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EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇, an
individual residing at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(hereinafter sometimes referred to as "Seller"), and EarthCare Company, a
Delaware Corporation (hereinafter referred to as "EarthCare" or "Buyer").
WITNESSETH:
WHEREAS, the Seller is the owner of 100 shares of common stock no
par value per share of ▇▇▇▇▇'▇ Cesspool Services, Inc., a Pennsylvania
corporation, engaged in liquid waste collection and disposal activities (said
corporation is hereinafter sometimes referred to as the "Company") (said shares
of ▇▇▇▇▇'▇ Cesspool Services, Inc. common stock are hereinafter sometimes
collectively referred to as the "▇▇▇▇▇ Common Stock"); and
WHEREAS, the ▇▇▇▇▇ Common Stock constitutes all of the issued and outstanding
shares of capital stock of the Company; and
WHEREAS, the parties hereto desire that the Buyer acquire the ▇▇▇▇▇ Common
Stock in exchange for cash and shares of the common stock, $.0001 par value, of
the Buyer (said shares of common stock are hereafter sometimes referred to as
the "EarthCare Common Stock")
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration the mutual receipt and sufficiency of which is
hereby acknowledged by the parties hereto, THE PARTIES HERETO, INTENDING TO BE
LEGALLY BOUND, HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
A. Upon the basis of the representations and warranties contained
herein and subject to the terms and conditions of this Agreement, at the time
of "Closing" (as hereinafter defined) Seller shall sell, convey, transfer,
assign and deliver to Buyer, and Buyer shall purchase from Seller, all of the
▇▇▇▇▇ Common Stock.
B. At the time of Closing, as the purchase price for the ▇▇▇▇▇ Common Stock,
and in exchange therefor, Buyer shall pay to Seller:
(1) Shares of EarthCare Common Stock equal in Value (as
defined hereinafter) to $500,000 less the Holdback Shares (as hereinafter
defined) duly registered under the Securities Act of 1933 as amended (the
"Act") and applicable state securities laws, to the extent necessary to permit
the disposition of such shares by Seller; provided, however that such shares
shall be subject to a lock-up agreement as in the form of Exhibit 1-B, attached
hereto (the "Lock-up Agreement"), and
(2) $1,000,000 cash, less the Holdback Cash (as hereinafter
defined)
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For purposes of determining the number of shares of EarthCare Common Stock to
be issued to Seller pursuant to Section 1B(1) above, the "Value" of such shares
shall be based upon the average closing price of EarthCare Common Stock as
reflected on NASDAQ (Bulletin Board) for the ten (10) trading days immediately
preceding the Closing Date.
2. CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the purchase and sale of the ▇▇▇▇▇ Common Stock (the "Closing")
shall be held at 10:00 a.m. March 31, 1999, at the Reading, Pennsylvania
offices of ▇▇▇▇▇▇▇ & ▇▇▇, P.C. or at such other time and date as shall be
mutually agreed upon by the parties hereto in writing. (Such time and date is
sometimes hereinafter referred to as the "Closing Date" or "Closing".)
3. PROCEDURE AT THE CLOSING. At the Closing, the parties hereto agree to
take the following steps in the order listed:
A. Seller shall deliver to the Buyer the ▇▇▇▇▇ Common Stock, and such
stock powers and other instruments to transfer to the Buyer good and marketable
title to the ▇▇▇▇▇ Common Stock, free and clear of all liens, claims and
encumbrances.
B. In exchange for the ▇▇▇▇▇ Common Stock, Buyer shall transfer to Seller:
(1) Shares of registered EarthCare Common Stock equal in
Value to $500,000 less that number of shares of registered EarthCare Common
Stock equal in Value to $150,000, which shares are hereinafter referred to as
the "Holdback Shares", and
(2) $1,000,000 (subject to adjustment as set forth in Section
3E hereof) by wire transfer to an account of Seller designated by Seller, less
$100,000, (hereinafter referred to as the "Holdback Cash").
C. Buyer shall transfer to an escrow holder (the "Escrow Holder"),
mutually agreed to by Buyer and Seller, the Holdback Shares and Holdback Cash.
Buyer, Seller and Escrow Holder shall execute an escrow agreement (the "Escrow
Agreement") the form of which is attached hereto as Exhibit 3-C.
D. The parties shall also exchange an executed Lock-up Agreement as well
as a consulting agreement, in the form attached hereto as Exhibit 3-D.
E. The purchase price shall be adjusted (the "Adjustment") as follows:
1. If the Company's current assets as of the Closing Date exceed the
Company's current liabilities as of such date, then such excess shall be paid
to Seller as an addition to the purchase price.
2. If the Company's current liabilities as of the Closing Date exceed the
Company's current assets as of such date, then Seller shall reimburse to Buyer
an amount equal to such deficiency.
3. The adjustment to be made under this paragraph shall be made 120 days
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after the Closing Date ("the Adjustment Date"). Current assets and current
liabilities shall be determined in accordance with generally accepted
accounting principles except that accounts receivable, including unbilled
services rendered to the date of Closing and billed thereafter (the "Accounts
Receivable"), will be considered current assets only if collected prior to the
Adjustment Date or are otherwise accepted in writing by Buyer. Buyer agrees
that all amounts collected shall be applied first to Accounts Receivable
generated prior to the Closing and that Buyer shall cause the Company to
collect the Accounts Receivable in the same manner as that employed by Buyer
and its affiliates in the collection of accounts receivable in general.
4. The Adjustment shall be made hereunder as follows:
a. If there is an excess of current assets over current
liabilities, the excess, to the extent of cash collected through the Adjustment
Date, shall be paid to Seller on the Adjustment Date. To the extent such excess
is in the form of yet uncollected Accounts Receivable, Buyer shall cause the
Company to continue to collect such outstanding Accounts Receivables after the
Adjustment Date and Buyer shall pay to Seller, monthly, Accounts Receivables
thereafter collected. Payment on account of the Accounts Receivables shall be
made by the 10th day of each month for collections received during the
preceding month and shall be accompanied by a statement of Accounts Receivables
collected.
b. If the current liabilities exceed current assets then, at
Seller's election, (a) Seller shall pay to Buyer the amount of such deficiency
or (b) the number of the Holdback Shares (as defined in Paragraph 3-B(1))
having a Value (calculated at the then current market) equal to the deficiency
shall be released to Buyer and, in either such event, Buyer shall pay to Seller
on a monthly basis as described above, an amount equal to the Accounts
Receivable thereafter collected by the Company.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
In order to induce the Buyer to enter into this Agreement and to consummate
the transactions contemplated hereunder, the Seller hereby makes the following
representations and warranties to and covenants and agreements with, Buyer:
A. ORGANIZATION AND EXISTENCE. The Company is a corporation duly organized
and validly subsisting under the laws of the Commonwealth of Pennsylvania, and
has all requisite corporate power and authority to carry on its business as now
conducted. Neither the nature of the business of the Company nor the character
of the properties owned or leased by it requires qualification to do business
as a foreign corporation in any jurisdiction. Seller has delivered to Buyer a
true and correct copy of the Articles of Incorporation (duly certified by the
Secretary of State of Pennsylvania) and By-Laws of the Company (certified by
its Secretary).
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B. SUBSIDIARIES OR OTHER ENTITIES. The Company has no subsidiaries, nor
does it have any ownership interests in any other corporations, partnerships,
joint ventures or other business enterprises.
C. CAPITALIZATION. The Company is authorized to issue 100 shares of common
stock, no par value, of which 100 shares are issued and outstanding at the time
of the execution of this Agreement. The ▇▇▇▇▇ Common Stock constitutes all of
the issued and outstanding shares of capital stock of the Company. The ▇▇▇▇▇
Common Stock, all of which has been duly issued, is validly outstanding, is
fully paid and nonassessable, and is held of record and beneficially by Seller;
there is no outstanding subscriptions, options, warrants or rights to receive,
purchase or subscribe to, or securities convertible into or exchangeable for,
any issued or unissued shares of the capital stock of the Company. The Company
has no liability for dividends declared but unpaid. Except as contemplated
herein, as of the Closing, the Seller has not, and has not permitted the
Company, to issue or enter into any subscriptions, options, agreements or other
commitments in respect of the issuance, transfer, sale or encumbrance of any
shares of the ▇▇▇▇▇ Common Stock.
D. STOCK OWNERSHIP. At the time of Closing, Seller shall have good,
marketable and valid title to the ▇▇▇▇▇ Common Stock, and there shall be, no
restrictions to the sale and transfer of the ▇▇▇▇▇ Common Stock to Buyer. Upon
delivery of the ▇▇▇▇▇ Common Stock to Buyer, the ▇▇▇▇▇ Common Stock (i) shall
constitute all of the issued and outstanding shares of capital stock of the
Company, and (ii) shall be free and clear of all security interests, liens,
charges, pledges, mortgages, encumbrances or rights of third parties
whatsoever. There are no existing options, calls, or commitments relating to
any issued, or authorized but unissued, capital stock of the Company.
E. FINANCIAL CONDITION.
Seller represents and warrants to Buyer that the Company's gross revenues for
the year ended December 31, 1998 were not less than $1,700,000 and that gross
revenues for the period January 1, 1999 through February 28, 1999 were in
excess of $250,000. Long term liabilities of the Company do not exceed $110,000
and will be paid on or before the Closing Date.
F. ASSETS.
1. The Company has good and marketable title to or a valid leasehold
interest in and is in possession of, all of its assets, equipment, vehicles,
properties and rights, including all properties, assets, vehicles and equipment
listed on Schedule 4-F attached hereto, free and clear of all liabilities,
mortgages, liens, pledges, security interests, restrictions, conditional sales
agreements, title retention agreements, charges or encumbrances except: (i)
taxes constituting a lien, set forth on Schedule 4-F attached hereto, but not
yet due and payable; (ii) those obligations set forth in Schedule 4-F; and
(iii) leases set forth in Schedule 4-F. Seller represents that Schedule 4-F
sets forth a list of all assets, equipment, vehicles, properties, and rights,
waste compaction bodies, containers,
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machinery, shop tools and miscellaneous equipment, office furniture, fixtures,
computer hardware/software and equipment owned by the Company which have a net
book value in excess of $1,000 as of the date of this Agreement (hereinafter
sometimes referred to as the "Operating Equipment"); such list identifies the
Operating Equipment by manufacturer, model number and serial number, where
available.
2. Except as set forth in Schedule 4-F, all of the Operating Equipment is,
in due regard to its age, in good operating condition (normal wear and tear
excepted), and is in adequate condition to service the Company's Customer
Accounts (as hereinafter defined) and to conduct the operations of the Company
as it exists on the Closing Date.
3. To the knowledge of the Seller there has not been any material adverse
change in the Operating Equipment, in the aggregate, since the inspection of
such Operating Equipment by Buyer on March 24, 1999. G. LIABILITIES. Except as
set forth in Schedule 4-G attached hereto, or in any other Schedule or Exhibit
delivered pursuant hereto, neither the Company nor its assets or properties are
subject to any liabilities or obligations (accrued, absolute, contingent or
otherwise), and the Company is not in material default in respect of any
material term or condition of any material indebtedness or liability. The
transactions contemplated by this Agreement do not and will not subject the
Company or the Buyer to any claim or liability for any obligation, debt or
contract other than specifically disclosed in this Agreement and the Schedules
attached hereto. Except as set forth in Schedule 4-G attached hereto, all
required consents of creditors and customers have been obtained for performance
of this Agreement.
H. CUSTOMER ACCOUNTS, MUNICIPAL CONTRACTS AND RELATED MATTERS.
1. "Customer Accounts" are the current commercial, industrial and
residential customers of the Company pursuant to which the Company provides
waste removal, collections, storage and/or disposal on a frequency which is
greater than once per year. Said Customer Accounts are listed on Schedule 4-H
attached hereto. (Each of the Customer Accounts listed in Schedule 4-H shall
identify the name and address of each of the Customer Accounts, and shall
reflect as to each the current monthly billing amount and frequency of
service.)
2. Also included in Schedule 4-H is a true, accurate and complete listing
of all written service agreements, franchises, licenses or other contracts
equal or greater than $5,000 annually, if any, for the collection and
transportation of waste to which the Company is a party and which relate to
Customer Accounts. Original copies of all such contracts shall be delivered by
the Seller to the Buyer no later than the Closing Date, and such copies shall
be true, accurate and complete and shall include all amendments, supplements or
other modifications to such contracts. Except as disclosed in Schedule 4-H, to
the knowledge of the Seller, neither the Company nor any other party to any of
the Company's municipal contracts or Customer Accounts is in material default
or alleged to be in material default thereunder and as
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of Closing, and to the knowledge of Seller, there exists no condition or event
which, after notice or the lapse of time or both, would constitute such a
material default. The sale, transfer and assignment of the ▇▇▇▇▇ Common Stock
will not result in a breach, violation or default of any of the Company's
municipal contracts or Customer Accounts.
3. Except as otherwise disclosed in Schedule 4-H, the Seller knows of no
oral or written communication, fact, event or action other than industry
consolidation or other general economic conditions, which exists or has
occurred within 90 days prior to the date of execution of this Agreement, which
would cause a reasonable person to conclude that any current customers of the
Company intends to terminate its business relationship with the Company.
4. Except for deminimis amounts, to the knowledge of the Seller, none of
the Customer Accounts, service agreements, franchises, licenses, or other
contracts for collection and transportation of waste, in any manner involve the
collection or transportation of waste materials classified as hazardous, toxic,
chemical or radioactive under the laws of the United States or the Commonwealth
of Pennsylvania or under any rules or regulations promulgated by any
administrative agency thereof.
I. MATERIAL CONTRACTS. Attached hereto as Schedule 4-I is a list and brief
description, as of the date of this Agreement, of material leases, contracts,
commitments, agreements and other documents to which the Company is a party or
by which it is bound and which is related to the operation of its business.
Except for contracts and documents listed in Schedule 4-I, the Company is not a
party to or bound by any written or oral (i) contracts not made in the ordinary
course of business; (ii) employment contracts, other than those terminable at
the will of the Company; (iii) contracts with any labor union or association;
(iv) bonus, pension, profit sharing, retirement, hospitalization, insurance or
other plan providing employee benefits; (v) leases with respect to any
property, real or personal, whether as lessor or lessee; (vi) continuing
contracts for the future purchase of materials, supplies or equipment in excess
of the requirements of its business now booked; (vii) contracts or commitment
for capital expenditures; (viii) contracts continuing over a period of more
than six (6) months from its date; or (ix) material contracts necessary to
conduct the operations and business of the Company. A true copy of each written
contract, commitment and agreement listed on Schedule 4-I has been furnished to
Buyer prior to Closing.
J. EMPLOYEES - LABOR MATTERS. Attached hereto as Schedule 4-J is a
complete list of all employees of the Company whose duties are related to the
operation of the business of the Company. Seller warrants there exists no
pending or, to the knowledge of Seller, threatened actions by any of its
employees alleging sex, age, race, or other discriminatory practices, no
current effort to organize these employees into collective bargaining units,
and no collective bargaining agreement is now in effect. There are no
contracts, written or oral, between the Company and any of its employees,
except as specifically disclosed in Schedule 4-J.
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K. INSURANCE. As of the Closing, the Company maintains in effect insurance
policies covering its assets and business as set forth in Schedule 4-K in the
amount identified therein. Except as set forth in Schedule 4-K attached hereto,
there are no pending material property damage or personal injury claims against
the Company or any of its assets.
L. LICENSES AND PERMITS. The Company possesses all licenses and other
required governmental or official approvals, permits or authorizations, if any,
of which the failure to possess would have a material adverse effect on the
business, financial condition or results of operations of the Company, taken as
a whole, including, without limitation, all common carrier rights, certificates
of public need, waste material transportation permits, trademarks and trade
names necessary to carry on its business as now being conducted, without known
conflict with valid licenses, permits, trademarks and trade names of others.
All such licenses and permits are in full force and effect, and Seller has
received no notices of any violations thereof which remain uncured as of the
Closing Date. There is no proceeding pending, or to the knowledge of Seller
threatened, to revoke, suspend or otherwise limit such licenses or permits. A
list of such licenses and permits is set forth on Schedule 4-▇.
▇. TAX MATTERS. Except as set forth in Schedule 4-M, the Company has
timely filed all federal, state, sales tax, franchise tax, and other tax
returns which are required to be filed by it and has paid or has made provision
for the payment of all taxes which have or may become due pursuant to said
returns. All taxes, including, without limitation, withholding and social
security taxes due with respect to the Company's employee, federal and state
income tax liabilities, corporate franchise taxes, sales, use, excise and ad
valorem taxes, due and payable by the Company on or before the Closing Date
have or will be paid. The Company has filed all reports required to be filed by
it with all such taxing authorities.
N. LITIGATION. Except as disclosed in Schedules 4-N and 4-H attached
hereto, the Company has not received any written notices of material default
and is not in material default of (a) any order, writ, injunction or decree of
any court, or any federal, state, municipal or other governmental department,
commission, board, bureau or instrumentality, or (b) any agreement or
obligation to which the Company is a party or by which the Company is bound or
to which the Company or any of the property of the Company's may be subject.
Except as disclosed in Schedules 4-N and 4-H, there are no material outstanding
claims, actions, suits, proceedings or investigations pending or, to the
knowledge of the Seller, threatened against the Company or which affect the
Company or any of its assets or property, at law or in equity before or by any
federal, state, municipal court or other governmental department, authority,
commission, board, bureau, agency or instrumentality.
O. COMPLIANCE WITH LAWS. Except as otherwise disclosed in Schedule 4-O
attached hereto, the Company is in compliance in all material respects with all
federal, state, and local laws, ordinances, regulations, rules, and orders
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applicable to it or to its assets including, without limitation, all laws and
regulations relating to the protection of the environment, the safe conduct of
the Company's business, anti-competitive practices, discrimination, employment,
wage and hour practices and health. The Company has not received notification
of any asserted past or present failure to comply with any of such laws or
regulations which remain unsecured as of the Closing Date.
P. ENVIRONMENTAL MATTERS Except as disclosed in Schedule 4-P attached
hereto, there are no claims, actions, suits, proceedings or investigations
relating to any Environmental Law (as hereinafter defined) pending or to the
knowledge of Seller threatened against the Company. Except as set forth on
Schedule 4-P attached hereto to the knowledge of Seller: (i) no release of any
hazardous substance or regulated substance has occurred or is occurring as a
result of the business of the Company; (ii) no hazardous substance or regulated
substance is currently present at, or has been previously generated, stored,
treated or disposed of at any landfill by the Company or through the conduct of
the business of the Company except deminimis amounts mixed with household
waste; (iii) no underground or partially underground storage tank has been or
is currently located at any facility of the Company; (iv) the business,
activities and processes heretofore conducted by the Company comply in all
material respects with all applicable Environmental Laws; (v) no facility of
the Company is listed on any list, registry or other compilation of sites that
require, or potentially require, removal, remedial action or any other response
under any Environmental Law as the result of the presence, release or potential
release of any hazardous substance or regulated substance; (vi) neither Seller
nor the Company has received any notice that the Company is liable or
responsible, or potentially liable or responsible, for any costs of any
removal, remedial action or other response under any Environmental Law as the
result of the presence, release or potential release of any hazardous substance
or regulated substance; and (vii) there is no pending litigation or
administrative proceeding (and Seller does not know of any potential or
threatened litigation or administrative proceeding) in which it is asserted
that the Company has materially violated or is not in materially compliance
with any material Environmental Law. "Environmental Law" means all laws,
statutes or acts of the United States of America, the Commonwealth of
Pennsylvania, or any political subdivision thereof as of the date hereof, that
relate to the condition of the air, ground or surface water, land or other
parts of the environment, to the release or potential release of any substance
or radiation into the air, ground or surface water, land or other parts of the
environment, or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or other handling of substances that might
pollute, contaminate or be hazardous or toxic if present in the air, ground or
surface water, land, or other parts of the environment. To the knowledge of
Seller, the landfills and other disposal sites to which waste material
transported by the Company has been delivered are properly licensed pursuant to
applicable Environmental Laws to receive the material disposed of therein.
Q. NO BROKERS'S OR AGENT'S FEES. No agent, broker, finder, representative
or other person or entity acting pursuant to authority of the
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Seller will be entitled to any commission or finder's fee in connection with
the origination, negotiation, execution or performance of the transactions
contemplated under this Agreement.
R. NO MATERIAL OR ADVERSE CHANGE. Except as otherwise disclosed in
Schedule 4-R attached hereto, since December 31, 1998, there has not been: (i)
any material adverse change in the financial condition, assets, liabilities,
business or results of operations of the Company; (ii) to the knowledge of the
Seller, any threatened or prospective event or condition of any character
whatsoever which could materially and adversely affect the business, financial
condition or results of operations of the Company; (iii) any sale or other
disposition of any of the Company's assets other than the ordinary course of
business; or (iv) any damage, destruction or loss (whether or not insured)
materially and adversely affecting the property, business or prospects of the
Company.
S. DUE AUTHORIZATION AND ABSENCE OF BREACH. This Agreement and all other
agreements of the Seller executed in connection herewith constitute valid and
binding obligations of the Seller, enforceable in accordance with their
respective terms. Except as set forth in Schedule 4-S attached hereto, neither
the execution and delivery of this Agreement (or any agreement contemplated
hereunder) nor the consummation of the transactions contemplated hereby will:
(i) conflict with or violate any provision of the Articles of Incorporation or
By-Laws of the Company; (ii) conflict with or violate any decree, writ,
injunction or order of any court or administrative or other governmental body
which is applicable to, binding upon or enforceable against the Company or
Seller; or (iii) result in any breach of or default (or give rise to any right
of termination, cancellation or acceleration) under any mortgage, contract,
agreement, indenture, will, trust or other instrument which is either binding
upon or enforceable against the Seller or the Company or its assets.
T. AUTHORITY TO CONTRACT. Except for the consent of the lenders listed in
Schedule 4-T attached hereto which will be satisfied as of Closing, Seller has
the full power, right and authority to enter into and perform this Agreement
without the consent of any person, entity or governmental agency, and the
consummation of the transactions contemplated by this Agreement will not result
in the breach or termination of any provision of or constitute a default under
any lease, indenture, mortgage, deed of trust or other agreement or instrument
or any order, decree, statute or restriction to which Seller or the Company is
a party or by which the Company is bound or to which the outstanding shares of
stock of the Company or any of the properties of the Company is subject.
U. ACCURACY OF THE INFORMATION FURNISHED BY THE SELLER. No representation,
statement or information made or furnished by the Seller to the Buyer contained
in this Agreement and the various exhibits attached hereto contain any untrue
statement of any material fact or omit any material fact necessary to make the
information contained therein not misleading. As used herein, the term
"knowledge of Seller" or any derivative thereof, shall mean
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the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇ without investigation. All
representatives set forth in this Section 4 are made as the Closing Date unless
otherwise indicated to the contrary. Seller makes no other representation or
warranty, express or implied, to Buyer except those representations and
warranties set forth in this Section 4.
5. REPRESENTATION AND WARRANTIES OF BUYER. In order to induce the Seller
to enter into this Agreement and to consummate the transactions contemplated
hereunder, the Buyer hereby makes the following representations and warranties
to, and covenants and agreements with, Seller:
A. ORGANIZATION AND EXISTENCE. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has all the requisite corporate power and authority to carry on its business as
now conducted and to consummate the transactions contemplated by this Agreement
and is authorized to do business in the Commonwealth of Pennsylvania.
B. AUTHORITY TO CONTRACT. The execution, delivery and performance of this
Agreement and the documents executed in connection herewith by Buyer has been
duly approved by its Board of Directors, and no further corporate action is
necessary on the part of Buyer to consummate the transactions contemplated by
this Agreement. This Agreement and all other agreements of the Buyer
contemplated hereunder constitute valid and binding obligations of the Buyer,
enforceable in accordance with their respective terms. Neither the execution
and delivery of this Agreement (or any agreement contemplated hereunder) nor
the consummation of the transactions contemplated hereby will: (i) conflict
with or violate any provision of the Articles of Incorporation or By-Laws of
the Buyer; (ii) conflict with or violate any decree, writ, injunction or order
of any court or administrative or other governmental body which is applicable
to, binding upon or enforceable against the Buyer; or (iii) result in any
breach of or default (or give rise to any right of termination, cancellation or
acceleration) under any mortgage, contract, agreement, indenture, will, trust
or other instrument which is either binding upon or enforceable against the
Buyer or its assets.
C. NO BROKER'S OR AGENT'S FEES. No agent, broker, finder, representative
or other person or entity acting pursuant to the authority of the Buyer will be
entitled to any commission or finder's fee in connection with the origination,
negotiation, execution or performance of the transactions contemplated under
this Agreement.
D. ACCURACY OF INFORMATION FURNISHED BY BUYER. No representation,
statement or information made or furnished by Buyer to the Seller in this
Agreement contains, or shall contain any untrue statement of any material fact
or omits or shall omit any material fact necessary to make the information
contained herein true.
E. REGISTRATION. The EarthCare Common Stock delivered to Seller on the
Closing Date has been duly registered with the Securities and Exchange
Commission (the "SEC") on Form S-1 effective December 9, 1998, and such
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registration statement is true and correct in all material respects and does
not omit to state any material information necessary to make such registration
statement not misleading.
F. REPORTS AND FINANCIAL STATEMENTS. Buyer has made available to Seller a
copy of each report, schedule, registration statement and definitive proxy
statement filed by Buyer with the SEC since September 1, 1998 (as such
documents have since the time of their filing been amended, the "Buyer SEC
Reports") which are all the documents (other than preliminary material) that
Buyer was required to file with the SEC since such date. As of their respective
dates, the Buyer SEC Reports complied in all material respects with the
requirements of the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Buyer SEC Reports. As of
their respective dates, the Buyer SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading.
The audited consolidated financial statements and unaudited interim
financial statements of Buyer included in such reports (the "Buyer Financial
Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC) and fairly present the financial position
of Buyer and its subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods of then ended,
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
1. Absence of Undisclosed Liabilities. Except for matters
disclosed in the Buyer SEC Reports, neither Buyer nor any of its subsidiaries
had at December 31, 1998, or has incurred since that date, any liabilities or
obligations whether absolute, accrued, contingent, or otherwise) of any nature,
except liabilities, obligations or contingencies (i) which are accrued in the
ordinary course of business or reserved against in the Buyer Financial
Statements or reflected in the notes thereto or (ii) which were incurred after
December 31, 1998, and were incurred in the ordinary course of business and
consistent with past practices, and except, in either case, for any such
liabilities, obligations or contingencies which would not, in the aggregate,
have a material adverse effect.
2. No Restrictions Regarding the EarthCare Stock. Except as set
forth in the Lock-up Agreement, the EarthCare Common Stock to be issued
pursuant to the provisions of Section 1B(i) will, upon the issuance thereof, to
the Seller, be (a) validly issued, fully paid, nonassessable and free and clear
of any liens or encumbrances or any restrictions regarding the transferability
thereof including, without limitation, any restrictions imposed pursuant to the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, or any applicable "blue sky" laws and (b) duly registered and freely
tradeable on NASDAQ.
3. Information Supplied. None of the information to be supplied
by Buyer, or their respective auditors, attorneys, financial advisors or other
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consultant or advisors, for inclusion in any documents to be filed with any
federal or state regulatory agency in connection with the transactions
contemplated hereby will, at the respective times of the filings, contain any
untrue statement of a material fact or omit to make the statements therein, in
light of the circumstances under which they were made, not misleading or
necessary to correct any statement in any earlier such filing.
6. ADDITIONAL AGREEMENT OF THE SELLER.The Seller further agrees with the
Buyer as follows:
A. DISCLOSURE OF FINANCIAL DATA. Seller acknowledges that Buyer is a
publicly-traded corporation and that Buyer will be required under the
applicable securities laws to publicly disclose detailed financial data
concerning the Company's operations.
B. EXECUTION OF FURTHER DOCUMENTS BY SELLER. From and after the Closing,
upon the reasonable request of the Buyer at Buyer's expense, the Seller shall
execute, acknowledge and deliver such documents as may be appropriate to carry
out the transactions contemplated by this Agreement.
C. INDEMNIFICATION BY SELLER.
1. The Seller will indemnify, defend and hold the Buyer harmless from and
against any and all damage, loss, cost, deficiency, assessment, liability or
other expense (including reasonable attorney's fees, costs of court and
litigation expenses, if any) suffered, incurred or paid by the Buyer as a
result of:
(a) The untruth, inaccuracy, breach or violation of any
representation, warranty, covenant or other obligation of the Seller set forth
in this Agreement or such other documents executed in connection herewith.
(b) The assertion against the Buyer or the Company of any liability or
obligation of the Company or of any claim relating to the operation of the
Company's waste collection and transportation business, prior to the Closing
Date, whether absolute or contingent, matured or unmatured, as of the Closing
Date (including, without limitation, customer claims or disputes and excluding
accounts payable and other liabilities disclosed to Buyer).
(c) The enforcement of the Buyer's right to indemnification under this
Agreement.
2. The Buyer shall give written notice to the Seller (and Escrow Holder if
within 6 months of the Closing Date) of any bona fide claim, for indemnity
against Seller not later than ten (10) days after Buyer has received notice or
become aware thereof. Seller shall have the right, at his option, to compromise
or defend, at his own expense and by his own counsel (which counsel shall be
reasonably satisfactory to Buyer), any such action, suit or
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proceeding. Buyer and Seller agree to cooperate in any such defense or
settlement and to give each other full access to all information relevant
thereto.
3. The Holdback Shares and Holdback Cash shall constitute security for
Seller's indemnification. The Holdback Shares and Holdback Cash shall be placed
in escrow with a third party as agreed upon by Buyer and Seller. Payments, on
account of any such claims, if any, shall be made with 40% cash and 60% stock,
such stock being Valued as of the Closing Date. Buyer and Seller shall each pay
50% of the cost attributable to the escrow account. If Buyer makes no claim of
breach of any of Seller's representations, warranties or covenants, then the
Holdback Shares and Holdback Cash shall be delivered in full to Seller within
one hundred eighty days of the Closing Date. In addition, Holdback Shares and
Holdback Cash in amounts exceeding Buyer's claims shall be delivered to Seller
within one hundred eighty days of the Closing Date.
4. If Buyer asserts there has been a breach of any of Seller's
representations, warranties or covenants, then Buyer shall notify Seller in
writing setting forth the nature of the breach and/or the amount of loss,
damage, cost or expense, as provided above. A claim or claims by Buyer against
Seller must total at least seven thousand five hundred dollars ($7,500.00) in
the aggregate before Seller is liable for indemnification; however, once
Buyer's claim(s) total at least seven thousand five hundred dollars ($7,500.00)
in the aggregate, then Seller shall be liable for the incremental amount above
$7,500.00. The balance of the Holdback Shares and Holdback Cash shall be
delivered to Seller on the date on which any unresolved claim asserted by Buyer
against Seller is finally resolved.
5. Seller's liability in connection with this Agreement shall in no event
exceed the amount paid (with the EarthCare Common Stock being Valued as of the
date hereof) for the ▇▇▇▇▇ Common Stock. Any claims of Buyer arising after 180
days from the Closing Date may be satisfied by Seller with cash or EarthCare
Common Stock(Valued as of the date hereof), or any combination thereof, at the
option of Seller. Seller's liability to Buyer or its affiliates for claims made
under or in connection with this Agreement (whether such claim is for indemnity
hereunder, or a claim based on breach of contract, warranty, tort or otherwise)
shall in no event exceed the amount of cash paid to Seller plus the shares of
EarthCare Common Stock delivered to Seller.
7. ADDITIONAL AGREEMENT OF THE BUYER.
A. EXECUTION OF FURTHER DOCUMENTS BY BUYER. From and after the Closing,
upon reasonable request of Seller at Seller's expense, Buyer shall execute,
acknowledge and deliver to Seller all such further documents as may be
appropriate to carry out the transactions contemplated by this Agreement.
B. INDEMNIFICATION BY BUYER.
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1. The Buyer will indemnify and hold the Seller harmless from and against
any and all damages, loss, cost, deficiency assessment, liability or other
expense (including reasonable attorney's fees, costs of court and costs of
litigation, if any) suffered, incurred or paid by the Seller as a result of:
(a) The untruth, inaccuracy, breach or violation of any
representation, warranty, covenant or other obligation of the Buyer set forth
in or made in connection with this Agreement;
(b) The assertion against the Seller of any liability or
obligation of the Buyer or the Company or of any claim relating to the
operation of the Company's waste collection and transportation business
subsequent to the Closing Date (including, without limitation, customer claims
or disputes); or
(c) The enforcement of the Seller's right to indemnification under
this Agreement.
2. The Seller shall give written notice to the Buyer of any claim, action,
suit or proceeding relating to the indemnity herein provided by Buyer not later
than ten (10) days after Seller has received notice thereof. Buyer shall have
the right, at its option, to compromise or defend, at its own expense and by
its own counsel (which counsel shall be reasonably satisfactory to Seller), any
such action, suit or proceeding. Seller and Buyer agree to cooperate in any
such defense or settlement and to give each other full access to all
information relevant thereto.
3. Except as herein expressly provided, the remedies provided in paragraph
7.B hereof shall be cumulative and shall not preclude assertion by the Seller
of any other rights or the seeking of any other remedies available against the
Buyer at law or in equity.
C Buyer shall promptly notify Seller in writing upon receipt by Buyer of
notice of any pending or threatened tax audits or assessments against the
Company for the tax periods of the Company which include any time periods prior
to the Closing Date. Seller shall have the exclusive right, at his own expense,
to control any audit or determination by any taxing authority or other
governmental body, initiate any claim for refund or amended return, and
contest, resolve and defend against any assessment, notice of deficiency, or
other adjustment or proposed adjustment of taxes for any taxable period
described in the immediately preceding sentence, and the Seller shall retain
all rights with respect to any tax refunds that may be due or payable with
regard to any such taxable periods.
In furtherance of the above, Buyer will cooperate fully with and, if
requested by the Seller, will appoint Seller as a duly authorized officer of
the Company solely for purposes of conducting any audits or examinations with
respect to any of the tax returns described in the immediately preceding
paragraph or any tax return with respect to which, or as the result of which,
the Seller may have any liability, negotiating and approving all changes or
adjustments to such tax returns or any tax return with respect to which, or as
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the result of which, the Seller may have any liability, and negotiating,
approving and executing all agreements (including closing agreements) with the
appropriate taxing authorities or other governmental bodies at the conclusion
of any such audits or examinations, which shall binding upon the Company and
Buyer. The Seller shall have sole and exclusive authority with respect to the
conduct, negotiation and settlement of any such audits or examinations;
provided, however, that (1) with respect to any matters that may adversely
affect the Buyer or the Company after the Closing Date, the Seller shall
consult with, and consider in good faith, the suggestions of the Buyer or
Company, and the Seller shall not settle any such matter without Buyer's
written consent, which consent will not be unreasonably withheld and (2)
nothing set forth in this Section 7.C will alter or affect Buyer's right to
receive, or the Sellers' obligation to provide, indemnity pursuant to Section 6
of the Agreement.
Buyer, upon the request of the Seller, will, at any time and from time
to time, afford to the Seller, or any representative of Seller, full and
complete access to the books and records of the Company (including all
accounting, financial and tax records) as shall be necessary to permit the
Seller and the Company to effectuate the provisions of this Section 7.C and, in
connection therewith, Buyer will make available, or cause to be made available,
to the Seller, such qualified personnel of as the Seller shall reasonably
request to assist in the compilation of the information necessary to prepare
and file the tax returns referred to in this Section 7.C as well as may be
necessary to respond to any audit that may be conducted from time to time with
respect to such tax returns or any other tax returns filed by the Company on or
prior to the Closing Date.
Buyer agrees to not amend or cause to be amended any income tax return
filed by the Company for tax years ending on or before the Closing Date,
without obtaining the consent of Seller.
D Confidentiality. Purchaser will maintain in confidence any confidential
or proprietary written, oral, or other information obtained from the Seller in
connection with this Agreement including, without limitation, the tax returns
of the Company prior to the date hereof (it being understood that, in all
events, such information may be disclosed to the Seller's affiliates,
representatives and financing providers), unless (a) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault or such party,
(b) the use of such information is necessary in making any filing or obtaining
any consent or approval required for the consummation of the transactions
contemplated under the Agreement, or (c) the furnishing or use of such
information is required by or necessary in connection with a legal requirement
or proceeding.
8. CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligations of the Buyer to
effect the transactions contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
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A. OPINION OF COUNSEL FOR SELLER. The Buyer shall have received an
opinion from counsel for the Seller dated the date of the Closing, in the form
of Exhibit 8.A, attached hereto.
B. RECEIPT BY THE BUYER OF NECESSARY CONSENTS. All necessary consents or
approvals of third parties to any of the transactions contemplated hereby shall
have been obtained, and satisfactory evidence of such consents or approvals
shall have been delivered to the Buyer at Closing.
C. RESIGNATION OF OFFICERS AND DIRECTORS. Buyer shall have received such
resignations of officers and directors of the Companies as shall have been
requested by Buyer.
9. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of the
Seller to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of each of the
following conditions:
A. PRE-CLOSING OBLIGATIONS. The Buyer shall have performed and complied
with all the obligations and conditions required by this Agreement to be
performed or complied with by Seller at or prior to the Closing Date, including
the execution and delivery of all documents and contracts required to be
delivered at or before the Closing Date pursuant to this Agreement.
B. CORPORATE AUTHORITY OF BUYER. The execution and performance of this
Agreement by the Buyer shall have been duly and legally authorized in accordance
with applicable law, and the Buyer shall have furnished to counsel for the
Seller certified copies of resolutions adopted by the Board of Directors of the
Buyer authorizing and approving the execution and delivery of this Agreement and
performance of the transactions contemplated hereunder.
C. OPINION OF COUNSEL FOR BUYER. The Seller shall have received an
opinion from counsel for the Buyer dated the date of the Closing, in the form
of Exhibit 9.C., attached hereto.
10. SELLER'S NON-COMPETE AND NON-SOLICITATION AGREEMENT. As inducement to
Buyer to enter into this Agreement and perform its obligations hereunder, and
in consideration of the payments to Seller pursuant to this Agreement, the
Seller agrees that Seller will not, for period of five (5) years from the
Closing Date, directly or indirectly (whether as owner, partner, shareholder,
agent, employee, independent contractor, consultant or otherwise): (i) engage
in the waste management business, waste collection and transportation business,
landfill business, or any other business which
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directly competes with business of the Buyer, or with any subsidiary of Buyer
as of the date of Closing, within, in each case, within the Counties of
▇▇▇▇▇▇▇, Burks, Montgomery, or Lehigh, Commonwealth of Pennsylvania; (ii)
solicit any party who is or was a customer or supplier of the Company on the
closing Date or at any time during the 12 month period immediately prior
thereto for services of any type or quality being provided by the Company;
(iii) with the exception of Seller's son, solicit for employment any person who
was or is an employee of the Company on the Closing Date, or at any time during
the 12 month period immediately prior thereto (provided, however, that the
exception for Seller's son shall not be construed as diminishing Seller's
covenants contained in this Article); or (iv) either directly or indirectly,
divulge, disclose, or communicate to any person, firm or corporation in any
manner whatsoever any confidential information relating to the business of
Buyer, or the Company. The term, "confidential information", as used herein
means all information of a business or technical nature relative to the
business of Buyer, the business of any customers of the Company or any business
of any person, firm or corporation which consults with, or is affiliated with,
Buyer or the Company. The term "confidential information" shall not include
information in the public domain. Notwithstanding the foregoing, confidential
information may be disclosed to the extent required by law or court order.
Each of the covenants contained in this Article are separate and independent.
The Seller acknowledges and agrees that Buyer's and Company's remedies at law
may be inadequate in the event of a breach or threatened breach of the
covenants set forth herein, and in such event, Buyer and the Company shall be
entitled to seek an injunction issued by any court of competent jurisdiction,
enjoining and restraining each and every party concerned therewith from the
creation or continuation of such breach.
11. OTHER PROVISIONS.
A. CONSULTING AGREEMENT. At Closing, Buyer will enter into a written
Consulting Agreement with Seller in a form substantially similar to Exhibit
11-A.
B. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, obligations and agreements of the parties contained in this
Agreement, or in any writing delivered pursuant to provisions of this
Agreement, shall survive the Closing for a period of two (2) years with the
exception of representations and warranties concerning Paragraph 4.M. hereof,
Tax Matters and Paragraph 4.P. hereof, Environmental Matters, which will
survive for as long as any claims may be asserted under the applicable periods
of limitation for violations of any tax (without extension) or environmental
law, rule or regulation. All claims shall be made within the applicable
survival period.
C. WAIVER OR EXTENSION OF CONDITIONS. The Seller or the Buyer may extend
the time for or waive the performance of any of the obligations of the other
party, waive any inaccuracies in the representations or warranties by the
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other party, or waive compliance by the other party with any of the covenants
or conditions contained in this Agreement. Any such extension or waiver shall
be in writing and signed by the Seller and the Buyer. Any such extension or
waiver shall not act as a waiver or an extension of any other provisions of
this Agreement.
D. NOTICES. Any notice, request or other document shall be in writing and
sent by registered or certified mail, return receipt requested, postage prepaid
and addressed to the party to be notified at the following addresses, or such
other address as such party may hereafter designate by written notice to all
parties, which notice shall be effective as of the date of posting:
(i) If to the Buyer:
EarthCare Company
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(ii) If to the Seller:
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
E. GOVERNING LAW. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
F. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns.
G. HEADINGS. The subject headings of the Sections of this Agreement are
included for purposes of convenience only and shall not affect the construction
or interpretation of any of its provisions.
H. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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I. ARBITRATION. Any controversy or claim arising out of, in connection
with, or relating to this Agreement or a breach thereof shall be settled by
arbitration under the arbitration rules of the American Arbitrators
Association. The arbitration proceeding shall be governed by the statutes of
the Commonwealth of Pennsylvania, and the proceeding shall be held in Reading,
Pennsylvania. The arbitration panel shall be comprised of three arbitrators.
Each party shall appoint one arbitrator for the panel and the two so appointed
shall appoint a third. The panel shall resolve the dispute within sixty (60)
days of the appointment of the panel and shall notify the parties of its
findings in writing. Each party agrees to bear its own costs of arbitrators and
to split equally the cost of the third arbitrator.
Anything to the contrary contained in the above mentioned rules and statutes
notwithstanding, the parties consent that any papers, notices, or process
necessary or proper for the institution or continuance of, or relating to any
arbitration proceeding, or for the confirmation of an award and entry of
judgement on any award made, including appeals in connection with any judgement
or award, may be served on each of the parties by registered mail addressed to
the party at the notice address set forth above, or by personal service on the
party in or without the above mentioned State. The parties hereby recognize and
consent to the above mentioned arbitration association's jurisdiction over each
and every one of them.
J. ENTIRE AGREEMENT; MODIFICATION. This Agreement (including the schedules
attached hereto) and the documents delivered pursuant hereto constitute the
entire agreement and understanding between the parties, and supersede any prior
agreements and understandings relating to the subject matter hereof. This
Agreement may be modified or amended by a written instrument executed by all
parties hereto.
IN WITNESS WHEREOF the parties have executed this Agreement as of the
31st day of March, 1999
"Seller"
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▇▇▇▇▇▇▇ ▇▇▇▇▇
"Buyer"
EarthCare Company
By:
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice-President
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