches.
14.3 PARTIES IN INTEREST. This Agreement shall be binding upon and shall
inure to the benefit of Sellers and their successors and assigns, and of
Purchaser and its successors and respective assigns. Except as expressly
provided in this Agreement, no right or remedy pursuant to this Agreement shall
inure to the benefit of any Person which is not a party to this Agreement.
14.4 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and
Schedules attached hereto, and the agreements to be entered into pursuant to
this Agreement, constitutes the entire agreement among the parties pertaining to
the subject matter hereof and supersedes all prior oral and written agreements
and understandings between the parties with respect to the transaction which is
the subject this Agreement.
14.5 PUBLICITY. Except as may be required by laws and regulatory
requirements applicable to Purchaser or Sellers, all notices to third parties
and all other publicity concerning this Agreement and the transactions
contemplated hereby shall be jointly planned and coordinated by Purchaser and
Sellers; and, in this regard, Purchaser shall not act unilaterally without the
prior approval of the Sellers (except as may be required by applicable laws and
regulatory requirements), and Sellers shall not act unilaterally without the
prior approval of Purchaser, which approvals, in any case, shall not be
unreasonably withheld or delayed.
14.6 GENDER, NUMBER. Except where the context otherwise requires, words
used in the masculine gender include the feminine and neuter; and words used in
the singular number include the plural, and the plural the singular.
14.7 PRO RATA ADJUSTMENTS. Whenever in this Agreement, or any of the
exhibits hereto, Purchaser is required make any payment or distribution or to
issue or cancel any stock "pro rata" among the Sellers, "pro rata" shall be
based on the percentages set forth on SCHEDULE 2.2. and shall mean as nearly pro
rata as reasonably possible which, in the case of dollars shall mean rounding to
the next whole dollar, and in the case of shares of stock, rounding to the next
whole share.
14.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which, when
taken together, shall constitute one and the same instrument, and this Agreement
shall be effective when one or more counterparts have been signed by each party
to this Agreement and delivered to the other parties to this Agreement.
14.9 GOVERNING LAW. This Agreement and the legal relations between the
parties relating to the transactions described in this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts made and to be performed entirely in the State of New
York. Any action, suit or other proceeding in connection with this Agreement,
shall be brought by any party hereto in a court of record of the State of New
York, County of New York, or in the United States District Court for the
Southern District of New York, each of the parties hereto hereby consenting to
the jurisdiction of such courts for such purpose.
14.10 EXHIBITS. ETC. All Exhibits and Schedules which are attached to this
Agreement are incorporated into this Agreement by reference. All references
contained in this Agreement to "Sections" or "Paragraphs" refer to paragraphs of
this Agreement unless a different document is expressly referred to. All
references contained in this Agreement to "Exhibits" and "Schedules" refer to
those Exhibits and Schedules which are attached to this Agreement.
14.11 HEADINGS. The index of agreement and the descriptive headings of the
several sections, subsections, paragraphs, Exhibits and Schedules of this
Agreement are inserted for convenience of reference only and do not constitute a
part of this Agreement.
14.12 ASSIGNMENT. Purchaser may assign its rights under this Agreement, in
whole or in part, to one or more of Purchaser's subsidiaries; provided,
nevertheless, that Purchaser shall not be released of any of its obligations
under this Agreement as a result of any such assignment. Except to the extent
permitted in the first sentence of this Paragraph 14.12, as set forth in
Paragraph 12.3 and as otherwise provided in the Notes, no party to this
Agreement may assign any of its rights under this Agreement, in whole or in
part, to any Person without the prior written consent of the other parties to
this Agreement.
14.13 DISCLOSURE ON SCHEDULES. For purposes of this Agreement, a disclosure
by any hereto of any fact on any Schedule shall be deemed a disclosure on every
Schedule of any hereto to the extent such disclosure properly could have been
made thereon but was not made.
IN WITNESS WHEREOF, the Sellers and the Purchaser have each caused this
Agreement to be executed by all as of the day and year first above written.
STERICYCLE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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[Corporate Seal] Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SELLERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
THE ESTATE OF
▇▇▇▇▇▇▇ DELBROCCOLO, SR.
By: /s/ ▇▇▇▇▇▇▇▇ Delbroccolo
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Name: ▇▇▇▇▇▇▇▇ Delbroccolo
Title: Executor