EXHIBIT 2(II)
Stock Purchase Agreement
among
ENVIRO-CLEAN OF AMERICA, INC.,
ENVIROACQII CO.
and
NISSCO/SUNLINE, INC.
dated
January 1, 1999
Index to Agreement
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Page
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Article I Purchase and Sale of Stock....................................... 1
Article II Related Matters.................................................. 3
Article III Representations and Warranties of ▇▇▇▇▇▇ and the Company......... 5
Article IV Representations and Warranties of Acquiror and
Acquiror's Subsidiary............................................ 19
Article V Covenants of ▇▇▇▇▇▇ and the Company.............................. 21
Article VI Covenants of the Acquiror........................................ 22
Article VII Conditions to the Obligations of ▇▇▇▇▇▇ and the Company.......... 23
Article VIII Conditions to Obligations of Acquiror and Acquiror's Subsidiary.. 24
Article IX Conduct of the Company's Business Pending the Closing............ 29
Article X Survival of Representations and Warranties....................... 33
Article XI Termination and Abandonment...................................... 33
Article XII Miscellaneous Provisions......................................... 34
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated January 1, 1999 among ENVIRO-CLEAN OF
AMERICA, INC., a Nevada corporation ("Acquiror"), ENVIROACQII CO., a Nevada
corporation which is a wholly-owned subsidiary of Acquiror ("Acquiror's
Subsidiary") NISSCO/SUNLINE, INC., a Florida corporation (the "Company") and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the sole shareholder of the Company ("▇▇▇▇▇▇").
This Agreement sets forth the terms and conditions upon which ▇▇▇▇▇▇ will
sell to Acquiror and convey to Acquiror's Subsidiary or other entities
designated by Acquiror, and Acquiror will purchase from ▇▇▇▇▇▇ shares of common
stock, $_____ par value per share, of the Company, representing all of the
issued and outstanding capital stock of the Company (the "Company Stock"). As
used in this Agreement, capitalized terms have the meanings ascribed to them in
Article II.
In consideration of the mutual agreements contained herein, intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.01. Purchase and Sale of Stock. Subject to the terms and conditions
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of this Agreement, at the Closing, ▇▇▇▇▇▇ shall sell, transfer, convey, assign
and deliver to Acquiror or Acquiror's Subsidiary and Acquiror or Acquiror's
Subsidiary shall purchase, acquire and accept from ▇▇▇▇▇▇ the Company Stock free
and clear of all liens, charges or encumbrances of whatsoever nature.
1.02. Consideration. Subject to the terms and conditions of this
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Agreement, in reliance on the representations, warranties and agreements of the
Company and ▇▇▇▇▇▇ contained in this
Agreement and in consideration of the sale, assignment, transfer and delivery of
the Company Stock, Acquiror or Acquiror's Subsidiary will deliver to ▇▇▇▇▇▇, at
the Closing:
(a) the sum of Five Hundred Thousand Dollars ($500,000) in cash,
certified check or verified wire transfer, it being acknowledged by all parties
that such sum has been previously paid to ▇▇▇▇▇▇ as a deposit, and no further
cash or other payments shall be made;
(b) Two Hundred Fifty Thousand (250,000) shares of Acquiror's Common
Stock, par value $.001 per share, ("Acquiror's Common Stock").
In addition to the sums and securities to be received at Closing, Acquiror
shall also issue and deliver to ▇▇▇▇▇▇ an aggregate of an additional Seven
Hundred Fifty Thousand (750,000) shares of Acquiror's Common Stock in two annual
installments of 250,000 shares on January 15, 2000, and 500,000 shares on
January 15, 2001. If on January 15, 2001 the average closing bid price of the
Acquiror's Common Stock for the ten (10) trading days immediately preceding
January 15, 2001 as reported on the principal stock exchange, on Nasdaq or on
any other automated quotation system upon which the Acquiror's Common Stock then
trades (the "Average Bid Price Per Share") is not at least $5.00 per share, the
Acquiror shall issue and deliver to ▇▇▇▇▇▇ such number of additional shares of
its Common Stock such that the aggregate value of the shares issued at Closing,
on January 15, 2000 and on January 15, 2001, calculated based on the Average Bid
Price Per Share, shall be $2,500,000.
1.03. Closing. The Closing of the transactions contemplated by this
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Agreement will take place at the offices of Acquiror in Dallas, Texas on January
15, 1999 at 10:00 a.m., except that any party hereto may, by giving two days'
written notice to all other parties hereto, defer the Closing to a date not
later than April 15, 1999 in order that such party may satisfy any of the
conditions required to be satisfied at or prior to the Closing.
(a) At the Closing, ▇▇▇▇▇▇ will deliver to Acquiror or Acquiror's
Subsidiary
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(i) the Company Stock, together with a stock power duly endorsed for transfer;
and (ii) all other previously undelivered documents required to be delivered by
▇▇▇▇▇▇ or the Company to Acquiror or Acquiror's Subsidiary at or prior to the
Closing in connection with the transactions contemplated by this Agreement.
(b) At the Closing, there will be delivered to ▇▇▇▇▇▇ (i) by Acquiror
or Acquiror's Subsidiary, the consideration referred to in Section 1.02 hereof
to be delivered at the Closing, and (ii) by Acquiror or Acquiror's Subsidiary,
all previously undelivered documents required to be delivered by Acquiror or
Acquiror's Subsidiary to ▇▇▇▇▇▇ at or prior to the Closing.
1.04. Further Assurances. After the Closing, the Company and ▇▇▇▇▇▇
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shall from time to time, at the request of Acquiror or Acquiror's Subsidiary and
without further cost or expense to Acquiror or Acquiror's Subsidiary, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as Acquiror or Acquiror's Subsidiary may reasonably request, in
order to more effectively consummate the transactions contemplated hereby.
ARTICLE II
RELATED MATTERS
2.01. Confidentiality. Each party hereto will hold and will cause its
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employees, consultants and advisors to hold in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the opinion
of its counsel, by other requirements of law, all documents and information
concerning the other party furnished it by such other party or its
representatives in connection with the transactions contemplated by this
Agreement (except to the extent that such information can be shown to have been
(i) previously known by the party to which it was furnished, (ii) in the public
domain through no fault of such party, or (iii) later
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lawfully acquired from other sources by the party to which it was furnished),
and each party will not release or disclose such information to any other
person, except its auditors, attorneys, financial advisors, bankers and other
consultants and advisors in connection with this Agreement. If the transactions
contemplated by this Agreement are not consummated, such confidence shall be
maintained except to the extent such information comes into the public domain
through no fault of the party required to hold it in confidence, and such
information shall not be used to the detriment of, or in relation to any
investment in, the other party and all such documents (including copies thereof)
shall be returned to the other party immediately upon the written request of
such other party. Each party shall be deemed to have satisfied its obligation to
hold confidential information concerning or supplied by the other party if it
exercises the same care as it takes to preserve confidentiality for its own
similar information.
2.02. Definitions. For all purposes of this Agreement, except as
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otherwise expressly provided or unless the context otherwise requires:
"Acquiror" means Enviro-Clean of America, Inc., a corporation formed under
the laws of the State of Nevada.
"Acquiror's Subsidiary" means ENVIROACQII CO., a corporation formed under
the laws of State of Nevada.
The terms "Affiliate" and "Associate" have the meanings prescribed by Rule
12b-2 of the regulations promulgated pursuant to the Securities Exchange Act.
"Balance Sheet" means the unaudited balance sheet of the Company referred
to in Section 3.06(ii) of this Agreement.
"Closing" means the closing referred to in Section 1.03 of this Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Company" means Nissco/Sunline, Inc., a corporation formed under the laws
of the State of Florida.
"Company Affiliate" means each Affiliate of the Company.
"Company Subsidiary" means any corporation of which the Company (a)
directly or indirectly owns or controls at the time outstanding shares of stock
which have in ordinary circumstances (not dependent upon the happening of a
contingency) voting power to elect a majority of the board of directors of said
corporation, or (b) of which shares of stock of the character described in the
foregoing clause (a) shall at the time be owned or controlled directly or
indirectly by the Company and one or more Company Subsidiaries as defined in the
foregoing clause (a) or by one or more such Company Subsidiaries.
"Disclosure Schedule" means the document delivered by the Company to the
Acquiror simultaneously with the execution hereof containing the information
required to be included therein pursuant to this Agreement.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
The plural of any defined term shall have a meaning correlative to such
defined term.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇ AND THE COMPANY
▇▇▇▇▇▇ and the Company hereby jointly and severally represent, covenant and
warrant to Acquiror and Acquiror's Subsidiary as follows:
3.01. Corporate Organization; Etc. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Florida and has full corporate
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power and authority to carry on its business as it is now being conducted and to
own the properties and assets it now owns; is duly qualified or licensed to do
business as a foreign corporation in good standing in the jurisdictions listed
in Section 3.01 of the Disclosure Schedule, which are all the jurisdictions in
which such qualification is required. The copies of the Certificate of
Incorporation and By-Laws of the Company heretofore delivered to Acquiror or
Acquiror's Subsidiary are complete and correct copies of such instruments as
presently in effect and no vote or comparable action by the directors or
shareholders of the Company has been taken to amend them.
3.02. Capitalization of the Company; Ownership of the Shares. The
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authorized capital stock of the Company consists of 100 shares of Common Stock,
$1.00 par value per share, of which all 100 shares are issued and outstanding
and no shares are held in the treasury of the Company. All issued and
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable. All 100 Shares of Company Stock are owned beneficially
and of record by ▇▇▇▇▇▇, free and clear of any liens, charges, encumbrances and
claims of any kind. At Closing, ▇▇▇▇▇▇ will have good and marketable title in
and to the Company Stock and, upon transfer to Acquiror's Subsidiary at Closing,
Acquiror's Subsidiary will receive valid title to the Company Stock, free and
clear of any liens, charges and encumbrances.
3.03. Subsidiaries and Affiliates. The Company does not own, directly
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or indirectly, any capital stock or other equity securities of any corporation
or have any direct or indirect equity or ownership interest in any business.
3.04. Authorization, Etc. ▇▇▇▇▇▇ has full power and authority to
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enter into this Agreement and to carry out the transactions contemplated hereby,
and this Agreement is a valid and binding agreement of the ▇▇▇▇▇▇ enforceable in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other
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similar laws now or hereafter in effect relating to creditor's rights and (ii)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought.
3.05 No Violation. Neither the execution and delivery of this Agreement
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nor the consummation of the transactions contemplated hereby will violate any
provision of the Certificate of Incorporation or By-Laws of the Company violate,
or be in conflict with, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or cause the
acceleration of the maturity of any debt or obligation pursuant to, or result in
the creation or imposition of any security interest, lien or other encumbrance
upon any property or assets of the Company under, any agreement or commitment to
which ▇▇▇▇▇▇ or the Company is a party or by which ▇▇▇▇▇▇ or the Company is
bound, or to which the property of the Company is subject, or violate any
statute or law or any judgment, decree, order, regulation or rule of any court
or governmental authority.
3.06. Financial Statements. The Company will, and ▇▇▇▇▇▇ will cause the
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Company to, deliver to Acquiror prior to the Closing: (i) a balance sheet of the
Company as at December 31 in each of the years 1996 through 1998; and (ii)
statements of income, changes in stockholders' equity and changes in financial
position for the years ended December 31, 1997 and 1998. Such balance sheets and
the notes thereto are true, complete and accurate and fairly present the assets,
liabilities and financial condition of the Company as at the respective dates
thereof, and such consolidated statements of income, changes in stockholders'
equity and changes in financial position and the notes thereto are true,
complete and accurate and fairly present the results of
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operations for the periods therein referred to; all in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved except, in the case of unaudited statements, for normally recurring
year-end adjustments, which adjustments will not be material either individually
or in the aggregate.
3.07. No Undisclosed Liabilities; Etc. The Company has no liabilities or
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obligations of any nature (absolute, accrued, contingent or otherwise) which
were not fully reflected or reserved against in the Balance Sheet, except for
liabilities and obligations incurred in the ordinary course of business and
consistent with past practice since the date thereof which do not, in the
aggregate, exceed $25,000, and the reserves for liabilities and contingencies
reflected in the Balance Sheet are adequate, appropriate and reasonable.
3.08. Accounts Receivable. All accounts receivable of the Company,
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whether reflected in the Balance Sheet or otherwise, represent sales actually
made in the ordinary course of business, and are current and collectible net of
any reserves shown on the Balance Sheet (which reserves are adequate and were
calculated consistent with past practice).
Subject to such reserve, each of the accounts receivable either has been
collected in full or will be collected in full, without any set-off, within 120
days after the day on which it became due and payable.
3.09. Interim Operations. Since the date of the Balance Sheet, the
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business of the Company has been conducted only in the ordinary and usual course
consistent with past practice. Since the date of the Balance Sheet, there have
not been any material adverse changes in the financial condition, assets or
results of operations of the Company. Since such date such assets have not been
affected in any way as a result of flood, fire, explosion or other casualty
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(whether or not covered by insurance). The Company is not aware of any
circumstances which may cause it to suffer any material adverse change in its
business, operations or prospects.
The Company has not, since the Balance Sheet Date:
(i) permitted or allowed any of its property or assets (real, personal or
mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, except for
liens for current taxes not yet due;
(ii) canceled any debts or waived any claims or rights of substantial
value;
(iii) sold, transferred, or otherwise disposed of any of its properties
or assets, including rights to the use of any patent, trademark, trade name or
copyright, or disposed of or disclosed (except as necessary in the conduct of
its business) to any person other than representatives of Acquiror or Acquiror's
Subsidiary any trade secret, formula, process or know-how not theretofore a
matter of public knowledge;
(iv) granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employee, and no such increase is
customary on a periodic basis or required by agreement or understanding; or
(v) agreed, whether in writing or otherwise, to take any action described
in this Section.
3.10. Title to Properties; Encumbrances. The Company has good, valid and
---------------------------------
marketable title to all the properties and assets which it purports to own
(real, personal and mixed, tangible and intangible), including, without
limitation, (i) all assets relating to the business of NIPPCO, a division
operated by the Company and (ii) all the properties and assets
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reflected in the Balance Sheet and all the properties and assets purchased by
the Company since the date of the Balance Sheet, which subsequently acquired
properties and assets (other than inventory and short term investments) are
listed in Section 3.10 of the Disclosure Schedule. All properties and assets
reflected in the Balance Sheet have a fair market or realizable value at least
equal to the value thereof as reflected therein, and all such properties and
assets are free and clear of all title defects or objections, liens, claims,
charges, security interests or other encumbrances of any nature whatsoever and
are not, in the case of real property, subject to any rights of way, building
use restrictions, exceptions, variances, reservations or limitations of any
nature whatsoever except, with respect to all such properties and assets, (a)
liens shown on the Balance Sheet as securing specified liabilities or
obligations with respect to which no default exists; and (b) liens for current
taxes not yet due. The rights, properties and other assets presently owned,
leased or licensed by the Company and described elsewhere in this Agreement
include all rights, properties and other assets necessary to permit the Company
to conduct its business in all material respects in the same manner as its
business has been conducted prior to the date hereof.
3.11. Plant and Equipment. The plants, structures and equipment of the
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Company are structurally sound with no defects and are in good operating
condition and repair and are adequate for the uses to which they are being put;
and none of such plants, structures or equipment are in need of maintenance or
repairs except for ordinary, routine maintenance and repairs which are not
material in nature or cost. Except as set forth in Section 3.11 of the
Disclosure Schedule, the Company has received no notification that it is in
violation of any applicable building, zoning, anti-pollution, health or other
law, ordinance or regulation in respect of its plants or structures or their
operations and no such violation exists.
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3.12. Patents, Trademarks, Trade Names, Etc. The Company owns, or is
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licensed or otherwise has the full and exclusive right to use, all patents,
trademarks, trade names, copyrights, technology, know-how and processes used in
or necessary for the conduct of the business as heretofore conducted. Section
3.12 of the Disclosure Schedule contains an accurate and complete description of
(a) all patents, trademarks, trade names and copyrights used or proposed to be
used by the Company, all applications therefor, and a summary of the terms of
all licenses and other agreements relating thereto and (b) a summary of the
terms of all agreements relating to technology, know-how or processes which the
Company is licensed or authorized to use by others. Except as set forth in
Section 3.12 of the Disclosure Schedule, the Company has the sole and exclusive
right to use the patents, trademarks, trade names, copyrights, technology, know-
how and processes referred to in the Disclosure Schedule, and the consummation
of the transactions contemplated hereby will not alter or impair any such
rights; no claims have been asserted by any person to the use of any such
patents, trademarks, trade names, copyrights, technology, know-how or processes
or challenging or questioning the validity or effectiveness of any such license
or agreement, and the Company does not know of any valid basis for any such
claim; and the use of such patents, trademarks, trade names, copyrights,
technology, know-how or processes by the Company does not infringe on the rights
of any person.
3.13. Leases. Section 3.13 of the Disclosure Schedule contains an
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accurate and complete description of the terms of all leases pursuant to which
the Company leases real or personal property. Except as set forth in Section
3.13 of the Disclosure Schedule, all such leases are valid, binding and
enforceable in accordance with their terms, and are in full force and effect;
there are no existing defaults by the Company thereunder; no event of default
has occurred which
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(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute a default thereunder; and all lessors under
such leases have consented (where such consent is necessary) to the consummation
of the transactions contemplated by this Agreement without requiring
modification in the rights or obligations of the lessee under such leases.
Executed counterpart copies of all consents referred to in the preceding
sentence will be delivered to Acquiror or Acquiror's Subsidiary at the Closing.
3.14. Bank Accounts. Section 3.14 of the Disclosure Schedule sets
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forth the names and locations of all banks, trust companies, savings and loan
associations and other financial institutions at which the Company maintains
safe deposit boxes or accounts of any nature and the names of all persons
authorized to draw thereon, make withdrawals therefrom or have access thereto.
At the Closing, the Company will deliver to Acquiror or Acquiror's Subsidiary
copies of all records, including all signature or authorization cards,
pertaining to such bank accounts.
3.15. Taxes. The Company has duly filed all tax reports and returns
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required to be filed by it and have duly paid all taxes and other charges due or
claimed to be due from it by federal, state, local or foreign taxing authorities
(including, without limitation, those due in respect of the properties, income,
franchises, licenses, sales or payrolls of any of them); the reserves for taxes
reflected in the Balance Sheet are adequate; and there are no tax liens upon any
property or assets of the Company except liens for current taxes not yet due.
The federal income tax returns of the Company have been examined by the Internal
Revenue Service for all periods to and including December 31, 1998; and, except
to the extent shown therein, all deficiencies asserted as a result of such
examinations have been paid or finally settled and no issue has been raised by
the Internal Revenue Service in any such examination which, by application of
the same or similar
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principles, reasonably could be expected to result in a proposed deficiency for
any other period not so examined. Further, no state of facts exists or has
existed which would constitute grounds for the assessment of any tax liability
with respect to the periods which have not been audited by the Internal Revenue
Service. Copies of all income tax returns for the Company in respect of all
years not barred by the statute of limitations have heretofore been delivered by
the Company to Acquiror or Acquiror's Subsidiary and all such returns are listed
in Section 3.15 of the Disclosure Schedule. The Company has not, with regard to
any assets or property held, acquired or to be acquired by any of them, filed a
consent to the application of Section 341(f)(2) of the Code.
3.16. Contracts and Commitments. Except as set forth in Section 3.16 of
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the Disclosure Schedule:
(a) The Company has no agreements, contracts, commitments or
restrictions which are material to its business, operations or prospects or
which require the making of any charitable contribution;
(b) No purchase contracts or commitments of the Company continue for
a period of more than 12 months or are in excess of the normal, ordinary and
usual requirements of business or at any excessive price;
(c) There are no outstanding sales contracts, commitments or
proposals of the Company which continue for a period of more than 12 months or
will result in any loss to the Company upon completion or performance thereof,
after allowance for direct distribution expenses nor are there any outstanding
contracts, bids or sales or service proposals quoting prices which will not
result in a normal profit;
(d) The Company has no outstanding contracts with officers,
employees,
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agents, consultants, advisors, salesmen, sales representatives, distributors or
dealers that are not cancelable by it on notice of not longer than 30 days and
without liability, penalty or premium or any agreement or arrangement providing
for the payment of any bonus or commission based on sales or earnings;
(e) The Company has no employment agreement, or any other agreement
that contains any severance or termination pay liabilities or obligations;
(f) The Company has no collective bargaining or union contracts or
agreements;
(g) The Company is not in default, nor is there any basis for any
valid claim of default, under any contract made or obligation owed by it;
(h) The Company has no employee (other than ▇▇▇▇▇▇ ▇▇▇▇▇▇) to whom it
is paying compensation at the annual rate of more than $100,000 for services
rendered;
(i) The Company is not restricted by agreement from carrying on its
business anywhere in the world;
(j) The Company is under no liability or obligation with respect to
the return of inventory or merchandise in the possession of wholesalers,
distributors, retailers or their customers;
(k) The Company has no debt obligation for borrowed money, including
guarantees of or agreements to acquire any such debt obligation of others;
(1) The Company has no outstanding loan to any person; and
(m) The Company has no power of attorney outstanding or any
obligations or liabilities (whether absolute, accrued, contingent or otherwise),
as guarantor, surety, co-signer,
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endorser, comaker, indemnitor or otherwise in respect of the obligation of any
person, corporation, partnership, joint venture, association, organization or
other entity.
3.17. Agreements in Full Force and Effect. All contracts, agreements,
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plans, leases, policies and licenses referred to in the Disclosure Schedule are
valid and in full force and effect, and true copies thereof have been heretofore
made available to Acquiror or Acquiror's Subsidiary.
3.18. Insurance. Section 3.18(a) of the Disclosure Schedule contains
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an accurate and complete description of all material policies of fire,
liability, workmen's compensation and other forms of insurance owned or held by
the Company. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of the Closing
have been paid, and no notice of cancellation or termination has been received
with respect to any such policy. Such policies are sufficient for compliance
with all requirements of law and of all agreements to which the Company is a
party; are valid, outstanding and enforceable policies; provide adequate
insurance coverage for the assets and operations of the Company; will remain in
full force and effect through the respective dates set forth in Section 3.18(a)
of the Disclosure Schedule without the payment of additional premiums; and will
not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Section 3.18(b) of the Disclosure
Schedule identifies all risks which the Company, its Board of Directors or
officers have designated as being self insured. The Company has not been
refused any insurance with respect to its assets or operations, or has its
coverage been limited, by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last three
years.
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3.19. Labor Difficulties. Except to the extent set forth in Section
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3.19 of the Disclosure Schedule, (a) the Company and all Company Subsidiaries
are in compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and are not
engaged in any unfair labor practice; (b) there is no unfair labor practice
complaint against the Company pending before the National Labor Relations Board;
(c) there is no labor strike, dispute, slowdown or stoppage actually pending or
threatened against or affecting the Company; (d) no representation question
exists respecting the employees of the Company; (e) no grievance nor any
arbitration proceeding arising out of or under collective bargaining agreements
is pending and no claim therefor exists; (f) no collective bargaining agreement
which is binding on the Company restricts any of them from relocating or closing
any of their operations; and (g) the Company has not experienced any work
stoppage or other labor difficulty at any time during its last three (3) fiscal
years or since the Balance Sheet Date.
3.20. Fringe Benefit Plans. Except as set forth in Section 3.20 of the
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Disclosure Schedule, neither the Company nor any Company Subsidiary has any
bonus, deferred compensation, pension, profit-sharing, retirement, stock
purchase, stock option or any other fringe benefit plan, arrangement or
practice, whether formal or informal. Section 3.20 of the Disclosure Schedule
contains an accurate and complete description of, and sets forth the annual
amount payable pursuant to, each bonus, deferred compensation, pension, profit-
sharing or retirement plan or arrangement, and each other fringe benefit plan,
of the Company and each Company Subsidiary, whether formal or informal. The
aggregate of such amounts will not exceed $15,000 for the fiscal year ended
December 31, 1999 and the Balance Sheet reflects in the aggregate an accrual of
all amounts accrued but unpaid under the aforesaid plans and
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arrangements as of the Balance Sheet Date. Neither the Company nor any Company
Subsidiary has any commitment, whether formal or informal and whether legally
binding or not, to create any additional such plan or arrangement.
3.21. Litigation. Except as set forth in Section 3.21 of the
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Disclosure Schedule, there is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or threatened against or involving
the Company, or which questions or challenges the validity of this Agreement or
any action taken or to be taken by the Company pursuant to this Agreement or in
connection with the transactions contemplated hereby; nor is there any valid
basis for any such action, proceeding or investigation. Except as set forth in
Section 3.21 of the Disclosure Schedule, the Company is not in default under or
in violation of, nor is there any valid basis for any claim of default under or
violation of, any contract, commitment or restriction to which it is a party or
by which it is bound. The Company is not subject to any judgment, order or
decree entered in any lawsuit or proceeding which may have an adverse effect on
its business practices or on its ability to acquire any property or conduct its
business in any area.
3.22. Consents and Approvals of Governmental Authorities. Except as set
--------------------------------------------------
forth in Section 3.22 of the Disclosure Schedule, no consent, approval or
authorization of, or declaration, filing or registration with any person or
governmental or regulatory authority is required in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
3.23. Compliance with Law. The operations of the Company have been
-------------------
conducted in accordance with all applicable laws, regulations and other
requirements of all national governmental authorities, and of all states,
municipalities and other political subdivisions and
17
agencies thereof, having jurisdiction over the Company. The Company has not
received any notification of any asserted present or past failure by the Company
to comply with such laws, rules or regulations.
3.24. Environmental Protection. The Company has obtained all permits,
------------------------
licenses and other authorizations which are required under federal, state and
local laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes. The Company is in full compliance with all terms and
conditions of the required permits, licenses and authorizations, and is also in
full compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
those laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder.
The Company is not aware of, nor has the Company received notice of, any past,
present or future events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent continued
compliance, or which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, suit, proceeding, hearing or
investigation, based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, or hazardous or toxic material or waste.
3.25. ERISA. The Company has no benefit plans that are subject to the
-----
Employee
18
Retirement Income Security Act of 1974, as amended ("ERISA").
3.26. Brokers and Finders. Neither the Company nor any of its
-------------------
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement.
3.27. Personnel. Section 3.27 of the Disclosure Schedule sets forth a
---------
true and complete list of:
(a) the names and current salaries of all directors and elected and
appointed officers, and each employee whose annual compensation is in excess of
$50,000 of the Company, the number of shares of the Company Stock owned
beneficially or of record, or both, by each such person and the amount of annual
compensation of each and the family relationships, if any, among such persons;
and
(b) all group insurance programs in effect for employees of the
Company. The Company is not in default with respect to any of its obligations
referred to in the preceding sentence.
3.28. Insider Interests. Except as set forth in Section 3.28 of the
-----------------
Disclosure Schedule, no officer or director of the Company has any material
interest in any property, real or personal, tangible or intangible, including
without limitation, inventions, patents, trademarks or trade names, used in or
pertaining to the business of the Company.
3.29. Disclosure. No representations or warranties by ▇▇▇▇▇▇ or the
----------
Company in this Agreement and no statement contained in any document (including,
without limitation, financial statements and the Disclosure Schedule),
certificate, or other writing furnished or to be furnished
19
by the Company to Acquiror or any of its representatives pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary, in light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND ACQUIROR'S SUBSIDIARY
Acquiror and Acquiror's Subsidiary, jointly and severally, represent and
warrant to the Company as follows:
4.01. Corporate Organization; Etc. Acquiror and Acquiror's Subsidiary
---------------------------
are corporations duly organized, validly existing and in good standing under the
laws of the State of Nevada. All the issued and outstanding shares of capital
stock of Acquiror's Subsidiary have been duly authorized by all necessary
corporation action and are validly issued, fully paid and nonassessable and are
owned by Acquiror.
4.02. Authorization; Etc. Acquiror and Acquiror's Subsidiary have full
------------------
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The Boards of Directors of Acquiror and
Acquiror's Subsidiary have taken all action required by law, their respective
Articles of Incorporation and By-Laws or otherwise to authorize the execution
and delivery of this Agreement and the transactions contemplated hereby, and
this Agreement is a valid and binding agreement of Acquiror and Acquiror's
Subsidiary enforceable
20
in accordance with its terms except that (i) enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
4.03. No Violation. Neither the execution and delivery of this
------------
Agreement nor the consummation of the transactions contemplated hereby will
violate any provisions of the respective Certificate of Incorporation or By-Laws
of Acquiror or Acquiror's Subsidiary, or violate, or be in conflict with, or
constitute a default under, or cause the acceleration of the maturity of any
debt or obligation pursuant to, any agreement or commitment to which Acquiror or
Acquiror's Subsidiary is a party or by which Acquiror or Acquiror's Subsidiary
is bound, or violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority.
4.04. Acquiror's Common Stock Authorized. The issuance of Acquiror's
----------------------------------
Common Stock to ▇▇▇▇▇▇ has been duly authorized by the Board of Directors of
Acquiror, and when issued at the Closing as provided herein, will be validly
issued, fully paid and non-assessable.
ARTICLE V
COVENANTS OF ▇▇▇▇▇▇ AND THE COMPANY
The Company hereby covenants and agrees with Acquiror:
5.01. Full Access. The Company shall afford, and ▇▇▇▇▇▇ will cause the
-----------
Company to afford, to Acquiror, its counsel, accountants and other
representatives full access to the plants,
21
offices, warehouses, properties, books and records of the Company in order that
Acquiror may have full opportunity to make such investigations as it shall
desire to make of the affairs of the Company; and the Company will cause its
officers and accountants to furnish such additional financial and operating data
and other information as Acquiror shall from time to time request.
5.02. Approval of Stockholders. The Company and its officers and
------------------------
directors shall (a) cause a meeting of the Company's stockholders to be duly
called and held as soon as practicable for the purpose of voting on this
Agreement, (b) recommend approval and adoption of this Agreement to the
Company's stockholders and (c) use their best efforts to obtain the necessary
approval and adoption of this Agreement by the Company's stockholders.
5.03. Consents of Company Lenders, Etc. ▇▇▇▇▇▇ and the Company shall,
--------------------------------
use their best efforts to obtain at the earliest practicable date and prior to
the Closing all consents necessary to the consummation of the transactions
contemplated hereby and will provide to Acquiror copies of each such consent
promptly after it is obtained.
5.04. Supplements to Disclosure Schedule. From time to time prior to
----------------------------------
the Closing, the Company will, and ▇▇▇▇▇▇ will cause the Company to, promptly
supplement or amend the Disclosure Schedule with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in the Disclosure Schedule. No
supplement or amendment of the Disclosure Schedule made pursuant to this section
shall be deemed to cure any breach of any representation of or warranty made in
this Agreement unless Acquiror specifically agrees thereto in writing.
5.05. Other Transactions. None of ▇▇▇▇▇▇, the Company nor its Board of
------------------
Directors shall enter into any discussions concerning, or approve or recommend
to the holders of any
22
shares of its capital stock, any merger, consolidation, disposition of all or
substantially all of its business, properties or assets (other than pursuant to
this Agreement), any tender offer, acquisition or other business combination, or
proposal therefor, or furnish or cause to be furnished any information
concerning the business, properties or assets of the Company to any party in
connection with any tender offer or other transaction involving the acquisition
of the Company or all or any substantial part of its assets by any person other
than Acquiror or Acquiror's Subsidiary.
5.06. Covenant to Satisfy Conditions. ▇▇▇▇▇▇ and the Company will use
------------------------------
their best efforts to insure that the conditions set forth in Article VIII
hereof are satisfied, insofar as such matters are within the control of any of
them.
5.07. Certificates. At the Closing ▇▇▇▇▇▇ and the Company will furnish
------------
Acquiror with such certificates of its officers and others to evidence
compliance with the covenants set forth in this Article V as may be reasonably
requested by Acquiror.
ARTICLE VI
COVENANTS OF THE ACQUIROR
6.01. Federal Securities and Blue Sky Filings. Acquiror will take all
---------------------------------------
such action as may be necessary under all applicable federal securities laws and
regulations or the securities or Blue Sky laws of the States or other political
subdivisions of the United States in connection with the transactions
contemplated hereby.
6.02. Eligibility for Trading. Acquiror will use its best efforts to
-----------------------
maintain the eligibility of Acquiror's Common Stock for trading on the NASD OTC
Bulletin Board.
23
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF ▇▇▇▇▇▇ AND THE COMPANY
Each and every obligation of ▇▇▇▇▇▇ and the Company under this Agreement to
be performed on or before the Closing shall be subject to the satisfaction, on
or before the Closing, of each of the following conditions, unless waived in
writing by the Company:
7.01. Representations and Warranties True. The representations and
-----------------------------------
warranties of Acquiror and Acquiror's Subsidiary contained herein shall be in
all material respects true and accurate as of the date when made at and as of
the Closing as though such representations and warranties were made at and as of
such date, except for changes expressly permitted or contemplated by the terms
of this Agreement.
7.02. Performance. Acquiror and Acquiror's Subsidiary shall have
-----------
performed and complied with all agreements, obligations and conditions required
by this Agreement to be performed or complied with by them on or prior to the
Closing.
7.03. Approval of Company's Stockholders. The approval of the
----------------------------------
stockholders of the Company referred to in Section 5.02(c) hereof shall have
been obtained.
7.04. No Governmental Proceeding or Litigation. No suit, action,
----------------------------------------
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
7.05. Certificates. Acquiror and Acquiror's Subsidiary shall have
------------
furnished the Company with such certificates of their officers and others to
evidence compliance with the conditions set forth in this Article VII as may be
reasonably requested by the Company.
24
ARTICLE VIII
CONDITIONS TO OBLIGATIONS
OF ACQUIROR AND ACQUIROR'S SUBSIDIARY
Each and every obligation of Acquiror and Acquiror's Subsidiary under this
Agreement to be performed on or before the Closing shall be subject to the
satisfaction, on or before the Closing, of each of the following conditions,
unless waived in writing by Acquiror:
8.01. Representations and Warranties True. The representations and
-----------------------------------
warranties contained in Article III hereof, the Disclosure Schedule and in all
certificates and other documents delivered and to be delivered by ▇▇▇▇▇▇ or the
Company to Acquiror or Acquiror's Subsidiary or their representatives pursuant
hereto or in connection with the transactions contemplated hereby shall be true,
complete and accurate as of the date when made at and as of the Closing Date as
though such representations and warranties were made at and as of such date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.
8.02. Performance. ▇▇▇▇▇▇ and the Company shall have performed and
-----------
complied with all agreements, obligations and conditions required by this
Agreement to be performed or complied with by them on or prior to the Closing.
8.03. Investigations; Etc. Neither any investigation of ▇▇▇▇▇▇ or the
-------------------
Company by Acquiror or Acquiror's Subsidiary, nor the Disclosure Schedule or any
supplement thereto nor any other document delivered to Acquiror or Acquiror's
Subsidiary as contemplated by this Agreement, shall have revealed any facts or
circumstances which, in the sole and exclusive judgment of Acquiror, reflect in
a material adverse way on the financial condition, assets, liabilities
(absolute, accrued, contingent or otherwise), reserves, business, operations or
prospects
25
of the Company.
8.04. Approval of Company Stockholders; Etc. The approval of the
-------------------------------------
stockholders of the Company referred to in Section 5.02(c) hereof and all
consents from third parties and government agencies required to consummate the
transactions contemplated hereby shall have been obtained.
8.05. No Government Proceeding or Litigation. No suit, action,
--------------------------------------
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby or which in the sole and exclusive judgment of Acquiror
might have a material adverse effect on the business or financial condition of
the Company.
8.06. No Injunction. On the Closing Date there shall be no effective
-------------
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as so provided or imposing
any conditions on the consummation of the transaction contemplated hereby which
the Acquiror deems unacceptable in its sole discretion.
8.07. Material Change. From the date of the Balance Sheet to the
---------------
Closing Date, the Company shall not have suffered any adverse change (whether or
not such change is referred to or described in any supplement to the Disclosure
Schedule) in its business, prospects, financial condition, working capital,
assets, liabilities (absolute, accrued, contingent or otherwise), reserves or
operations.
8.08. Opinion of the Company's Counsel. ▇▇▇▇▇▇ and the Company shall
--------------------------------
have delivered to Acquiror an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇, counsel to ▇▇▇▇▇▇ and
the Company, dated
26
as of the Closing Date, in form and substance satisfactory to Acquiror, to the
effect that:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation;
(b) The Company is duly qualified as a foreign corporation and in good
standing in each jurisdiction in which such qualification is necessary;
(c) The Company has the corporate power and authority to carry on its
business as it is now being conducted and to own the properties and assets it
now owns, and the Company has the full corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby;
(d) The authorized capital stock of the Company consists of 100 shares
of Common Stock, $1.00 par value per share, and, stating that all 100 of such
shares were issued and outstanding, that such issued shares have been duly and
validly authorized and issued and are fully paid and nonassessable and that such
shares are owned beneficially and of record by ▇▇▇▇▇▇ ▇▇▇▇▇▇, free and clear of
any lien, claim, charge or encumbrance;
(e) Based upon an examination of the records of the Company, to the
best of the knowledge of such counsel except as disclosed in this Agreement or
pursuant hereto, there are no outstanding options, warrants or other rights to
purchase or acquire any capital stock of the Company;
(f) All corporate action by the Company required in order to authorize
the transactions contemplated hereby has been duly and validly taken; and this
Agreement has been duly executed and delivered by the Company and is the valid
and binding obligation of ▇▇▇▇▇▇ and the Company enforceable in accordance with
its terms except that (i) such enforcement may
27
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors, rights, and (ii)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;
(g) ▇▇▇▇▇▇ has complete and unrestricted power to sell, convey,
assign, transfer and deliver to Acquiror the Company Stock to be sold, conveyed,
assigned, transferred and delivered pursuant hereto; and the instruments of
sale, conveyance, assignment and transfer executed and delivered to Acquiror or
Acquiror's Subsidiary hereunder are duly executed, are valid and binding
obligations of ▇▇▇▇▇▇ as contemplated by this Agreement;
(h) Neither the execution and delivery of this Agreement by ▇▇▇▇▇▇ and
the Company nor the consummation of the transactions contemplated hereby will
violate the Certificate of Incorporation or By-Laws of the Company or, will
violate, conflict with, or constitute a default under, or cause the acceleration
of maturity of any debt or obligation pursuant to, or result in the creation or
imposition of any security interest, lien or other encumbrance upon any property
or assets of the Company, under any contract, commitment, agreement, trust,
understanding, arrangement or restriction of any kind to which ▇▇▇▇▇▇ or the
Company is a party or by which ▇▇▇▇▇▇ or the Company is bound or violate any
statute or law, or any judgment, decree, order, regulation or rule of any court
or governmental authority;
(i) The Company is not engaged in or threatened with any legal action
or other proceeding or has incurred or been charged with or is under
investigation with respect to any violation of any federal, state or local law
or administrative regulation which if adversely determined might adversely
affect or impair the business or condition, financial or otherwise, of
28
the Company;
(j) No consent of any governmental body nor of any other person, is
required for the consummation by ▇▇▇▇▇▇ and the Company of the transactions
contemplated hereby;
(k) To the best knowledge of such counsel, the Company is in
compliance with all applicable laws and regulations;
(l) No facts have come to the attention of such counsel which would
lead them to believe that any representation or warranty of ▇▇▇▇▇▇ or the
Company contained herein or in the Disclosure Schedule or any supplement thereto
is incorrect, false or misleading; and
(m) As to such other matters incident to the matters herein
contemplated as Acquiror and its counsel may reasonably request, including the
form of all documents and the validity of all proceedings.
8.09. Consents Obtained. All consents referred to in Sections 3.04,
-----------------
3.05, 3.14 and 3.25 shall have been obtained.
8.10. Employment Contract. At or prior to the Closing, Acquiror's
-------------------
Subsidiary shall have entered into a contract with ▇▇▇▇▇▇ ▇▇▇▇▇▇ satisfactory to
Acquiror providing for his employment by Acquiror commencing upon the Closing.
29
ARTICLE IX
CONDUCT OF THE COMPANY'S BUSINESS
PENDING THE CLOSING
Pending the Closing, and except as otherwise expressly consented to or
approved by Acquiror in writing:
9.01. Regular Course of Business. The Company will, and ▇▇▇▇▇▇ will
--------------------------
cause the Company to, carry on its business diligently and substantially in the
same manner as heretofore conducted, and shall not institute any new methods of
manufacture, purchase, sale, lease, management, accounting or operation or
engage in any transaction or activity, enter into any agreement or make any
commitment, except in the ordinary course of business and consistent with past
practice.
9.02. Amendments. No change or amendment shall be made in the
----------
Certificate of Incorporation or By-Laws of the Company.
9.03. Capital Changes; Dividends; Redemptions. The Company will not,
---------------------------------------
and ▇▇▇▇▇▇ will not cause the Company to, issue or sell any shares of its
capital stock or other securities, acquire directly or indirectly, by redemption
or otherwise, any such capital stock, reclassify or split-up any such capital
stock, declare or pay any dividends thereon in cash, securities or other
property or make any other distribution with respect thereto, or grant or enter
into any options, warrants, calls or commitments of any kind with respect
thereto.
9.04. Subsidiaries. The Company will not, and ▇▇▇▇▇▇ will not cause
------------
the Company to, organize any new subsidiary, acquire any capital stock or other
equity securities of any corporation or acquire any equity or ownership interest
in any business.
30
9.05. Organization. The Company and ▇▇▇▇▇▇ shall use their best
------------
efforts to preserve the corporate existence and business organization of the
Company intact, to keep available to Acquiror its officers and key employees,
and to preserve for Acquiror its relationships with licensors, suppliers,
distributors, customers and others having business relations with it.
9.06. Certain Changes. The Company will not:
---------------
(a) Borrow or agree to borrow any funds or incur, or assume or become
subject to, whether directly or by way of guarantee or otherwise, any obligation
or liability (absolute or contingent), except obligations and liabilities
incurred in the ordinary course of business and consistent with past practice;
(b) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of liabilities or obligations reflected or reserved against in the
Balance Sheet or incurred in the ordinary course of business and consistent with
past practice since the date of the Balance Sheet;
(c) Prepay any obligation having a fixed maturity of more than 90 days
from the date such obligation was issued or incurred;
(d) Permit or allow any of its property or assets (real, personal or
mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien or
encumbrance, except for those of a kind permitted under Section 3.11 hereof;
(e) Write down the value of any inventory or write off as
uncollectible any notes or accounts receivable;
(f) Cancel any debts or waive any claims or rights of substantial
value or sell,
31
transfer, or otherwise dispose of any of its properties or assets, except in the
ordinary course of business and consistent with past practice;
(g) Dispose of or permit to lapse any rights to the use of any patent,
trademark, trade name or copyright, or dispose of or disclose to any person any
trade secret, formula, process or know-how not theretofore a matter of public
knowledge;
(h) Grant any general increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employee;
(i) Make any single capital expenditure or commitment in excess of
$10,000 for additions to property, plant or equipment or make aggregate capital
expenditures and commitments in excess of $10,000 (on a consolidated basis) for
additions to property, plant or equipment;
(j) Pay, loan or advance any amount to, or sell transfer or lease any
properties or assets to, or enter into any agreement or arrangement with, any of
its officers or directors or any affiliate or associate of any of its officers
or directors, except for directors' fees and compensation to officers at rates
not exceeding the rates of compensation paid during the fiscal year ended
December 31, 1998;
(k) Change any of the banking or safe deposit arrangements described
in Section 3.14 of the Disclosure Schedule;
(1) Grant or extend any power of attorney or act as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any person,
32
corporation, partnership, joint venture, association, organization or other
entity; or
(m) Agree, whether in writing or otherwise, to do any of the
foregoing.
9.07. Contracts. No contract or commitment will be entered into, and
---------
no purchase of raw material or supplies and no sale of assets will be made, by
or on behalf of the Company, except (i) normal contracts or commitments for the
purchase of, and normal purchases of, raw materials or supplies, made in the
ordinary course of business and consistent with past practice, (ii) normal
contracts or commitments for the sale of, and normal sales of, inventory in the
ordinary course of business and consistent with past practice, and (iii) other
contracts, commitments, purchases or sales in the ordinary course of business
and consistent with past practice not in excess of $10,000 in the aggregate.
9.08. Insurance; Property. The Company shall, and ▇▇▇▇▇▇ will cause the
-------------------
Company to, adequately insure all property, real, personal and mixed, owned or
leased by the Company, against all ordinary and insurable risks; and all such
property shall be used, operated, maintained and repaired in a careful and
reasonably efficient manner.
9.09. No Default. Neither the Company nor ▇▇▇▇▇▇ shall do any act or
----------
omit to do any act, or permit any act or omission to act, which will cause a
breach of any material contract or commitment of the Company or which would
cause the breach of any warranty made hereunder.
9.10. Compliance With Laws. The Company shall, and ▇▇▇▇▇▇ will cause
--------------------
the Company to, duly comply with all laws applicable to it and its properties,
operations, business and employees.
9.11. Tax Returns. The Company shall, and ▇▇▇▇▇▇ will cause the
-----------
Company to, prepare and file all federal, state, local and foreign tax returns
and amendments thereto required to be
33
filed by it. ▇▇▇▇▇▇ will cause the Company to ensure that Acquiror shall have a
reasonable opportunity to review each such return and amendment prior to the
filing thereof.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
10.01. Investigations; Survival of Warranties. The respective
--------------------------------------
representations and warranties of ▇▇▇▇▇▇, the Company, Acquiror's Subsidiary and
Acquiror contained herein or in any certificates or other documents delivered
prior to or at the Closing shall not be deemed waived or otherwise affected by
any investigation made by any party hereto. Each and every such representation
and warranty shall survive the Closing for a period of two (2) years thereafter.
ARTICLE XI
TERMINATION AND ABANDONMENT
11.01. Methods of Termination. The transactions contemplated herein may
----------------------
be terminated and/or abandoned at any time but not later than the Closing:
(a) By mutual consent of the respective Boards of Directors of
Acquiror and the Company; or
(b) By the Board of Directors of Acquiror on or after February 28,
1999, or such later date as may be established pursuant to Section 1.03 hereof,
if any of the conditions provided for in Article VIII of this Agreement shall
not have been met or waived in writing by Acquiror prior to such date.
34
11.02. Procedure Upon Termination. In the event of termination and
--------------------------
abandonment by the Board of Directors of Acquiror or by the Board of Directors
of the Company, or both, pursuant to Section 11.01 hereof, written notice
thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated and/or abandoned, without
further action by Acquiror or the Company. If the transactions contemplated by
this Agreement are terminated and/or abandoned as provided herein:
(a) Each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) All confidential information received by any party hereto with
respect to the business of any other party or its subsidiaries shall be treated
in accordance with Section 2.01 hereof; and
(c) No party hereto shall have any liability or further obligation to
any other party to this Agreement except as stated in subparagraphs (a) and (b)
of this Section 11.02.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01. Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified and supplemented by written agreement of
▇▇▇▇▇▇ and the respective Boards of Directors of the Company and Acquiror or by
their respective officers authorized by such Boards of Directors at any time
prior to the Closing with respect to any of the terms contained herein.
35
12.02. Waiver of Compliance. Any failure of ▇▇▇▇▇▇ or the Company, on
--------------------
the one hand, or Acquiror, on the other, to comply with any obligation,
covenant, agreement or condition herein may be expressly waived in writing by
the Chairman of the Board or the President of Acquiror or ▇▇▇▇▇▇ or the Company,
respectively, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
12.03. Expenses; Transfer Taxes, Etc. Whether or not the transaction
-----------------------------
contemplated by this Agreement shall be consummated, ▇▇▇▇▇▇ and the Company
agree that all fees and expenses incurred by him or it in connection with this
Agreement shall be borne by him or it and Acquiror agrees that all fees and
expenses incurred by it in connection with this Agreement shall be borne by it,
including, without limitation, all fees of counsel and accountants. ▇▇▇▇▇▇
agrees that it will pay all sales, transfer or other taxes which may be payable
in connection with the transactions contemplated by this Agreement.
12.04. Notices. All notices, requests, demands and other communications
-------
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed, certified or registered mail
with postage prepaid:
(a) If to ▇▇▇▇▇▇ or the Company, to:
Nissco/Sunline, Inc.
▇▇▇▇▇ ▇▇▇ ▇.▇. ▇▇
#▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
36
or to such other person or address as the Company shall furnish to Acquiror or
Acquiror's Subsidiary in writing.
(b) If to Acquiror or Acquiror's Subsidiary, to:
Enviro-Clean of America, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(with a copy to:)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇, LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as Acquiror shall furnish to the Company in
writing.
12.05. Assignment. This Agreement and all of the provisions hereof shall
----------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
(except by operation of law and except that Acquiror may assign its rights, but
not its obligations, under this Agreement to any subsidiary of Acquiror). If
such assignment shall be made by Acquiror, such subsidiary shall be entitled to
all of the rights and shall assume all of the obligations of Acquiror hereunder,
provided that Acquiror shall guarantee the performance of such subsidiary's
obligations under this Agreement and shall deliver evidence thereof reasonably
37
satisfactory to the Company.
12.06. Publicity. None of ▇▇▇▇▇▇, the Company nor Acquiror shall make or
---------
issue, or cause to be made or issued, any announcement or written statement
concerning this Agreement or the transactions contemplated hereby for
dissemination to the general public without the prior consent of the other
party. This provision shall not apply, however, to any announcement or written
statement required to be made by law or the regulations of any federal or state
governmental agency or any stock exchange, except that the party required to
make such announcement shall, whenever practicable, consult with the other party
concerning the timing and content of such announcement before such announcement
is made.
12.07. Governing Law. This Agreement and the legal relations among the
-------------
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York without regard to its conflicts of law doctrine.
12.08. Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.09. Headings. The headings of the Sections and Articles of this
--------
Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
12.10. Entire Agreement. This Agreement, including the Exhibits hereto,
----------------
the Disclosure Schedule and the other documents and certificates delivered
pursuant to the terms hereof, set forth the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein, and
supersede all prior agreements, promises, covenants, arrangements,
38
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.
12.11. Third Parties. Except as specifically set forth or referred to
-------------
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or corporation other than the parties hereto
and their successors or assigns, any rights or remedies under or by reason of
this Agreement.
39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
NISSCO/SUNLINE, INC.
By:____________________________________
Name:
Title:
Attest:
_________________________
Name:
Title:
ENVIRO-CLEAN OF AMERICA, INC.
By:____________________________________
Name:
Title:
Attest:
_________________________
Name:
Title:
ENVIROACQII CO.
By:____________________________________
Name:
Title:
Attest:
_________________________
Name:
Title:
40