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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 15, 2000
EARTHCARE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 000-24685 58-2335973
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
14901 Quorum Drive, Suite 200, Dallas, Texas 75240
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(Address of principal executive offices) (Zip Code)
(972) 858-6025
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Effective February 1, 2000, on February 15, 2000, EarthCare Company (the
"Company") acquired all of World Fuel Services Corporation's, a Florida
corporation ("Seller"), ownership interest in the issued and outstanding stock
("Purchased Stock") of the following corporations: (i) International Petroleum
Corporation, (ii) International Petroleum Corporation of LA, (iii) International
Petroleum Corporation of Maryland, (iv) International Petroleum Corporation of
Delaware, (v) International Petroleum Corporation of Georgia, (vi) International
Petroleum Corporation of Lafayette, (vii) International Petroleum Corporation of
Pennsylvania, and (viii) International Environmental Services, Inc.
(collectively, the "Corporations"). This transaction was consummated pursuant to
a Stock Purchase Agreement, dated January 12, 2000 (the "Agreement").
The Company paid $33.0 million for the Purchased Stock in a combination of
cash and shares of common stock, $.0001 par value ("Common Stock"), of the
Company. The Company funded the $28.0 million cash portion of the purchase price
with borrowings under its revolving credit facility with Bank of America
National Trust and Savings Association and the proceeds from the sale of 12%
Subordinated Notes due February 28, 2008. Common Stock having a value equal to
$5.0 million (the "Shares) was delivered to the Seller. The Share are subject to
a lock-up agreement for 12 months for the first $2.5 million of Shares and 18
months for the remaining $2.5 million of Shares. In addition, a portion of the
Shares having a value of $1.0 million will be held in an escrow account for a
period of 180 days from the closing of the transaction as security for the
Seller's obligations to indemnify the Company under the Agreement. The Company
also paid to the Seller, in cash, an amount equal to the oil inventory on hand
at the Corporations at the close of business on the day prior to the closing of
the transaction.
The Corporations are in the business of recycling used oil with operations
in 16 southern and mid-Atlantic states. The Company currently intends to operate
the Corporations in substantially the same manner as they were operated prior to
this transaction.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
It is impracticable for the Registrant to provide the required financial
statements for the business acquired at the time this Current Report on Form 8-K
is filed. Such financial statements will be filed as soon as practicable but not
later than 60 days after the date this Current Report on Form 8-K is required to
be filed.
(b) Pro Forma Financial Information.
It is impracticable for the Registrant to provide the required
pro forma financial information for the business acquired at the time this
Current Report on Form 8-K is filed. Such proforma financial information will be
filed as soon as practicable but not later than 60 days after the date this
Current Report on Form 8-K is required to be filed.
(c) Exhibits
2.1 Stock Purchase Agreement, by and between EarthCare Company
and World Fuel Services Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EARTHCARE COMPANY
(Registrant)
Date: February 24, 2000 By: /s/ Harry Habits
Harry Habits
President and Chief Operating
Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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2.1 Stock Purchase Agreement, by and between EarthCare Company and
World Fuel Services Corporation.
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Exhibit 2.1
STOCK PURCHASE AGREEMENT
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THIS AGREEMENT is made and entered into by and between World Fuel Services
Corporation, a Florida corporation (hereinafter sometimes referred to as
"Seller"), and EarthCare Company, a Delaware Corporation (hereinafter referred
to as "EarthCare" or "Buyer").
WITNESSETH:
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WHEREAS, the Seller is the owner of the issued and outstanding stock of the
following corporations: International Petroleum Corporation (hereinafter
referred to as "International"), International Petroleum Corporation of LA
(hereinafter referred to as "Louisiana"), International Petroleum Corp. of
Maryland (hereinafter referred to as "Maryland"), International Petroleum Corp.
of Delaware (hereinafter referred to as "Delaware"), International Petroleum
Corp. of Georgia (hereinafter referred to as "Georgia"), International Petroleum
Corp. of Lafayette (hereinafter referred to as "Lafayette"), International
Petroleum Corporation of Pennsylvania (hereinafter referred to as
"Pennsylvania") and International Environmental Services, Inc. (hereinafter
referred to as "Environmental"), such corporations are hereinafter sometimes
referred to as the "Corporations", and the ownership interest of the Seller in
the capital stock of the Corporations is hereinafter referred to as the "Stock".
WHEREAS, the parties hereto desire that the Buyer acquire the Stock in exchange
for cash and shares of the common stock, $.0001 par value of the Buyer (said
shares of common stock are hereafter sometimes referred to as the "EarthCare
Common Stock").
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration the mutual receipt and sufficiency of which is
hereby acknowledged by the parties hereto, THE PARTIES HERETO AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
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1.1 Upon the basis of the representations and warranties contained herein and
subject to the terms and conditions of this Agreement, at the time of "Closing"
(as hereinafter defined) Seller shall sell, convey, transfer, assign and deliver
to Buyer, and Buyer shall purchase from Seller, all of the Stock.
1.2 At the time of Closing, as the purchase price for the Stock, and in
exchange therefor, Buyer shall pay to Seller:
(a) $28,000,000 Cash (the "Cash Portion"); and
(b) Shares of EarthCare Common Stock (the "Share Portion") having a
value equal to $5,000,000, computed as set forth below (hereinafter referred to
as the "Shares"), will be delivered to Seller, provided, however that such
shares shall be subject to a lock-up agreement in the form of Exhibit "A-1",
attached hereto (the "Lock-up Agreement") and provided further that Shares
having a value of $1,000,000 (computed as set forth below) shall be held in
escrow by an escrow agent (the "Escrow Agent") selected by the parties (the
"Retained Shares") for 180 days
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following Closing, as security for Seller's obligation to indemnify Buyer under
this Agreement. The Retained Shares shall be held pursuant to an escrow
agreement ("Escrow Agreement") in the form of Exhibit "A" hereto.
Notwithstanding the foregoing, Buyer may at any time prior to Closing, elect to
pay the Share Portion in cash at Closing, by wire transfer of immediately
available funds.
(c) For purposes of determining the number of Shares issued to Seller
and the number of Shares held in escrow, shares of EarthCare Common Stock shall
be valued at a price equal to the average closing price for such shares on the
NASDAQ National Market System, as reported by The Wall Street Journal,
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during the five (5) trading day period ending two (2) trading days prior to the
Closing.
(d) At Closing, Buyer shall deliver stock certificates representing
the EarthCare Common Stock, duly issued in favor of Seller, as follows: (1) the
Retained Shares shall be delivered to the Escrow Agent, and (2) the balance of
the Shares shall be delivered to Seller.
1.3 In addition to the payments and deliveries set forth in Section 1.2, Buyer
shall pay Seller, as additional purchase price, the Agreed Value (as defined
below) of the oil inventory of the Corporations on hand as of the close of
business on the day immediately preceding the Effective Date, as defined below
(the "Inventory Price"). The Agreed Value of inventory means the Corporations'
cost thereof (including allocable overhead, collection and processing costs), as
shown on the Corporations' books and determined in accordance with the
Corporations' customary practices. Immediately prior to the Closing Date, the
parties will jointly determine the amount of the oil inventory on hand. The
Inventory Price shall be paid on a monthly basis, by wire transfer of
immediately available funds, as and when the inventory is sold by the
Corporations, but in no event more than 90 days after the Closing. Until the
Inventory Price is paid in full, the Corporations shall account for inventory
sales on a first-in, first-out (FIFO) basis.
1.4 Immediately prior to the Closing, the parties shall determine the amount
of: (i) prepaid expenses, deposits and similar items which were paid by the
Corporations before the Effective Date and will inure to the benefit of Buyer
after the Effective Date (collectively, the "Seller Credits"); and (ii) the
liabilities of the Corporations accrued for periods prior to the Effective Date
which will be paid by the Corporations after Closing (collectively, the "Buyer
Credits"). A preliminary list of such credits is attached as Schedule 1.4
hereto. At Closing, the Buyer Credits shall be applied against the Seller
Credits, and any party having a net balance in its favor shall be paid the
amount of such net balance by wire transfer at Closing.
2. CLOSING. Subject to the terms and conditions of this Agreement, the
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closing of the purchase and sale of the Stock (the "Closing") shall be held on
the later of: (i) February 1, 2000, or (ii) five (5) business days after the
date the HSR Act clearance (as defined below) is received, at the offices of
World Fuel Services Corporation, 700 S. Royal Poinciana Blvd., Suite 800, Miami
Springs, FL 33166, or at such other time and date as shall be mutually agreed
upon by the parties hereto in writing. (Such time and date is sometimes herein
referred to as the "Closing Date" or "Closing".) Notwithstanding the date of
Closing, Closing shall be effective as of February 1, 2000 (the "Effective
Date").
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3. PROCEDURE AT THE CLOSING. The parties hereto agree to take the following
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steps at Closing in the order listed:
3.1 Seller shall deliver to the Buyer the Stock, and such bills of sale,
assignments and other instruments as may be reasonably required to transfer to
the Buyer good and marketable title to the Stock, free and clear of all liens,
claims and encumbrances.
3.2 In exchange for the Stock, Buyer shall deliver to Seller:
(a) Shares of EarthCare Common Stock, as provided above (or
$5,000,000 in cash, if Buyer elects to pay the Share Portion in
cash); and
(b) $28,000,000 in cash, by wire transfer of immediately available
funds.
3.3 The parties shall also exchange executed lock-up agreements, Escrow
Agreements and other documents contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. In order to induce the Buyer to
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enter into this Agreement and to consummate the transactions contemplated
hereunder, the Seller hereby makes the following representations, warranties,
covenants and agreements:
4.1 Organization and Existence.
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4.1(a) INTERNATIONAL is a corporation duly organized and legally existing
in good standing under the laws of the State of Florida, and has
all requisite corporate power to carry on its business as now
conducted. The nature of the business of INTERNATIONAL and the
character of the properties owned or leased by it do not require
its qualification to do business as a foreign corporation in any
state where such corporation is not so qualified. Seller has
delivered to Buyer a true and correct copy of the Articles of
Incorporation of INTERNATIONAL (certified by the Secretary of State
of Florida) and by-laws of INTERNATIONAL (certified by its
Secretary).
4.1(b) LOUISIANA is a corporation duly organized and legally existing in
good standing under the laws of the State of Louisiana, and has all
requisite corporate power to carry on its business as now
conducted. The nature of the business of LOUISIANA and the
character of the properties owned or leased by it do not require
its qualification to do business as a foreign corporation in any
state where such corporation is not so qualified. Seller has
delivered to Buyer a true and correct copy of the Articles of
Incorporation of LOUISIANA (certified by the Secretary of State of
Louisiana) and by-laws of LOUISIANA (certified by its Secretary).
4.1(c) MARYLAND is a corporation duly organized and legally existing in
good standing under the laws of the State of Maryland, and has all
requisite corporate power to carry on its business as now
conducted. The nature of the business of MARYLAND and the character
of the properties owned or leased by it do not
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require its qualification to do business as a foreign corporation
in any state where such corporation is not so qualified. Seller has
delivered to Buyer a true and correct copy of the Articles of
Incorporation of MARYLAND (certified by the Secretary of State of
Maryland) and by-laws of MARYLAND (certified by its Secretary).
4.1(d) DELAWARE is a corporation duly organized and legally existing in
good standing under the laws of the State of Delaware, and has all
requisite corporate power to carry on its business as now
conducted. The nature of the business of DELAWARE and the character
of the properties owned or leased by it do not require its
qualification to do business as a foreign corporation in any state
where such corporation is not so qualified. Seller has delivered to
Buyer a true and correct copy of the Articles of Incorporation of
DELAWARE (certified by the Secretary of State of Delaware) and by-
laws of DELAWARE (certified by its Secretary).
4.1(e) GEORGIA is a corporation duly organized and legally existing in
good standing under the laws of the State of Georgia, and has all
requisite corporate power to carry on its business as now
conducted. The nature of the business of GEORGIA and the character
of the properties owned or leased by it do not require its
qualification to do business as a foreign corporation in any state
where such corporation is not so qualified. Seller has delivered to
Buyer a true and correct copy of the Articles of Incorporation of
GEORGIA (certified by the Secretary of State of Georgia) and by-
laws of GEORGIA (certified by its Secretary).
4.1(f) LAFAYETTE is a corporation duly organized and legally existing in
good standing under the laws of the State of Louisiana, and has all
requisite corporate power to carry on its business as now
conducted. The nature of the business of LAFAYETTE and the
character of the properties owned or leased by it do not require
its qualification to do business as a foreign corporation in any
state where such corporation is not so qualified. Seller has
delivered to Buyer a true and correct copy of the Articles of
Incorporation of LAFAYETTE (certified by the Secretary of State of
Louisiana) and by-laws of LAFAYETTE (certified by its Secretary).
4.1(g) PENNSYLVANIA is a corporation duly organized and legally existing
in good standing under the laws of the State of Pennsylvania, and
has all requisite corporate power to carry on its business as now
conducted. The nature of the business of PENNSYLVANIA and the
character of the properties owned or leased by it do not require
its qualification to do business as a foreign corporation in any
state where such corporation is not so qualified. Seller has
delivered to Buyer a true and correct copy of the Articles of
Incorporation of PENNSYLVANIA (certified by the Secretary of State
of Pennsylvania) and by-laws of PENNSYLVANIA (certified by its
Secretary).
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4.1(h) ENVIRONMENTAL is a corporation duly organized and legally existing
in good standing under the laws of the State of Florida, and has
all requisite corporate power to carry on its business as now
conducted. The nature of the business of ENVIRONMENTAL and the
character of the properties owned or leased by it do not require
its qualification to do business as a foreign corporation in any
state where such corporation is not so qualified. Seller has
delivered to Buyer a true and correct copy of the Articles of
Incorporation of ENVIRONMENTAL (certified by the Secretary of State
of Florida) and by-laws of ENVIRONMENTAL (certified by its
Secretary).
4.2 Subsidiaries or Other Entities. Except as set forth herein, none of
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the Corporations has any investments or ownership interests in any
corporations, partnerships, joint ventures or other business
enterprises.
4.3 Capitalization.
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4.3(a) INTERNATIONAL is authorized to issue 1,000 shares of common stock,
$1.00 par value, of which 250 shares are issued and outstanding at
the time of the execution of this Agreement. All of the issued and
outstanding shares of capital stock of INTERNATIONAL have been duly
issued, are validly outstanding, are fully paid and nonassessable,
and are held of record and beneficially by Seller; there are no
outstanding subscriptions, options, warrants or rights to receive,
purchase or subscribe to, or securities convertible into or
exchangeable for, any issued or unissued shares of the capital
stock of INTERNATIONAL. INTERNATIONAL has no liability for
dividends declared and unpaid. Prior to Closing, the Seller shall
not, and shall not permit INTERNATIONAL to, issue or enter into any
subscriptions, options, agreements or other commitments in respect
of the issuance, transfer, sale or encumbrance of any shares of the
INTERNATIONAL capital stock.
4.3(b) LOUISIANA is authorized to issue 1,000 shares of common stock, no
par value, of which 250 shares are issued and outstanding at the
time of the execution of this Agreement. All of the issued and
outstanding shares of capital stock of LOUISIANA have been duly
issued, are validly outstanding, are fully paid and nonassessable,
and are held of record and beneficially by Seller; there are no
outstanding subscriptions, options, warrants or rights to receive,
purchase or subscribe to, or securities convertible into or
exchangeable for, any issued or unissued shares of the capital
stock of LOUISIANA. LOUISIANA has no liability for dividends
declared and unpaid. Prior to Closing, the Seller shall not, and
shall not permit LOUISIANA to, issue or enter into any
subscriptions, options, agreements or other commitments in respect
of the issuance, transfer, sale or encumbrance of any shares of the
LOUISIANA capital stock.
4.3(c) MARYLAND is authorized to issue 1,000 shares of common stock, $1.00
par value, all of which are issued and outstanding at the time of
the execution of this Agreement. All of the issued and outstanding
shares of capital stock of
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MARYLAND have been duly issued, are validly outstanding, are fully
paid and nonassessable, and are held of record and beneficially by
Seller; there are no outstanding subscriptions, options, warrants
or rights to receive, purchase or subscribe to, or securities
convertible into or exchangeable for, any issued or unissued shares
of the capital stock of MARYLAND. MARYLAND has no liability for
dividends declared and unpaid. Prior to Closing, the Seller shall
not, and shall not permit MARYLAND to, issue or enter into any
subscriptions, options, agreements or other commitments in respect
of the issuance, transfer, sale or encumbrance of any shares of the
MARYLAND capital stock.
4.3(d) DELAWARE is authorized to issue 3,000 shares of common stock, $.01
par value, all of which are issued and outstanding at the time of
the execution of this Agreement. All of the issued and outstanding
shares of capital stock of DELAWARE have been duly issued, are
validly outstanding, are fully paid and nonassessable, and are held
of record and beneficially by Seller; there are no outstanding
subscriptions, options, warrants or rights to receive, purchase or
subscribe to, or securities convertible into or exchangeable for,
any issued or unissued shares of the capital stock of DELAWARE.
DELAWARE has no liability for dividends declared and unpaid. Prior
to Closing, the Seller shall not, and shall not permit DELAWARE to,
issue or enter into any subscriptions, options, agreements or other
commitments in respect of the issuance, transfer, sale or
encumbrance of any shares of the DELAWARE capital stock.
4.3(e) GEORGIA is authorized to issue 1,000 shares of common stock, $1.00
par value, all of which are issued and outstanding at the time of
the execution of this Agreement. All of the issued and outstanding
shares of capital stock of GEORGIA have been duly issued, are
validly outstanding, are fully paid and nonassessable, and are held
of record and beneficially by Seller; there are no outstanding
subscriptions, options, warrants or rights to receive, purchase or
subscribe to, or securities convertible into or exchangeable for,
any issued or unissued shares of the capital stock of GEORGIA.
GEORGIA has no liability for dividends declared and unpaid. Prior
to Closing, the Seller shall not, and shall not permit GEORGIA to,
issue or enter into any subscriptions, options, agreements or other
commitments in respect of the issuance, transfer, sale or
encumbrance of any shares of the GEORGIA capital stock.
4.3(f) LAFAYETTE is authorized to issue 1,000 shares of common stock,
$1.00 par value, of which 250 shares are issued and outstanding at
the time of the execution of this Agreement. All of the issued and
outstanding shares of capital stock of LAFAYETTE have been duly
issued, are validly outstanding, are fully paid and nonassessable,
and are held of record and beneficially by Seller; there are no
outstanding subscriptions, options, warrants or rights to receive,
purchase or subscribe to, or securities convertible into or
exchangeable for, any issued or unissued shares of the capital
stock of LAFAYETTE. LAFAYETTE has no liability for dividends
declared and unpaid. Prior to Closing, the Seller shall not, and
shall not permit LAFAYETTE to, issue or enter into any
subscriptions, options,
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agreements or other commitments in respect of the issuance,
transfer, sale or encumbrance of any shares of the LAFAYETTE
capital stock.
4.3(g) PENNSYLVANIA is authorized to issue 1,000 shares of common stock,
$1.00 par value, all of which are issued and outstanding at the
time of the execution of this Agreement. All of the issued and
outstanding shares of capital stock of PENNSYLVANIA have been
duly issued, are validly outstanding, are fully paid and
nonassessable, and are held of record and beneficially by Seller;
there are no outstanding subscriptions, options, warrants or
rights to receive, purchase or subscribe to, or securities
convertible into or exchangeable for, any issued or unissued
shares of the capital stock of PENNSYLVANIA. PENNSYLVANIA has no
liability for dividends declared and unpaid. Prior to Closing,
the Seller shall not, and shall not permit PENNSYLVANIA to, issue
or enter into any subscriptions, options, agreements or other
commitments in respect of the issuance, transfer, sale or
encumbrance of any shares of the PENNSYLVANIA capital stock.
4.3(h) ENVIRONMENTAL is authorized to issue 7,500 shares of common
stock, $1.00 par value, of which 250 shares are issued and
outstanding at the time of the execution of this Agreement. All
of the issued and outstanding shares of capital stock of
ENVIRONMENTAL have been duly issued, are validly outstanding, are
fully paid and nonassessable, and are held of record and
beneficially by Seller; there are no outstanding subscriptions,
options, warrants or rights to receive, purchase or subscribe to,
or securities convertible into or exchangeable for, any issued or
unissued shares of the capital stock of ENVIRONMENTAL.
ENVIRONMENTAL has no liability for dividends declared and unpaid.
Prior to Closing, the Seller shall not, and shall not permit
ENVIRONMENTAL to, issue or enter into any subscriptions, options,
agreements or other commitments in respect of the issuance,
transfer, sale or encumbrance of any shares of the ENVIRONMENTAL
capital stock.
4.4. Stock Ownership. Seller has, and at the time of Closing will have, good
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and marketable title to the Stock, and there are, and at the time of Closing
will be, no impediments to the sale and transfer of the Stock to Buyer, except
that the sale of the Stock is subject to the consent of Seller's lender, Bank of
America ("BofA"). Seller covenants that it will procure such consent prior to
Closing. Upon delivery of the Stock to Buyer, the Stock (i) shall constitute all
of the issued and outstanding shares of capital stock of the Corporations, and
(ii) shall be free and clear of all security interests, liens, charges, pledges,
mortgages, encumbrances or rights of third parties whatsoever.
4.5. Financial Condition. Seller has prepared and furnished to Buyer copies
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of the unaudited interim financial statements of the Corporations attached
hereto as Schedule 4.5, and described below, all of which are true and complete
in all material respects.
4.5(a) A statement of assets and liabilities ("Balance Sheet") of the
Corporations as of September 30, 1999.
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4.5(b) Statements of income of the Corporations for the twelve (12) months ended
March 31, 1999, and the six (6) months ended September 30, 1999 (collectively,
the Balance Sheet and statements of income are hereinafter referred to as the
"Financial Statements").
The Financial Statements are in accordance with the books of account and records
of the Corporations and present fairly, in all material respects, the financial
position of the Corporations' business and the income of the Corporations'
business at the dates and for the periods indicated. The Financial Statements do
not include the operations of Georgia and Pennsylvania, which are inactive.
4.6 Assets.
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4.6(a) Each of the Corporations has good and marketable title to, and is in
possession of, all of its assets, equipment, vehicles, properties and rights,
including all properties, assets, vehicles and equipment listed on Schedule
4.6(a) attached hereto and as shown on the Balance Sheet; provided, the
Corporations may not own certain items of equipment shown on such Schedule,
which missing items are not, in the aggregate, material to the Corporations'
business. All the Corporations' assets are owned free and clear of all
liabilities, mortgages, liens, pledges, security interests, restrictions,
conditional sales agreements, title retention agreements, charges or
encumbrances except for liens shown on Schedule 4.6(a)-1 (all liens shown on
such schedule shall be satisfied and released at or prior to Closing). Seller
represents that Schedule 4.6(a) sets forth a list of all material items of
equipment, vehicles, properties, containers, machinery, shop equipment, welders,
grinders, work benches, jacks, stands, parts, office furniture, fixtures,
computer hardware/software and equipment owned by the Corporations as of the
date of such Schedule and used in connection with their business operations
(hereinafter sometimes referred to as the "Operating Equipment"); such list
identifies the Operating Equipment by size, manufacturer, model number and
serial number, where available.
4.6(b) Except for the equipment purchases and improvements shown on Schedule
4.6(b), there has not been any material change in the Operating Equipment, in
the aggregate, since September 30, 1999, and there shall not be any material
change in the Operating Equipment, in the aggregate, between the Closing and a
final inspection of the Operating Equipment to be performed by Buyer and Seller
prior to Closing.
4.6(c) Schedule 4.6(c) shall identify all assets and property of the
Corporations which shall be retained by Seller. The Corporations shall transfer
such assets to Seller on or before Closing.
4.7 Liabilities. Except as set forth in Schedule 4.7 attached hereto or in
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the Financial Statements submitted to Buyer, or in any other Schedule delivered
pursuant hereto, none of the Corporations or its assets or properties are
subject to any liabilities or obligations (accrued, absolute, contingent or
otherwise), except for liabilities incurred in the ordinary course of business
and none of the Corporations is in material default in respect of any material
term or condition of any material indebtedness or liability. The transactions
contemplated by this Agreement do not and will not subject the Corporations or
the Buyer to any other claim or liability for any obligation, debt or contract
other than specifically disclosed in this Agreement and the Schedules
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attached hereto. All required consents of creditors, if any, have been, or by
Closing will be, obtained for Seller's performance of this Agreement.
4.8 Customer Accounts, Municipal Contracts and Related Matters.
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4.8(a) Customer Accounts are the commercial, industrial, municipal, and
residential accounts of the Corporations pursuant to which the Corporations sell
products or provide services. Said Customer Accounts are listed on Schedule
4.8(a) attached hereto which includes both active and inactive accounts. (Each
of the Customer Accounts listed in Schedule 4.8(a) shall identify the name and
address of each of the Customer Accounts).
4.8(b) Schedule 4.8(b) is a true, accurate and complete listing of all written
material service agreements, franchises, licenses or other contracts, if any, to
which any of the Corporations is a party and which relate to Customer Accounts.
Original copies of all such contracts shall be delivered by the Seller to the
Buyer no later than the Closing Date, and such copies shall be true, accurate
and complete and shall include all amendments, supplements or other
modifications to such contracts. Except as disclosed in Schedule 4.8(a), to the
knowledge of the Seller, none of the Corporations or any other party to any of
the Corporations' municipal contracts or Customer Accounts is in material
default or alleged to be in material default thereunder and there exists no
condition or event which, after notice or the lapse of time or both, would
constitute such a default. The sale, transfer and assignment of the Stock will
not result in a breach, violation or default of any of the Corporations'
municipal contracts or Customer Accounts, and all of the Corporations' municipal
contracts and Customer Accounts will remain in full force and effect as if there
had been no sale, transfer and assignment thereof.
4.8(c) Except as otherwise disclosed in Schedule 4.18, the Seller knows of no
oral or written communication, fact, event or action which exists or has
occurred after September 30, 1999, and prior to the date of execution of this
Agreement, which would tend to indicate that any current customers of any of the
Corporations intend to terminate its business relationship with any of the
Corporations.
4.8(d) Except for deminimis amounts, none of the Customer Accounts, service
agreements, franchises, licenses, or other contracts for collection and
transportation of waste, in any manner involve the collection or transportation
of waste materials classified as special, hazardous, toxic, chemical or
radioactive under the laws of the United States or of any state or other
governmental jurisdiction in which any of the Corporations conduct collection
and transportation operations, or under any rules or regulations promulgated by
any administrative agency thereof.
4.9 Material Contracts. Attached hereto as Schedule 4.9 is a list, as of the
------------------
date of this Agreement, of certain leases, contracts, commitments, agreements
and other documents to which any of the Corporations is a party or by which any
is bound and which is related to the operation of its business. Except for
contracts and documents listed in Schedule 4.9, none of the Corporations is a
party to or bound by any written or oral (i) contracts not made in the ordinary
course of business; (ii) employment contracts, other than those terminable at
the will of the Corporations; (iii) contracts with any labor union or
association; (iv) bonus, pension, profit sharing, retirement, hospitalization,
insurance or other plan providing employee benefits; (v)
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leases with respect to any property, real or personal, whether as lessor or
lessee; (vi) continuing contracts for the future purchase of materials, supplies
or equipment in excess of the requirements of its business now booked; (vii)
contracts or commitments for capital expenditures; (viii) any contract
continuing over a period of more than one (1) year from its date and involving
aggregate payments of more than $50,000; or (ix) material contracts necessary to
conduct the operations and business of the Corporations. A true copy of each
contract, commitment and agreement listed on Schedule 4.9 will be furnished to
Buyer prior to Closing.
4.10 Employees - Labor Matters. The Corporations have generally enjoyed a
-------------------------
good employer-employee relationship with their employees. Attached hereto as
Schedule 4.10 is a complete list of all employees of the Corporations whose
duties are related to the operation of the business of the Corporations. Seller
warrants there exists no pending or to Seller's knowledge threatened actions by
any employees alleging sex, age, race, or other discriminatory practices, no
current effort to organize these employees into collective bargaining units, and
no collective bargaining agreement is now in effect. There are no contracts,
written or oral, between any of the Corporations and any employees, except as
specifically disclosed in Schedule 4.9.
4.11 Insurance. The Corporations maintain in effect insurance covering their
---------
assets and businesses and any liabilities relating thereto and such insurance
coverage shall be maintained by the Corporations through the Closing Date.
Between the date hereof and the Closing Date, the Seller shall cause the
Corporations to furnish to the Buyer such information as the Buyer shall
reasonably request regarding the Corporations' insurance. Except as set forth
in Schedule 4.11 attached hereto, there are no pending material property damage
or personal injury claims against the Corporations or any of their assets.
4.12 Licenses and Permits. To Seller's knowledge, except as disclosed in
--------------------
Schedule 4.12: (i) the Corporations possess all licenses and other required
governmental or official approvals, permits or authorizations, if any, the
failure to possess which would have a material adverse effect on the businesses,
financial condition or results of operations of the Corporations including,
without limitation, all common carrier rights, certificates of public need,
waste material transportation permits, trademarks and trade names necessary to
carry on business as now being conducted, without known conflict with valid
licenses, permits, trademarks and trade names of others; (ii) all such licenses
and permits are in full force and effect, and no violations are or have been
recorded in respect to any thereof, and no proceeding is pending, or threatened,
to revoke, suspend or otherwise limit such licenses or permits; and (iii) all
licenses and permits will survive the closing of the transactions contemplated
by this Agreement.
4.13 Tax Matters. The Corporations have timely filed all federal, state,
-----------
sales tax, franchise tax, and other tax returns which are required to be filed
by and have paid or have made provision for the payment of all taxes which have
or may become due pursuant to said returns. All taxes, including, without
limitation, withholding and social security taxes due with respect to the
Corporations' employee, federal and state income tax liabilities, corporate
franchise taxes, sales, use, excise and ad valorem taxes, due, payable or
accrued by the Corporations on or before the Closing Date have or will be paid.
The Corporations have filed all reports required to be filed with all such
taxing authorities. Seller shall be responsible for any tax liability
attributable to
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operations of the Corporations prior to Closing. Buyer understands that there
will be no 338(h)(10) election as part of this transaction.
4.14 Litigation. Except as disclosed in Schedule 4.14 attached hereto, none
----------
of the Corporations has received any notices of material default, and to
Seller's knowledge, is not in material default, of (i) any order, writ,
injunction or decree of any court, or any federal, state, municipal or other
governmental department, commission, board, bureau or instrumentality, or (ii)
any agreement or obligation to which any Corporation is a party or by which any
Corporation is bound or to which the Corporations or any of the property of the
Corporations may be subject. Except as disclosed in Schedule 4.14, there are no
material outstanding claims, actions, suits, proceedings or investigations
pending or, to the knowledge of the Seller, threatened against the Corporations
or which affect any of the Corporations or any of their assets or property, at
law or in equity before or by any federal, state, municipal court or other
governmental department, authority, commission, board, bureau, agency or
instrumentality.
4.15 Compliance with Laws. Except as otherwise disclosed in Schedule 4.15
--------------------
attached hereto, to Seller's knowledge, (i) the Corporations are in compliance
in all material respects with all federal, state, and local laws, ordinances,
regulations, rules, and orders applicable to them or to their assets including,
without limitation, all laws and regulations relating to the safe conduct of the
Corporations' business, anti-competitive practices, discrimination, employment,
wage and hour practices and health; and (ii) none of the Corporations has
received notification of any asserted past or present failure (which remains
uncured) to comply with any of such laws or regulations; provided, no
representation is made herein as to compliance with any Environmental Law (as
defined and covered by Section 4.16).
4.16 Environmental Matters. Except as disclosed in Schedules 4.16(a) and
---------------------
4.16(b) attached hereto: (i) no release of any hazardous substance, medical
waste, toxic waste or regulated substance (collectively, "Waste") has occurred
or is occurring as a result of the business of the Corporations, except for
releases which have been remediated to the extent required under all applicable
Environmental Laws (as defined below); (ii) no Waste is currently present at, or
has been previously generated, stored, treated or disposed of at any landfill by
the Corporations or through the conduct of the business of the Corporations,
except in accordance with applicable Environmental Laws; (iii) no underground or
partially underground storage tank has been or is currently located at any
facility of the Corporations, except tanks which have been removed in accordance
with applicable Environmental Laws; (iv) the business, activities and processes
heretofore conducted by the Corporations comply in all material respects with
all applicable Environmental Laws; (v) no facility of the Corporations is listed
on any list, registry or other compilation of sites that require, or potentially
require, removal, remedial action or any other response under any Environmental
Law as the result of the presence or release of any Waste; (vi) neither Seller
nor any of the Corporations has received any written notice that any of the
Corporations is liable or responsible, or potentially liable or responsible, for
any costs of any removal, remedial action or other response under any
Environmental Law as the result of the presence, release or potential release of
any Waste; and (vii) there is no litigation, claim, action, investigation or
administrative proceeding pending, or to the knowledge of Seller threatened,
against any of the Corporations in which it is asserted that any of the
Corporations has violated or is not in compliance with any material
Environmental Law. "Environmental Law" means all laws,
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statutes or acts of the United States of America, the States of Florida,
Georgia, Pennsylvania, Louisiana, Delaware and/or Maryland, and/or any political
subdivision thereof, that relate to the condition of the air, ground or surface
water, land or other parts of the environment, to the release or potential
release of any substance or radiation into the air, ground or surface water,
land or other parts of the environment, or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or other handling of
substances that might pollute, contaminate or be hazardous or toxic if present
in the air, ground or surface water, land, or other parts of the environment.
4.17 No Brokers' or Agent's Fees. No agent, broker, finder, representative or
---------------------------
other person or entity acting pursuant to authority of the Seller will be
entitled to any commission or finder's fee in connection with the origination,
negotiation, execution or performance of the transactions contemplated under
this Agreement, except for Bank of America, and its fees will be paid by Seller.
4.18 No Material or Adverse Change. Except as otherwise disclosed in Schedule
-----------------------------
4.18 attached hereto, since September 30, 1999, there has not been: (i) any
material adverse change in the financial condition, assets, liabilities,
business or results of operations of the Corporations; (ii) to the knowledge of
the Seller, any threatened or prospective event or condition of any character
whatsoever which could materially and adversely affect the business, financial
condition or results of operations of the Corporations; (iii) any sale or other
disposition of any of the Corporations= assets other than in the ordinary course
of business; or (iv) any damage, destruction or loss (whether or not insured)
materially and adversely affecting the property, business or results of
operations of the Corporations.
4.19 Due Authorization and Absence of Breach. This Agreement and all other
---------------------------------------
agreements of the Seller contemplated hereunder constitute valid and binding
obligations of the Seller, enforceable in accordance with their respective
terms. Neither the execution and delivery of this Agreement (or any agreement
contemplated hereunder) nor the consummation of the transactions contemplated
hereby will: (i) conflict with or violate any provision of the Articles of
Incorporation or By-Laws of the Corporations; (ii) conflict with or violate any
decree, writ, injunction or order of any court or administrative or other
governmental body which is applicable to, binding upon or enforceable against
any of the Corporations or Seller; or (iii) result in any breach of or default
(or give rise to any right of termination, cancellation or acceleration) under
any mortgage, contract, agreement, indenture, will, trust or other instrument
which is either binding upon or enforceable against the Seller or any of the
Corporations or their assets.
4.20 Authority to Contract. Except for the BofA consent set forth in Section
---------------------
4.4, Seller has the full power, right and authority to enter into and perform
this Agreement without the consent of any person, entity or governmental agency,
and the consummation of the transactions contemplated by this Agreement will not
result in the breach or termination of any provision of or constitute a default
under any lease, indenture, mortgage, deed of trust or other agreement or
instrument or any order, decree, statute or restriction to which Seller or any
of the Corporations is a party or by which any of the Corporations is bound or
to which the outstanding shares of stock of any of the Corporations or any of
the properties of any of the Corporations is subject.
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<PAGE>
4.21 Accuracy of the Information Furnished by the Seller. No representation,
---------------------------------------------------
statement or information made or furnished by the Seller to the Buyer in this
Agreement and the various exhibits attached hereto and the other information and
statements referred to herein, contains or shall contain any untrue statement of
any material fact and Seller represents that it has not omitted to state any
material fact which would render any representation contained herein incomplete,
false or misleading in any material respect.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. In order to induce the Seller
---------------------------------------
to enter into this Agreement and to consummate the transactions contemplated
hereunder, the Buyer hereby makes the following representations, warranties,
covenants and agreements:
5.1 Organization and Existence. Buyer is a corporation duly organized,
--------------------------
validly existing and in good standing under the laws of the State of Delaware
and has all the requisite corporate power and authority to carry on its business
as now conducted and to consummate the transactions contemplated by this
Agreement.
5.2 Authority to Contract. The execution, delivery and performance of this
---------------------
Agreement by Buyer has been duly approved by its Board of Directors, and no
further corporate action is necessary on the part of Buyer to consummate the
transactions contemplated by this Agreement, assuming due execution of this
Agreement by the Seller.
5.3 No Broker's or Agent's Fees. No agent, broker, finder, representative or
---------------------------
other person or entity acting pursuant to the authority of the Buyer will be
entitled to any commission or finder's fee in connection with the origination,
negotiation, execution or performance of the transactions contemplated under
this Agreement.
5.4 Accuracy of Information Furnished by Buyer. No representation, statement
------------------------------------------
or information made or furnished by Buyer to the Seller in this Agreement, or in
connection with the transactions contemplated hereby contains, or shall contain
any untrue statement of any material fact or omits or shall omit any material
fact necessary to make the information contained herein true.
5.5 Registration. The EarthCare Common Stock delivered to Seller on the
------------
Closing Date: (i) has been duly registered with the Securities and Exchange
Commission under the Securities Act of 1933 (the "1933 Act") on Form S-1
effective December 9, 1998, and such registration statement is true and correct
in all material respects and does not omit to state any material information
necessary to make such registration statement not misleading; and (ii) may be
freely resold by Seller, without further registration, subject only to the terms
of the Escrow Agreement.
5.6 Capitalization and Related Matters. Buyer has authorized capital stock
----------------------------------
consisting of 70,000,000 shares of common stock, $.0001 par value per share, of
which 10,847,834 shares were issued and outstanding as of November 4, 1999, and
30,000,000 shares of preferred stock, none of which are issued as of the date of
this Agreement. The EarthCare Common Stock will be, as of the date or dates
issued and delivered to Seller, duly and validly authorized and issued, and
fully paid and non-assessable, and will be issued, transferred and delivered to
Seller free of all liens whatsoever.
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<PAGE>
5.7 Execution; No Inconsistent Agreements; Etc.
-------------------------------------------
(a) The execution and delivery of this Agreement, the agreements
attached as Exhibits hereto, and the agreements contemplated hereby and thereby
and the performance of the transactions contemplated hereby and thereby have
been duly and validly authorized and approved by Buyer and this Agreement, the
agreements attached as Exhibits hereto, and the agreements contemplated hereby
and thereby are valid and binding agreements of Buyer, enforceable against it in
accordance with their terms.
(b) The execution and delivery of this Agreement, the agreements
attached as Exhibits hereto, and the agreements contemplated hereby and thereby
by the Buyer do not, and the consummation of the transactions contemplated
hereby and thereby will not, constitute (i) a breach or violation of the charter
or bylaws of Buyer or any of its subsidiaries; (ii) a default under any of the
terms, conditions or provisions of (or an act or omission that would give rise
to any right of termination, cancellation or acceleration under) any material
note, bond, mortgage, lease, indenture, agreement or obligation to which the
Buyer or any of its subsidiaries is a party, pursuant to which any of them
otherwise receive benefits, or by which any of their properties may be bound; or
(iii) a violation of any law, order, regulation, judgment, license or decree
applicable to the Buyer or any of its subsidiaries.
5.8 Financial Statements; No Adverse Change. Buyer has delivered to Seller the
---------------------------------------
consolidated audited balance sheet of Buyer and its subsidiaries as at December
31, 1998, the audited statement of profit and loss and cash flows for the fiscal
year ended December 31, 1998, the consolidated unaudited balance sheet of Buyer
and its subsidiaries as of September 30, 1999, and the consolidated unaudited
statements of profit and loss and cash flows for the nine (9) months ended
September 30, 1999. The foregoing financial statements are referred to
collectively as the "Buyer Financial Statements." The Buyer Financial Statements
have been prepared in accordance with generally accepted accounting principles
("GAAP"), applied on a consistent basis (except that the unaudited statements do
not contain all the disclosures required by GAAP), and fairly reflect in all
material respects the consolidated financial condition of Buyer and its
subsidiaries as of the dates thereof and the consolidated results of their
operations for the periods then ended. Since September 30, 1999, there has not
been any material adverse change in the business, assets, results of operations
or financial condition of Buyer or its subsidiaries.
5.9 SEC Documents. The Buyer has delivered to the Seller copies of the
-------------
following documents filed with the SEC (the "SEC Documents"): (i) Buyer's
annual report on Form 10-K for the year ended December 31, 1998, (ii) Buyer's
Proxy Statement on Schedule 14A, dated May 6, 1999; and (iii) Buyer's quarterly
reports on Form 10-Q for the quarters ended March 31, June 30 and September 30,
1999. The SEC Documents have been duly and timely filed with the SEC, complied
as to form in all material respects with all applicable requirements of the 1933
Act, the 1934 Act, and the rules and regulations promulgated thereunder, and
contained no untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading.
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5.10 Contingencies. Except as disclosed in Schedule 5.10 or the SEC Documents,
-------------
there are no actions, suits, claims or proceedings pending or, to the knowledge
of Buyer, threatened against, by or affecting the Buyer or any of its
subsidiaries in any court or before any arbitrator or governmental agency which
could have a material adverse effect on Buyer or which could materially and
adversely affect the right or ability of the Buyer to consummate the
transactions contemplated hereby.
5.11 No Additional Representations. Buyer acknowledges that none of the Seller
-----------------------------
or the Corporations or any other person has made any representation or warranty,
expressed or implied, as to the accuracy or completeness of any information
regarding the Corporations except as expressly set forth in this Agreement or
the schedules hereto, and except as otherwise expressly provided herein none of
the Seller or any other person will have or be subject to any liability or
indemnification obligation to Buyer or any other person resulting from the
distribution to Buyer or the use by Buyer of any such information.
5.12 Release of Guarantees, Bonds. Seller has executed certain parent company
----------------------------
guarantees (the "Guarantees"), and obtained certain surety bonds (the "Bonds"),
securing obligations of one or more of the Corporations, all as set forth in
Schedule 5.12. As soon as practicable after the date hereof (and in no event
more than 90 days after Closing), Buyer shall: (i) cause Seller to be released
from all such Guarantees; and (ii) cause the Bonds to be released and returned
to Seller. To the extent required to obtain such releases, Buyer shall deliver
to the releasing party a Buyer guarantee, surety bond, letter of credit, or
other security. To the extent any Guarantee or Bond remains outstanding after
Closing, Buyer shall defend, indemnify and hold Seller harmless from and against
any loss, liability or expense (including without limitation attorneys fees)
incurred by Seller and arising from or under any such Guarantee or Bond;
provided, however, that Buyer would otherwise be required to indemnify Seller
for such loss, liability or expense pursuant to the terms of this Agreement.
6. ADDITIONAL AGREEMENTS OF THE SELLER. The Seller further agrees with the
-----------------------------------
Buyer as follows:
6.1 Access to Offices and Records. The Seller shall cause the Corporations to
-----------------------------
afford representatives of the Buyer, from and after the date of execution of
this Agreement, full access, during normal business hours and upon reasonable
notice, to all offices, books, properties, contracts, documents and records of
the Corporations and to furnish to the Buyer or its representatives all
additional information, including financial or operating information with
respect to the business and affairs of the Corporations that the Buyer or its
representatives may reasonably request. Seller acknowledges that Buyer is a
publicly-traded corporation and that Buyer will be required under the applicable
securities laws to make public disclosure of detailed financial data concerning
the Corporations' operations. Prior to the Closing Date, Buyer has Seller's
permission to disclose publicly: (i) the amount of the Corporations' revenues;
and (ii) such other information as shall be included in any press release of
Buyer which Seller approves in advance of being released; such approval shall
not be unreasonably withheld. Provided, however, that any furnishing of such
information to the Buyer and any investigation by the Buyer shall not affect the
right of the Buyer to rely solely upon the representations and warranties made
by the Seller in or pursuant to this Agreement; and provided further, that the
Buyer: (i) will hold in strict
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<PAGE>
confidence all documents and information concerning the Corporations so
furnished; and (ii) will promptly return all such documents and all copies to
the Corporations if this Agreement is not closed for any reason. Seller
acknowledges and agrees that Buyer's continued access to the business records
and information of Seller is essential to completion of the necessary due
diligence as a prerequisite to Buyer's agreement to consummate the transaction
at the Closing.
6.2 Conduct of Business Pending the Closing. From and after the execution
---------------------------------------
and delivery of this Agreement and until the Closing Date, except as otherwise
provided by the prior written consent or approval of the Buyer:
6.2(a) The Seller will cause the Corporations to conduct their business and
operations in the manner in which the same has heretofore been conducted and
Seller will use its best efforts to cause the Corporations to: (i) preserve the
Corporations' current business organization intact; (ii) keep available to the
Buyer the services of the Corporations' current employees and the Corporations'
agents and distributors; and (iii) preserve the Corporations' current
relationships with customers, suppliers and others having business dealing with
the Corporations.
6.2(b) The Seller will cause the Corporations to maintain all properties in
customary repair, order and condition, reasonable wear and use excepted, and
will maintain its existing insurance upon all of its properties and with respect
to the conduct of its business in such amounts and of such kinds comparable to
that in effect on the date of this Agreement.
6.2(c) The Seller will take action to insure that none of the Corporations
will: (i) pay any bonus or increase the rate of compensation of any employees or
enter into any new employment agreement or amend any existing employment
agreement; (ii) make any general increase in the compensation or rate of
compensation payable or to become payable to hourly-rated employees; (iii) sell
or transfer any assets except in the ordinary course of business; (iv) obligate
itself for capital expenditures other than in the ordinary course of business
and not unusual in amount; or (v) incur any material obligations or liabilities,
which are not in the ordinary course of business, or enter into any material
transaction.
6.2(d) The Seller shall not, and shall not permit any of the Corporations to,
issue or enter into any subscriptions, options, agreements or other commitments
in respect of the issuance, transfer, sale or encumbrance of any shares of the
Stock.
6.3 Execution of Further Documents by Seller. From and after the Closing,
----------------------------------------
upon the reasonable request of the Buyer, the Seller shall execute, acknowledge
and deliver such documents as may be appropriate to carry out the transactions
contemplated by this Agreement.
6.4 Indemnification by Seller.
-------------------------
6.4(a) The Seller will indemnify and hold the Buyer harmless from and against
any and all damage, loss, cost, deficiency, assessment, liability or other
expense (including reasonable attorney's fees, costs of court and litigation
expenses, if any) suffered, incurred or paid by the Buyer as a result of:
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(1) The untruth, inaccuracy, breach or violation of any representation,
warranty, covenant or other obligation of the Seller set forth in this
Agreement;
(2) any loss, liability or expense, including fines and penalties,
incurred by the Corporations by reason of (i) the matters giving rise to the
Notices of Violation ("NOVs") and the Notices of Deficiency ("NODs") listed in
Schedule 4.16(b); and (ii) the Delaware Contamination, as defined in and subject
to Section 6.5 below;
(3) the assertion against the Buyer or the Corporations of any material
liability or obligation of the Corporations or any claim relating to the
operation of the Corporations' waste collection, transportation and disposal
business prior to the Closing Date; provided, Seller shall not indemnify Buyer
--------
for any liability or expense relating to or arising from the Delaware
Contamination, except as provided in Section 6.5 below; or
(4) the enforcement of the Buyer's right to indemnification under this
Agreement.
6.4(b) The Buyer shall give written notice to the Seller of any claim, action,
suit or proceeding relating to the indemnity herein provided by Seller not later
than ten (10) days after Buyer has received notice thereof. Seller shall have
the right, at his option, to compromise or defend, at his own expense and by his
own counsel (which counsel shall be reasonably satisfactory to Buyer), any such
action, suit or proceeding. Buyer and Seller agree to cooperate in any such
defense or settlement and to give each other full access to all information
relevant thereto.
6.4(c) The Retained Shares shall constitute security for Seller's
indemnification. If Buyer makes no claim of breach of any of Seller's
representations, warranties or covenants, then the Retained Shares shall be
delivered in full to Seller 180 days after the Closing.
6.4(d) Notwithstanding anything to the contrary contained in this Agreement:
(1) After Closing, the remedies provided in this Section 6.4 and
Section 6.5 shall be the exclusive remedies of Buyer under this Agreement or in
connection with the transactions contemplated hereby, and Buyer hereby
irrevocably waives any other rights or remedies available against the Seller at
law or in equity as a result of the transactions contemplated hereby.
(2) In no event shall the aggregate liability of Seller after
Closing, for all indemnification payments made to Buyer from the Shares,
Seller's funds or otherwise, exceed $3,000,000 (the "Total Cap"), which Total
Cap shall also apply to indemnification payments under Section 6.5; provided,
the Total Cap shall not apply to any indemnification claim resulting from a
breach of Seller's representation relating to taxes set forth in Section 4.13.
(3) No claims for indemnification by Buyer shall be payable until
the aggregate thereof reaches $100,000 (the "Deductible") and only claims in
excess of $100,000 shall be subject to indemnification; provided, the Deductible
shall not apply to indemnification claims under Section 6.5.
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(4) Seller may, at its option, pay for indemnification claims with
Shares or cash. Any shares used to pay indemnity claims shall be valued at the
original per share price determined at Closing pursuant to Section 1.2(c).
(5) If, between the date hereof and the Closing Date, Seller or Buyer
obtains actual knowledge of any fact, event or condition, whether new or a
modification of a fact, event or condition previously disclosed (hereinafter,
"New Matter(s)"), which would render any representation or warranty of Seller in
this Agreement untrue, incomplete or incorrect in any material respect, then
such party shall promptly give written notice of same to the other party. If the
New Matter(s) can be remedied prior to Closing, Seller may elect, by written
notice to Buyer, to correct the New Matter(s) prior to Closing. If Seller
corrects the New Matter(s), this Agreement shall not terminate and the parties
shall proceed to close in accordance with the terms hereof. If Seller elects not
to correct the New Matter(s), or, after electing to correct the New Matter(s),
fails to do so by the Closing Date, Buyer, as Buyer's sole remedy, may terminate
this Agreement by written notice delivered to Seller on or before the Closing
Date, but Buyer shall not be entitled to seek damages from Seller for any breach
of this Agreement arising from such New Matter(s).
6.5 Special Provision for Delaware Site.
-----------------------------------
(a) Pursuant to Section 4.16 and Schedule 4.16(a), Seller has disclosed to
Buyer certain contamination (the "Delaware Contamination") at Delaware's
facility located at 505 South Market Street, Wilmington, Delaware (the "Delaware
Site").
(b) Buyer does not intend to remediate the Delaware Contamination unless
Buyer or Delaware is required to do so by any court, government, or governmental
or regulatory authority (collectively, a "Regulatory Authority"). If Buyer or
Delaware is required to remediate the Delaware Contamination by any Regulatory
Authority, Buyer shall pay the first $1,000,000 of the costs of such
remediation, any required monitoring and reporting, and any related fines or
penalties imposed by any Regulatory Authority (collectively, the "Clean-up
Costs"), and Seller shall be responsible for, and indemnify Buyer against, any
Clean-up Costs in excess of such $1,000,000; provided, in no event shall Seller
be required to pay more than a total of $2,000,000 pursuant to this Section 6.5.
Seller's obligations to indemnify Buyer under this Section 6.5 shall also be
subject to the Total Cap set forth in Section 6.4(d)(2).
(c) Notwithstanding anything to the contrary contained in this Agreement,
if neither Buyer nor Delaware are required by a Regulatory Authority to
remediate the Delaware Contamination within three (3) years after Closing, then
Seller shall have no obligation to indemnify Buyer for any liability or expense
related to such contamination.
7. ADDITIONAL AGREEMENTS OF THE BUYER.
----------------------------------
7.1 Execution of Further Documents by Buyer. From and after the Closing, upon
---------------------------------------
reasonable request of Seller, Buyer shall execute, acknowledge and deliver to
Seller all such further documents as may be appropriate to carry out the
transactions contemplated by this Agreement.
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7.2 Indemnification by Buyer.
------------------------
7.2(a) The Buyer will indemnify and hold the Seller harmless from and against
any and all damages, loss, cost, deficiency assessment, liability or other
expense (including reasonable attorney's fees, costs of court and costs of
litigation, if any) suffered, incurred or paid by the Seller as a result of:
(1) the untruth, inaccuracy, breach or violation of any representation,
warranty, covenant or other obligation of the Buyer set forth in this Agreement;
(2) the assertion against the Seller of any liability or obligation of
the Buyer or any of the Corporations or of any claim relating to: (i) the
operation of the Corporations' waste collection and transportation business
subsequent to the Closing Date; or (ii) subject to Section 6.5, the first
$1,000,000 in Clean-up Costs related to the Delaware Contamination; or
(3) the enforcement of the Seller's right to indemnification under this
Agreement.
7.2(b) The Seller shall give written notice to the Buyer of any claim, action,
suit or proceeding relating to the indemnity herein provided by Buyer not later
than ten (10) days after Seller has received notice thereof. Buyer shall have
the right, at its option, to compromise or defend, at its own expense and by its
own counsel (which counsel shall be reasonably satisfactory to Seller), any such
action, suit or proceeding. Seller and Buyer agree to cooperate in any such
defense or settlement and to give each other full access to all information
relevant thereto.
7.2(c) Except as herein expressly provided, after Closing the remedies provided
in this Section 7.2 shall be the exclusive remedies of Seller under this
Agreement or in connection with the transactions contemplated hereby, and Seller
hereby irrevocably waives any other rights or remedies available against the
Buyer at law or in equity as a result of the transactions contemplated hereby.
8. CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligations of the Buyer to
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effect the transactions contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of each of the following conditions:
8.1 Validity of Seller's Representations. All representations and
------------------------------------
warranties of the Seller contained in this Agreement or otherwise made in
writing pursuant to this Agreement shall have been true and correct in all
material respects at and as of the date hereof and they shall be true and
correct in all material respects at and as of the Closing Date, with the same
force and effect as though made at and as of the Closing Date.
8.2 Pre-Closing Obligations. The Seller shall have performed and complied
-----------------------
with all the obligations and conditions required by this Agreement to be
performed or complied with by Seller at or prior to the Closing Date, including
the execution and delivery of all documents and contracts required to be
delivered at or before the Closing Date pursuant to this Agreement.
8.3 Opinion of Counsel for Seller. The Buyer shall have received a
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favorable opinion
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from counsel for the Seller dated the date of the Closing, in form satisfactory
to counsel for the Buyer, to the effect that:
8.3(a) Each of the Corporations is a corporation duly organized and legally
existing under the laws of its respective jurisdiction, and each has the
corporate power and authority to carry on its business as now being conducted
and to own or hold under lease, or otherwise, its assets.
8.3(b) This Agreement has been duly executed and delivered by the Seller, and
constitutes a valid and binding obligation of the Seller, enforceable against
Seller in accordance with its terms, except as such enforcement may be limited
by bankruptcy or similar laws affecting the enforcement of creditors' rights
generally, and the availability of equitable remedies.
8.3(c) Except as otherwise disclosed in this Agreement, counsel does not know
of any action, suit, investigation or other legal, administrative or arbitration
proceeding pending against the Seller or any of the Corporations, or which
questions the validity or enforceability of this Agreement or of any action
taken or to be taken pursuant to or in connection with this Agreement or any
agreement contemplated herein.
8.3(d) To the knowledge of such counsel, no consent, authorization, license,
franchise, permit, approval or order of any court or governmental agency or
body, other than those obtained by Seller and delivered to the Buyer prior to or
on the date of the opinion, is required for the sale of the Stock by the Seller
pursuant to this Agreement.
8.3(e) The execution and performance of this Agreement by the Seller will not
violate: (i) the Articles of Incorporation or the By-Laws of any of the
Corporations, or (ii) any order of any court or other agency of government known
to said counsel.
8.3(f) The instruments of conveyance and assignments executed by the Seller to
the Buyer pursuant to this Agreement are adequate to convey the ownership to the
Stock, free and clear of all liens, claims or encumbrances known to such counsel
after conducting a UCC-I lien search with the offices of the Secretary of State
for the States in which the Corporations are organized.
8.3(g) To the knowledge of such counsel (after a review of the stock
certificates and stock ledgers of the Corporations), Seller owns all of the
issued and outstanding shares of capital stock of the Corporations.
8.4 Receipt by the Buyer of Necessary Consents. All necessary consents or
------------------------------------------
approvals of third parties to any of the transactions contemplated hereby shall
have been obtained, and satisfactory evidence of such consents or approvals
shall have been delivered to the Buyer at Closing.
8.5 Resignation of Officers and Directors. Buyer shall have received such
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resignations of officers and directors of the Corporations as shall have been
requested by Buyer.
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9. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of the Seller to
---------------------------------------
effect the transactions contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of each of the following conditions:
9.1 Validity of Buyer's Representations. All representations and warranties
-----------------------------------
of the Buyer contained in this Agreement or otherwise made in writing pursuant
to this Agreement shall have been true and correct at and as of the date hereof
and they shall be true and correct at and as of the Closing Date, with the same
force and effect as though made at and as of the Closing Date.
9.2 Pre-Closing Obligations. The Buyer shall have performed and complied
-----------------------
with all the obligations and conditions required by this Agreement to be
performed or complied with by Buyer at or prior to the Closing Date, including
the execution and delivery of all documents and contracts required to be
delivered at or before the Closing Date pursuant to this Agreement.
9.3 Corporate Authority of Buyer. The execution and performance of this
----------------------------
Agreement by the Buyer shall have been duly and legally authorized in accordance
with applicable law, and the Buyer shall have furnished to counsel for the
Seller certified copies of resolutions adopted by the Board of Directors of the
Buyer authorizing and approving the execution and delivery of this Agreement and
performance of the transactions contemplated hereunder.
9.4 Opinion of Counsel for Buyer. The Seller shall have received a favorable
----------------------------
opinion from counsel for the Buyer dated the date of the Closing, in form
satisfactory to counsel for the Seller, to the effect that:
9.4(a) The Buyer is a corporation, duly organized and legally existing in good
standing under the laws of the State of Delaware, and it has the corporate power
and authority to carry on its business as now being conducted and to carry out
the transactions and agreements contemplated hereby.
9.4(b) All corporate and other proceedings required to be taken by or on the
part of the Buyer in order to authorize it to perform its obligations hereunder
have been duly and properly taken, including any necessary approval or
authorization by the Board of Directors of the Buyer.
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9.4(c) This Agreement has been duly executed and delivered by the Buyer and
constitutes a valid and binding obligation of the Buyer enforceable against
Buyer in accordance with its terms, except as such enforcement may be limited by
bankruptcy or similar laws affecting the enforcement of creditors' rights
generally, and the availability of equitable remedies.
9.4(d) To the knowledge of such counsel, no consent, authorization, license,
franchise, permit, approval or order of any court or governmental agency or
body, other than those obtained by Buyer and delivered to the Seller prior to or
on the date of the opinion, is required for the purchase of the Stock and
issuance of the EarthCare Common Stock by the Buyer pursuant to this Agreement.
9.4(e) Except as otherwise disclosed in this Agreement, said counsel does not
know of any action, suit, investigation or other legal, administrative or
arbitration proceeding pending against the Buyer or which questions the validity
or enforceability of this Agreement or of any action taken or to be taken
pursuant to or in connection with this Agreement or any agreement contemplated
herein.
9.4(f) The execution and performance of this Agreement by the Buyer will not
violate: (i) the Articles of Incorporation or the By-Laws of the Buyer; or (ii)
any order of any court or other agency of government known to said counsel.
9.4(g) The EarthCare Common Stock has been duly issued to Seller, is fully paid
and nonassessable, has been duly registered under the 1933 Act, and may be
resold by Seller without further registration, subject only to the terms of the
Escrow Agreement and the Lock-up Agreement.
10. ACCOUNTS RECEIVABLE AND PAYABLE.
--------------------------------
10.1 Accounts receivable and accounts payable of the Corporations shall be
netted-out and distributed as follows: Buyer shall collect all accounts
receivable arising prior to the Effective Date ("Retained Receivables") and pay
to Seller the difference between: (i) Retained Receivables collected by the
Corporations, and (ii) the dollar amount of Seller's Payables (defined below)
paid by the Corporations after the Effective Date. "Seller's Payables" means all
accounts payable and accrued expenses of the Corporations accruing prior to the
Effective Date. At Closing, Seller shall provide Buyer with a list of Seller's
Payables accruing prior to the Effective Date and Buyer will be authorized to
pay all accounts on such list. Buyer will consult with Seller prior to paying
accounts not shown on the aforesaid list, or accounts which vary from the
amounts shown on the list. Payments of Seller's Payables shall be made by Buyer
on a monthly basis for a period of four (4) months subsequent to the Closing.
After such four month period, any Retained Receivables remaining unpaid shall be
assigned by the Corporations to Seller. After Closing, upon reasonable advance
notice and during business hours, Seller may review the accounts, books and
records of the Corporations to confirm the accounts receivable actually
collected and the payments made on accounts payable which accrued prior to the
Effective Date.
10.2 For purposes of this Section 10, accounts receivable resulting from (i)
product sales shall be deemed to arise when the product is delivered to the
customer, and (ii) collection or other
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services shall be deemed to arise when the service is performed. For customers
who pay a fixed amount of service fees on a monthly or other periodic basis, the
fee shall be pro-rated based on the Effective Date. For purposes of this Section
10, the time of accrual for expenses of the Corporations will be determined in
accordance with the existing practices of the Corporations.
11. SELLER'S NON-COMPETE AND NON-SOLICITATION AGREEMENT. As inducement to Buyer
---------------------------------------------------
to enter into this Agreement and perform its obligations hereunder, and in
consideration of the payments to Seller pursuant to this Agreement, the Seller
agrees that Seller will not, for a period of five (5) years from the Closing
Date, directly or indirectly (whether as owner, partner, shareholder, agent,
employee, independent contractor, consultant or otherwise): (i) engage in
business which directly or indirectly competes with business of the
Corporations or the Buyer, or with any subsidiary of Buyer, in each case, within
the County of Miami-Dade and the County of Broward, State of Florida; (ii)
solicit or accept business from any party who is or was a customer or supplier
of the Corporations on the Closing Date or at any time during the 12 month
period immediately prior thereto for services of any type or quality being
provided by the Corporations; (iii) solicit for employment any person who was or
is an employee of the Corporations on the Closing Date, or at any time during
the 12 month period immediately prior thereto; or (iv) either directly or
indirectly, divulge, disclose, or communicate to any person, firm or corporation
in any manner whatsoever any confidential information relating to the business
of Buyer, or the Corporations. The term, "confidential information", as used
herein means all information of a business or technical nature relative to the
business of Buyer, the business of any customers of the Corporations or any
business of any person, firm or corporation which consults with, or is
affiliated with, Buyer or the Corporations and shall further be construed to
constitute "trade secrets" as such term is defined in Chapters 688 and 812 of
the Florida Statutes. The term "confidential information" shall not include
information so generally known as to be part of the public domain.
Each of the covenants contained in this Article are separate and independent.
The Seller acknowledges and agrees that Buyer's and Corporations' remedies at
law may be inadequate in the event of a breach or threatened breach of the
covenants set forth herein, and in such event, Buyer and the Corporations shall
be entitled to have an injunction issued by any court of competent jurisdiction,
enjoining and restraining each and every party concerned therewith from the
creation or continuation of such breach.
12. OTHER PROVISIONS.
----------------
12.1 HSR Act. Promptly after the date hereof, the parties shall file such
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applications as may be necessary to obtain the approvals or clearances under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), for the transactions contemplated hereby, and shall use their best
efforts to cause such approvals to be issued. Buyer will pay the filing fee
required to be paid by the acquiring person under the HSR Act. Notwithstanding
anything to the contrary contained herein, it shall be a condition precedent to
the parties' obligation to consummate the Closing that the waiting period
applicable to such Closing under the HSR Act shall have expired or been
terminated.
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12.2 Lease Amendments. Simultaneously with the execution of this Agreement,
-----------------
the Trust Leases (as defined below) shall be amended by execution of the lease
amendments attached as Exhibits "B" and "C" hereto. As used herein, the Trust
Leases means: (i) the lease dated August 17, 1984 between International, as
tenant, and the Jerrold Blair Irrevocable Trust "A" as landlord; and (ii) the
lease dated August 17, 1984 between Louisiana, as tenant, and the Jerrold Blair
Irrevocable Trust "B" as landlord. Pursuant to the said amendments,
International and Louisiana will purchase the properties subject to the Trust
Leases for an aggregate cash price of $2,000,000.
12.3 Survival of Representations and Warranties. The representations,
------------------------------------------
warranties, obligations and agreements of the parties contained in this
Agreement, or in any writing delivered pursuant to provisions of this Agreement,
shall survive the Closing for a period of twelve (12) months, with the exception
of representations and warranties contained in (i) Paragraph 4.13 hereof, Tax
Matters, which will survive for as long as any claims may be asserted under the
applicable periods of limitation for violations of any tax law, rule or
regulation; and (ii) Paragraph 4.16, (Environmental Matters) and Section 6.5
(Special Provision for Delaware Site), which shall survive Closing for a period
of three (3) years after Closing.
12.4 Waiver or Extension of Conditions. The Seller or the Buyer may extend the
---------------------------------
time for or waive the performance of any of the obligations of the other party,
waive any inaccuracies in the representations or warranties by the other party,
or waive compliance by the other party with any of the covenants or conditions
contained in this Agreement. Any such extension or waiver shall be in writing
and signed by the Seller and the Buyer. Any such extension or waiver shall not
act as a waiver or an extension of any other provisions of this Agreement.
12.5 Notices. Any notice, request or other document shall be in writing and
--------
sent by registered or certified mail, return receipt requested, postage prepaid
and addressed to the party to be notified at the following addresses, or such
other address as such party may hereafter designate by written notice to all
parties, which notice shall be effective as of the date of posting:
(i) If to the Buyer:
EarthCare Company
14901 Quorum Drive
Suite 200
Dallas, TX 75240
Copy to: Robert C. Gist, Esq.
12809 Plum Hollow Drive
Oklahoma City, OK 73142-5148
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(ii) If to the Seller:
World Fuel Services Corporation
700 S. Royal Poinciana Blvd.
Suite 800
Miami Springs, FL 33166
Attn: Jerrold Blair, President
Copy to: Shutts & Bowen LLP
1500 Miami Center
201 S. Biscayne Boulevard
Miami, FL 33131
Attn: Luis A. de Armas, P.A.
12.6 Governing Law. This Agreement shall be governed by the laws of the State
-------------
of Florida.
12.7 Successors and Assigns. This Agreement shall be binding upon and inure to
----------------------
the benefit of the parties hereto and their respective heirs, representatives,
successors and assigns.
12.8 Headings. The subject headings of the Sections of this Agreement are
--------
included for purposes of convenience only and shall not affect the construction
or interpretation of any of its provisions.
12.9 Counterparts. This Agreement may be executed simultaneously in two or
------------
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
12.10 Arbitration. Any controversy or claim arising out of, in connection
-----------
with, or relating to this Agreement or a breach thereof shall be settled by
binding arbitration in Miami, Florida, under the Rules of the American
Arbitration Association. The arbitration panel shall be comprised of three
arbitrators. Each party shall appoint one arbitrator for the panel and the two
so appointed shall appoint a third. The panel shall resolve the dispute within
sixty (60) days of the appointment of the panel and shall notify the parties of
its findings in writing. Each party agrees to bear the cost of its own
arbitrator and to split equally the cost of the third arbitrator.
12.11 Entire Agreement; Modification. This Agreement (including the schedules
------------------------------
attached hereto) and the documents delivered pursuant hereto constitute the
entire agreement and understanding between the parties, and supersede any prior
agreements and understandings relating to the subject matter hereof. This
Agreement may be modified or amended by a written instrument executed by all
parties hereto.
IN WITNESS WHEREOF the parties have executed this Agreement as of the __________
day of January, 2000.
"Seller" "Buyer"
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World Fuel Services Corporation EarthCare Company
By: ___________________________ By: _____________________________
Its: __________________________ Its: ____________________________
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