EXHIBIT 10.1
Page 6
PURCHASE AGREEMENT
DATED AS OF THE 13TH DAY OF OCTOBER, 1998
BY AND AMONG
WASTE RECOVERY, INC.
NEW U.S. TIRE RECYCLING CORP.
U.S. TIRE RECYCLING PARTNERS, L.P.
TIRUS ASSOCIATES, L.L.C.
AND
CONCORD RECYCLING, L.L.C.
THIS AGREEMENT (this "Agreement") is made as of the 13th day of October,
1998, by and among WASTE RECOVERY, INC., a Texas corporation ("WRI"), NEW
U.S. TIRE RECYCLING CORP., a Texas corporation ("New U.S. Tire"), U.S. TIRE
RECYCLING PARTNERS, L.P., a Delaware limited partnership (the "Recycling,
L.P."), TIRUS ASSOCIATES, L.L.C., a New York limited liability company
("Tirus") CONCORD RECYCLING, L.L.C., a Delaware limited liability company
(the "Purchaser").
WHEREAS, as of September 30, 1996, among others, WRI, New U.S. Tire,
Recycling, L.P., and Tirus entered into that certain Agreement and Plan of
Reorganization, whereby, among other things, New U.S. Tire, Tirus, and
Recycling L.P. (collectively, New U.S. Tire, Tirus and Recycling, L.P. may be
referred to herein as the "U.S. Tire Entities") became wholly owned
subsidiaries of WRI (the "1996 Reorganization") in consideration of debt and
stock of WRI paid to the then owners of the U.S. Tire Entities ("the
Shareholders");
WHEREAS, in connection with the 1996 Reorganization, the Shareholders
received shares of capital stock of WRI (the "WRI Stock") a portion of which
is currently held by U.S. Trust Company of Dallas, N.A. (the "Escrow Agent")
pursuant to that certain Escrow Agreement dated November 1996 by and between
WRI, New U.S. Tire, the Shareholders and Escrow Agent (the "Escrow
Agreement");
WHEREAS, in connection with the 1996 Reorganization, WRI issued to each
Shareholder a Convertible Subordinated Note payable pursuant to the terms
contained therein and convertible into common stock of WRI collectively
representing an aggregate principal amount equal to $1,877,856, secured by
the stock of New U.S. Tire and a mortgage on real property owned by that
company (collectively, the "Convertible Subordinated Notes") and an unsecured
note in an aggregate principal amount of $150,000 payable to Tire Lending
Associates, a New York partnership (the "150 Note")
WHEREAS, subsequent to the 1996 reorganization Tire Lending Associates
made advances from time to time totaling $600,000 to WRI for which WRI issued
an unsecured promissory note (the "Unsecured Note"); and
WHEREAS, the Purchaser wishes to purchase and WRI wishes to sell the
U.S. Tire Entities for the consideration hereinafter provided and that
thereafter. WRI shall continue its existence separate and apart from New U.S.
Tire, Tirus, Recycling L.P. and the various Shareholders, and the ownership
of New U.S. Tire, Tirus and Recycling, L.P. shall vest in the Purchaser.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual agreements, representations, warranties, provisions and covenants
herein contained, and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
A. PURCHASE AND SALE. Purchaser hereby purchases and WRI hereby sells
100% of the U.S. Tire Entities for the full cash purchase price of
approximately $2,794,856, comprised of the following:
1. Cash Payments of $ 400,000
2. Assumption of the Convertible
Subordinated Notes 1,877,856
3. Accrued Interest on Convertible
Subordinated Note 117,000
4. Release of the 150 Note 150,000
5. Working on Capital Note
(Subject to adjustment) 250,000
----------
Sub Total $2,794,856
6. 1.5 Million shares of WRI Common Stock -
7. Calls on 500,000 shares of WRI Common Stock -
B. WRI ACTIONS. On the Closing Date, as defined below, WRI shall take
the following actions:
1. Deliver to the Purchaser (a) 100% of the issued and
outstanding shares of New U.S. Tire common stock, (b) 100% of all membership
interests in Tirus and (c) 100% of the partnership interests in Recycling
Partners, L.P., (collectively referred to as the "WRI Delivered Stock") all
free of all liens and encumbrances, rights and claims except as hereinafter
specifically provided.
2. WRI shall execute and deliver to Tire Lending Associates a
promissory note in the original aggregate principal amount of Six Hundred
Thousand Dollars ($600,000.00), bearing interest at a rate equal to the Prime
Rate plus 1% (the "Prime
Rate" shall be equal to the then current published prime rate of Chase Bank,
N.A. adjusted quarterly or, in the event Chase Bank, N.A. should cease to
publish a prime rate, then by reference to a similar rate charged by a
similar, national, banking institution), maturing on the second anniversary
of the Closing Date (the "Tire Lending Note"). Interest shall be paid
quarterly, beginning on January 2, 1999. As security for the Tire Lending
Note, WRI will issue and deliver a third priority deed of trust lien on WRI's
Baytown facility, which lien shall be junior only to (a) a first deed of
trust lien in a principal amount not to exceed Three Hundred Thousand Dollars
($300,000) (plus accrued interest); and (b) a second priority deed of trust
lien in a principal amount not to exceed Two Hundred Thousand Dollars
($200,000) (plus accrued interest). This Note shall replace the existing
Unsecured Note, which shall be returned and canceled simultaneously herewith.
C. PURCHASER'S ACTIONS.
On the Closing Date, the Purchaser shall take the following actions:
1. The Purchaser shall pay, via wire transfer, to WRI, the sum of
Four Hundred Thousand Dollars ($400,000);
2. Deliver to WRI releases from the Shareholders of all of the
Convertible Subordinated Notes, the 150 Note and the Unsecured Note;
3. To Deliver to WRI at Closing authorization to the Escrow Agent
to release all Escrowed WRI Stock (in form attached as Exhibit A);
4. Deliver to WRI Five Hundred Thousand (500,000) shares of WRI
stock currently held by various Shareholders or their assigns;
5. Execute and deliver to WRI Option Agreements, granting WRI
options, exercisable on or before June 30, 2000, to purchase Five Hundred
Thousand (500,000) shares of WRI common stock from various Shareholders, at a
price equal to $1.00 per share (the "Option") (in form attached as Exhibit B);
6. Except as specifically set forth herein, forgive, cancel and
extinguish each and every debt and obligation reflected on the financial
statements, books or records of any U.S. Tire Entity, whether evidenced by
instrument or otherwise, by and between WRI and any U.S. Tire Entity,
existing as of the Closing Date;
7. Deliver the Unsecured Note;
8. Grant WRI the right to deliver up to 400 tons of
tire shreds and/or whole tires meeting industry standards to the U.S. Tire
landfill at Concord NC, at no cost to WRI (except expenses for freight), such
right exercisable by WRI at any time and from time to time during regular
business hours for a period of 180 days following the Closing Date.
9. An option to WRI, exercisable within 30 days of the Closing
Date by delivery of written notice to Purchaser, to (a) deliver the pick-up
truck located in Illinois, VIN#IB7HF16Y955166058, in satisfactory condition,
normal wear and tear excepted to U.S. Tire or (b) retain possession of such
vehicle and deliver to Purchaser a release of the loan on the vehicle. In
the event WRI elects to retain possession and assume all indebtedness with
respect to such vehicle, U.S. Tire shall promptly execute and deliver the
vehicle title or any other documents that may be necessary to transfer title
to WRI upon release of U.S. Tire's obligations under the Loan.
10. Execute and deliver to WRI a promissory note in an aggregate
principal amount equal to the working capital of New U.S. Tire as of the
Closing Date subject to certain adjustments (presently estimated to be in the
aggregate principal amount of approximately $250,000) to be specifically
determined in and as described in and on such other terms set forth in the
form of promissory note attached hereto as Exhibit C (the "Working Capital
Note");
11. Deliver to WRI the representations, warranties and releases of
the Shareholders as set forth in PARAIII(A)(1) and VIII.
D. MUTUAL ACTIONS OF PARTIES.
On the Closing Date all partes shall be deemed to have waived, released
and canceled any and all inter-company claims or obligations from one to the
other then existing, whether liquidated or not, including claims of or
obligations owing to officers, directors, employees, agents or affiliates of
another party; except as specifically provided to the contrary in this
Agreement or any other simultaneous or subsequent agreement or instrument.
I. CLOSING
On the Closing Date, and thereafter the parties shall take all actions
necessary to consummate all the actions set forth in Article I above
(hereinafter referred to as the "Closing"). The Closing shall take place at
the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, on a date agreed upon by the parties and all other
closing conditions set forth herein have been satisfied or waived by the
appropriate parties. The date on which the Closing shall occur shall be
referred to as the "Closing Date".
II. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
A. Each of the Shareholders severally represents and warrants that all
of the following representations and warranties with respect to them are true
and correct as of the date of this Agreement and shall be true and correct at
the time of the Closing.
1. AUTHORIZATION. Each Shareholder has the full legal right,
power and authority to enter into this Agreement. This Agreement and each
agreement or instrument to which the Shareholder is a party pursuant to the
provisions of this Agreement have each been duly executed and delivered by
each Shareholder and constitutes the valid and binding obligation of each
such party, enforceable in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, (ii) the
remedy of specific performance and injunctive relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceedings may be brought and (iii) rights to indemnification hereunder may
be limited under applicable securities laws (the "Equitable Exceptions").
2. WRI STOCK. Each Shareholder (i) owns of record and has good
and marketable title to all of the issued and outstanding shares of the WRI
Stock, free and clear of any and
all liens, mortgages, security interests, encumbrances, pledges, charges,
adverse claims, options, rights or restrictions of any character whatsoever
arising or otherwise created after the 1996 Reorganization other than
standard state and federal securities law private offering legends and
restrictions and any restrictions on transfer arising in connection with the
Escrow Agreement (collectively, "Liens"), and (ii) each has the right to vote
the WRI Stock on any matters as to which any shares of WRI Stock are entitled
to be voted under the laws of the state of incorporation of WRI and WRI's
charter documents, free of any right of any other person.
3. TAX MATTERS.
(a) THE SHAREHOLDERS ACKNOWLEDGE THAT THE TRANSACTIONS
CONTEMPLATED UNDER THIS AGREEMENT MAY HAVE ADVERSE TAX CONSEQUENCES. THEY
HAVE HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL OF THEIR CHOOSING REGARDING
THESE CONSEQUENCES, AND UNDERSTAND AND ACKNOWLEDGE THAT WRI HAS NO
RESPONSIBILITY FOR, AND MAKES NO REPRESENTATION AS TO, ANY TAX CONSEQUENCES
TO ANY SHAREHOLDER.
4. BANKRUPTCY. No Shareholder is under the jurisdiction of any
federal bankruptcy court, or the subject of any receivership or other
insolvency proceeding.
5. CONSIDERATION. To the best knowledge of each
Shareholder, the fair market value of the WRI stock, release and other
consideration given by the Shareholders, will be approximately equal to the
fair market value of the consideration received by them hereunder.
6. EXPENSES. The Shareholders (other than ▇▇▇▇▇▇ Bodners) will
each pay their own respective expenses, if any, incurred in connection with
this Agreement and any transaction contemplated hereby.
7. NO VIOLATIONS. The execution, delivery and performance of
this Agreement and the other agreements and documents contemplated hereby by
the Shareholders (to which such Shareholder is a party) and the consummation
of the transactions contemplated hereby will not (i) violate any statute,
rule, regulation, order or decree of any public body or authority by which
the Shareholders or their respective properties or assets are bound, the
result of which would materially adversely affect the ability of any
Shareholder to perform such party's obligations hereunder or under any
document or agreement contemplated hereby, or (ii) result in a violation or
breach of, or constitute a default under, or result in the creation of any
encumbrance upon, or, create any rights of termination, cancellation or
acceleration with respect to any of the obligations undertaken by the
Shareholders hereunder.
8. CONSENTS. No consent, approval or other
authorization of any governmental authority or under any contract or other
agreement or commitment to which the Shareholders are parties or by which its
or their respective assets are bound is required as a result of or in
connection with the execution or delivery of this Agreement which the failure
to obtain would materially adversely affect the performance by the
Shareholders of their obligations hereunder or under any agreement or
document contemplated hereby.
9. COMPLIANCE WITH LAWS. The Shareholders are and have been in
compliance with all applicable laws, regulations (including federal, state
and local procurement regulations), orders, judgments and decrees with
respect to the WRI Stock except where the failure to so comply would not
materially adversely affect the performance by the Shareholders or U.S. Tire
of their obligations hereunder or under any agreement or document
contemplated hereby.
10. OWNERSHIP. Each Shareholder owns beneficially and of record
the shares of WRI Stock set forth opposite such Shareholder's name on ANNEX I
and the promissory note from WRI in the original principal amount set forth
opposite such Shareholder's name on ANNEX II, such shares of the WRI Stock
owned by the Shareholder are owned free and clear of all Liens other than
standard state and federal securities laws private offering restrictions.
11. NO OTHER REPRESENTATIONS. Except to the extent set forth in
this Agreement or expressly incorporated herein, no Shareholder has made any
representation or warranty whatsoever and hereby disclaims all liability or
responsibility for any other representation or warranty made, communicated or
furnished (orally or in writing) to the other party or its representatives
(including without limitation, any opinion, information, projection or advice
as may have been or may be provided to WRI or any of its affiliates by any
partner, director, officer, employee, agent, consultant or representative of
any Shareholder).
III. REPRESENTATIONS OF WRI AND U.S. TIRE ENTITIES
A. WRI represents and warrants that all of the following
representations and warranties in this Section are true and correct at the
date of this Agreement and shall be true and correct at the time of the
Closing.
1. DUE ORGANIZATION. Each of WRI, New U.S. Tire, Tirus and
Recycling, L.P. is duly organized, validly existing and in good standing
under the laws of the State in which each is organized, and is duly
authorized and qualified under all applicable laws, regulations, and
ordinances of public authorities to carry on its businesses in the places and
in the manner as now conducted except for where the failure to be so
authorized or qualified would not have a material adverse effect on its
business, operations, affairs, properties, assets or
condition (financial or otherwise).
2. WRI DELIVERED STOCK. The WRI Delivered Stock shall constitute
100% of the valid and legally issued shares of New U.S. Tire and membership
interests of Tirus and Recycling Partners, L.P. owned by WRI as of the
Closing Date, fully paid and nonassessable, and shall be conveyed free and
clear of all Liens created by WRI or by any of the U.S. Tire Entities. Upon
delivery of the shares of the WRI Delivered Stock to the Shareholders at the
Closing, the Shareholders shall have good and marketable title to such
shares.
(a) WRI received the WRI Delivered Stock in connection with
the 1996 Reorganization from certain of the Shareholders and their
affiliates, and there have been no subsequent issuances by U.S. Tire of any
shares of its capital stock or by Tirus of any membership interests. Since
the 1996 Reorganization, there have not been issued any conversion or
exchange rights, subscriptions, options, warrants or other arrangements or
commitments obligating the U.S. Tire or Tirus to issue any shares of capital
stock or other securities or to purchase, redeem or otherwise acquire any
shares of capital stock or other securities, or to pay any dividend or make
any distribution in respect thereof.
(b) WRI (i) owns of record and has good and marketable title
to all of the issued and outstanding shares of the WRI Delivered Stock, free
and clear of any and all claims, Liens, or encumbrances and (ii) has the
right to vote the WRI
Delivered Stock on any matters as to which any shares of U.S. Tire common
stock or any Tirus membership interests or Tire Recycling, L.P. partnership
interests are entitled to be voted under the laws of the state of
incorporation of such companies and such companies' charter documents, free
of any right of any other person.
3. PERMITS AND INTANGIBLES. The representations and warranties
in this Section 3 are limited to the extent that any Shareholder has actual
or constructive knowledge that (a) WRI will or is threatened to be in breach
of any warranty on the Closing Date or (b) any representation contains any
untrue statement of fact or omits to state a material fact necessary to make
the statements herein, in light of the circumstances which they are made, not
misleading. Since the 1996 Reorganization, U.S. Tire and Tirus have not
cancelled, terminated or otherwise failed to renew any license, franchise,
permit and other governmental authorization, including any permit, title
(including motor vehicle titles and current registrations), fuel permit,
license, franchise, certificate, trademarks trade name, patent, patent
application and copyright owned or held by company as of the closing date of
the 1996 Reorganization, the absence of any of which would have a material
adverse effect on the business, operations, properties, assets or conditions
(financial or otherwise) of such companies (the "Material Permits"). WRI has
not received notice that any governmental authority intends to cancel,
terminate or not renew any such
Material Permit. Since the 1996 Reorganization, U.S. Tire has conducted and
is conducting its business in compliance with the requirements, standards,
criteria and conditions set forth in such Material Permits and is not in
violation of any of the foregoing except where such noncompliance or
violation would not have a material adverse effect on the business,
operations, properties, assets or conditions (financial or otherwise) of the
company.
4. VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement, the Tire Lending Note and any other agreements annexed hereto to
which WRI is a party and the performance of the transactions contemplated
herein or therein have been duly and validly authorized by the Boards of
Directors, and this Agreement, the Tire Lending Note, and such other
agreements have each been duly and validly authorized by all necessary
corporate action, duly executed and delivered and are the legal, valid and
binding obligations of each of such entities to the extent that it is a party
thereto, enforceable against such party thereto in accordance with their
respective terms subject to the Equitable Exceptions.
5. NO CONFLICTS. The representations and warranties in this
Section 5 are limited to the extent that any Shareholder has actual or
constructive knowledge which has not been disclosed to a member of the WRI
Board, other than a Shareholder, that (a) WRI will or is threatened to be in
breach of any warranty on the Closing Date or (b) any representation
contains any untrue statement of fact or omits to state a material fact
necessary to make the statements herein, in light of the circumstances which
they are made, not misleading. The execution, delivery and performance of
this Agreement and the other agreements and documents contemplated hereby by
WRI, New U.S. Tire, Tirus and Recycling, L.P. and the consummation of the
transactions contemplated hereby will not (i) violate any provision of any of
the entities' organizational documents, (ii) violate any statute, rule,
regulation, order or decree of any public body or authority by which such
entities or its or their respective properties or assets are bound, or (iii)
result in a violation or breach of, or constitute a default under, or result
in the creation of any encumbrance upon, or, create any rights of
termination, cancellation or acceleration in any person with respect to any
contract or any material license, franchise or permit of WRI, New U.S. Tire,
Tirus and Recycling, L.P. or any other agreement, contract, indenture,
mortgage or instrument to which WRI, New U.S. Tire, Tirus and Recycling, L.P.
is a party or by which any of its properties or assets is bound, the result
of which would materially adversely affect the WRI's ability to perform its
obligations hereunder or under any document or agreement contemplated hereby.
6. EXPENSES. WRI will pay its expenses incurred in connection
with this Agreement.
7. CONSIDERATION. To the best of the knowledge of WRI's Board of
Directors, the fair market value of the U.S. Tire
stock, Tirus membership interests and other consideration given by WRI, will
be approximately equal to the fair market value of consideration received by
it hereunder.
8. CONSENTS. The representations and warranties in this Section 8
are limited to the extent that any Shareholder has actual or constructive
knowledge which has not been disclosed to a member of the WRI Board, other
than a Shareholder, than (a) WRI will or is threatened to be in breach of any
warranty on the Closing Date or (b) any representation contains any untrue
statement of fact or omits to state a material fact necessary to make the
statements herein, in light of the circumstances which they are made, not
misleading. No consent, approval, authorization or order of any court,
Agency or any other person is required in order to permit WRI to consummate
the transactions contemplated by this Agreement the absence of which would
have a materially adverse effect on WRI's ability to perform its obligations
hereunder.
9. TAX MATTERS. The representations and warranties in this
Section 9 are limited to the extent that any Shareholder has actual or
constructive knowledge which has not been disclosed to a member of the WRI
Board, other than a Shareholder, that (a) WRI will or is threatened to be in
breach of any warranty on the Closing Date or (b) any representation contains
any untrue statement of fact or omits to state a material fact necessary to
make the statements herein, in light of the circumstances which they are
made, not misleading.
(a) Since the 1996 Reorganization and except for the 1997 and
1998 tax years, U.S. Tire and Tirus have filed all income tax returns
required to be filed by U.S. Tire or Tirus and all returns of other Taxes (as
defined below) required to be filed and has paid or provided for all Taxes
shown to be due on such returns. Since the 1996 Reorganization (i) no action
or proceeding for the assessment or collection of any Taxes is pending
against U.S. Tire or Tirus; (ii) no deficiency, assessment or other formal
claim for any Taxes has been asserted or made against U.S. Tire of Tirus that
has not been fully paid or finally settled; and (iii) no issue has been
formally raised by any taxing authority in connection with an audit or
examination of any return of Taxes. No Federal, state or foreign income tax
returns of U.S. Tire or Tirus have been examined since the 1996
Reorganization, and there are no outstanding agreements or waivers extending
the applicable statutory periods of limitation for such Taxes assessed during
any such period. No state Taxes will be assessed on or after the Closing
Date against either Tirus or U.S. Tire for any tax period beginning after the
1996 Reorganization and ending on or prior to the Closing Date, other than
for 1997 and 1998, payment for which tax liabilities have been provided for
by the parties hereto in the manner set forth in the Working Capital Note.
For purposes of this Agreement, "Taxes" shall mean all taxes, charges, fees,
levies or other assessments including, without limitation, income, excise,
property, withholding, sales and
franchise taxes, imposed by the United States, or any state, county, local or
foreign government or subdivision or agency thereof, and including any
interest, penalties or additions attributable thereto. With respect to the
1997 North Carolina income tax return for 1997, WRI agrees to cause its
accountants to prepare the return and to furnish the completed return to
Purchaser for filing within 60 days after closing.
(b) Neither U.S. Tire nor Tirus is a party to any Tax
allocation or sharing agreement.
(c) To the best knowledge of WRI, none of the assets of U.S.
Tire or Tirus constitutes tax-exempt bond financed property or tax-exempt use
property, within the meaning of Section 168 of the Code. To the best
knowledge of WRI, none of the U.S. Tire Entities are a party to any "safe
harbor lease" that is subject to the provisions of Section 168(f)(8) of the
Code as in effect prior to the Tax Reform Act of 1986, or to any "long-term
contract" within the meaning of Section 460 of the Code.
(d) At the Closing Date, neither U.S. Tire nor Tirus will
have outstanding any warrants, options, convertible securities, or any other
type of right granted, issued or otherwise created after the 1996
Reorganization pursuant to which any person could acquire stock in U.S. Tire
or a membership interest in Tirus that, if exercised or converted, would
affect the Shareholders' acquisition or retention of ownership of more than
eighty percent (80%) of the total
combined voting power of all classes of the WRI Delivered Stock and more than
eighty percent (80%) of the total number of shares of each non-voting class
of the WRI Delivered Stock.
(e) Neither U.S. Tire, Tirus nor WRI is an investment company
as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(f) The fair market value of the assets of U.S. Tire exceeds
the sum of its liabilities, plus the amount of liabilities, if any, to which
the assets are subject.
(g) Neither WRI, U.S. Tire nor Tirus is under jurisdiction of
a court in a Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
(h) Neither U.S. Tire, Recycling Partners, L.P. nor Tirus has
any liability for Taxes for any entity or individual other than U.S. Tire or
Tirus (i) as a transferee or successor, (ii) by contract or (iii) otherwise.
10. CONTRACTS. The representations and warranties in this Section
10 are limited to the extent that any Shareholder has actual or constructive
knowledge which has not disclosed to a member of the WRI Board, other than a
Shareholder, that (a) WRI will or is threatened to be in breach of any
warranty on the Closing Date or (b) any representation contains any untrue
statement of fact or omits to state a material fact necessary to make the
statements herein, in light of the circumstances which they are made, not
misleading. U.S. Tire and Tirus are not in default in any material respect
under any contract, lease,
arrangement and commitment (whether written or oral) to which either U.S.
Tire and Tirus is a party or by which its assets or business are bound and
the breach of which would have a materially adverse effect on the business,
operations, properties, assets or conditions (financial or otherwise) of
either company.
11. LITIGATION AND RELATED MATTERS. The representations and
warranties in this Section 11 are limited to the extent that any Shareholder
has actual or constructive knowledge which has not been disclosed to a member
of the WRI Board, other than a Shareholder, that (a) WRI will or is
threatened to be in breach of any warranty on the Closing Date or (b) any
representation contains any untrue statement of fact or omits to state a
material fact necessary to make the statements herein, in light of the
circumstances which they are made, not misleading. Except for the ▇▇▇▇▇▇▇▇
Action, there are no actions, suits, proceedings or grievances pending
against U.S. Tire and Tirus or, to the best knowledge of WRI, threatened
against either company, in each event arising after the 1996 Reorganization,
the business or any property or rights of either company, at law or in
equity, before or by any arbitration board or panel, court or federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign ("Agencies"), that could have a
material adverse effect on the business, operations, properties, assets or
conditions (financial or otherwise) of
U.S. Tire or Tirus or affects or would, if adversely determined, affect the
right or ability of either company to carry on its business substantially as
now conducted. Neither U.S. Tire nor Tirus is subject to any continuing
court or Agency order, writ, injunction or decree applicable specifically to
either company's business, operations or assets or its employees, nor in
default with respect to any order, writ, injunction or decree of any court or
Agency with respect to its assets, business, operations or employees.
12. COMPLIANCE WITH LAWS. The representations and warranties in
this Section 12 are limited to the extent that any Shareholder has actual or
constructive knowledge which has not been disclosed to a member of the WRI
Board, other that a Shareholder, than (a) WRI will or is threatened to be in
breach of any warranty on the Closing Date or (b) any representation contains
any untrue statement of fact or omits to state a material fact necessary to
make the statements herein, in light of the circumstances which they are
made, not misleading. Since the 1996 Reorganization, U.S. Tire and Tirus are
and have been in compliance with all applicable laws, regulations (including
federal, state and local procurement regulations), orders, judgments and
decrees except where the failure to so comply would not have a material
adverse effect on the business, operations, properties, assets or conditions
(financial or otherwise) of either company.
13. INSURANCE. Since the 1996 Reorganization, U.S.
Tire has maintained the policies and contracts for fire, casualty, liability
and other forms of insurance in existence on the closing date of the 1996
Reorganization or has renewed or replaced such policies and contracts with
policies and contracts with substantially similar coverage, deductibles and
limits of insurance. All such policies are in full force and effect and shall
remain in full force and effect until the Closing Date and are adequate for
the business engaged in by the U.S. Tire. U.S. Tire has not received any
notice of cancellation or non-renewal or of significant premium increases
with respect to any existing policy. All premiums due prior to the date of
this Agreement and the Closing Date for periods prior to the date of this
Agreement and the Closing Date with respect to such policies have been timely
paid.
14. GOOD STANDING CERTIFICATES. On or before the Closing Date,
WRI, New U.S. Tire, Tirus and Recycling, L.P. each shall have delivered to
the Purchaser a certificate, dated as of a recent date prior to the Closing
Date, demonstrating that each of WRI, New U.S. Tire and Tirus is in good
standing and authorized to do business in the state of incorporation of such
entity.
15. CAPITALIZATION. As of the date hereof, the authorized capital
stock of the New U.S. Tire consists of (i) 10,000 shares of common stock, of
which 1,000 shares are issued and outstanding. All of such outstanding
shares of capital stock are, or upon issuance will be, duly authorized,
validly
issued, fully paid and nonassessable.
16. SOLVENCY. At the present time, WRI reasonably believes it has
the financial ability to meet all of the financial obligations imposed upon
WRI under this Agreement. WRI is solvent, able to meet its financial
obligations and its assets exceed its liabilities.
17. TITLE. The representations and warranties in this Section 17
are limited to the extent that any Shareholder has actual or constructive
knowledge which has not been disclosed to a member of the WRI Board, other
than a Shareholder, that (a) WRI will or is threatened to be in breach of any
warranty on the Closing Date or (b) any representation contains any untrue
statement of fact or omits to state a material fact necessary to make the
statements herein, in light of the circumstances which they are made, not
misleading. To the best of WRI's knowledge, since the 1996 Reorganization,
no lien, encumbrance, covenant, condition or restriction has been created and
touches and concerns the North Carolina landfill realty currently operated by
WRI which materially interferes with or materially impairs its current
operation.
18. NO OTHER REPRESENTATIONS. Except to the extent set forth in
this Agreement or expressly incorporated herein, WRI, New U.S. Tire, Tirus
and Recycling, L.P. have made no representation or warranty whatsoever to the
Shareholders or the other parties hereto and hereby disclaim all liability or
responsibility for any other representation or warranty made,
communicated or furnished (orally or in writing) to the Shareholders and any
other parties hereto or their representatives (including without limitation,
any opinion, information, projection or advice as may have been or may be
provided to the Shareholders and the other parties hereto or any of their
affiliates by any director, officer, employee, agent, consultant or
representative of WRI, New U.S. Tire, Tirus and Recycling, L.P.), including,
without limitation, in connection with the 1996 Reorganization and all
agreements, documents and instruments executed in connection therewith.
IV. CONDITIONS PRECEDENT
A. CONDITIONS PRECEDENT TO OBLIGATIONS OF WRI
The obligations of the parties hereto with respect to actions to be
taken on the Closing Date are subject to the satisfaction or waiver on or
prior to the Closing Date of all of the following conditions.
1. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
All of the representations and warranties of the Shareholders contained in
this Agreement shall be true and correct as of the Closing Date as though
such representations and warranties had been made as of that time; and each
and all of the terms, covenants and conditions of this Agreement to be
complied with and performed by the Shareholders on or before the Closing Date
shall have been duly complied with and performed.
2. SATISFACTION. All actions, proceedings,
instruments and documents required to carry out this Agreement or incidental
hereto and all other related legal matters shall be reasonably satisfactory
to WRI and its counsel.
3. OPTION AGREEMENT. The Shareholders shall have executed and
delivered to WRI the Option Agreement.
4. DELIVERY OF WRI STOCK. The Purchasers shall have delivered
500,000 shares of WRI Stock to WRI.
5. DELIVERY OF ESCROWED WRI STOCK. The Escrow Agent shall have
delivered all WRI Stock held in escrow pursuant to the Escrow Agreement.
6. DELIVERY OF WORKING CAPITAL NOTE. Purchaser shall have
delivered the Working Capital Note, executed by Purchaser, and by New U.S.
Tire and Recycling Partners, L.P. as co-makers.
7. EXECUTION OF ASSIGNMENT AND ASSUMPTION. The Purchaser shall
have executed the Assignment and Assumption Agreement (Exhibit D) and
Purchaser shall have delivered Shareholder's releases.
8. NO MATERIAL ADVERSE EFFECT. No event or circumstance shall
have occurred that would materially adversely affect the performance by the
Shareholders, New U.S. Tire, or Recycling, L.P. of their obligations
hereunder or under the Working Capital Note.
9. NO LITIGATION. No action or proceeding before a court or any
other Agency shall have been instituted or threatened to restrain or prohibit
the transactions hereunder and no Agency shall have taken any other action or
made any
request of WRI as a result of which WRI reasonably deems it inadvisable to
proceed with the transactions hereunder.
B. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
1. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
All of the representations and warranties of WRI contained in this Agreement
shall be true and correct as of the Closing Date as though such
representations and warranties had been made as of that time; and each and
all of the terms, covenants and conditions of this Agreement to be complied
with and performed by WRI on or before the Closing Date shall have been duly
complied with and performed.
2. SATISFACTION. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and all
other related legal matters shall be reasonably satisfactory to the
Shareholders and their counsel.
3. DELIVERY OF WRI DELIVERED STOCK. WRI shall have delivered the
WRI Delivered Stock to the Purchaser.
4. DELIVERY OF TIRE LENDING NOTE. WRI shall have delivered the
Tire Lending Note to Tire Lending Associates.
5. NO MATERIAL ADVERSE EFFECT. No event or circumstance shall
have occurred that would materially adversely affect the performance by WRI
of its obligations hereunder or under the Tire Lending Note.
6. NO LITIGATION. No action or proceeding before a court or any
other Agency shall have been instituted or
threatened to restrain or prohibit the transactions hereunder and no Agency
shall have taken any other action or made any request of the Shareholders as
a result of which the Shareholders reasonably deems it inadvisable to proceed
with the transactions hereunder.
7. EXECUTION OF ASSIGNMENT AND ASSUMPTION. WRI shall have
executed the Assignment and Assumption Agreement.
V. SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES.
A. COVENANTS AND AGREEMENTS. All covenants and agreements made
hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall survive the Closing and shall continue in full
force and effect thereafter according to their terms without limit as to
duration.
B. REPRESENTATIONS AND WARRANTIES. All representations and warranties
contained herein shall survive the Closing and shall continue in full force
and effect thereafter following the Closing.
VI. SECURITIES ACT REPRESENTATIONS AND TRANSFER RESTRICTIONS
The new U.S. Tire Stock, the membership interests in Tirus acquired by
Purchaser and the WRI Stock acquired or the subject of the Option pursuant to
this Agreement are being acquired solely for their own respective accounts,
for investment purposes only, and with no present intention of distributing,
selling or otherwise disposing of it in connection with a
distribution. None of the stock or membership interests are not presently
registered under the 1933 Act, and the stock may not be sold without
registration unless an exemption from the applicable registration
requirements under the 1933 Act and state securities laws is available.
VII. MUTUAL RELEASES
A. WRI RELEASE. On the Closing Date, WRI will deliver releases
running in favor of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, New U. S. Tire, Tirus, Recycling, L.P. and their present and
former officers, directors, shareholders, employees, agents, attorneys and
insurers.
B. SHAREHOLDER AND U.S. TIRE ENTITIES RELEASE. On the Closing Date
Purchaser will deliver releases from the Shareholders, New U. S. Tire, Tirus,
and Recycling, L.P., each on its own behalf and in any representative
capacity of any other party releasing WRI and its present and former
officers, directors, shareholders, employees, agents, attorneys, insurers.
C. NO RELEASE FROM OBLIGATIONS. Notwithstanding the foregoing
Paragraphs A and B, nothing herein shall release the parties from their
obligations under this Agreement, that certain side letter (the "Side
Letter") dated as of the date hereof among WRI, Purchaser and the U.S. Tire
Entities or that certain restrictive covenants agreement (the "Restrictive
Covenants") dated as of the date hereof among WRI, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and the
Purchaser.
D. NO RELEASE FOR FRAUD. Notwithstanding the foregoing
Paragraphs A, B and C, nothing herein shall release any party from fraudulent
or willful, knowing and intentional misconduct that materially adversely
affects the any other party to this Agreement.
VIII. GENERAL
A. COOPERATION. The parties hereto shall each deliver or cause to be
delivered to the other on the Closing Date, and at such other times and
places as shall be reasonably agreed to, such additional instruments as the
other may reasonably request for the purpose of carrying out this Agreement,
including, but not limited to, documents of title and financing statements.
WRI will cooperate and use its reasonable efforts to have the present
officers, directors and employees thereof cooperate with the Shareholders and
New U.S. Tire on and after the Closing Date in furnishing information,
evidence, testimony and other assistance in connection with any Tax return
filing obligations, actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to the U.S. Tire Entities for all
periods prior to the Closing Date.
B. SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall
be binding upon and shall inure to the benefit of the parties hereto, the
successors of WRI, New U.S. Tire, Tirus and Recycling, L.P. and the heirs and
legal representatives of the Shareholders.
C. ENTIRE AGREEMENT. This Agreement (including the
Schedules, Exhibits and Annexes attached hereto and the agreements and the
documents delivered pursuant hereto) constitute the entire agreement and
understanding among parties hereto, and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This
Agreement, upon execution, constitutes a valid and binding agreement of the
parties hereto enforceable in accordance with its terms and this Agreement
and the Annexes hereto may be modified or amended only by a written
instrument executed by the parties.
D. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall
constitute but one and the same instrument.
E. EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, (i) WRI will pay the fees, expenses and disbursements
of WRI and its respective agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in the
performance and compliance with all conditions to be performed by WRI under
this Agreement and (ii) the Purchaser will pay from personal funds the fees,
expenses and disbursements its agents, representatives, accountants, business
advisors or counsel incurred in connection with the subject matter of this
Agreement, together with all post closing costs of New U.S.
Tire, Tirus and Recycling, L.P. after the Closing Date.
F. NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by (a) depositing the same in
United States mail, addressed to the party to be notified, postage prepaid
and registered or certified with return receipt requested, (b) delivering the
same in person to an officer or agent of such party, or (c) telecopying the
same with electronic confirmation of receipt.
a. If to WRI, addressed to them at:
Waste Recovery, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
If to Purchaser, Concord Recycling, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
G. GOVERNING LAW. This Agreement shall be construed, enforced and
governed by the internal laws of the State of New York (without regard to its
choice of law principles).
H. USE OF CERTAIN TERMS. As used in this Agreement, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular paragraph, subparagraph
or other subdivision.
I. MODIFICATION AND WAIVER. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled
to the benefits thereof, and this Agreement may be modified or amended by a
written instrument executed by all of the parties hereto. No supplement,
modification or amendment of this Agreement shall be binding unless executed
in writing by all of the parties hereto. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
J. EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall
it be construed as a waiver of or acquiescence in any such breach or default,
or of any similar breach or default occurring later; nor shall any waiver of
any single breach or default be deemed a
waiver of any other breach or default occurring before or after that waiver.
K. REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable
but so as to most nearly retain the intent of the parties, and if such
modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected
or impaired thereby.
L. REMEDIES CUMULATIVE. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.
M. CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
IX. REPRESENTATIONS OF PURCHASER
A. Purchaser represents and warrants that all of the following
representations and warranties in this Section are true and correct at the
date of this Agreement and shall be true and correct at the time of the
Closing.
1. DUE ORGANIZATION. Concord Recycling, LLC, is duly organized,
validly existing and in good standing under the
laws of the State Delaware, and is duly authorized and qualified under all
applicable laws, regulations, and ordinances of public authorities to carry
on its businesses in the places and in the manner as now conducted except for
where the failure to be so authorized or qualified would not have a material
adverse effect on its business, operations, affairs, properties, assets or
condition (financial or otherwise).
2. VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement and any other agreements annexed hereto to which Purchaser is a
party and the performance of the transactions contemplated herein or therein
have been duly and validly authorized by the Board of Managers of Purchaser,
duly executed and delivered and are the legal, valid and binding obligations
of Purchaser to the extent that it is a party thereto, enforceable against
Purchaser in accordance with their respective terms.
3. NO OTHER REPRESENTATIONS. Except to the extent set forth in
this Agreement or expressly incorporated herein, Purchaser has made no
representation or warranty whatsoever to the other parties hereto and hereby
disclaim all liability or responsibility for any other representation or
warranty made, communicated or furnished (orally or in writing) to any other
parties hereto or their representatives (including without limitation, any
opinion, information, projection or advice as may have been or may be
provided to the Shareholders and the other parties hereto or any of their
affiliates by any director,
officer, employee, agent, consultant or representative of Purchaser.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
WASTE RECOVERY, INC.
By:
-------------------------------
Name:
Title:
NEW U.S. TIRE RECYCLING CORP.
By:
-------------------------------
Name:
Title:
U.S. TIRE RECYCLING PARTNERS, L.P.
By: U.S. TIRE RECYCLING CORP.,by
its general partner
By:
--------------------------
Name:
Title:
TIRUS ASSOCIATES, L.L.C., a New York
limited liability company
By:
-------------------------------
Name:
Title:
CONCORD RECYCLING, L.L.C., a Delaware
limited liability company
By:
-------------------------------
Name:
Title:
PURCHASE AGREEMENT
LIST OF EXHIBITS & ATTACHMENTS
EXHIBITS
EXHIBIT DESCRIPTION SECTION PAGE
# # REF # REF
-------- ----------- ------- -----
A. Form of Authorization to Escrow Agent C.3. 4
B. Form of Option Agreement C.5. 4
C. Form of the Working Capital Note C.10. 5
D. Form of Assignment and Assumption
Agreement IV.A.7. 20
ADDITIONAL AND ANNEXED DOCUMENTS TO BE DELIVERED PURSUANT TO THIS AGREEMENT
Form of Tire Lending Note ($600,000) C.5 4
Form of Deed of Trust
Representations, Warranties and Releases
of Shareholders C.11 6
Form of WRI Releases VII.A. 23
Form of U.S. Tire Entities release VII.B. 23
Form of Letter Agreement
Side Letter
Restrictive Covenants
▇▇▇▇▇▇▇▇▇▇ Resignation Letter
October 13, 1998
U.S. Trust Company of Texas, N.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Attention: Mr. ▇▇▇▇ ▇▇▇▇▇▇
Re: Escrow Agreement (the "Agreement") dated as of November 1996, by and
among Waste Recovery, Inc., New U.S. Tire Recycling Corp., ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
Environmental Venture Fund, L.P. and Argentum Capital, L.P.
Dear ▇▇. ▇▇▇▇▇▇:
In connection with the above referenced Agreement, the undersigned, being all
the parties to said Agreement, hereby direct and instruct you, as Agent, to
deliver all of the Escrowed Shares (as defined in the Agreement) set forth on
Schedule I to such Agreement and currently held by you to Waste Recovery,
Inc. at the [address set forth in Section 10 of the Agreement]. Upon
delivery of such Escrowed Shares, the Agreement shall be terminated and shall
have no further force and effect.
WASTE RECOVERY, INC.
By:
--------------------------------
Name:
Title:
NEW U.S. TIRE RECYCLING CORP.
By:
--------------------------------
Name:
Title:
THE SHAREHOLDERS:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇
ENVIRONMENTAL VENTURE FUND, L.P.
By:
--------------------------------
Name:
Title:
ARGENTUM CAPITAL, L.P.
By:
--------------------------------
Name:
Title:
AGREED AND ACKNOWLEDGED
U.S. TRUST COMPANY OF TEXAS, N.A.
By:
--------------------------------
Name:
Title:
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is made and entered into this
13th day of October, 1998, by and among WASTE RECOVERY, INC., a Texas
corporation ("WRI"), the shareholders listed on ANNEX I hereto (each a
"Shareholder" and collectively the "Shareholders") and ▇▇▇ ▇▇▇▇▇▇▇▇, in his
capacity as "Representative" under the Release Agreement, as defined below.
WHEREAS, WRI and the Shareholders have entered into that certain Release
Agreement dated October 13, 1998 (the "Release Agreement").
WHEREAS, WRI and the Shareholders have executed the Release Agreement
and are obligated to perform the transactions required thereby.
WHEREAS, this Agreement is a condition to the closing of the Release
Agreement.
WHEREAS, ▇▇▇ ▇▇▇▇▇▇▇▇ is the Representative, as such term is defined in
the Release Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. GRANT OF OPTION. The Shareholders hereby grant to WRI, or
its successors or assigns, the right and option to purchase any or all of the
shares of Common Stock owned by each Shareholder (the "Option") at any time
and from time to time on or before June 30, 2000. Each Shareholder hereby
individually grants to WRI the right and option to purchase the number of
shares of Common Stock set forth opposite its name on Annex I hereto.
Section 2. OPTION PERIOD. The "Option Period" shall commence on the
Closing Date, as defined in the Release Agreement, and end on June 30, 2000.
In the event WRI does not elect to purchase any such shares of Common Stock
during the Option Period, the Shareholder, its successors and assigns may
retain or otherwise sell or transfer all shares of Common Stock.
Section 3. PURCHASE PRICE. The Purchase Price for each share of
Common Stock purchased hereunder shall be $1.00. WRI may exercise the Option
under this Agreement by delivering to the Representative a notice of exercise
in form and substance reasonably satisfactory to
the Representative, and a check in the amount of the appropriate purchase
price, at any time and from time to time during the Option Period. Upon
receipt of the notice of exercise and WRI's check in the proper amount, the
Representative shall tender to WRI certificates representing the appropriate
number of shares of Common Stock purchased.
Section 4. CLOSING. The closing, if any, of any purchase of shares
of Common Stock pursuant to this Agreement shall take place at the principal
office of WRI or at such other place as the parties may agree.
Section 5. GOOD TITLE. Each Shareholder represents and warrants
that the Shares are, and throughout the term of this Option shall be, free
and clear of all liens, security interests and encumbrances of any kind
whatsoever.
Section 6. DELIVERY OF STOCK. To secure its obligations under this
Agreement, each Shareholder will deliver stock certificates representing all
the Common Stock owned by such Shareholder subject to this agreement to the
Representative to be held by it pursuant to the terms of the provisions set
forth in the Release Agreement.
Section 7. TERMINATION. This Agreement shall terminate at 5:00 PM
New York City time on June 30, 2000.
Section 8. ASSIGNMENT. This Agreement may not be assigned by either
party in whole or in part without the prior written consent of the either WRI
or the Representative which consent shall not be unreasonably withheld.
Subject to the foregoing, this Agreement shall be binding upon and inure to
the benefit of all of the parties hereto, and their respective heirs,
executors, administrators, successors and assigns.
Section 9. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
WASTE RECOVERY, INC., A TEXAS CORPORATION
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
REPRESENTATIVE
By:
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▇▇▇ ▇▇▇▇▇▇▇▇
THE SHAREHOLDERS:
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Argentum Capital Partners, L.P.
By:
---------------------------------------------
Name:
Title:
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ANNEX I
TO THAT CERTAIN
OPTION AGREEMENT
DATED AS OF OCTOBER 9, 1996
BY AND AMONG
WASTE RECOVERY, INC.
AND
THE SHAREHOLDERS NAMED THEREIN
Number of WRI Shares
subject to Option
Name and Address Agreement
---------------- ---------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 206,520
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Argentum Capital Partners, L.P. 40,020
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ 36,653
c/o Feil Organization
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 36,653
c/o Feil Organization
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ 36,653
c/o Fell Organization
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ 10,101
c/o Feil Organization
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Number of WRI
Shares subject to
Name and Address Option Agreement
---------------- ----------------
▇▇▇▇ ▇▇▇▇▇▇ 26,680
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ 26,680
c/o Weston Investments Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ 6,670
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
PO Drawer 370308 6,670
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ 6,670
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ 6,670
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ 26,680
c/o USA Waste
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ 26,680
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL: 500,000
PROMISSORY NOTE
Principal as determined hereunder October 13, 1998
FOR VALUE RECEIVED, in connection with that certain Asset Purchase
Agreement dated October ___, 1998 by and between WASTE RECOVERY, INC., a
Texas corporation ("Payee"), NEW U.S. TIRE RECYCLING CORP., a Texas
corporation, U.S. TIRE RECYCLING PARTNERS, L.P., a Delaware limited
partnership, TIRUS ASSOCIATES, L.L.C., a New York limited liability company,
and CONCORD RECYCLING, L.L.P. (the "Agreement"), the undersigned ("Maker"),
hereby promises to pay to the order of Payee, at Payee's address set forth in
Section 6 below or such other place as Payee or any other holder of this
Promissory Note may from time to time designate as provided in Section 6
below, in installments without interest as herein provided and in lawful
money of the United States of America, an aggregate principal amount to be
determined pursuant to Section 1 of this Note.
1. PAYMENTS.
a. On the 15th day of each month beginning on November 15, 1998 and
ending on April 15, 1999, for a total of six (6) payments, Maker
shall pay to Payee the Pro Forma Working Capital Amount (as
calculated pursuant to Schedule I attached hereto).
b. On the 15th day of each month beginning on May 15, 1999 and
ending on July 15, 1999, for a total of three (3) payments, Maker
shall pay to Payee the Final Working Capital Amount (as
calculated pursuant to Schedule I attached hereto).
c. On January 15, 2000, Maker shall pay to Payee a final installment
in an amount equal to all accounts receivable existing on the
Closing Date which have been collected by Maker (or any
successor, assign, agent or representative) or which have
otherwise been conveyed for consideration on or before December
31, 1999 (the "Final Installment") and not paid pursuant to the
Pro Forma Working Capital Amount or the Final Working Capital
Amount. The Pro Forma Working Capital Amount, the Adjusted
Working Capital Amount and the Final Installment, are
collectively referred to herein as the "Principal Payments" and
each a "Principal Payment".
2. PREPAYMENT. Maker shall have the right and privilege to prepay
this Promissory Note in whole or in part at any time and from time to time
without premium and without notice to the holder hereof prior to the making
of a prepayment.
3. EVENTS OF DEFAULT; REMEDIES.
(a) At the option of the holder of this Promissory Note, the
entire unpaid balance of this Promissory Note shall become due and payable
upon written notice to Maker if there occurs
any of the following events (each an "Event of Default"):
(i) The failure of Maker to pay the Principal Payment by the
date that the same becomes due and after the expiration of five (5) business
days following Maker's receipt of written notice from the holder hereof that
any such installment has not been received by the holder by such date; or
(ii) Maker shall voluntarily commence any case, proceeding or
other action seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of its debts under any bankruptcy or insolvency
law, or seeking the appointment of a receiver, trustee or custodian for him
or for all of its property; or
(iii) Any case, proceeding or other action shall be commenced
against Maker under any bankruptcy, insolvency or reorganization law or
seeking the appointment of a receiver, custodian or trustee for Maker or for
all of its property, and such case, proceeding or other action remains
undismissed for a period of sixty (60) days after commencement thereof.
(b) Upon the occurrence of an Event of Default hereunder, the
holder of this Promissory Note may declare the entire unpaid balance to be
immediately due and payable upon written notice to Maker, and may, at its
option, exercise any other right existing at law or in equity. Failure to
exercise any such right or remedy shall not constitute a waiver of the right
to exercise the same in the event of any subsequent default.
4. ATTORNEYS' FEES. If this Promissory Note is not paid pursuant to
its terms and is placed in the hands of an attorney for collection, or if it
is collected through bankruptcy or any other court proceeding after maturity,
then any holder hereof shall be entitled to attorneys' fees for collection.
5. GOVERNING LAW AND VENUE. THIS PROMISSORY NOTE IS BEING EXECUTED
AND DELIVERED AND IS INTENDED TO BE PERFORMED IN THE STATE OF TEXAS. THIS
PROMISSORY NOTE SHALL BE CONSTRUED AS TO BOTH VALIDITY AND PERFORMANCE AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
-46-
6. NOTICES. Any notice, request, instruction, document or other
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally,
(ii) sent by telecopy, (iii) delivered by reputable overnight delivery
service, or (iv) sent by registered or certified mail, first class postage
prepaid, as follows:
If to Maker, to:
Concord Recycling L.L.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLC
▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Payee, to:
Waste Recovery, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
or at such other address for a party as shall be specified by like notice.
Any notice that is delivered personally or by overnight express in the manner
provided herein shall be deemed to have been duly given to the party to whom
it is directed upon actual receipt by such party. Any notice that is sent by
telecopy in the manner provided herein shall be deemed to have been duly
given to the party to whom it is directed upon the transmission of such
telecopy with a confirmation of receipt. Any notice that is addressed and
mailed in the manner herein provided shall be conclusively presumed to have
been duly given to the party to whom it is addressed at the close of
business, local time of the recipient, on the third day after the day it is
so placed in the mail. Notice shall be effective when received or deemed
received, whichever is appropriate, by the parties in accordance with this
Section 6.
7. CALCULATION OF PRINCIPAL PAYMENTS. On October 31, 1998 and on May
10, 1999 Maker shall deliver to Payee copies of Maker's applicable financial
statements, balance sheets and other documents as of October 13, 1998 and
April 30, 1999, respectively, used in the calculation of such Principal
Payment. The parties shall cooperate in good faith in the calculation of the
Principal Payments. At the request of Payee and for a reasonable time after
the maturity of this Note, Maker shall provide to Payee copies of all
additional materials and other underlying data and documentation used in the
calculation of the Principal Payments including, but not limited to, the
applicable books and records of the Maker for its review and comment.
8. ACCOUNTING TERMS AND DETERMINATIONS. All accounting terms used
herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Payee
hereunder shall (unless otherwise disclosed to the Payee in writing at the
time of delivery thereof in the manner described below) be prepared, in
accordance with generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the latest financial
statements prepared by Payee (which shall mean the financial statements as of
August 31, 1998 attached hereto)(hereafter, "GAAP"). All calculations made
for the purposes of determining Principal Payments hereunder shall be made by
application of GAAP. Maker shall deliver to Payee at the same time as its
delivery of any financial statements hereunder (i) a description in
reasonable detail of any material variation between the application of
accounting principles employed in the preparation of such statements and GAAP
and (ii) reasonable estimates of the difference between such statements
arising as a consequence thereof.
9. ARBITRATION. Any unresolved dispute or controversy arising under
or in connection with this Note shall be settled exclusively by arbitration,
conducted before a panel of three (3) arbitrators in accordance with the
rules of the American Arbitration Association then in effect. Such
arbitration, if requested by Payee, shall take place in North Carolina, and
if requested by Maker, shall take place in Dallas, Texas. The arbitrators
shall not have the authority to add to, detract from, or modify any provision
hereof nor to award punitive damages to any injured party. The arbitrators
shall have the authority to order refunds, additional payments, reimbursement
of costs, including those incurred to review records or otherwise audit the
calculations of Principal Payments hereunder, and interest thereon in the
event the arbitrators determine that any calculation of Principal Payments
was made without good faith, or that either party has otherwise materially
breached this Note. A decision by a majority of the arbitration panel shall
be final and binding. Judgment may be entered on the arbitrators' award in
any court having jurisdiction. The filing fee for any arbitration proceeding
shall be borne equally by both parties.
IN WITNESS WHEREOF, the undersigned have executed this Promissory Note
as of the day and year first above written.
MAKER
CONCORD RECYCLING, L.L.C., a Delaware limited
liability company
--------------------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Manager
CO-MAKERS
NEW U.S. TIRE RECYCLING CORP., a Texas
corporation
--------------------------------------------
By:
Name:
U.S. TIRE RECYCLING PARTNERS, L.P., a
Delaware limited partnership
--------------------------------------------
By:
Name:
SCHEDULE I
All accounting terms used herein shall be interpreted (unless otherwise
disclosed to Payee in writing in the manner described in the Promissory Note)
in accordance with generally accepted accounting principles ("GAAP") applied
on a basis consistent with those used in the preparation of the latest
financial statements prepared by Payee (which shall mean the financial
statements as of August 31, 1998 attached hereto). All calculations made
hereunder shall be made in accordance with GAAP applied on a basis consistent
with those used in the preparation of the August 31, 1998 financial
statements.
PRO FORMA WORKING CAPITAL AMOUNT:
The Pro Forma Working Capital Amount shall be calculated as follows:
"PRO FORMA WORKING CAPITAL" means:
Current Assets less current liabilities (as shown on the balance
sheet of U.S. Tire Recycling L.P. dated August 31, 1998 as
attached hereto as Exhibit A) as adjusted by normal business
activity prior to and including October 13, 1998 in connection
with the North Carolina facility consistent with past business
practices as determined in accordance with GAAP, as reflected in
the October 13, 1998 financial statements referred to on
Paragraph 7, subject to the following specific adjustments:
1. add "inventory valuation" as of the Closing Date ($10,000); and
2. deduct accrued bonuses ($22,500);
3. deduct "current installments of long-term debt";
4. eliminate all intercompany payables;
5. deduct purchase price of the Philadelphia shredder ($63,137.99);
6. deduct debt on Illinois vehicle VIN# IGCEC14W2V2182093
($10,136.27);
7. deduct estimated 1997 North Carolina state income taxes in the
amount of $75,000 ("1997 Estimated Tax");
8. deduct $250,000; and
9. deduct $51,500.
"PRO FORMA WORKING CAPITAL AMOUNT" means
the product of one-ninth (1/9) times Pro Forma Working Capital
FINAL WORKING CAPITAL AMOUNT:
The Final Working Capital Amount shall be calculated as follows:
"Final Working Capital" means:
Pro Forma Working Capital adjusted as follows:
1. increased to the extent that the 1997 Estimated Tax EXCEEDS the
actual 1997 North Carolina state income tax paid to the state
of North Carolina ("1997 Tax");
2. reduced to the extent that the 1997 Tax EXCEEDS the 1997
Estimated Tax;
3. reduced by an amount equal to the applicable corporate state
income tax rate in the state of North Carolina times the taxable
income accrued through the end of business on October 12, 1998;
4. decreased by the sum of all accounts receivables outstanding and
uncollected as of October 13, 1998 that have not been collected
as of April 30, 1999;
5. deduct any medical expenses due as of October 13, 1998 which have
not been paid as of April 30, 1999.
"FINAL WORKING CAPITAL AMOUNT" means
the product of one-third (1/3) times the difference between (A)
the aggregate amount paid to Payee under this Note through and
including the April 15, 1999 Principal Payment and (B) Final
Working Capital.
ASSUMPTION AND ASSIGNMENT AGREEMENT
This ASSUMPTION AND ASSIGNMENT AGREEMENT (the "Agreement") is made this
13th day of October, 1998, by Concord Recycling, L.L.C. ("Purchaser") from
Waste Recovery, Inc. ("WRI"); and the Shareholders set forth on the signature
page hereto (collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Purchase Agreement dated as of October
13th, 1998, by and between Purchaser and WRI (the "Purchase Agreement"), WRI
is to convey to Purchaser and Purchaser is to accept the assets specified
therein, and to assume the liability of WRI to certain Shareholders specified
therein under the Convertible Subordinated Notes (as defined therein) and all
related security documents (collectively, the "Assumed Liabilities") and
WHEREAS, in executing this Agreement, the Shareholders and WRI shall
consent to and authorize Purchaser to assume the Assumed Liabilities, and to
discharge and release WRI from any further liability or obligation for the
Assumed Liabilities;
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. ASSIGNMENT AND ASSUMPTION. WRI hereby assigns and transfers, and
Purchaser hereby accepts the assignment and transfer of, the Assets as set
forth in the Purchase Agreement, and Purchaser hereby assumes and agrees to
pay, perform and discharge in due course the Assumed Liabilities.
2. FURTHER ASSURANCES. Purchaser, at any time and from time to time,
upon the request of Seller, shall do, execute, acknowledge and deliver all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances as may be required to convey and transfer the Assumed
Liabilities to Purchaser.
3. CONSENT TO ASSUMPTION. The Shareholders and WRI hereby consent to
the assumption by Purchaser of the Assumed Liabilities.
4. HEADINGS. Headings are for convenience of reference only and shall
not in any manner affect the meaning or interpretation of this Assumption
Agreement.
5. PURCHASE AGREEMENT. This Agreement is entered into pursuant to the
Purchase Agreement and is subject to the terms and conditions thereof.
Undefined capitalized terms will have the same meaning as those terms have in
the Purchase Agreement and Assignment, and
acknowledge that the Assumed Liabilities shall, on and after the Closing
Date, be the sole liabilities of the Purchaser, and no longer a liability of
WRI.
6. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties set forth above have caused this
Assumption Agreement to be executed in its corporate name by its duly
authorized officer, on the day and year first above written.
CONCORD RECYCLING, L.L.C.
BY:
----------------------------------------
NAME:
--------------------------------------
Title:
-------------------------------------
WASTE RECOVERY, INC.
BY:
----------------------------------------
NAME:
--------------------------------------
Title:
-------------------------------------
SHAREHOLDERS:
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
ARGENTUM CAPITAL PARTNERS, L.P.
BY:
----------------------------------------
NAME:
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Title:
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▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇
ENVIRONMENTAL VENTURE FUND L.P.
BY:
----------------------------------------
NAME:
--------------------------------------
Title:
-------------------------------------
PROMISSORY NOTE
$600,000.00 October , 1998
FOR VALUE RECEIVED, the undersigned ("Maker"), hereby promises to pay to
the order of Tire Lending Associates, a New York partnership, ("Payee") at
Payee's address set forth in Section 6 below or such other place as Payee or
any other holder of this Promissory Note may from time to time designate as
provided in Section 6 below, in installments as herein provided and in lawful
money of the United States of America, the principal sum of Six Hundred
Thousand and no/100 Dollars ($600,000.00), all as set forth below.
2. PAYMENTS. The outstanding balance of this Promissory Note shall
bear interest from the Closing Date at a rate equal to the Prime Rate plus 1%
(the "Prime Rate" shall be equal to the then current published prime rate of
Chase Bank, N.A. adjusted quarterly or, in the event Chase Bank, N.A. should
cease to publish a prime rate, then by reference to a similar rate charged by
a similar, national, banking institution). Interest shall be paid quarterly,
beginning on January 2, 1999 (each an "Interest Payment"). Principal shall
be payable in four equal installments of One Hundred and Fifty Thousand
Dollars ($150,000), on 6th day (or next business day if the 6th is not a
business day) of the 15th, 18th, 21st and 24th months after the execution of
this Promissory Note (each a "Principal Payment").
2. PREPAYMENT. This Promissory Note is subject to prepayment in whole
or in part at any time after twelve (12) months from the date hereof at the
option of the Maker by giving the holder thirty (30) days prior written
notice of the Maker's intent to prepay this Promissory Note stating the date
of prepayment and the amount of principal to be prepaid (the "Prepayment
Notice"). Interest accrued to the prepayment date on the principal amount of
this Promissory Note to be prepaid will be paid to the holder on the
prepayment date.
3. EVENTS OF DEFAULT; REMEDIES.
(a) At the option of the holder of this Promissory Note, the
entire unpaid balance of this Promissory Note shall become due and payable
upon written notice to Maker if there occurs any of the following events
(each an "Event of Default"):
(i) The failure of Maker to pay any Interest Payment or
Principal Payment by the date that the same becomes due and after the
expiration of five (5) business days following Maker's receipt of written
notice from the holder hereof that any such installment has not been received
by the holder by such date; or
(ii) Maker shall voluntarily commence any case, proceeding or
other action seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of
his debts under any bankruptcy or insolvency law, or seeking the appointment
of a receiver, trustee or custodian for him or for all of his property; or
(iii) Any case, proceeding or other action shall be commenced
against Maker under any bankruptcy, insolvency or reorganization law or
seeking the appointment of a receiver, custodian or trustee for Maker or for
all of his property, and such case, proceeding or other action remains
undismissed for a period of sixty (60) days after commencement thereof.
(b) Upon the occurrence of an Event of Default hereunder the
holder of this Promissory Note may declare the entire unpaid balance to be
immediately due and payable upon written notice to Maker, and may, at his
option, exercise any other right existing at law or in equity. Failure to
exercise any such right or remedy shall not constitute a waiver of the right
to exercise the same in the event of any subsequent default.
4. ATTORNEYS' FEES. If this Promissory Note is not paid pursuant to
its terms and is placed in the hands of an attorney for collection, or if it
is collected through bankruptcy or any other court proceeding after maturity,
then any holder hereof shall be entitled to reasonable attorneys' fees for
collection.
5. GOVERNING LAW AND VENUE. THIS PROMISSORY NOTE IS BEING EXECUTED
AND DELIVERED AND IS INTENDED TO BE PERFORMED IN THE STATE OF TEXAS. THIS
PROMISSORY NOTE SHALL BE CONSTRUED AS TO BOTH VALIDITY AND PERFORMANCE AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
-11-
6. NOTICES. Any notice, request, instruction, document or other
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally,
(ii) sent by telecopy, (iii) delivered by reputable overnight delivery
service, or (iv) sent by registered or certified mail, first class postage
prepaid, as follows:
If to Maker, to:
Waste Recovery, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to Payee, to:
Tire Lending Associates
c/o The ▇▇▇▇ Organization
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.:__________________
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
or at such other address for a party as shall be specified by like notice.
Any notice that is delivered personally or by overnight express in the manner
provided herein shall be deemed to have been duly given to the party to whom
it is directed upon actual receipt by such party. Any notice that is sent by
telecopy in the manner provided herein shall be deemed to have been duly
given to the party to whom it is directed upon the transmission of such
telecopy with a confirmation of receipt. Any notice that is addressed and
mailed in the manner herein provided shall be conclusively presumed to have
been duly given to the party to whom it is addressed at the close of
business, local time of the recipient, on the third day after the day it is
so placed in the mail. Notice shall be effective when received or deemed
received, whichever is appropriate, by the parties in accordance with this
Section 6.
7. SECURITY. This Note is secured by that certain Deed of Trust dated
contemporaneously herewith by and between the Maker and Payee as attached
hereto as Exhibit A. The lien created thereby shall be subordinate to (a) a
first priority deed of trust lien in a principal amount not to exceed Three
Hundred Thousand Dollars ($300,000) (plus accrued interest) and (b) a second
priority deed of trust lien in a principal amount not to exceed Two Hundred
Thousand Dollars ($200,000) (plus accrued interest) in, to and under the
property described in Exhibit A.
IN WITNESS WHEREOF, the undersigned has executed this Promissory Note as
of the day and year first above written.
MAKER
WASTE RECOVERY, INC., a Texas corporation
By:
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Name:
-------------------------------------
Title:
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EXHIBIT A
DEED OF TRUST
Date: October ___, 1998
Grantors: Waste Recovery, Inc.
Grantors' Mailing Address:
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇
Trustee: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Trustee's Mailing Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Dallas County
Beneficiary: ___________
Beneficiary's Mailing Address:
Agreement: This Deed of Trust is granted
to secure the payment and performance of
Grantors' obligations under that certain
Separation Agreement dated as of October
___, 1998, by and among WASTE RECOVERY,
INC., a Texas corporation ("WRI"), NEW
U.S. TIRE RECYCLING CORP., a Texas
corporation ("New U.S. Tire"), U.S. TIRE
RECYCLING PARTNERS, L.P., a Delaware
limited partnership (the "Recycling,
L.P."), TIRUS ASSOCIATES, L.L.C., a New
York limited liability company
("Tirus"), the shareholders listed on
ANNEX I thereto (the "Agreement").
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Property (including any improvements): That certain real property described on
Exhibit "A" attached hereto and
incorporated herein for all purposes.
Prior Lien(s) (including recording information): _____
Other Exceptions to Conveyance and Warranty: _____
For value received and to secure the payment and performance of
Grantors' obligations under the Agreement, Grantors convey the property to
Trustee in trust. Grantors warrant and agree to defend the title to the
property. If Grantors perform all the covenants and pay all of the
obligations under the Agreement, this deed of trust shall have no further
effect, and Beneficiary shall release it at Grantors' expense.
GRANTORS' OBLIGATIONS
Grantors agree to:
1. keep the property in good repair and condition;
2. pay all taxes and assessments on the property when due;
3. preserve the lien's priority as it is established in this deed of
trust;
4. maintain, in a form acceptable to Beneficiary, an insurance policy
that:
a. covers all improvements for their full insurable value as
determined when the policy is issued and renewed, unless Beneficiary
approves a smaller amount in writing;
b. contains an 80 % coinsurance clause;
c. provides fire and extended coverage, including windstorm
coverage;
d. protects Beneficiary with a standard mortgage clause;
e. provides flood insurance at any time the property is in a flood
hazard area; and
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f. contains such other coverage as Beneficiary may reasonably
require;
5. comply at all times with the requirements of the 80% coinsurance
clause;
6. deliver the insurance policy to Beneficiary and deliver renewals to
Beneficiary at least ten days before expiration;
7. keep any buildings occupied as required by the insurance policy; and
8. if this is not a first lien, pay all prior lien notes that Grantors
are personally liable to pay and abide by all prior lien instruments.
BENEFICIARY'S RIGHTS
1. Beneficiary may appoint in writing a substitute or successor
trustee, succeeding to all rights and responsibilities of Trustee.
2. Beneficiary may apply any proceeds received under the insurance
policy either to reduce the obligations under the Agreement or to repair or
replace damaged or destroyed improvements covered by the policy.
3. If Grantors fail to perform any of their obligations under the
Agreement or this deed of trust, Beneficiary may perform those obligations
and be reimbursed by Grantors on demand at the place where the obligations
under the Agreement are payable for any sums so paid, including reasonable
attorneys' fees, plus interest on those sums from the dates of payment at the
maximum rate permitted by applicable law for matured, unpaid amounts. The
sum to be reimbursed shall be secured by this deed of trust.
5. If Grantors default on the Agreement or fail to perform any of
their obligations under the Agreement or this deed of trust or if default
occurs on a prior lien note or other instrument, and the default continues
after Beneficiary gives Grantors notice of the default and the time within
which it must be cured, as may be required by law or by written agreement,
then Beneficiary may:
a. declare the unpaid obligations under the Agreement and earned
interest on such obligations immediately due;
b. request Trustee to foreclose this lien, in which case Beneficiary
or Beneficiary's agent shall give notice of the foreclosure sale as
provided by the Texas Property Code as then amended; and
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c. purchase the property at any foreclosure sale by offering the
highest bid and then have the bid credited on the obligations under
the Agreement.
TRUSTEE'S DUTIES
If requested by Beneficiary to foreclose this lien, Trustee shall:
1. either personally or by agent give notice of the foreclosure sale
as required by the Texas Property Code as then amended;
2. sell and convey all or part of the property to the highest bidder
for cash with a general warranty binding Grantor, subject to prior liens and
to other exceptions to conveyance and warranty; and
3. from the proceeds of the sale, pay, in this order:
a. expenses of foreclosure, including a commission to Trustee of 5%
of the bid;
b. to Beneficiary, the full amount of the obligations under the
Agreement, interest, attorneys' fees, and other charges due and
unpaid, including, without limitation amounts due and unpaid under
this deed of trust;
c. any amounts required by law to be paid before payment to
Grantors; and
d. to Grantors, any balance.
GENERAL PROVISIONS
1. If any of the property is sold under this deed of trust, Grantors
shall immediately surrender possession to the purchaser. If Grantors fail to
do so, Grantors shall become a tenant at sufferance of the purchaser, subject
to an action for forcible detainer.
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2. Recitals in any Trustee's deed conveying the property will be presumed
to be true.
3. Proceeding under this deed of trust, filing suit for foreclosure,
or pursuing any other remedy will not constitute an election of remedies.
4. This lien shall remain superior to liens later created even if the
time of payment of all or part of the obligations under the Agreement is
extended or part of the property is released.
5. If any portion of the obligations under the Agreement cannot be
lawfully secured by this deed of trust, payments shall be applied first to
discharge that portion.
6. Grantors assign to Beneficiary all sums payable to or received by
Grantors from condemnation of all or part of the property, from private sale
in lieu of condemnation, and from damages caused by public works or
construction on or near the property. After deducting any expenses incurred,
including attorneys' fees, Beneficiary may release any remaining sums to
Grantors or apply such sums to reduce the obligations under the Agreement.
Beneficiary shall not be liable for failure to collect or to exercise
diligence in collecting any such sums.
7. Grantors assign to Beneficiary absolutely, not only as collateral,
all present and future rent and other income and receipts from the property.
Leases are not assigned. Grantors warrant the validity and enforceability of
the assignment. Grantors may as Beneficiary's licensee collect rent and
other income and receipts as long as Grantors are not in default under the
Agreement or this deed of trust. Grantors will apply all rent and other
income and receipts to payment of the obligations under the Agreement and
performance of this deed of trust, but if the rent and other income and
receipts exceed the amount due under the Agreement and deed of trust,
Grantors may retain the excess. If Grantors default on the Agreement or fail
to perform any of their obligations under the Agreement or this deed of
trust, Beneficiary may terminate Grantors' license to collect and then as
Grantors' agent may rent the property if it is vacant and collect all rent
and other income and receipts. Beneficiary neither has nor assumes any
obligations as lessor or landlord with respect to any occupant of the
property. Beneficiary may exercise Beneficiary's rights and remedies under
this paragraph without taking possession of the property. Beneficiary shall
apply all rent and other income and receipts collected under this paragraph
first to expenses incurred in exercising Beneficiary's rights and remedies
and then to Grantors' obligations under the Agreement and this deed of trust
in the order determined by Beneficiary. Beneficiary is not required to act
under this paragraph, and acting under this paragraph does not waive any of
Beneficiary's other rights or remedies. If any Grantor becomes a voluntary
or involuntary bankrupt, Beneficiary's filing a proof of claim in bankruptcy
will be tantamount to the appointment of a receiver under Texas law.
8. Interest on the debt secured by this deed of trust shall not exceed
the maximum amount of nonusurious interest that may be contracted for, taken,
reserved, charged, or received under law; any interest in excess of that
maximum amount shall be credited on the principal of the debt or, if that has
been paid, refunded. On any acceleration or required or permitted
prepayment, any such excess shall be canceled automatically as of the
acceleration or prepayment or, if already paid, credited on the principal of
the debt or, if the principal of the debt has been paid, refunded.
0
This provision overrides other provisions in this and all other instruments
concerning the debt.
9. When the context requires, singular nouns and pronouns include the
plural.
10. The Agreement includes all sums secured by this deed of trust.
11. This deed of trust shall bind, inure to the benefit of, and be
exercised by successors in interest of all parties.
12. Grantors represent that this deed of trust is given for the purpose
of securing the payment and performance of their obligations under the
Agreement.
GRANTOR:
WASTE RECOVERY, INC.
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the ____ day of October
____, 1998, by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, as president of Waste Recovery, Inc., a
Texas Corporation, on behalf of such corporation.
------------------------------------------
Notary Public, State of Texas
Notary's name (printed):
Notary's commission expires:
1
AFTER RECORDING RETURN TO:
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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RELEASE AGREEMENT
DATED AS OF THE 13TH DAY OF OCTOBER, 1998
BY AND AMONG
WASTE RECOVERY, INC.
AND
THE SHAREHOLDERS NAMED HEREIN
THIS RELEASE AGREEMENT (this "Agreement") is made as of the 13th day of
October, 1998, by and among WASTE RECOVERY, INC., a Texas corporation
("WRI"), and the shareholders listed on ANNEX I hereto (each such party
listed on ANNEX I, a "Shareholder" and collectively the "Shareholders"). All
capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in that certain Purchase Agreement (the "Purchase
Agreement") dated October 13, 1998 among WRI, Concord Recycling, L.L.C., a
Delaware limited liability company ("Concord"), New U.S. Tire Corp., a Texas
corporation ("New U.S. Tire"), U.S. Tire Recycling Partners, L.P., a Delaware
limited partnership ("Recycling L.P.") and Tirus Associates, L.L.C., a New
York limited liability company ("Tirus" and together with New U.S. Tire and
Recycling L.P., the "U.S. Tire Entities").
WHEREAS, as of September 30, 1996, among others, WRI, New U.S. Tire,
Recycling, L.P., and Tirus entered into that certain Agreement and Plan of
Reorganization, whereby, among
3
other things, the U.S. Tire Entities became wholly owned subsidiaries of WRI
(the "1996 Reorganization");
WHEREAS, in connection with the 1996 Reorganization, the Shareholders
received shares of capital stock of WRI (the "WRI Stock") a portion of which
are currently held by U.S. Trust Company of Dallas, N.A. (the "Escrow Agent")
pursuant to that certain Escrow Agreement dated November, 1996 by and between
WRI, New U.S. Tire, the Shareholders and Escrow Agent (the "Escrow
Agreement").
WHEREAS, in connection with the 1996 Reorganization, WRI issued to each
Shareholder (i) a Convertible Subordinated Note payable pursuant to the terms
contained therein and convertible into common stock of WRI (collectively, the
"Convertible Subordinated Notes") collectively representing an aggregate
principal amount equal to $1,877,856 and (ii) the 150 Note.
WHEREAS, the Board of Directors of WRI, and the Shareholders, deem
it advisable and in the best interests of the parties and their respective
shareholders, members and partners that all necessary action be taken to
perform the transactions set forth herein;
NOW, THEREFORE, for and in consideration of the premises and of the
mutual agreements, representations, warranties, provisions and covenants
herein contained, and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
A. WRI ACTIONS. On the date hereof, WRI shall take the following
actions:
1. WRI shall execute and deliver to Tire Lending Associates, a New
York partnership ("Tire Lending") a promissory note in the original aggregate
principal amount of Six Hundred Thousand Dollars ($600,000.00), bearing
interest at a rate equal to the Prime Rate plus 1% (the "Prime Rate" shall be
equal to the then current published prime rate of Chase Bank, N.A. adjusted
quarterly or, in the event Chase Bank, N.A. should cease to publish a prime
rate, then by reference to a similar rate charged by a similar, national,
banking institution), maturing on the second anniversary of the Closing Date
(the "Tire Lending Note"). Interest shall be paid quarterly, beginning on
January 2, 1999. Principal shall be payable in four equal installments of One
Hundred and Fifty Thousand Dollars ($150,000), on 6th day (or next business
day if the 6th is not a business day) of the 15, 18, 21st and 24th months
after execution of the Tire Lending Note. The Tire Lending Note shall be
secured by a third priority deed of trust lien on WRI's Baytown facility,
which lien shall be junior only to (a) a first deed of trust lien in a
principal amount not to exceed Three Hundred Thousand Dollars ($300,000)
(plus accrued interest); and (b) a second priority deed of trust lien in a
principal amount not to exceed Two Hundred Thousand Dollars ($200,000) (plus
accrued interest), evidenced by that certain Deed of Trust dated of even date
herewith on substantially the terms and conditions set forth in Exhibit A
hereto (the "Deed of Trust").
B. SHAREHOLDER ACTIONS.
On the date hereof or within the time period set forth under that
certain side letter
dated October 13, 1998 among WRI, Concord and the U.S. Tire Entities (the
"Side Letter"), Shareholders shall take the following actions:
1. Direct the Escrow Agent to deliver to WRI at Closing all 1,000,000
shares of WRI Stock currently held by the Escrow Agent pursuant to the Escrow
Agreement (the "WRI Escrow Stock");
2. Deliver to Concord that amount of WRI Stock currently held by such
Shareholder or its assigns set forth opposite such Shareholder's name in the
first column of Annex I, aggregating Five Hundred Thousand (500,000) shares
of WRI Stock. (the "Shareholder Delivered Stock");
3. Execute and deliver to Concord an Option Agreement, granting WRI an
option, exercisable on or before June 30, 2000, to purchase Five Hundred
Thousand (500,000) shares of WRI common stock from the Shareholders in the
amounts set forth opposite their name on Annex I hereto, at a price equal to
$1.00 per share (the "Option").
I. DELIVERY OF SHARES
A. DELIVERY PROCEDURE. Upon the exection of this Agreement:
1. THE SHAREHOLDERS SHALL BE ENTITLED TO BENEFITS DESCRIBED UNDER THIS
AGREEMENT.
2. WRI SHALL UPON EXECUTION OF THIS AGREEMENT, BE ENTITLED TO RECEIVE
THE SHAREHOLDER DELIVERED STOCK, THE WRI ESCROW STOCK FROM THE ESCROW AGENT
AND THE OPTION.
II. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
A. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
Each of the Shareholders severally represents and warrants that all of
the following representations and warranties with respect to them are true
and correct as of the date of this Agreement and shall be true and correct at
the time of the execution of this Agreement.
1. AUTHORIZATION. Each Shareholder has the full legal right, power
and authority to enter into this Agreement. This Agreement and each
agreement or instrument to which the Shareholder is a party pursuant to the
provisions of this Agreement have each been duly executed and delivered by
each Shareholder and constitutes the valid and binding obligation of each
such party, enforceable in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, (ii) the
remedy of specific performance and injunctive relief are subject to certain
equitable defenses and to the discretion of the court before which any
proceedings may be brought and (iii) rights to indemnification hereunder
may be limited under applicable securities laws (the "Equitable
Exceptions").
2. WRI STOCK. Each Shareholder (i) owns of record and has good and
marketable title to all of the issued and outstanding shares of the WRI
Stock set forth opposite its name on Annex I, free and clear of any and all
liens, mortgages, security interests, encumbrances, pledges, charges,
adverse claims, options, rights or restrictions of any character whatsoever
arising or otherwise created after the 1996 Reorganization other than
standard state and federal securities law private offering legends and
restrictions and any restrictions on transfer arising in connection with
the Escrow Agreement (collectively, "Liens"), and (ii) each has the right
to vote such WRI Stock on any matters as to which any shares of WRI Stock
are entitled to be voted under the laws of the state of incorporation of
WRI and WRI's charter documents, free of any right of any other person.
3. TAX MATTERS.
a. THE SHAREHOLDERS ACKNOWLEDGE THAT THE TRANSACTIONS
CONTEMPLATED UNDER THIS AGREEMENT MAY HAVE ADVERSE TAX CONSEQUENCES. THEY
HAVE HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL OF THEIR CHOOSING
REGARDING THESE CONSEQUENCES, AND UNDERSTAND AND ACKNOWLEDGE THAT WRI HAS
NO RESPONSIBILITY FOR, AND MAKES NO REPRESENTATION AS TO, ANY TAX
CONSEQUENCES TO ANY SHAREHOLDER.
4. BANKRUPTCY. No Shareholder is under the jurisdiction of any
federal bankruptcy court, or the subject of any receivership or other
insolvency proceeding.
5. CONSIDERATION. To the best knowledge of each Shareholder, the
fair market value of the WRI stock, the release and other consideration
given by the Shareholders, will
be approximately equal to the fair market value of the consideration
received by them hereunder.
6. EXPENSES. The Shareholders (other than ▇▇▇▇▇▇ ▇▇▇▇▇▇) will each
pay their own respective expenses, if any, incurred in connection with this
Agreement and any transaction contemplated hereby.
7. NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other agreements and documents contemplated hereby by the
Shareholders (to which such Shareholder is a party) and the consummation of
the transactions contemplated hereby will not (i) violate any statute,
rule, regulation, order or decree of any public body or authority by which
the Shareholders or their respective properties or assets are bound, the
result of which would materially adversely affect the ability of any
Shareholder to perform such party's obligations hereunder or under any
document or agreement contemplated hereby, or (ii) result in a violation or
breach of, or constitute a default under, or result in the creation of any
encumbrance upon, or, create any rights of termination, cancellation or
acceleration with respect to any of the obligations undertaken by the
Shareholders hereunder.
8. CONSENTS. No consent, approval or other authorization of any
governmental authority or under any contract or other agreement or
commitment to which the Shareholders are parties or by which its or their
respective assets are bound is required as a result of or in connection
with the execution or delivery of this Agreement which the failure to
obtain would materially adversely affect the performance by the
Shareholders of their obligations hereunder or under any agreement or
document contemplated hereby.
9. COMPLIANCE WITH LAWS. The Shareholders are and have been in
compliance with all applicable laws, regulations (including federal, state
and local procurement regulations), orders, judgments and decrees with
respect to the WRI Stock except where the failure to so comply would not
materially adversely affect the performance by the Shareholders of their
obligations hereunder or under any agreement or document contemplated
hereby.
10. OWNERSHIP. The Shareholder owns beneficially and of record the
shares of WRI Stock set forth opposite such Shareholder's name on ANNEX I
and the promissory notes from WRI in the original principal amounts set
forth opposite such Shareholder's name on ANNEX II, such shares of the WRI
Stock owned by the Shareholder are owned free and clear of all Liens other
than standard state and federal securities laws private offering
restrictions.
11. NO OTHER REPRESENTATIONS. Except to the extent set forth in this
Agreement or expressly incorporated herein, no Shareholder has made any
representation or warranty whatsoever and hereby disclaims all liability or
responsibility for any other representation or warranty made, communicated
or furnished (orally or in writing) to the other party or its
representatives (including without limitation, any opinion, information,
projection or advice as may have been or may be provided to WRI or any of
its affiliates by any partner, director, officer, employee, agent,
consultant or representative of any Shareholder).
III. REPRESENTATIONS OF WRI
A. WRI Represents and warrants that all of the following
representations and warranties in this SECTION III are true and correct at
the date of this Agreement and shall be true and correct at the time of the
execution of this Agreement.
1. DUE ORGANIZATION. WRI is duly organized, validly existing and in
good standing under the laws of the State in which each is organized, and
is duly authorized and qualified under all applicable laws, regulations,
and ordinances of public authorities to carry on its businesses in the
places and in the manner as now conducted except for where the failure to
be so authorized or qualified would not have a material adverse effect on
its business, operations, affairs, properties, assets or condition
(financial or otherwise).
2. VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement, the Tire Lending Note and any other agreements annexed hereto to
which WRI is a party and the performance of the transactions contemplated
herein or therein have been duly and validly authorized by the Boards of
Directors, and this Agreement, the Tire Lending Note, and such other
agreements have each been duly and validly authorized by all necessary
corporate action, duly executed and delivered and are the legal, valid and
binding obligations of each of such entities to the extent that it is a
party thereto, enforceable against such party thereto in accordance with
their respective terms subject to the Equitable Exceptions.
3. NO CONFLICTS. The representations and warranties in this Section
3 are limited to the extent that any Shareholder has actual or constructive
knowledge that has not
been disclosed to any member of WRI's Board of Directors (other than the
Shareholders) that (a) WRI will or is threatened to be in breach of any
warranty on the Closing Date or (b) any representation contains any untrue
statement of fact or omits to state a material fact necessary to make the
statements herein, in light of the circumstances which they are made, not
misleading. The execution, delivery and performance of this Agreement and
the other agreements and documents contemplated hereby by WRI and the
consummation of the transactions contemplated hereby will not (i) violate
any provision of any of the entities' organizational documents, (ii)
violate any statute, rule, regulation, order or decree of any public body
or authority by which such entities or its or their respective properties
or assets are bound, or (iii) result in a violation or breach of, or
constitute a default under, or result in the creation of any encumbrance
upon, or, create any rights of termination, cancellation or acceleration
in any person with respect to any contract or any material license,
franchise or permit of WRI or any other agreement, contract, indenture,
mortgage or instrument to which WRI is a party or by which any of its
properties or assets is bound, the result of which would materially
adversely affect the WRI's ability to perform its obligations hereunder
or under any document or agreement contemplated hereby.
4. EXPENSES. WRI will pay its expenses incurred in connection with
this Agreement.
5. CONSIDERATION. To the best of the knowledge of WRI, the fair
market value of the Tire Lending Note, the release and other consideration
given by WRI, will be approximately equal to the fair market value of
consideration received by it hereunder.
6. CONSENTS. No consent, approval, authorization or order of any
court, Agency or any other person is required in order to permit WRI to
consummate the transactions contemplated by this Agreement the absence of
which would have a materially adverse effect on WRI's ability to perform
its obligations hereunder.
7. COMPLIANCE WITH LAWS. The representations and warranties in this
Section 7. are limited to the extent that any Shareholder has actual or
constructive knowledge which has not been disclosed to any member of WRI'S
Board of Directors (other than the Shareholders) that (a) WRI will or is
threatened to be in breach of any warranty on the Closing Date or (b) any
representation contains any untrue statement of fact or omits to state a
material fact necessary to make the statements herein, in light of the
circumstances which they are made, not misleading. WRI is in compliance
with all applicable laws, regulations (including federal, state and local
procurement regulations), orders, judgments and decrees except where the
failure to so comply would not have a material adverse effect on the
business, operations, properties, assets or conditions (financial or
otherwise) of either company.
8. GOOD STANDING CERTIFICATES. On or before the date of this
Agreement, WRI shall have delivered to the Shareholders a certificate,
dated as of a recent date prior to the date of this Agreement,
demonstrating that each of WRI is in good standing and authorized to do
business in the state of incorporation of such entity.
9. SOLVENCY. WRI has the financial ability to meet all of the
financial obligations imposed upon WRI under this Agreement.
10. NO OTHER REPRESENTATIONS. Except to the extent set forth in this
Agreement or expressly incorporated herein, WRI has made no representation
or warranty whatsoever to the Shareholders or the other parties hereto and
hereby disclaim all liability or responsibility for any other
representation or warranty made, communicated or furnished (orally or in
writing) to the Shareholders and any other parties hereto or their
representatives (including without limitation, any opinion, information,
projection or advice as may have been or may be provided to the
Shareholders and the other parties hereto or any of their affiliates by any
director, officer, employee, agent, consultant or representative of WRI,
including, without limitation, in connection with the 1996 Reorganization
and all agreements, documents and instruments executed in connection
therewith.
IV. SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES.
A. COVENANTS AND AGREEMENTS. All covenants and agreements made
hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall survive the Closing and shall continue in full
force and effect thereafter according to their terms without limit as to
duration.
B. REPRESENTATIONS AND WARRANTIES. All representations and warranties
contained herein shall survive the closing of the transcactions set forth
herein and shall continue in full force and effect thereafter following the
execution of this Agreement.
V. SECURITIES ACT REPRESENTATIONS AND TRANSFER RESTRICTIONS
The WRI Stock acquired or the subject of the Option pursuant to this
Agreement are being acquired solely for their own respective accounts, for
investment purposes only, and with no present intention of distributing,
selling or otherwise disposing of it in connection with a distribution. None
of the stock or membership interests are not presently registered under the
Securities Act of 1933 Act, as amended (the "33 Act"), and the stock may not
be sold without registration unless an exemption from the applicable
registration requirements under the 1933 act and state securities laws is
available.
VI. MUTUAL RELEASES
A. WRI RELEASE. Effective upon the date of this Agreement, WRI
releases and forever discharges the Shareholders, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and their present and former
officers, directors, shareholders, employees, agents, attorneys, insurers,
and their foregoing assigns and successors from any and all claims, demands,
losses, damages, actions and causes of action, of any nature whatsoever,
known or unknown, discovered or undiscovered, from any and all claims,
demands, losses, damages, actions, and causes of action, of any nature
whatsoever, known or unknown, discovered or undiscovered, which it now holds
or has ever held, prior to and including the date hereof. This release
includes, without limiting the broad scope set forth above, all claims that
relate in any way to the 1996 Reorganization. The release described above
shall not be delivered until satisfaction of the items described in the Side
Letter.
B. SHAREHOLDERS RELEASE. Effective upon the date hereof and the
performance by the parties of the transactions described herein, the
Shareholders, each on its own behalf and in
any representative capacity of any other entity, release and forever
discharge WRI and its present and former officers, directors, shareholders,
employees, agents, attorneys, insurers, and its foregoing assigns and
successors from any and all claims, demands, losses, damages, actions, and
causes of action, of any nature whatsoever, known or unknown, discovered or
undiscovered, which they now hold or have ever held, prior to the date of the
Agreement. This release includes, without limiting the broad scope set forth
above, all claims that relate in any way to the 1996 Reorganization and any
and all claims or obligations that relate in any way to the Convertible
Subordinate Notes or the Working Capital Note. The release described above
shall not be delivered until satisfaction of the items described in the Side
Letter.
C. NO RELEASE FROM OBLIGATIONS. Notwithstanding the foregoing
Paragraphs A and B, nothing herein shall release the parties from their
obligations under this Agreement, that certain letter agreement dated as of
the date hereof among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
Concord and WRI (the "Letter Agreement") or that certain restrictive
covenants agreement dated as of the date hereof among WRI, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and Concord (the "Restrictive Covenants").
D. NO RELEASE FOR FRAUD. Notwithstanding the foregoing Paragraphs A,
B and C, nothing herein shall release any party from fraudulent or willful,
knowing and intentional misconduct that materially adversely affects the any
other party to this Agreement.
VII. GENERAL
A. COOPERATION. The parties hereto shall each deliver or cause to be
delivered to the other on the date hereof, and at such other times and places
as shall be reasonably agreed to, such
additional instruments as the other may reasonably request for the purpose of
carrying out this Agreement, including, but not limited to, the filing of the
Deed of Trust with the appropriate Texas authorities by WRI, documents of
title and financing statements. WRI will cooperate and use its reasonable
efforts to have the present officers, directors and employees thereof
cooperate with the Shareholders on and after the date hereof in furnishing
information, evidence, testimony and other assistance in connection with any
tax return filing obligations, actions, proceedings, arrangements or disputes
of any nature with respect to matters pertaining to the Shareholders for all
periods prior to the date of this Agreement.
B. WRI ACKNOWLEDGEMENT OF DELIVERY. WRI hereby acknowledges and
agrees that (i) Concord can accept delivery of the executed Option and the
Shareholder Delivered Shares from the Shareholders on its behalf and (ii)
delivery by the Shareholders of the executed Option and the Shareholder
Delivered Shares to Concord shall satisfy the obligations of the Shareholders
under Sections B and Article I of this Agreement
C. SHAREHOLDERS CONSENT TO ASSIGNMENT AND TRANSFER OF THE CONVERTIBLE
SUBORDINATED NOTES. Shareholders hereby consent to the transfer of the
Convertible Subordinated Notes from WRI to Concord pursuant to that certain
Assignment and Assumption Agreement of even date herewith.
D. SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall
be binding upon and shall inure to the benefit of the parties hereto, the
successors of WRI and the heirs and legal representatives of the Shareholders.
E. ENTIRE AGREEMENT. This Agreement (including the Side Letter, the
Letter
Agreement, the Purchase Agreement (including the Schedules, Exhibits and
Annexes attached thereto), the Restricitve Covenants, the Schedules, Exhibits
and Annexes attached hereto and the agreements and the documents delivered
pursuant hereto) constitute the entire agreement and understanding among
parties hereto, and supersede any prior agreement and understanding relating
to the subject matter of this Agreement. This Agreement, upon execution,
constitutes a valid and binding agreement of the parties hereto enforceable
in accordance with its terms and this Agreement and the Annexes hereto may be
modified or amended only by a written instrument executed by the parties.
F. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
G. EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, (i) WRI will pay the fees, expenses and disbursements
of WRI and its respective agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in the
performance and compliance with all conditions to be performed by WRI under
this Agreement and (ii) the Shareholders (other than ▇▇▇▇▇▇ ▇▇▇▇▇▇) will pay
from personal funds the fees, expenses and disbursements its agents,
representatives, accountants, business advisors or counsel incurred in
connection with the subject matter of this Agreement.
H. NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by (a) depositing the same in
United States mail, addressed to the party to be notified, postage prepaid
and registered or certified with return receipt requested, (b) delivering
the same in person to an officer or agent of such party, or (c) telecopying
the same with electronic confirmation of receipt.
a. If to WRI, addressed to them at:
Waste Recovery, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
b. If to the Shareholders, addressed to the representative
at the address set forth on ANNEX I;
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
I. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
J. USE OF CERTAIN TERMS. As used in this Agreement, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any
particular paragraph, subparagraph or other subdivision.
K. MODIFICATION AND WAIVER. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled
to the benefits thereof, and this Agreement may be modified or amended by a
written instrument executed by all of the parties hereto. No supplement,
modification or amendment of this Agreement shall be binding unless executed
in writing by all of the parties hereto. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
L. EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall
it be construed as a waiver of or acquiescence in any such breach or default,
or of any similar breach or default occurring later; nor shall any waiver of
any single breach or default be deemed a waiver of any other breach or
default occurring before or after that waiver.
M. TIME. Time is of the essence with respect to this Agreement.
N. REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable
but so as to most nearly retain the intent of the parties, and if such
modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected
or impaired thereby.
O. REMEDIES CUMULATIVE. No right, remedy or election given by any
term of this
Agreement shall be deemed exclusive but each shall be cumulative with all
other rights, remedies and elections available at law or in equity.
P. CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
Q. APPOINTMENT OF REPRESENTATIVE.
1. Each Shareholder hereby irrevocably constitutes and appoints ▇▇▇
▇▇▇▇▇▇▇▇ (together with any successor appointed pursuant to SUBSECTION 5
below being hereinafter referred to as the "Representative") with full
power of substitution as such Shareholder's true and lawful agent and
attorney-in-fact with full power and authority in such Shareholder's
name, place and stead to (i) negotiate, determine and settle all matters
arising hereunder or in connection with any document related hereto,
including without limitation any action required or permitted to be
taken by the Shareholders or any of them under, or the resolution of any
dispute or other matter arising under the Option Agreement and (ii)
execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices all certificates, documents and other
instruments (including, without limitation, this Agreement and any
amendments thereto) that the Representative deems appropriate or
necessary under the terms of this Agreement or the laws of any state or
jurisdiction, and all certificates, documents and other instruments
which the Representative deems appropriate or necessary in the exercise
of its authority under (i) above. In dealing with any Shareholder
hereunder, WRI shall be entitled to deal exclusively with the
Representative, and any action taken by the Representative may be
considered to be the action of each Shareholder with respect to which
such action was taken. All action taken by the Representative shall be
binding on all
of the Shareholders, and no Shareholder shall have the right to object
to, dissent from, protest or otherwise contest the same. WRI shall be
permitted to rely upon any written instrument or documents executed by
the Representative as valid and binding upon all of the Shareholders.
2. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest and it shall survive
and not be affected by the subsequent death, incompetency, disability,
incapacity, dissolution or bankruptcy of such Shareholder and shall
extend to such Shareholder's heirs, transferees, successors, assigns and
personal representatives.
3. The Representative may consult with legal counsel, independent
accountants and other experts selected by it with respect to the
determination of any matters or the taking of any action referred to
herein and the Representative shall be fully justified and protected in
taking or omitting to take any action in good faith and in reliance on,
and in accordance with, the opinion or advice of such persons. Each of
the Shareholders agrees to bear such Shareholder's proportionate share
of any compensation and expenses of such counsel, accountants or experts
or other out-of-pocket expenses incurred by the Representative in
carrying out its duties as herein provided, and upon receipt from time
to time of notices from the Representative as to any amounts to be so
paid by such Shareholder to make payment thereof, or reimburse the
Representative therefor, promptly as directed by the Representative.
Each of the Shareholders agrees to indemnify the Representative and hold
it
harmless from any and all loss, damage or liability which it may sustain
as a result of any action taken in good faith.
4. Each Shareholder hereby irrevocably agrees that any action
required or permitted under this Agreement to be taken by the
Representative shall be valid and binding upon, and shall have the
effect as though taken by, such Shareholder hereunder, and in accordance
therewith the Representative may, on behalf of such Shareholder and in
his name, place and ▇▇▇▇▇, accept payment of any amounts due and payable
to such Shareholder hereunder and make payment of any amount due and
payable from such Shareholder hereunder.
5. If the Representative shall be unable to perform the duties of
the Representative or shall resign from such position, the Shareholders,
who, as of the Closing Date hold a majority of the shares of capital
stock of the Company shall be entitled to designate a successor
Representative, who shall be the Representative for all purposes
thereafter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WASTE RECOVERY, INC.
BY:
------------------------------------
NAME:
----------------------------------
Title:
---------------------------------
THE SHAREHOLDERS:
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
ENVIRONMENTAL VENTURE FUND L.P.
BY:
------------------------------------
NAME:
----------------------------------
Title:
---------------------------------
ARGENTUM CAPITAL PARTNERS, L.P.
BY:
------------------------------------
NAME:
----------------------------------
Title:
---------------------------------
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▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇
ANNEX I
TO THAT CERTAIN
RELEASE AGREEMENT
DATED AS OF OCTOBER 13, 1998
BY AND AMONG
WASTE RECOVERY, INC.
AND
THE SHAREHOLDERS NAMED THEREIN
Number of Shares Number of WRI
of WRI Stock to be Number of WRI Shares Shares subject to
Name and Address Delivered Held by Escrow Agent Option Agreement
---------------- --------- -------------------- ----------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ 286,226 166,667 206,520
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 0 166,667 0
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Environmental Venture Fund L.P. 0 0 0
c/o First Analysis Corp.
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Sears Tower - ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Argentum Capital Partners, L.P. 120,060 0 40,020
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ 13,552 96,407 36,653
c/o Feil Organization
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 13,552 96,407 36,653
c/o Feil Organization
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ 13,552 96,407 36,653
c/o Fell Organization
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Number of Shares Number of WRI
of WRI Stock to be Number of WRI Shares Shares subject to
Name and Address Delivered Held by Escrow Agent Option Agreement
---------------- --------- -------------------- -----------------
▇▇▇ ▇▇▇▇▇▇▇▇ 3,734 26,569 10,101
c/o Feil Organization
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ 9,865 70,175 26,680
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ 9,865 70,175 26,680
c/o Weston Investments Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,466 17,544 6,670
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 2,466 17,544 6,670
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ 2,466 17,544 6,670
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ 2,466 17,544 6,670
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ 9,865 70,175 26,680
c/o USA Waste
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 9,865 70,175 26,680
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL: 500,000 1,000,000 500,000
ANNEX II
TO THAT CERTAIN
RELEASE AGREEMENT
DATED AS OF OCTOBER 13, 1998
BY AND AMONG
WASTE RECOVERY, INC.
AND
THE SHAREHOLDERS NAMED THEREIN
Principal
Principal Amount Amount of
Holder of Primary Note "Stub" Note
------ --------------- -----------
[▇▇▇▇▇▇ ▇▇▇▇▇▇] $308,025 $ 4,638
Environmental Venture Fund,
L.P. $148,074 $ 2,230
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ $308,025 $ 4,638
Argentum Capital Partners,
L.P. $148,074 $ 2,230
▇▇▇▇▇ ▇▇▇▇ $135,616.10 $ 2,042
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $135,616.10 $ 2,042
▇▇▇▇▇▇▇ ▇▇▇▇ $135,616.10 $ 2,042
▇▇▇ ▇▇▇▇▇▇▇▇ $37,373.30 $ 563
▇▇▇▇ ▇▇▇▇▇▇ $ 98,716 $ 1,486
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ $ 98,716 $ 1,486
▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 24,679 $ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $ 24,679 $ 372
▇▇▇▇ ▇▇▇▇▇▇ $ 24,679 $ 372
▇▇▇▇▇ ▇▇▇▇▇▇ $ 24,679 $ ▇▇▇
▇▇▇▇ ▇▇▇▇▇ $ 98,716 $ 1,486
▇▇▇ ▇▇▇▇▇▇▇ $ 98,716 $ 1,486
FORM OF WRI RELEASE
To all to whom these Presents shall come or may Concern, Know that
CONCORD RECYCLING, LLC, a limited liability company organized under the laws
of the State of Delaware, as RELEASOR, in consideration of the sum of Ten
Dollars and other goods and valuable consideration received from Waste
Recovery, Inc. as RELEASEE, receipt whereof is hereby acknowledged, releases
and discharges Waste Recovery, Inc. as RELEASEE, the RELEASEE, RELEASEE'S
heirs, executors, administrators, successors and assigns from all actions,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions,
claims, and demand whatsoever, in law, admiralty or equity, which against the
RELEASEE, THE RELEASOR, RELEASOR'S heirs, executors, administrators,
successors and assigns ever had, now have or hereafter can, shall or may,
have for, upon, or by reason of any matter, cause or thing whatsoever from
the beginning of the world to the day of the date of this RELEASE. Except
obligations arising out of the purchase agreement dated October 13, 1998 and
other instruments and documents made and executed in connection with that
agreement. Nothing herein shall release any party from fraudulent or willful,
knowing and intentional misconduct that materially adversely affects the
RELEASOR.
Whenever the text hereof requires, the use of singular number shall
include the appropriate plural number as the text of the within instrument
may require.
This RELEASE may not be changed orally.
In Witness Whereof, the RELEASOR has CAUSED THIS RELEASE TO BE EXECUTED
BY ITS DULY AUTHORIZED OFFICERS AND ITS CORPORATE SEAL TO BE HEREUNTO AFFIXED
ON.
In presence of: Concord Recycling, LLC, State of New York, COUNTY OF New
York On 1998 before me personally came ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ to me known to me
know, who, by me duly sworn, did depose and say that deponent resides at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇ ▇▇▇▇▇ that deponent is the Manager of Concord
Recycling LLC, the LLC the corporation described in, and when executed the
foregoing RELEASE, that deponent knows the seal of the corporation, that the
seal affixed to the RELEASE is the corporate seal, that it was affixed by
order of the board of ____________ of the corporation; and that deponent
signed deponent's name by like order.
------------------------------------
FORM OF U.S. TIRE ENTITIES RELEASE
To all to whom these Presents shall come or may Concern, Know that WASTE
RECOVERY, INC, a Texas corporation, as RELEASOR, in consideration of the sum
of Ten Dollars and other goods and valuable consideration received from New
U.S. Tire, a Texas corporation ("New U.S. Tire"), U.S. Tire Recycling
Partners L.P., a Delaware limited partnership ("Recycling L.P.") and Tirus
Associates, L.L.C., a New York limited liability company ("Tirus",
collectively with New U.S. Tire and Recycling L.P., the "U.S. Tire Entities)
and ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, (together
with the U.S. Tire Entities, the RELEASEE), receipt whereof is hereby
acknowledged, releases and discharges the RELEASEE, RELEASEE'S heirs,
executors, administrators, successors and assigns from all actions, causes of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions,
claims, and demand whatsoever, in law, admiralty or equity, which against the
RELEASEE, THE RELEASOR, RELEASOR'S heirs, executors, administrators,
successors and assigns ever had, now have or hereafter can, shall or may,
have for, upon, or by reason of any matter, cause or thing whatsoever from
the beginning of the world to the day of the date of this RELEASE. Except
obligations arising out of the purchase agreement and related transactions
dated October 13, 1998 and other instruments and documents made and executed
in connection with that agreement. Nothing herein shall release any party
from fraudulent or willful, knowing and intentional misconduct that
materially adversely affects the RELEASOR.
Whenever the text hereof requires, the use of singular number shall
include the appropriate plural number as the text of the within instrument
may require.
This RELEASE may not be changed orally.
In Witness Whereof, the RELEASOR has CAUSED THIS RELEASE TO BE EXECUTED
BY ITS DULY AUTHORIZED OFFICERS.
WASTE RECOVERY, INC., a Texas Corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
FORM OF LETTER AGREEMENT
AGREEMENT
This Agreement is entered into as of the 13th day of October among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇"), ▇▇▇ ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇", together with ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇, the "Principals"),
Concord Recycling, L.L.C., a Delaware limited liability company ("Concord")
and Waste Recovery, Inc., a Texas corporation ("WRI").
Reference is hereby made to that certain Purchase Agreement (the
"Purchase Agreement") to be entered into among WRI, Concord, New U.S. Tire, a
Texas corporation ("New U.S. Tire"), U.S. Tire Recycling Partners L.P., a
Delaware limited partnership ("Recycling L.P.") and Tirus Associates, L.L.C.,
a New York limited liability company ("Tirus", collectively with New U.S.
Tire and Recycling L.P., the "U.S. Tire Entities"). All capitalized terms
used and not otherwise defined herein shall have the meanings assigned to
them in the Purchase Agreement
WHEREAS, Pursuant to the terms of such Purchase Agreement, WRI has
agreed to close on the date hereof, deferring delivery by Concord of certain
items required to be delivered by Concord at the time of closing under the
Purchase Agreement, the production of which is under the control of the
Shareholders.
WHEREAS, the Principals, due to their relationship with such
Shareholders, are in a position to assist in the delivery of such items.
NOW THEREFORE, in consideration of the mutual promises herein and
for other valuable consideration, the adequacy of which is hereby
acknowledged, the parties hereto do hereby agree as follows.
1. Each of the Principals hereby agree to cause the delivery by
each of the Shareholders to Concord of the following items as soon as
practicable from the date hereof, but within the time limits set forth in
that certain Side Letter dated October 13, 1998 between WRI, Concord and the
U.S. Tire Entities (the "Side Letter").
a. an executed copy of that certain Release Agreement (the
"Release Agreement") dated as of October 13, 1998 between the Shareholders
and WRI containing releases to WRI of its obligations under the Convertible
Subordinate Notes and the 150 Note as well as the representations and
warranties of the Shareholders set forth in B.10. of the Purchase Agreement;
b. the authorization to the Escrow Agent by each Shareholder
directing the Escrow Agent to release and deliver all WRI Stock held by it
pursuant to the terms
of the Escrow Agreement;
c. 500,000 shares of WRI Stock currently held by the
Shareholders and their assigns as set forth in the first column of Annex I to
the Release Agreement;
d. an executed copy of the Option;
e. a cancelled copy of the Unsecured Note; and
f. allonges from each holder (each a "Holder") of the notes
(the "Notes") set forth opposite such holders name on Annex II to the Release
Agreement, amending the terms of the Notes in substantially the form
attached hereto as Exhibit A.
2. Concord agrees to enter into an agreement with the Holders
granting them the right/option to purchase a twenty five percent (25%)
membership interest in Concord for an aggregate purchase price of $675,000 so
long as any of the Notes remain unpaid, on terms and conditions mutually
agreeable to the parties. This option is in addition to the 15% membership
interest granted to Tire Lending Associates ("TLA") upon payment of that
certain promissory note dated October 13, 1998 made by Concord in favor of
TLA. In addition, Concord agrees to amend its operating agreement or other
charter documents as required to comply with the terms of the agreement
contemplated by this Section.
3. Each of the Principals shall indemnify and hold WRI harmless
from any loss, cost or liability (including, but not limited to attorneys
fees) due to the Principals' failure to comply with the terms of this
Agreement. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ shall indemnify and hold Concord and
▇▇▇▇▇▇▇▇▇▇ harmless from any loss, cost or liability (including, but not
limited to attorneys fees) due to the their failure to comply with the terms
of this Agreement PROVIDED, HOWEVER, that ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ shall have no
obligation to indemnify Concord or ▇▇▇▇▇▇▇▇▇▇ if such loss is due to
▇▇▇▇▇▇▇▇▇▇'▇ failure to deliver any such items set forth in Paragraph 1.
above in his capacity as a Shareholder or due to Concord's failure to deliver
such items received by them to WRI and PROVIDED, FURTHER, that (i) ▇▇▇▇▇▇▇▇▇▇
agrees to indemnify and hold ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ harmless from any loss,
cost or liability (including, but not limited to attorneys fees) due to the
his failure to deliver any such items set forth in Paragraph 1. above in his,
or ▇▇▇▇▇▇ ▇▇▇▇▇▇'▇, capacity as a Shareholder and (ii) Concord agrees to
indemnify and hold ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ harmless from any loss, cost or
liability (including, but not limited to attorneys fees) due to the their
failure to deliver to WRI any items set forth in Paragraph 1. above which
were timely delivered to Concord under the terms of this Agreement.
4. This Agreement along with the Release Agreement, the Purchase
Agreement (and all Exhibit, Schedules and other agreements attached thereto),
the Side Letter, the Option, the Tire Lending Note, the Deed of Trust and the
Assignment and Assumption Agreement constitutes the entire agreement between
the parties and supersedes all prior and written or oral communications,
understandings or agreements regarding the subject matter
hereof. This Agreement may not be amended, supplemented or modified in any
respect except by the written agreement of the parties. This Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument.
5. This Agreement shall be construed, and the rights and
obligations of the parties hereunder determined, in accordance with and
governed by the internal laws of the State of New York (as permitted by
Section 5-1401 of the New York General Obligations Law (or any similar
successor provision)) without giving effect to any choice of law rule that
would cause the application of the laws of any jurisdiction other than the
internal laws of the State of New York to the rights and duties of the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date above.
PRINCIPALS:
---------------------
▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
CONCORD RECYCLING, L.L.C.
---------------------
Name:
Title:
WASTE RECOVERY, INC.
By:
------------------
Name:
Title:
SIDE LETTER
October 13, 1998
Concord Recycling, L.L.C.
c/o ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Letter Agreement Supplementing Purchase Agreement, Dated as
of October 13, 1998, By and Among Waste Recovery, Inc., New
U.S. Tire Recycling Corp., U.S. Tire Recycling Partners,
L.P., Tirus Associates, L.L.C. and Concord Recycling, L.L.C.
(the "Purchase Agreement")
Pursuant to Section IV of the Purchase Agreement, entitled "Conditions
Precedent," the parties enumerated various conditions to be satisfied or
waived on or prior to the Closing Date. In addition, Sections B and C (pages
3 and 4) specify closing actions required to be performed on the Closing
Date. This letter sets forth the parties understanding regarding a TEMPORARY
waiver, which will permit the Closing Date to occur on October 13, 1998. In
the event that the conditions and actions which are temporarily waived in
this letter are not fulfilled within thirty days of the Closing Date, unless
any temporarily waived condition is further waived or excused in writing, the
party failing to satisfy the temporarily waived condition shall be deemed in
default under the terms of the Purchase Agreement.
The following Conditions Precedent to obligations of WRI specified in
IV(A) are waived for a period of thirty (30) days:
2. SATISFACTION
3. OPTION AGREEMENT
4. DELIVERY OF WRI STOCK
5. DELIVERY OF ESCROWED WRI STOCK
7. EXECUTION OF ASSIGNMENT AND ASSUMPTION
All other conditions precedent to WRI's obligations set forth in the
Purchase Agreement remain conditions precedent.
The following Closing Actions by Purchaser specified in Section C are
waived for a period of thirty (30) days:
2. DELIVERY OF RELEASE FROM SHAREHOLDERS
3. RELEASE OF ESCROW SHARES TO WRI
4. DELIVERY OF WRI STOCK
5. OPTION AGREEMENT
7. DELIVERY OF UNSECURED NOTE
11. DELIVERY OF REPS AND WARRANTIES OF SHAREHOLDERS
The mutual delivery of releases, provided for in sections VII.A. and
VII.B. are waived for a period of thirty (30) days.
WRI agrees to delivery to Purchaser organizational documents and
corporate records of the U.S. Tire Entities.
The following conditions precedent to obligations of Purchaser specified
in IV(B) are temporarily waived by Purchaser:
2. SATISFACTION
7. EXECUTION OF ASSIGNMENT AND ASSUMPTION
Notwithstanding the foregoing, the parties agree that without further
action by any party hereto, the following closing actions shall be deemed to
have taken place as of the Closing Date:
1. Transfer of WRI rights to and interest in the entities described in
Section B(1) and IV(B)(3).
2. The granting of the rights and options described in Sections C(8)
and C(9).
Further, neither party hereto shall be deemed to be in default hereunder
for failure to deliver a release in any situation where the released party
has not previously or simultaneously furnished a corresponding release.
All other conditions precedent to Purchaser's obligations set forth in
the Purchase Agreement remain conditions precedent.
In addition, Purchaser will deliver ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇'▇ resignation and
mutual restrictive covenants will be exchanged.
WRI will deliver an undertaking to defend ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ in the
▇▇▇▇▇▇▇▇ action at WRI's expense and to hold him harmless from, and indemnify
him against any claims and losses therefrom.
If you believe the foregoing constitutes the terms of our agreement,
please execute in the space indicated below. Except as specified herein,
this letter does not amend, modify, alter or otherwise affect the Purchase
Agreement or any terms thereof.
Very truly yours,
WASTE RECOVERY, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Agreed and Approved:
NEW U.S. TIRE RECYCLING CORP.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
U.S. TIRE RECYCLING PARTNERS, L.P.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
By: U.S. TIRE RECYCLING CORP., its
general partner
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
TIRUS, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
CONCORD RECYCLING, L.L.C.
By:
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Manager
RESTRICTIVE COVENANT AGREEMENT
THIS RESTRICTIVE COVENANT AGREEMENT (the "Agreement") made and entered
into as of the 13th day of October, 1998, by and among ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇▇"), Concord Recycling, LLC, a Delaware limited liability company
("Concord") and Waste Recovery, Inc., a Texas corporation ("WRI").
W I T N E S S E T H:
WHEREAS, WRI, NEW U.S. TIRE RECYCLING CORP., a Texas corporation ("New
U.S. Tire"), U.S. TIRE RECYCLING PARTNERS, L.P., a Delaware limited
partnership (the "Recycling, L.P."), TIRUS ASSOCIATES, L.L.C., a New York
limited liability company ("Tirus") and CONCORD have entered into that
certain Purchase Agreement dated October 13, 1998 (the "Purchase Agreement");
WHEREAS, all the parties hereto have executed the Purchase Agreement and
are obligated to perform the transactions required thereby;
WHEREAS, this Agreement is a condition to the closing of the Purchase
Agreement;
WHEREAS, the covenants of WRI, ▇▇▇▇▇▇▇▇▇▇ and Concord hereunder are an
important aspect of the Acquisition, and neither WRI nor Concord would
consummate the Acquisition absent the execution and delivery by the parties
hereto of this Agreement;
WHEREAS, ▇▇▇▇▇▇▇▇▇▇ was, until the Closing Date, an officer and employee
of WRI pursuant to the terms of that certain Employment Agreement between
▇▇▇▇▇▇▇▇▇▇ and WRI dated November 1996 (the "Employment Agreement");
WHEREAS, in connection with the Acquisition, ▇▇▇▇▇▇▇▇▇▇ has resigned as
an employee and officer of WRI;
WHEREAS, WRI has agreed to reduce the principal amount of the Working
Capital Note, as defined in the Purchase Agreement, by $51,500 in settlement
and severance to ▇▇▇▇▇▇▇▇▇▇ in connection with the resignation of ▇▇▇▇▇▇▇▇▇▇,
the termination of Employment Agreement and as consideration for this
Agreement;
WHEREAS, the parties acknowledge that they will have no obligations
under the Employment Agreement except as otherwise set forth in this
Agreement;
WHEREAS, WRI, ▇▇▇▇▇▇▇▇▇▇ and Concord and their affiliates have
substantial resources, experience in the collection, disposal and recycling
of scrap tires and the manufacture, production and marketing of tire-derived
fuel ("TDF") (the "Business") and the ability to operate a business or
businesses that could compete with each other in the Business or in related
businesses following the Closing; and
WHEREAS, the agreements hereunder are reasonable and necessary, both in
scope and duration, to protect the consideration, benefit, business and
goodwill that will be acquired pursuant to the Purchase Agreement.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, warranties, covenants and agreements contained
herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and upon the terms and subject
to the conditions hereinafter set forth, the parties do hereby agree as
follows:
1. ▇▇▇▇▇▇▇▇▇▇ AND CONCORD COVENANT NOT TO COMPETE. For a period of one
(1) year after the execution of this Agreement, neither Concord nor
▇▇▇▇▇▇▇▇▇▇ shall, for any reason, directly or indirectly, by any
means or device whatsoever, individually or on behalf of or in
conjunction with any other person or entity do any one or more of the
following:
a. Engage in a Competing Business within a 350-mile radius of any
TDF processing plant (excluding WRI's TDF processing plant
located in Atlanta Georgia), in which, at the time of this
Agreement, WRI has, directly or indirectly through a subsidiary
or other affiliate, thirty percent (30%) ownership or greater
(the "Territory"). For the purposes of the foregoing sentence,
the term "engage" with respect to ▇▇▇▇▇▇▇▇▇▇ shall mean being a
principal, consultant, officer, director, employee, owner (other
than a holder of less than five percent (5%) of the outstanding
stock of a publicly-traded company), partner or equity owner in
any business enterprise, regardless of structure or whether done
directly or indirectly, that engages in a Competing Business.
The term "Competing Business" shall mean any business enterprise
that engages in the collection, disposal and recycling of scrap
tires, or the manufacture, production and marketing of TDF.
b. Call upon, solicit, divert, take away or attempt to call upon,
solicit, divert or take away any existing or potential customers,
suppliers, businesses or accounts of WRI in connection with any
Competing Business in the Territory;
c. Sell, offer for sale, participate in or advise about a sale, or
solicit the sale of products or services of a Competing Business
regarding any account in the Territory which ▇▇▇▇▇▇▇▇▇▇ learned
of or did business with during the Term of the Employment
Agreement;
d. Divert, take away or attempt to take away any account of WRI,
which ▇▇▇▇▇▇▇▇▇▇ sold, visited, solicited or otherwise learned
of during the Term of the Employment Agreement;
e. Hire or attempt to hire or employ any person who is or within the
twelve months preceding ▇▇▇▇▇▇▇▇▇▇'▇ resignation was an employee
of WRI.
2. WRI COVENANT NOT TO COMPETE. WRI agrees that for a period of one
(1) year following the date hereof, it shall not call upon, solicit, divert,
take away or attempt to call upon, solicit, divert or take away any of those
existing customers, suppliers, businesses or accounts of the U.S. Tire
Recycling facility located in North Carolina (acquired by Concord from WRI
pursuant to the Purchase Agreement) listed on Exhibit A (which shall be
delivered to WRI within 30 days) to the extent that such customers transact
business with the North Carolina facility (the "Concord Customers"). For
purposes of this section, "existing customers, suppliers, businesses or
accounts" shall mean any person or entity that has transacted business with
the North Carolina facility at any time in the preceding 12 months. This
covenant is not intended to restrict WRI's right to develop and maintain
business relationships with any Concord Customers that transacted or may
transact business with any WRI facility outside the state of North Carolina.
3. ENFORCEMENT OF COVENANTS. Each of the parties hereto acknowledges
that a violation or attempted violation of any of the covenants and
agreements in Sections 1 and 2 above will cause such damage to the other
party as will be irreparable, the exact amount of which would be difficult to
ascertain and for which there will be no adequate remedy at law, and
accordingly, agrees that the other party shall be entitled as a matter of
right to an injunction issued by any court of competent jurisdiction,
restraining such violation or attempted violation of such covenants and
agreements by such party, or the affiliates, partners or agents thereof, as
well as recover from such party any and all costs and expenses sustained or
incurred by the other party in obtaining such an injunction, including,
without limitation, reasonable attorneys' fees. Each of the parties hereto
agrees that no bond or other security shall be required in connection with
such injunction. Each party represents and warrants that it has been
represented by counsel in the negotiation and execution of this Agreement,
including without limitation the provisions set forth above in this Section 3
concerning the recovery of attorneys' fees.
4. INTELLECTUAL PROPERTY. ▇▇▇▇▇▇▇▇▇▇ recognizes and agrees that, on
and after the date hereof, he will not have the right to use for his own
account any of the service marks, trademarks, trade names, licenses,
procedures, processes, labels, trade secrets or customer lists that he may
have obtained in connection with his employment with WRI.
5. VALIDITY. To the extent permitted by applicable law, if it should
ever be held that any provision contained herein does not contain reasonable
limitations as to time, geographical area or scope of activity to be
restrained, then the court so holding shall reform such provisions to the
extent necessary to cause them to contain reasonable limitations as to time,
geographical area and scope of activity to be restrained and to give the
maximum permissible effect to the intentions of the parties as set forth
herein; and the court shall enforce such provisions as so reformed. If,
notwithstanding the foregoing, any provision hereof is held to be illegal,
invalid or unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or enforceable provision or by its severance here from. Furthermore,
in lieu of such illegal, invalid or unenforceable provision there shall be
added automatically as a part hereof a provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable, and the parties hereby agree to such provision.
6. NOTICE. Any notice, request, instruction, document or other
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (i) delivered personally,
(ii) sent by telecopy with electronic confirmation of receipt, (iii)
delivered by overnight express, or (iv) sent by registered or certified mail,
postage prepaid, as follows:
If to Buyer:
Concord Recycling L.L.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLC
▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to WRI: WASTE RECOVERY, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address for a party as shall be specified by like notice.
Any notice that is delivered personally, or sent by telecopy or overnight
express in the manner provided herein shall be deemed to have been duly given
to the party to whom it is directed upon receipt by such party. Any notice
that is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been given to the party to whom it is addressed
at the close of business, local time of the recipient, on the fourth day
after the day it is so placed in the mail.
7. MODIFICATION AND WAIVER. No modification or amendment of any of
the terms, conditions or provisions in this Agreement may be made otherwise
than by written agreement signed by the parties hereto, except as otherwise
provided in Section 5 hereof. The waiver by any party to this Agreement of a
breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by any party nor shall such waiver
constitute a continuing waiver.
8. SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any rights,
interests or obligations hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto, and any
purported assignment in violation of this Section 9 shall be null and void.
9. EMPLOYMENT AGREEMENT. Except as otherwise provided herein,
▇▇▇▇▇▇▇▇▇▇ and WRI are hereby released from their respective obligations and
covenants under the Employment Agreement and the parties agree that the
Employment Agreement is hereby null and void.
10. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience of reference only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and such counterparts
together shall constitute one and the same instrument.
WITNESS WHEREOF, the parties have duly caused this Agreement to be executed
as of the date first above written.
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
CONCORD RECYCLING, LLC, a Delaware limited
liability company
By:
---------------------------------
Printed Name:
-----------------------
Title:
------------------------------
WASTE RECOVERY, INC.
By:
---------------------------------
Printed Name:
-----------------------
Title:
------------------------------
EXHIBIT A
LIST OF EXISTING CUSTOMERS AND SUPPLIERS
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Resignation Letter
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
October 13, 1998
Waste Recovery, Inc.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
I hereby resign as officer, director and employee of WRI, effective
immediately, simultaneously with the closing of that certain Purchase
Agreement between WRI and Concord Recycling, LLC, completed today.
Sincerely,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇