SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) FEBRUARY 3, 1997
HI-RISE RECYCLING SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA
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(State or other jurisdiction of incorporation)
0-21946 65-0222933
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(Commission File Number) (IRS Employer Identification No.)
16255 N.W. 54TH AVENUE
MIAMI, FLORIDA 33014
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 624-9222
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 3, 1997, the Registrant, through a newly-formed
wholly-owned subsidiary ("Acquisition Corp"), acquired (the "Acquisition")
substantially all of the assets other than real property (the "Assets") and
assumed certain of the liabilities of Wilkinson Company, Inc., an Ohio
corporation (the "Seller"), pursuant to the terms of an Asset Purchase
Agreement, dated as of February 3, 1997 (the "Asset Purchase Agreement"), by and
among the Registrant, Acquisition Corp. and the Seller. The aggregate purchase
price (the "Purchase Price") paid by the Registrant for the Assets was (i)
$2,486,827 in cash, subject to adjustment under certain circumstances, and (ii)
76,272 shares of the common stock, $.01 par value, of the Registrant. The
Purchase Price was determined through negotiations between the Registrant and
the Seller. Reference is made to the Asset Purchase Agreement, filed as Exhibit
2 hereto, for further information concerning the terms and conditions of the
Acquisition. The Asset Purchase Agreement and such information are incorporated
herein by reference.
In connection with the Acquisition, Acquisition Corp and the Seller
entered into a three-year lease pursuant to which Acquisition Corp is leasing
the Seller's manufacturing facility in Ohio.
Following the consummation of the Acquisition, Acquisition Corp changed
its name to "Wilkinson Company, Inc."
The Seller was engaged in the sale, manufacture, distribution and
installation of sheet metal fabrication products, including metal kick plates,
corner guards, door edge protectors, lighted hand rails, bumper rail systems,
conveyor systems, linen and rubbish chutes, multiple chute systems, recycling
systems and accessories associated therewith. The Registrant intends to continue
the business conducted by the Seller and to consolidate manufacturing and
engineering of all of the Registrant's products at the manufacturing facility in
Ohio.
The Registrant funded the cash portion of the Purchase Price from the
proceeds of two lines of credit and a term loan from Ocean Bank, N.A.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
It is currently impracticable to provide the financial information
required pursuant to Item 310 of Regulation S-B. This Report will be amended
within 60 days of the date this Report is filed to include such financial
information.
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(B) PRO FORMA FINANCIAL INFORMATION
It is currently impracticable to provide the pro forma financial
information required pursuant to Item 310(d) of Regulation S-B. This Report will
be amended within 60 days of the date this Report is filed to include such pro
forma financial information.
(C) EXHIBITS
(2) Asset Purchase Agreement, dated as of February 3, 1997,
by and among Hi-Rise Recycling Systems, Inc., WC
Acquisition Corp. and Wilkinson Company, Inc.
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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.
HI-RISE RECYCLING SYSTEMS, INC.
Dated: February 18, 1997 By:/s/ DONALD ENGEL
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Donald Engel
Co-Chairman of the Board and
Chief Executive Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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2 Asset Purchase Agreement, dated as of February 3, 1997, by and
among Hi-Rise Recycling Systems, Inc., WC Acquisition Corp. and
Wilkinson Company, Inc.
ASSET PURCHASE AGREEMENT
DATED AS OF
FEBRUARY 3, 1997
BY AND AMONG
HI-RISE RECYCLING SYSTEMS, INC.,
WC ACQUISITION CORP.,
AS BUYER,
AND
WILKINSON COMPANY, INC.,
AS SELLER
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TABLE OF CONTENTS
PAGE
1. Sale and Purchase of Assets.................................. 1
1.1 Sale of Assets to Buyer........................... 1
1.2 Excluded Assets................................... 4
1.3 Method of Conveyance.............................. 4
2. Purchase Price............................................... 5
2.1 Amount and Payment of Consideration............... 5
2.2 Holdback.......................................... 5
2.3 Purchase Price Adjustments........................ 6
2.4 Assumed Obligations............................... 9
2.5 Purchase Price Allocation......................... 10
3. Closing...................................................... 10
3.1 Date of Closing................................... 10
3.2 Items to be Delivered at Closing.................. 10
4. Representations and Warranties of the Seller................. 13
4.1 Organization and Authority........................ 13
4.2 Authorization of Agreement........................ 13
4.3 Capitalization and Share Ownership of Seller...... 14
4.4 Non-Contravention; Consents and Approvals......... 14
4.5 Ownership of Assets............................... 15
4.6 Balance Sheet; Existing Condition; Ordinary
Course............................................ 16
4.7 Litigation........................................ 17
4.8 Compliance with Laws.............................. 18
4.9 Permits and Licenses.............................. 18
4.10 Contracts......................................... 19
4.11 Condition of Purchased Assets..................... 20
4.12 Customers......................................... 21
4.13 Employee Benefit Plans............................ 21
4.14 Warranties........................................ 25
4.15 Trademarks, Patents, Etc.......................... 25
4.16 Insurance......................................... 26
4.17 Environmental..................................... 26
4.18 Notes, Accounts or Other Receivables.............. 29
4.19 Real Estate....................................... 29
4.20 Guarantees........................................ 30
4.21 Taxes............................................. 30
4.22 Labor Matters..................................... 31
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PAGE
4.23 Absence of Undisclosed Liabilities................ 32
4.24 Liabilities....................................... 32
4.25 Accuracy of Documents and Information............. 32
4.26 Brokers and Agents................................ 33
4.27 Restrictions on Shares; Investor Knowledge........ 33
5. [Reserved]................................................... 35
6. Representations and Warranties of the Acquiring Companies.... 35
6.1 Acquiring Companies' Organization................. 35
6.2 Authorization of Agreement........................ 35
6.3 Non-Contravention; Consents....................... 36
6.4 Litigation........................................ 37
6.5 Hi-Rise Shares.................................... 37
7. Further Agreements of the Parties............................ 37
7.1 Operation of the Business......................... 37
7.2 Consents; Assignment of Agreements................ 38
7.3 Change in Name.................................... 39
7.4 No Discussions.................................... 39
7.5 Employee Matters.................................. 39
7.6 Notice Regarding Changes.......................... 39
7.7 Furnishing of Information......................... 39
7.8 Notification to Customers......................... 40
7.9 Collection of Receivables......................... 40
7.10 Brokers and Agents................................ 40
7.11 Lease Negotiations................................ 41
7.12 Grant of Registration Rights...................... 41
7.13 Seller's Access to Records........................ 43
8. Conditions Precedent to Closing.............................. 44
8.1 Conditions Precedent to the Obligations of
Seller............................................ 44
8.2 Conditions Precedent to the Obligations of the
Acquiring Companies............................... 45
9. Termination, Amendment and Waiver............................ 47
9.1 Termination....................................... 47
9.2 Effect of Termination............................. 48
9.3 Amendment, Extension and Waiver................... 49
10. Survival of Representations and Warranties; Indemnification.. 49
10.1 Survival.......................................... 49
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PAGE
10.2 Indemnification................................... 50
10.3 Conditions of Indemnification for Third Party
Claims............................................ 52
10.4 Limitation on Indemnification..................... 54
11. Post-Closing Matters......................................... 55
11.1 Transition Services............................... 55
11.2 Further Assurances................................ 55
11.3 Payment of Liabilities; Discharge of Liens........ 56
11.4 Transfer of Permits; Additional Consents.......... 56
12. Risk of Loss................................................. 56
13. Miscellaneous................................................ 56
13.1 Entire Agreement.................................. 56
13.2 No Third Party Beneficiary........................ 57
13.3 Amendment......................................... 57
13.4 Waivers and Remedies.............................. 57
13.5 Severability...................................... 57
13.6 Descriptive Headings.............................. 58
13.7 Counterparts...................................... 58
13.8 Notices........................................... 58
13.9 Successors and Assigns............................ 59
13.10 Applicable Law.................................... 59
13.11 Expenses.......................................... 59
13.12 Confidentiality................................... 59
13.13 Attorneys' Fees................................... 60
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT") is made and entered into
this 3rd day of February, 1997, by and among HI-RISE RECYCLING SYSTEMS, INC., a
Florida corporation (the "PARENT"), WC ACQUISITION CORP., an Ohio corporation
and a wholly-owned subsidiary of the Parent (the "BUYER" and, together with the
Parent, the "ACQUIRING COMPANIES"), and WILKINSON COMPANY, INC., an Ohio
corporation (the "SELLER").
W I T N E S S E T H :
WHEREAS, the Seller is engaged in the sale, manufacture, distribution
and installation of sheet metal fabrication products, including metal kick
plates, corner guards, door edge protectors, lighted hand rails, bumper rail
systems, conveyor systems, linen and rubbish chutes, multiple chute systems,
recycling systems and accessories associated therewith (the Seller's activities
in pursuing such businesses are herein referred to collectively as the
"Business"); and
WHEREAS, Seller desires to sell, convey, transfer, assign and deliver
to Buyer the Business and substantially all of the assets, properties and
operations used in the Business, and Buyer desires to purchase the Business and
such assets, properties and operations, on the terms and subject to conditions
contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
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1. SALE AND PURCHASE OF ASSETS.
1.1 SALE OF ASSETS TO BUYER. Upon the terms and
subject to the conditions herein set forth, at the Closing referred to in
Section 3, Seller shall sell, transfer, assign, convey and deliver to Buyer, and
Parent and Buyer shall purchase and acquire from Seller, all of the properties,
assets and goodwill that are used in the Business, of whatever kind and nature,
personal, tangible or intangible (including all rights of the Seller arising
from its operation of the Business and excluding only those assets referred to
in Section 1.2 of this Agreement) (collectively, the "Assets"), as those Assets
exist on the Closing Date (as defined in Section 3). The Assets include, but are
not limited to, the following:
(a) all of Seller's machinery, equipment,
equipment leases, chemicals, supplies, vehicles, furniture, fixtures, tools,
molds, dyes, computers and all other personal property, wherever located, which
are used in the Business, including, but not limited to, the items listed on
Schedule 1.1(a);
(b) [Reserved];
(c) all inventory of Seller used in the
Business, wherever located, including, without limitation, the parts, chemicals
and materials listed on Schedule 1.1(c);
(d) all of Seller's computer software
used in the Business, and all rights, title and interest of Seller in, to and
under all trademarks, trademark rights, trademark applications, patents, patent
rights, patent applications, trade secrets, inventions, training and equipment
manuals, technology, methods, manufacturing, engineering, technical and any
other know-how, processes, projects in development, trade names, service marks,
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other intellectual property rights and other proprietary information of the
Seller used in or relating to the Business, including, but not limited to, the
trade name "Wilkinson Company" and any and all variations thereof. All material
intellectual property, including all trade names and patents used or held by
Seller, are listed on Schedule 1.1(d);
(e) all of Seller's rights under any
written or oral contracts, unfilled service and/or blanket purchase orders,
agreements, leases, instruments, registrations, licenses, certificates,
distribution agreements or other documents, commitments, arrangements or
authorizations relating to the Business, including, but not limited to, the
agreements and other instruments identified on Schedule 1.1(e) (the
"Contracts"); PROVIDED, that nothing contained in this Agreement shall be
construed as an attempt to agree to assign any contract which is by itself
non-assignable without the consent of the other party or parties thereto, unless
such consent shall be given;
(f) all rights in connection with all
permits, certificates, licenses, approvals, registrations and authorizations of
Seller which may be necessary or desirable in order to conduct the Business (the
"Permits");
(g) all of Seller's rights under
manufacturers' and vendors' warranties relating to those items included in the
Assets and all of Seller's similar rights against third parties relating to
items included in the Assets;
(h) all of Seller's accounts receivable,
notes and other receivables, unbilled costs and fees, all prepaid items, amounts
on deposit of Seller, employee advances, and other current assets existing on
the Closing Date, including, but not
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limited to, the receivables and other assets set forth on Schedule 1.1(h), but
excluding cash, cash equivalents and prepaid insurance;
(i) all goodwill, customer and vendor
lists, telephone numbers, and other intangible property, and all of Seller's
rights to commence or maintain future and existing actions relating to the
operation of the Business or the ownership of the Assets, for events occurring
after the Closing Date, and the right to settle those actions and retain the
proceeds therefrom;
(j) all shares of stock and partnership
interests owned by Seller, if any;
(k) except for prepaid insurance referred
to in Section 1.1(h), all of Seller's rights under the insurance or similar
policies in effect on or prior to the Closing Date set forth on Schedule 1.1(k);
and
(l) all financial, operational, and any
other files, logs, books and records and data of the Business of Seller, and all
correspondence, advertising and promotional materials and files, and other
business records which are owned by Seller relating to the Business.
1.2 EXCLUDED ASSETS. The following assets (the
"Excluded Assets") shall be retained by the Seller and shall not be sold or
assigned to Buyer:
(a) cash, cash equivalents and prepaid
insurance of Seller;
(b) the corporate minute books and stock
books of Seller;
(c) any lease, commitment or other
agreement with respect to which the Buyer shall have given the Seller written
notice prior to the Closing stating that
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the Buyer does not desire to acquire such lease, commitment or other agreement
pursuant to its purchase of the Assets under this Agreement; and
(d) the assets listed on Schedule 1.2(d).
1.3 METHOD OF CONVEYANCE. The sale, transfer,
conveyance and assignment by the Seller of the Assets to the Buyer in accordance
with Section 1.1 hereof shall be effected on the Closing Date by the Seller's
execution and delivery to the Buyer of a bill of sale, in substantially the form
attached hereto as Exhibit A (the "Bill of Sale"), and an assignment and
assumption agreement, in substantially the form attached hereto as Exhibit B
(the "Assignment and Assumption Agreement"). At the Closing, all of the Assets
shall be transferred by the Seller to the Buyer free and clear of any and all
liens, encumbrances, mortgages, security interests, pledges, claims, equities
and other restrictions or charges of any kind or nature whatsoever
(collectively, "Liens").
2. PURCHASE PRICE.
2.1 AMOUNT AND PAYMENT OF CONSIDERATION. The
purchase price to be paid by the Buyer for the Assets to be sold, transferred
and conveyed by the Seller pursuant to this Agreement shall be, subject to
adjustment as provided in Section 2.3 hereof (such purchase price, as adjusted,
the "Purchase Price"):
(a) cash in the amount of Two Million
Five Hundred Thousand Dollars ($2,500,000), paid by check or wire transfer, and
(b) an aggregate number of shares (the
"Hi-Rise Shares") of the common stock, par value $0.01 per share (the "Common
Stock"), of Parent determined by dividing $300,000 by the average of the last
reported sale prices of the Common Stock
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as quoted on the Nasdaq SmallCap Market as reported by the WALL STREET JOURNAL
during the thirty (30) trading days ending five (5) trading days immediately
preceding the Closing Date (as defined below). On the Closing Date, Parent shall
deliver to the Escrow Agent (as defined below) a stock certificate duly
registered in the name of the Seller representing the Hi-Rise Shares.
2.2 HOLDBACK. The Seller agrees that $50,000 of the
cash portion of the Purchase Price and all of the Hi-Rise Shares shall be held
in escrow pursuant to the terms of an escrow agreement to be entered into at the
Closing by and among the Seller, the Acquiring Companies and Ocean Bank, N.A.,
as escrow agent (the "Escrow Agent"), in substantially the form attached hereto
as Exhibit C (the "Escrow Agreement").
2.3 PURCHASE PRICE ADJUSTMENTS.
(a) The cash portion of the Purchase
Price shall be reduced at Closing by the amount, if any, by which the book value
(the "Receivables Value") as of the close of business on January 31, 1997 (the
"Valuation Date") of the Seller's trade accounts receivable included in the
Assets is less than 95% of the book value of the Seller's trade accounts
receivable on the 1996 Balance Sheet (as hereinafter defined), or shall be
increased at Closing by the amount, if any, by which the Receivables Value is
greater than 105% of the book value of the Seller's trade accounts receivable on
the 1996 Balance Sheet. The Receivables Value shall be determined as of the
Valuation Date in accordance with generally accepted accounting principles
consistently applied in accordance with past practice.
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(b) The cash portion of the Purchase
Price shall be reduced at Closing by the amount, if any, by which the book value
(the "Inventory Value") as of the Valuation Date of the Seller's inventory
included in the Assets is less than 95% of the book value of the Seller's
inventory on the 1996 Balance Sheet, or shall be increased at Closing by the
amount, if any, by which the Inventory Value is greater than 105% of the book
value of the Seller's inventory on the 1996 Balance Sheet. The Inventory Value
shall be determined as of the Valuation Date in accordance with generally
accepted accounting principles consistently applied in accordance with past
practice.
(c) At the Closing, the Seller shall
deliver to the Buyer a certificate (the "Seller's Valuation Certificate") signed
by the President of the Seller certifying the Receivables Value and the
Inventory Value. All statements contained in such certificate shall be deemed to
be representations and warranties of the Seller contained in this Agreement.
(d) During the period ending sixty (60)
days from the Closing Date, the Acquiring Companies may, at their own expense,
cause their regularly retained certified independent public accounting firm (the
"Acquiring Companies' Accountants") to determine the Receivables Value and the
Inventory Value as of the Valuation Date (the "Acquiring Companies' Accountants
Determination"). If the Acquiring Companies' Accountants Determination of the
Receivables Value and the Inventory Value, on a combined basis, is less than 95%
of the Receivables Value and the Inventory Value, on a combined basis, set forth
on the Seller's Valuation Certificate and the Acquiring Companies desire to
request an adjustment of the Purchase Price as a result thereof, the Acquiring
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Companies shall provide written notice of such request and a copy of the
Acquiring Companies' Accountants documentation and other documentation relating
to such determination within sixty (60) days after the Closing Date. The Seller
shall have twenty (20) days from the date of receipt of such written notice and
accompanying documentation from the Acquiring Companies to object to the
Acquiring Companies' Accountants Determination or such determination shall
become final and binding upon the Acquiring Companies and the Seller. If the
Seller objects to the Acquiring Companies' Accountants Determination within such
twenty (20) day period, the Acquiring Companies and the Seller will use
reasonable efforts to agree on such determination. If the Acquiring Companies
and the Seller are unable to agree on such determination within twenty (20)
days, the Seller may, at its own expense, have its regularly retained certified
independent public accounting firm (the "Seller's Accountants") determine the
Receivables Value and the Inventory Value as of the Valuation Date (the
"Seller's Accountants Determination"). If a discrepancy arises between the
Acquiring Companies' Accountants Determination and the Seller's Accountants
Determination, the Acquiring Companies and the Seller shall cause their
respective accountants to cooperate to try to eliminate such discrepancy. If
such accountants are unable to eliminate such discrepancy, then, in such event,
the two accounting firms shall select a third independent, nationally recognized
accounting firm (the "Disinterested Firm") which shall then review the reports
and other books and records relative to the issue or issues in dispute and shall
make a final determination of the Receivables Value and the Inventory Value on a
combined basis (the "Disinterested Accountants Determination"), which
determination shall be final and binding upon all parties hereto. If the
Receivables
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Value and the Inventory Value on a combined basis as finally determined pursuant
to this 2.3(d) is less by 5% or more than such corresponding values used in
calculating the cash portion of the Purchase Price at the Closing, the cash
portion of the Purchase Price shall be recalculated in accordance with Sections
2.3(a) and 2.3(b) using such values as finally determined. In such event within
five (5) days of the agreement of the parties and their respective accountants
as to the Receivables Value and the Inventory Value or its receipt of the
Disinterested Accountants Determination, as the case may be, the Seller shall
pay to the Acquiring Companies the amount by which the cash portion of the
Purchase Price paid to the Seller at the Closing exceeds such recalculated cash
portion of the Purchase Price as finally determined pursuant to this Section
2.3(d). If the Receivables Value and the Inventory Value on a combined basis as
finally determined pursuant to this 2.3(d) is greater, by 5% or more, than such
corresponding values used in calculating the cash portion of the Purchase Price
at the Closing, the cash portion of the Purchase Price shall be recalculated in
accordance with Sections 2.3(a) and 2.3(b) using such values as finally
determined by the Disinterested Firm. In such event, within five (5) days of the
agreement of the parties and their respective accountants as to the Receivables
Value and the Inventory Value or its receipt of the Disinterested Accountants
Determination, as the case may be, the Acquiring Companies shall pay to Seller
the amount by which the cash portion of the Purchase Price paid to Seller at the
Closing is less than such recalculated cash portion of the Purchase Price as
finally determined pursuant to this Section 2.3(d). If the Disinterested
Accountants Determination of the Receivables Value and the Inventory Value, on a
combined basis, is utilized for payment purposes as set forth above, the party
making the payment shall pay
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the fees and expenses of the Disinterested Firm. If the Disinterested
Accountants Determination of the Receivable Value and the Inventory Value, on a
combined basis, does not result in a payment being made by either the Seller of
the Acquiring Companies as set forth above, Seller and the Acquiring Companies
shall each pay one-half (1/2) of the fees and expenses of the Disinterested
Firm.
2.4 ASSUMED OBLIGATIONS. At the Closing, Buyer shall assume and agree
to discharge as the same become due only those liabilities and obligations
("Assumed Liabilities") of Seller set forth on Schedule 2.4. Each of the
obligations under the Assumed Liabilities to be assumed by Buyer hereunder and
under the Assignment and Assumption Agreement will be independently assumed
subject to the representations, warranties, covenants and conditions made herein
as to that obligation. Except as expressly provided in the first sentence of
this Section 2.4, neither Parent nor Buyer shall assume or otherwise be
responsible at any time for any liability, obligation, debt or commitment of the
Seller, whether absolute or contingent, accrued or unaccrued, asserted or
unasserted, or otherwise. The Seller understands and agrees that the Buyer
intends to employ the employees of the Seller following the Closing with such
benefits (including vacation, pension, insurance and severance benefits) as the
Buyer may adopt from time to time in its sole and absolute discretion, no such
act of the Buyer shall be construed as an assumption by the Buyer of any of such
obligations of the Seller and the Buyer shall have no liability for any of such
obligations of the Seller arising prior to the Closing. The Seller expressly
agrees to satisfy and discharge as the same shall become due all the
liabilities, obligations, debts and commitments of the Seller, including but not
limited to all Taxes.
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2.5 PURCHASE PRICE ALLOCATION. The Acquiring
Companies and the Seller agree that the Purchase Price will be allocated to the
Assets purchased pursuant to this Agreement for all purposes (including Tax and
financial accounting purposes) in accordance with Schedule 2.5 hereto. The
Acquiring Companies and the Seller will file all Tax Returns (as defined in
Section 4.21(d) hereof) (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.
3. CLOSING.
3.1 DATE OF CLOSING. Subject to the terms and
conditions set forth herein, the closing of the transactions contemplated hereby
(the "Closing") shall be held at 10:00 a.m. at the offices of the Seller at 1530
Commerce Drive, Stow, Ohio 44224 on or before February 3, 1997, provided that
all conditions to the Closing have been satisfied, or at such other time, date
and place as shall be fixed by agreement among the parties hereto. The date on
which the Closing shall occur is referred to herein as the "Closing Date." At
the Closing, the parties shall execute and deliver the documents referred to in
Section 3.2.
3.2 ITEMS TO BE DELIVERED AT CLOSING. At the
Closing and subject to the terms and conditions herein contained:
(a) Seller shall deliver or cause to be
delivered to Buyer the following:
(i) the Bill of Sale and such
other good and sufficient instruments and documents of conveyance and transfer
executed by Seller, in a form reasonably satisfactory to Buyer and its counsel,
as shall be necessary and effective to transfer and assign to, and vest in,
Buyer all of Seller's right, title and interest in and to the
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Assets, including without limitation, (A) good and valid title in and to all of
the Assets owned by Seller, (B) good and valid leasehold interests in and to all
of the Assets leased by Seller as lessee, and (C) all of the Seller's rights
under all agreements, contracts, instruments and other documents included in the
Assets to which Seller is a party or by which it has rights on the Closing Date;
(ii) all third-party consents
which may be necessary or desirable in connection with the transfer of the
Assets, including the Contracts and the Permits, except as set forth on
Schedules 4.9 and 4.10(c);
(iii) all of the agreements,
contracts, commitments, leases, plans, computer programs and software, data
bases whether in the form of computer tapes or otherwise, manuals and
guidebooks, customer lists, supplier lists, and other documents, books, records,
papers, files, office supplies and data belonging to the Seller which are part
of the Assets;
(iv) the Assignment and
Assumption Agreement executed by Seller;
(v) a written opinion of
Wegman, Hessler, Vanderburg & O'Toole, counsel for Seller, dated the Closing
Date, in the form of Exhibit D hereto;
(vi) a certificate, signed by a
duly authorized officer of the Seller and dated the Closing Date, representing
that the conditions contained in Sections 8.2(a) and 8.2(b) of this Agreement
have been satisfied;
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(vii) certified copies of
resolutions of the Seller's Board of Directors and the Shareholder with respect
to the approval of this Agreement and the transactions contemplated hereby; and
(viii) any other opinions,
certificates or other documents and instruments required herein to be delivered
by the Seller.
(b) Buyer shall deliver to the Seller the
following:
(i) the Purchase Price pursuant
to Section 2 hereof;
(ii) a certificate, signed by a
duly authorized officer of each of the Acquiring Companies and dated the Closing
Date, representing that the conditions contained in Sections 8.1(a) and 8.1(b)
of this Agreement have been satisfied;
(iii) certified copies of
resolutions of the Board of Directors of each of the Acquiring Companies with
respect to the approval of this Agreement and the transactions contemplated
hereby;
(iv) a written opinion of
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., counsel for the
Acquiring Companies, dated the Closing Date, in the form of Exhibit E hereto;
and
(v) any other opinions,
certificates or other documents and instruments required herein to be delivered
by Buyer.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. In order to induce
the Acquiring Companies to enter into this Agreement and to consummate the
transactions contemplated hereby, the Seller hereby represents and warrants to
the Acquiring Companies as follows:
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4.1 ORGANIZATION AND AUTHORITY. The Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Ohio. Seller has the full power and authority to enter into
and perform this Agreement, to own, operate and lease its properties and assets,
to carry on its business as it is now being conducted, and to execute, deliver
and perform its obligations under this Agreement and consummate the transactions
contemplated hereby. The Seller has delivered to the Buyer complete and correct
copies of its Articles of Incorporation and Code of Regulations, each as amended
to date. Seller is duly qualified to do business as a foreign corporation and in
good standing in each jurisdiction in which the property owned or leased by it
or the nature of the activities conducted by it requires such qualification,
except where the failure to be so qualified or in good standing would not have a
material adverse effect on the condition (financial or otherwise), results of
operations or business of Seller. Set forth on Schedule 4.1 hereto is a list of
all jurisdictions where the Seller is qualified to do business.
4.2 AUTHORIZATION OF AGREEMENT. The execution,
delivery and performance by the Seller of this Agreement and of each and every
document and instrument contemplated hereby and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized and approved by all necessary corporate action of the Seller. This
Agreement has been duly executed and delivered by the Seller and constitutes
(and, when executed and delivered, each such other document and instrument will
constitute) a valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms.
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4.3 CAPITALIZATION AND SHARE OWNERSHIP OF SELLER.
The Seller's authorized capital stock consists of 12,000 shares of preferred
stock, no par value, and 18,000 shares of common stock, no par value. There are
no shares of the Seller's preferred stock issued or outstanding and 4,825 shares
of the Seller's common stock presently outstanding, all of which shares of
common stock (the "Seller's Shares") are owned by EFCO, Inc., an Ohio
corporation (the "Shareholder"), free and clear of all Liens. All of the
Seller's Shares have been duly authorized and validly issued, are fully paid and
nonassessable. No equity securities of the Seller, other than the Seller's
Shares, are issued and outstanding. There are no existing contracts,
subscriptions, options, warrants, calls, commitments or other rights of any
character to purchase or otherwise acquire any common stock or other securities
of the Seller.
4.4 NON-CONTRAVENTION; CONSENTS AND APPROVALS.
(a) Neither the execution and delivery
by the Seller of this Agreement nor the consummation by the Seller of the
transactions contemplated hereby, nor compliance by the Seller with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of the Articles of Incorporation or Code of Regulations of the Seller, (ii)
(other than such breaches, conflicts and defaults set forth in Schedule 4.4(a)
hereto which shall have been waived at or prior to the Closing) result in the
breach of, or conflict with, any of the terms and conditions of, or constitute a
default (with or without the giving of notice or the lapse of time or both) with
respect to, or result in the cancellation or termination of, or the acceleration
of the performance of any obligations or of any indebtedness under any contract,
agreement, lease, commitment, indenture, mortgage, note,
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bond, license or other instrument or obligation to which the Seller is a party
or by which the Seller or any of the Assets may be bound or affected, (iii)
result in the creation of any Lien upon any of the Assets, or (iv) violate any
law or any rule or regulation of any administrative agency or governmental body,
or any order, writ, injunction or decree of any court, administrative agency or
governmental body to which the Seller or any of the Assets may be subject.
(b) Except as set forth in Schedule
4.4(b) hereto, no approval, authorization, consent or other order or action of,
or filing with or notice to any court, administrative agency or other
governmental authority or any other person is required for the execution and
delivery by the Seller of this Agreement or the consummation by it of the
transactions contemplated hereby.
(c) A description of all Permits which to
the best knowledge of Seller are necessary or desirable for the operation of the
Business are set forth in Schedule 4.4(c) hereto. Except as set forth in
Schedule 4.4(c) hereto, no approval by a governmental authority is required for
transfer to Buyer of such Permits.
4.5 OWNERSHIP OF ASSETS.
(a) The Seller has and will have at the
Closing good, valid and marketable title to each and every one of the tangible
and intangible personal property and assets which are included in the Assets,
and valid leasehold interests in all leases of tangible personal property
included in the Assets, free and clear of any Liens. At the Closing, the Seller
will transfer to Buyer good, valid and marketable title to the Assets, free and
clear of any and all Liens.
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(b) Except as set forth in Schedule
4.5(b), none of Seller's affiliates has, or has indirectly acquired, any right,
title or interest in or to any of the Assets.
(c) The Seller has not sold, transferred,
assigned or conveyed any of its right, title and interest, or granted or entered
into any option to purchase or acquire any of its right, title or interest, in
and to any of the Assets or the Business. No third party has any option or right
to acquire the Business or any of the Assets.
4.6 BALANCE SHEET; EXISTING CONDITION; ORDINARY
COURSE. Attached hereto as Schedule 4.6 are (i) the Seller's audited balance
sheet (the "1996 Balance Sheet") as of September 30, 1996 (the "Balance Sheet
Date"), together with the related audited statements of income, shareholders
equity and cash flows for the year then ended (such audited financial statements
being referred to herein collectively as the "Audited Financial Statements"),
and (ii) the Seller's management prepared unaudited balance sheets as of
September 1995 and 1994, together with the related management prepared unaudited
statements of income, shareholders equity and cash flows for the years ended
September 30, 1995 and 1994 (such unaudited financial statements being referred
to herein collectively as the "Unaudited Financial Statements" and, together
with the Audited Financial Statements, the "Financial Statements"). Except as
set forth on Schedule 4.6, to the best knowledge of the Seller, the Financial
Statements (i) are true, complete and correct, (ii) are in accordance with the
books and records of the Seller, (iii) in the case of the Audited Financial
Statements fairly, completely and accurately present the financial position of
the Seller as of the respective dates thereof and the results of its operations
for the periods presented and (iv) in the case of the Audited Financial
Statements, were prepared in conformity with
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generally accepted accounting principles consistently applied throughout the
periods covered thereby. The Audited Financial Statements have been audited by
Hausser & Taylor, independent certified public accountants, whose report thereon
is included therein. Since the Balance Sheet Date, except as set forth in
Schedule 4.6 hereto, there has not been with respect to the Seller:
(a) any material adverse change in the
Assets or the Business of the Seller from their condition as set forth on the
1996 Balance Sheet;
(b) any damage, destruction or loss,
whether covered by insurance or not, materially and adversely affecting the
Business or Assets of the Seller or any sale, transfer or other disposition of
the Assets other than in the ordinary course of business;
(c) any declaration, setting aside or
payment of any dividend, or any distribution with respect to the capital stock
of the Seller or any direct or indirect redemption, purchase or other
acquisition by the Seller of shares of its capital stock, or any payment to any
affiliate of any intercompany payable or any transfer of Assets to any
affiliate; or
(d) except as set forth on Schedule
4.6(d), any increase in the compensation payable by the Seller to the
Shareholder or any of the Seller's officers, employees or agents, or in the
payment of any bonus, or in any insurance, payment or arrangement made to, for
or with any such officers, employees or agents.
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Since the Balance Sheet Date, Seller has conducted its Business in
the ordinary course and has made no material change to its marketing,
purchasing, collections or accounting procedures.
4.7 LITIGATION. Except as set forth in Schedule
4.7, there is no litigation, suit, proceeding, action, claim or investigation,
at law or in equity, pending or, to the best knowledge of the Seller, threatened
against, or affecting in any way the Assets, the Seller or the Seller's ability
to own or operate the Business, or which questions the validity of this
Agreement or challenges any of the transactions contemplated hereby or the use
of the Assets after the Closing by the Buyer. Neither the Seller nor any of the
Assets is subject to any judgment, order, writ, injunction or decree of any
court or any federal, state, municipal or other governmental authority,
department, commission, board, bureau, agency or other instrumentality.
4.8 COMPLIANCE WITH LAWS. Except as set forth in
Schedule 4.8, to the best knowledge of the Seller, the Seller's Business has at
all times been conducted in substantial compliance with all applicable laws,
regulations, ordinances and other requirements of governmental authorities
(including applicable federal, state and local laws, rules and regulations
respecting occupational safety and health standards). Except as set forth in
Schedule 4.8, the Seller has not received any notice, advice, claim or complaint
from any employee or governmental authority that the Seller has not conducted,
or is not presently conducting, its business and operations in accordance with
all applicable laws and other requirements of governmental authorities.
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4.9 PERMITS AND LICENSES. To the best knowledge of
the Seller, the Seller has all permits, certificates, licenses, approvals,
registrations and authorizations required in connection with the conduct of the
Business. To the best knowledge of the Seller, the Seller is not in violation
of, and has not violated, any applicable provisions of any such permits,
certificates, licenses, approvals, registrations or authorizations. Except as
set forth on Schedule 4.9, to the best knowledge of the Seller, all permits,
certificates, licenses, approvals, registrations and authorizations of the
Seller which are necessary for the operation of the Seller's Business are freely
transferable.
4.10 CONTRACTS.
(a) Schedule 4.10(a) contains a true and
complete list of all material contracts and agreements related to or involving
the Business or the Assets or by which any of the Assets is subject or bound in
any material respect, including, without limiting the generality of the
foregoing, any and all: contracts and agreements for the purchase, sale or lease
of inventory, goods, materials, equipment, hardware, supplies or other personal
property; contracts for the purchase, sale or lease of real property; contracts
and agreements for the performance or furnishing of services; joint venture,
partnership or other contracts, agreements or arrangements involving the sharing
of profits; employment agreements; and agreements containing any covenant or
covenants which purport to limit the ability or right of the Seller or any other
person or entity to engage in any aspects of the business related to the Assets
or compete in any aspect of such business with any person or entity
(collectively, the "Scheduled Contracts"). As used herein, the terms "contract"
and "agreement" mean and include every material contract, agreement, commitment,
arrange-
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ment, understanding and promise whether written or oral. Except for contracts
and agreements with the Shareholder which are not included in the Assets, a
complete and accurate copy of each written Scheduled Contract has been delivered
or made available to the Buyer or, if oral, a complete and accurate summary
thereof has been delivered to the Buyer. Except as set forth on Schedule
4.10(a), the Scheduled Contracts are valid, binding and enforceable in
accordance with their respective terms, are in full force and effect and were
entered into in the ordinary course of business on an "arms-length" basis and
consistent with past practices. The Seller is not in breach or default of any of
the Scheduled Contracts and, except as set forth on Schedule 4.10(a), no
occurrence or circumstance exists which constitutes (with or without the giving
of notice or the lapse of time or both) a breach or default by the other party
thereto. The Seller has not been notified or advised by any party to a Scheduled
Contract of such party's intention or desire to terminate or modify any such
contract or agreement. The Seller has not granted any Lien on any Scheduled
Contract included in the Assets.
(b) Except as set forth on Schedule
4.10(b) and this Agreement, the Seller is not a party to, and neither the Seller
nor any of the Assets is subject or bound in any respect by, any written or oral
contract and agreement related to or involving the Business which will affect in
any manner the Buyer's ownership, use or operation of the Assets, including,
without limitation any contracts or agreements (i) for the purchase, sale or
lease of inventory, goods, equipment or for the performance or furnishing of
services; (ii) for the furnishing of services for which the Seller has received
payment in advance of furnishing such services and has not yet furnished such
services; and (iii) contain-
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ing any covenant or covenants which purport to limit the ability or right of the
Seller or any other person or entity to engage in any aspects of the business
related to the Assets or compete in any aspect of such business with any person
or entity.
(c) Except as set forth on Schedule
4.10(c), all Scheduled Contracts included in the Assets will be fully and
validly assigned to the Buyer as of the Closing.
4.11 CONDITION OF PURCHASED ASSETS. Each and every
one of the Assets to be purchased by Buyer pursuant to this Agreement is in good
operating condition and repair, ordinary wear and tear excepted, and is fit and
suitable for the purposes for which they are currently used by Seller. The
Assets include all of the properties and assets of Seller required, necessary or
desirable to enable Buyer to conduct the operation of the Business in the same
manner in which the Business has been conducted prior to the date hereof by
Seller.
4.12 CUSTOMERS. Except as set forth in Schedule
4.12, no customer party to a Scheduled Contract (i) has canceled, suspended or
otherwise terminated its relationship with the Seller or (ii) has advised the
Seller of its intent to cancel, suspend or otherwise terminate such
relationship, or to materially decrease its usage of the services provided by
Seller.
4.13 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.13 contains a list of all
employee benefit plans as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and each pension, benefit,
profit sharing, retirement, deferred
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compensation, welfare, insurance, disability, bonus, vacation pay, severance pay
and other plans, programs, agreements, arrangements and/or commitments
(including any post-retirement group insurance benefits to former employees or
employees), whether or not legally binding, whether written or oral, and whether
express or implied, relating to the employees or former employees (or their
dependents, survivors or beneficiaries) of the Seller which are or have been at
any time maintained by the Seller since 1991 ("Employee Plans"). Except as set
forth on Schedule 4.13: (i) none of the Employee Plans is a "multiemployer plan"
(within the meaning given such term under Sections 3(37) and 4001 of ERISA, and
Section 414(f) of the Internal Revenue Code of 1986, as amended (the "Code");
(ii) to the best knowledge of the Seller, all Employee Plans have been
administered and are in substantial compliance with the requirements prescribed
by any and all applicable statutes (including, but not limited to, ERISA and the
Code, orders or governmental rules or regulations currently in effect with
respect thereto), and the Seller has substantially performed all obligations
(including, but not limited to, the making of all contributions and/or payments
under any such Employee Plan and/or collective bargaining agreement) required to
be performed by it prior to the date hereof, and, to the best knowledge of
Seller, is not in default under or in violation of the terms of, any of the
Employee Plans and nothing has occurred, and prior to Closing nothing shall have
occurred, with respect to any Employee Plan which will or may result in the
imposition of any Lien on the assets of the Seller or the imposition of any
liability (other than a liability to pay benefits and associated administrative
costs and expenses pursuant to the Employee Plans incurred subsequent to
Closing), withdrawal liability, excise tax, penalty, or fine with respect to any
Employee Plan;
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(iii) none of the Employee Plans and no fiduciary thereof has been the direct or
indirect subject of an order or investigation or examination by a governmental
or quasi-governmental agency, and there are no matters pending before the
Internal Revenue Service, Department of Labor or the Pension Benefit Guaranty
Corporation ("PBGC") with respect to an Employee Plan; (iv) each Employee Plan
intended to be qualified under Section 401(a) of the Code meets the requirements
for qualification under said Section and any Trust or Trusts forming part of
such Employee Plan is now, and has since its inception been, exempt from federal
income tax under Section 501(a) of the Code, and has received a favorable
determination letter from the Internal Revenue Service with respect to such
qualification and nothing has occurred since the date of such determination that
would result in the loss of such qualification; (v) no "disqualified person" or
"party-in-interest" (as defined in Section 4975 of the Code and Section 3 of
ERISA, respectively) has engaged in any "prohibited transaction" (as such term
is defined in Section 4975 of the Code or Section 406 of ERISA), which could
subject any Employee Plan (or its related trust), the Seller, the Acquiring
Companies or any of their affiliates, or any officer, director or employee of
any of them to any tax or penalty imposed under Section 4975 of the Code or
Section 502(i) of ERISA either directly or indirectly, and whether by way of
indemnity or otherwise; (vi) no event has occurred and there has been no failure
to act on the part of the Seller, a fiduciary of any Employee Plan or a "plan
official" (as defined in Section 412 of ERISA) that could subject the Seller,
any Employee Plan, a fiduciary or a plan official to the imposition of any tax,
penalty or other disability, whether by way of indemnity or otherwise; (vii)
none of the Employee Plans provides medical benefits for former employees,
except such continuation
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coverage as is required under Section 4980B of the Code; (viii) no Lien has been
imposed on any of the assets of the Seller under Section 412 of the Code,
Section 302 of ERISA or Section 4068 of ERISA; (ix) the Seller has not incurred
and will not incur as a result of the transactions contemplated by this
Agreement, any "withdrawal liability" (within the meaning given such term under
Section 4201 and Subtitle E of Title IV of ERISA) with respect to any Employee
Plan, and the Seller has or will have, as of the Closing Date, made all
contributions to each such multiemployer plan required to be made on or prior to
the date thereof by the terms of such multiemployer plan and/or any collective
bargaining agreement, and there is no liability or lien under any agreement
imposing secondary or contingent liability on the Seller in this regard; (x) to
the best knowledge of the Seller, each Employee Plan which is subject to the
minimum funding standards of Section 302 of ERISA and Section 412 of the Code is
in compliance with such standards and no such Employee Plan has incurred any
"accumulated funding deficiency" (as defined in ERISA), whether or not waived,
and the Seller has not sought nor received a waiver of its funding requirements
with respect to any such Employee Plan; (xi) the PBGC has not instituted
proceedings to terminate any Employee Plan nor, to the best knowledge of the
Seller, do conditions exist which could give rise to a termination proceeding by
the PBGC with regard to any such Employee Plan; and (xii) all premiums which may
be due to the PBGC with regard to any Employee Plan have been paid on a timely
basis. The Seller has made available to Buyer full and complete copies of all
Employee Plans, if any, and all associated trust agreements, determination
letters, summary plan descriptions and material modifications, actuarial
valuations and annual reports (including series 5500 and all schedules thereto),
participant
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communications, governmental filings, insurance contracts and any other material
written documents under which the Employee Plans are operated. The Acquiring
Companies agree and acknowledge that they will be responsible for payment of any
amounts for unfunded or underfunded obligations or benefits of an Employee
Benefit Plan which become due or are created by an amendment or termination of
an Employee Benefit Plan by the Acquiring Companies after the Closing Date.
(b) Except as set forth on Schedule
4.13(b), to the best knowledge of the Seller, each Employee Plan which is an
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA), now meets
the requirements for tax-favored treatment under the Code; each such Employee
Plan has been administered to date in substantial compliance with applicable law
and the terms and provisions of all documents, agreements or contracts pursuant
to which such plans are maintained; and each such Employee Plan which is a
"group health plan" (as such term is defined in Section 5000(b)(1) of the Code)
has been administered in substantial compliance with the continuation
requirements contained in the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"), and as provided under Section 4980B(f) of the Code
and any regulations promulgated or proposed thereunder. The Seller does not
maintain any self-insured medical plan.
(c) Except as specifically set forth in
Schedule 4.13(c), the execution and performance of the transactions contemplated
by this Agreement will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event of default under any
Employee Plan or individual agreement that will or may result
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in any payment (whether of severance pay or otherwise), acceleration, vesting or
increase in benefits with respect to any employee, former employee, officer or
director of the Seller, and any affiliate or related entity thereof.
4.14 WARRANTIES. Schedule 4.14 sets forth a complete
and correct copy of all of the Seller's standard warranties (collectively, the
"Warranties" or individually a "Warranty") currently extended by the Seller to
the customers of the Seller. Except as set forth on Schedule 4.14, there are no
warranty claims outstanding against the Seller.
4.15 TRADEMARKS, PATENTS, ETC. Except as set forth
in Schedule 4.15, the Seller does not own or have any rights to any patents,
trademarks, trade names, brand names, service marks, service names, copyrights,
inventions or licenses and rights and applications with respect to the foregoing
(collectively, the "Marks and Patents"). All the Marks and Patents are
subsisting and have not been abandoned, and there are no prior claims,
controversies, lawsuits or judgments which affect the validity of the Seller's
rights to the Marks and Patents nor are there any legal proceedings, claims or
controversies instituted, pending or, to the best knowledge of the Seller,
threatened with respect to any of the Marks and Patents, or which challenge the
Seller's rights, title or interest in respect thereto. Except as set forth on
Schedule 4.15, none of the Marks and Patents are the subject of any outstanding
assignments, grants, licenses, Liens, obligations or agreements, whether
written, oral or implied. All required renewal fees, maintenance fees,
amendments and/or other filings or payments which are necessary to preserve and
maintain the Marks and Patents have been filed and/or made. To the best
knowledge of Seller, the Seller owns or has the right to use all Marks and
Patents and the like necessary to conduct its Business
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as presently conducted and without conflict with any patent, trade name,
trademark or the like of any other person or entity.
4.16 INSURANCE. Set forth in Schedule 4.16 is a
complete list of all insurance policies which the Seller maintains with respect
to its Business or the Assets. Such policies are in full force and effect. Such
policies, with respect to their amounts and types of coverage, are adequate to
insure fully against risks to which the Seller, the Business or the Assets are
normally exposed in the operation of the Business. There has not been any
material adverse change in the Seller's relationship with its insurers or in the
premiums payable pursuant to such policies. Except for the retention of prepaid
insurance by the Seller, the insurance coverage provided by the Seller's
insurance policies shall not be affected by, and shall not lapse or otherwise be
terminated by reason of, the execution of this Agreement. The Seller has not
received any notice respecting the cancellation of such insurance policies.
4.17 ENVIRONMENTAL.
(a) Except as set forth on Schedule
4.17(a) attached hereto, to the best knowledge of the Seller, Seller has
obtained all permits, licenses, and other authorizations (collectively, the
"Licenses") which are required in connection with the conduct of the Business
under all applicable Environmental Laws (as defined below) and regulations
relating to pollution or protection of the environment, including Environmental
Laws and regulations relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including without
limitation, ambient air, surface water, groundwater,
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or land) or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
(b) Except as set forth in Schedule
4.17(b), to the best knowledge of the Seller, Seller is in substantial
compliance in the conduct of the Business with all terms and conditions of the
Licenses and is in substantial compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or contained in any
regulation, code, plan, order, decree, judgment, injunction, notice (written or
verbal) or demand letter issued, entered, promulgated or approved thereunder. To
the best knowledge of Seller, all machinery and equipment included in the
Assets, including but not limited to the spray booth, meet or exceed all
standards promulgated under the Environmental Laws.
(c) Except as set forth on Schedule
4.17(c), Seller is not aware of, nor has Seller received any written or verbal
notice of, any past, present or future events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with or
prevent compliance or continued compliance with any Environmental Laws or any
regulations, code, order, decree, judgment, injunction, notice (written or
verbal) or demand letter issued, entered, promulgated or approved thereunder, or
which may give rise to any common law or legal liability, or otherwise form the
basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation, based on or related to the Seller's manufacture, processing,
storage, distribution, use, treatment, disposal, transport, or handling, or the
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emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant, chemical, or industrial, toxic or hazardous substance or
waste.
(d) Except as set forth on Schedule
4.17(d), there is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice or demand letter, notice of violation, investigation, or
proceeding pending or threatened against Seller in connection with the conduct
of the Business relating in any way to any Environmental Laws or regulation,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder.
(e) For purposes of this Agreement,
"Environmental Laws" means collectively, all federal, state and local
environmental laws, common law, statutes, rules and regulations including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Sec. 9061 et seq.), as amended, the Hazardous Materials
Transportation Act (49 U.S.C. Sec. 1801 et seq.), as amended, the Resource
Conservation and Recovery Act (42 U.S.C. Sec. 6901 et seq.), as amended, the
Federal Water Pollution Control Act (33 U.S.C. Sec. 1251 et seq.), as amended,
the Safe Drinking Water Act (42 U.S.C. Sec. 300f et seq.), as amended, the Clean
Air Act (42 U.S.C. Sec. 7401 et seq.), as amended, the Toxic Substances Control
Act (15 U.S.C. Sec. 2601 et seq.), as amended, the Federal Emergency Planning
and Community Right-to-Know Act ((42 U.S.C. Sec. 11001 et seq.), as amended, any
so-called "superfund" or "super-lien" law and such statutes and ordinances as
may be enacted by state and local governments with jurisdiction over any real
property now owned or leased by the Seller or any real property upon which the
Seller now conducts its Business and any permits, licenses, authorizations,
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variances, consents, approvals, directives or requirements of, and any
agreements with, any governments, departments, commissions, boards, courts,
authorities, agencies, officials and officers applicable to such real property
or the use thereof and regulating, relating to, or imposing liability or
standards of conduct concerning any pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
4.18 NOTES, ACCOUNTS OR OTHER RECEIVABLES. Set forth
on Schedule 4.18 is a complete list of Seller's notes, accounts or other
receivables included in the Assets as existing on January 31, 1997. All of the
Seller's notes, accounts or other receivables included on Schedule 4.18 are
properly reflected on the books and records of the Seller, and are in their
entirety valid accounts receivable arising from bona fide transactions in the
ordinary course of business. Buyer and Parent acknowledge and agree that no
claim will be made against Seller for accounts receivable which are not paid
unless the representations in this Section are not accurate.
4.19 REAL ESTATE.
(a) Except as set forth on Schedule 4.19,
the Seller does not own any real property, which property is not being acquired
by Buyer.
(b) The Seller does not have leasehold
interests in any real property.
(c) Seller has not received notice of any
pending condemnation, expropriation, eminent domain or similar proceedings
affecting all or any portion of the real property owned by the Seller and, to
the best knowledge of the Seller, no such proceedings are contemplated.
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4.20 GUARANTEES. Except as set forth on Schedule
4.20, the Seller has not guaranteed or pledged any Assets with respect to any
obligation or indebtedness of any person or entity and no person or entity has
guaranteed any obligation or indebtedness of the Seller.
4.21 TAXES.
(a) Except as set forth on Schedule
4.21(a), to the best knowledge of the Seller, the Seller has filed all Tax
Returns that it was required to file. All such Tax Returns were correct and
complete in all respects. To the best knowledge of the Seller, all Taxes owed by
the Seller (whether or not shown on any Tax Return) have been paid. The Seller
has disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Code Sec. 6662. Except as set forth on Schedule 4.21(a), the Seller
is not currently the beneficiary of any extension of time within which to file
any Tax Return. Except as set forth on Schedule 4.21(a), no claim has ever been
made by any Taxing Authority in a jurisdiction where the Seller does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction which
has not been resolved. There are no security interests on any of the assets of
the Seller that arose in connection with any failure (or alleged failure) to pay
any Tax. Except as set forth on Schedule 4.21(a), the Seller has not waived any
statute of limitations in respect of any Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency. There is no pending or
threatened action, audit, proceeding or investigation for the assessment of
collection of any Taxes for which
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the Seller could be liable, and no written or legally binding agreement has been
entered into with any Taxing Authority relating to Taxes for which the Seller
could be liable.
(b) To the best knowledge of the Seller,
the Seller has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(c) The unpaid Taxes of the Seller (i)
did not, as of the most recent fiscal month end, exceed the reserve for Tax
liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
most recent balance sheet (rather than in any notes thereto) and (ii) do not
exceed that reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Seller in filing its Tax
Returns.
(d) For purposes of this Agreement, "Tax"
means any federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under section 59A of the Internal
Revenue Code), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether or not disputed; "Tax Return" means any
return, declaration, report, claim for refund or information return or statement
relating to Taxes, including any schedule or
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attachment thereto, and including any amendment thereof; and "Taxing Authority"
means any governmental authority responsible for the imposition or collection of
any Tax.
4.22 LABOR MATTERS. Schedule 4.22 sets forth a true
and complete list of all employees of Seller together with a brief summary of
their titles, duties, terms of employment and compensation arrangements,
including the salary and any bonus, commission or other compensation paid to
each employee during the twelve (12) month period prior to the date hereof and
the current employment and compensation arrangements with respect to each such
employee. Except as set forth on Schedule 4.22, Seller is not a party to any
collective bargaining or similar labor agreements, no such agreement determines
the terms and conditions of employment of any employee of Seller, no collective
bargaining or other labor agent has been certified as a representative of any of
the employees of the Seller, and no representation campaign or election is now
in progress with respect to any of the employees of the Seller. All agreements
set forth on Schedule 4.22 are in full force and effect. Other than as
identified on Schedule 4.22, there exists no labor disputes with regard to
Seller's employees. Seller's cessation of operations will not violate any laws,
rules or regulations applicable to its employees.
4.23 ABSENCE OF UNDISCLOSED LIABILITIES. To the best
knowledge of the Seller, the Seller has no material liabilities or obligations
with respect to the Business, either direct or indirect, matured or unmatured or
absolute, contingent or otherwise, other than (a) those reflected in the 1996
Balance Sheet and (b) those liabilities or obligations incurred, consistently
with past business practice, in or as a result of the normal and ordinary course
of business since the Balance Sheet Date.
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4.24 LIABILITIES. The liabilities to be assumed by
Buyer pursuant to this Agreement consist solely of liabilities of Seller under
Contracts included in the Assets which relate solely to the operation of the
Business.
4.25 ACCURACY OF DOCUMENTS AND INFORMATION. The
information provided to the Acquiring Companies by the Seller with respect to
the Seller, the Assets and the Business, including the representations and
warranties made in this Agreement and in the Schedules attached hereto, and all
other information provided to the Acquiring Companies in connection with their
investigation of the Seller, does not (and will not at the Closing Date) contain
any untrue statement of a material fact and does not omit (and will not omit at
the Closing Date) to state any material fact necessary to make the statements or
facts contained herein or therein not misleading.
4.26 BROKERS AND AGENTS. Neither Seller nor
Shareholder has employed or dealt with any business broker, agent or finder in
respect of the transactions contemplated hereby, other than C.G. Mack
Associates, Ltd. the fees and expenses of which shall be paid by the Seller.
4.27 RESTRICTIONS ON SHARES; INVESTOR KNOWLEDGE.
(a) The Seller acknowledges that it has
been given access to all information relating to the business and assets of
Parent which it has requested, including Parent's Prospectus dated July 22,
1993, Parent's Annual Report on Form 10-KSB for the year ended December 31,
1995, and Parent's Quarterly Reports on Form 10-QSB for the quarters ended March
31, 1996, June 30, 1996 and September 30, 1996, respectively, copies of which
Prospectus, Annual Report and Quarterly Reports are attached hereto as Schedule
4.27.
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(b) The Seller understands that the
Hi-Rise Shares to be issued and delivered in accordance with Section 2.1(b)
hereof shall be issued and delivered pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"); that for such purpose Buyer will rely upon the
representations, warranties, covenants and agreements contained herein; and that
such exemption may not be available unless such representations and warranties
are correct and such covenants and agreements performed.
(c) The Seller understands that, except
as expressly set forth in Section 7.12 hereof, neither of the Acquiring
Companies is under any obligation to effect a registration under the Securities
Act of the Hi-Rise Shares to be issued in accordance with this Agreement.
(d) The Seller understands that, under
existing rules of the Securities and Exchange Commission (the "SEC"), there are
substantial restrictions on the transferability of the Hi-Rise Shares; such
securities will not be, and, except as expressly set forth herein, the Seller
will have no rights to require that such securities be, registered under the
Securities Act; such securities may be transferred only if registered under the
Securities Act or if an exemption from such registration is available; the
Seller may not be able to avail itself of the provisions of Rule 144 promulgated
by the SEC under the Securities Act with respect to the transfer of such
securities; and, accordingly, the Seller may have to hold such securities issued
to it pursuant to this Agreement indefinitely.
(e) The Seller is a sophisticated
investor familiar with the type of risks inherent in the acquisition of
securities such as the Hi-Rise Shares and the financial
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position of the Seller is such that it can afford to retain such securities for
an indefinite period of time without realizing any direct or indirect cash
return on its investment.
(f) The Seller is acquiring or will
acquire the Hi-Rise Shares for its own account and not with a view to, or for
sale in connection with, the distribution thereof within the meaning of the
Securities Act.
(g) The Seller understands that the
certificates evidencing the Hi-Rise Shares will bear appropriate restrictive
legends.
5. [Reserved]
6. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING COMPANIES. In
order to induce the Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, each of the Acquiring Companies, jointly and
severally, hereby represents and warrants to the Seller as follows:
6.1 ACQUIRING COMPANIES' ORGANIZATION.
(a) The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. The Buyer has all requisite power and authority to own and operate and
lease its properties and assets, to carry on its business as it is now being
conducted and to execute, deliver and perform its obligations under this
Agreement and consummate the transactions contemplated hereby.
(b) The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. The Parent has all requisite power and authority to own and operate and
lease its properties and assets, to carry on its
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business as it is now being conducted and to execute, deliver and perform its
obligations under this Agreement and consummate the transactions contemplated
hereby.
6.2 AUTHORIZATION OF AGREEMENT. The execution,
delivery and performance by each of the Acquiring Companies of this Agreement
and of each and every agreement and document contemplated hereby and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action of each of the Acquiring Companies.
This Agreement has been duly and validly executed and delivered by each of the
Acquiring Companies and constitutes (and, when executed and delivered, each such
other agreement and document will constitute) a valid and binding obligation of
each of the Acquiring Companies, enforceable against each of the Acquiring
Companies in accordance with its terms.
6.3 NON-CONTRAVENTION; CONSENTS. Neither the
execution and delivery by the Acquiring Companies of this Agreement nor the
consummation by the Acquiring Companies of the transactions contemplated hereby,
nor compliance by the Acquiring Companies with any of the provisions hereof,
will (i) conflict with or result in a breach of any provision of the Articles of
Incorporation or by-laws of the Parent or the Articles of Incorporation or Code
of Regulations of the Buyer, (ii) result in the breach of, or conflict with, any
of the terms and conditions of, or constitute a default (with or without the
giving of notice or the lapse of time or both) with respect to, or result in the
cancellation or termination of, or the acceleration of the performance of any
obligations or of any indebtedness under any contract, agreement, commitment,
indenture, mortgage, note, bond, license or other instrument or obligation to
which either of the Acquiring Companies is now
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a party or by which either of the Acquiring Companies or their respective
properties or assets may be bound or affected (other than such breaches,
conflicts and defaults as shall have been waived at or prior to the Closing) or
(iii) violate any law or any rule or regulation of any administrative agency or
governmental body, or any order, writ, injunction or decree of any court,
administrative agency or governmental body to which either of the Acquiring
Companies may be subject. No approval, authorization, consent or other order or
action of, or filing with or notice to any court, administrative agency or other
governmental authority or any other person is required for the execution and
delivery by either of the Acquiring Companies of this Agreement or consummation
by either of the Acquiring Companies of the transactions contemplated hereby
(other than (a) such consents as shall have obtained at or prior to the Closing
and (b) the filing of a Current Report on Form 8-K with the SEC).
6.4 LITIGATION. There is no litigation, suit,
proceeding, action, claim or investigation, at law or in equity, pending, or to
the best knowledge of the Acquiring Companies, threatened against, or affecting
in any way, either of the Acquiring Companies' ability to perform its
obligations as contemplated by this Agreement.
6.5 HI-RISE SHARES. The Hi-Rise Shares have been
duly authorized and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable.
7. FURTHER AGREEMENTS OF THE PARTIES.
7.1 OPERATION OF THE BUSINESS. From and after the
date of this Agreement until the Closing Date, except to the extent contemplated
by this Agreement or
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otherwise consented to in writing by the Buyer, the Seller shall operate its
Business in substantially the same manner as presently conducted and only in the
ordinary and usual course and substantially consistent with past practice and in
substantial compliance with (i) all laws and (ii) all leases, contracts,
commitments and other agreements, and all licenses, permits, and other
instruments, relating to the operation of the Business, and will use reasonable
efforts to preserve intact its present business organization and to keep
available the services of all employees, representatives and agents. The Seller
shall use its reasonable efforts, consistent with past practices, to promote the
Business and to maintain the goodwill and reputation associated with the
Business, and shall not take or omit to take any action which causes, or which
is likely to cause, any material deterioration of the Business or the Seller's
relationships with material suppliers or customers. Without limiting the
generality of the foregoing, (a) the Seller will maintain all of the equipment
in substantially the same condition and repair as such equipment is maintained
as of the date hereof, ordinary wear and tear excepted; (b) the Seller shall not
sell, transfer, pledge, lease or otherwise dispose of any of the Assets, other
than in the ordinary course of business; (c) the Seller shall not amend,
terminate or waive any material right in respect of the Assets or the Business,
or do any act, or omit to do any act, which will cause a breach of any material
contract, agreement, commitment or obligation by it; (d) the Seller shall
maintain its books, accounts and records in accordance with good business
practice and generally accepted accounting principles consistently applied; (e)
the Seller shall not engage in any activities or transactions outside the
ordinary course of business; (f) the Seller shall not declare or pay any
dividend or make any other distribution or payment of any kind in cash or
property to the
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Shareholder or other affiliates; and (g) the Seller shall not increase any
existing employee benefits, establish any new employee plan or amend or modify
any existing Employee Plans, or otherwise incur any obligation or liability
under any employee plan materially different in nature or amount from
obligations or liabilities incurred in connection with the Employee Plans.
7.2 CONSENTS; ASSIGNMENT OF AGREEMENTS. Seller
shall obtain, at the earliest practicable date after the Closing, all consents
and approvals of third parties (whether or not listed on Schedule 4.4) which are
necessary or desirable for the consummation of the transactions contemplated
hereby (including, without limitation, the valid and binding transfer of the
Assets to Buyer) (the "Consents"). The Consents shall be written instruments
whose form and substance are reasonably satisfactory to Buyer. The Consents
shall not, without Buyer's express consent, impose any obligations on Buyer or
create any conditions adverse to Buyer, other than the conditions or obligations
specified in this Agreement.
7.3 CHANGE IN NAME. At or promptly following the
Closing, Seller shall change its name to a name that does not include the word
"Wilkinson".
7.4 NO DISCUSSIONS. The Seller shall not enter into
any substantive negotiations or discussions with any third party with respect to
the sale or lease of the Assets or the Business, or the sale of any capital
stock of the Seller, or any other merger, acquisition, partnership, joint
venture or other business combination until the earlier to occur of the (a)
Closing Date or (b) the termination of this Agreement.
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7.5 EMPLOYEE MATTERS. The Seller shall permit the
Buyer to contact and make arrangements with the Seller's employees for the
purpose of assuring their employment by the Buyer after the Closing and for the
purpose of ensuring the continuity of the Business, and the Seller agrees not to
discourage any such employees from being employed by or consulting with the
Buyer. Nothing herein shall obligate the Buyer to employ or otherwise be
responsible for any of the Seller's employees.
7.6 NOTICE REGARDING CHANGES. The Seller shall
promptly notify the Buyer in writing of any change in facts and circumstances
that could render any of the representations and warranties made herein by the
Seller materially inaccurate or misleading.
7.7 FURNISHING OF INFORMATION. The Seller will
allow Buyer to make a complete examination and analysis of the Business, Assets
and records, financial or otherwise, of the Seller. In connection with the
foregoing review, Seller agrees that it shall furnish to the Buyer and Buyer's
representatives all such information concerning the Seller's Business, Assets,
operations, properties or affairs as may be reasonably requested.
7.8 NOTIFICATION TO CUSTOMERS. At the Buyer's
request and in a form approved by the Buyer, the Seller agrees to notify all
customers of the Business identified by Buyer and all customers of the Business
during the year preceding the Closing as identified by Buyer, either separately
or jointly with the Buyer, of the Buyer's purchase of the Business and Assets
hereunder and that all further communications or requests by such customers with
respect to the Business and Assets shall be directed to the Buyer. Without
limiting the foregoing, promptly following the Closing, the Seller shall send a
letter, in a
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form approved by the Buyer, to each debtor with respect to the notes, accounts
or other receivables included in the Assets directing that all payments on
account of such receivables made after the Closing shall be made to the Buyer.
7.9 COLLECTION OF RECEIVABLES. Subject to Section
4.18, the Seller agrees that it will reasonably cooperate with the Buyer in
collecting the notes, accounts and other receivables included in the Assets from
any customers and will immediately deliver to the Buyer the amount paid on any
and all receivables it collects after the Closing Date in connection with the
Business, less out-of-pocket expenses incurred by Seller at the request of
Buyer, provided that Christian Kamm shall not be required to travel in
connection with the collection of such receivables without reasonable
compensation.
7.10 BROKERS AND AGENTS. Buyer, on the one hand, and
the Seller, on the other hand, agree to indemnify and hold the other harmless
from and against all fees, expenses, commissions and costs due and owing to any
other broker, agent or finder on account of or in any way resulting from any
contract or understanding existing between the indemnifying party and such
person.
7.11 LEASE NEGOTIATIONS. Seller shall cooperate with
and keep Buyer apprised of the satisfactory negotiation of the Lease (as
hereinafter defined).
7.12 GRANT OF REGISTRATION RIGHTS.
(a) In the event that, at any time prior
to the two-year anniversary of the Closing Date, Parent proposes to register any
shares (the "Registration Shares") of Common Stock under the Securities Act
other than pursuant to a registration statement on Forms S-4 or S-8, or any
successor to such Forms, for the purpose of the sale
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or other transfer of the Registration Shares by Parent, Parent shall mail or
deliver to the Seller, prompt written notice (the "Registration Notice") of its
intention to effect such registration and a copy of the registration statement
(a "Registration Statement") covering such Registration Shares.
(b) In the event that a Registration
Notice shall have been so mailed or delivered, Seller may, at its election, mail
or deliver to Parent a written notice (a "Supplemental Notice") (i) specifying
the number of Shares ("Supplemental Registration Shares") proposed to be sold or
otherwise transferred by the Seller, (ii) describing the proposed manner of sale
or other transfer thereof and (iii) requesting the registration thereof under
the Securities Act; provided, however, that such Supplemental Notice shall be so
mailed or delivered by the Seller not more than 15 days after the date of
receipt by the Seller of a Registration Notice.
(c) From and after receipt of a
Supplemental Notice, Parent shall, subject to the sale or other transfer of some
or all of such Registration Shares, use its best efforts to cause the
Supplemental Registration Shares held by the Seller specified in such
Supplemental Notice to be included in such Registration Statement and to effect
and to comply with all such qualifications, compliances and requirements as may
be necessary to permit the sale or other transfer of such Supplemental
Registration Shares in the manner described in such Supplemental Notice,
including, without limitation, qualifications under the applicable Blue Sky or
other state securities laws (provided that Parent shall not be required in
connection therewith to qualify as a foreign corporation or to execute general
consent to service of process in any state); provided, however, that (i) in the
case of an
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underwritten public offering of securities proposed to be made by Parent, if the
managing underwriter shall advise Parent in writing that inclusion of some or
all of such Supplemental Registration Shares would, in such managing
underwriter's opinion, interfere with the proposed distribution of the
securities to be issued by Parent in respect of which registration was
originally to be effected, then Parent may exclude from such Registration
Statement all or a portion of the Supplemental Registration Shares, (ii) if any
firm of counsel representing Parent in connection with such registration shall
advise Parent in writing that in their opinion one or more of the steps
contemplated hereby is not necessary to permit the sale of the Supplemental
Registration Shares in a transaction constituting a public offering within the
meaning of the Securities Act, then Parent shall not be required to take any
action with respect to such step or steps, and (iii) in the case of an
underwritten public offering, if the managing underwriter requires that Parent
and all other selling security holders agree not to sell or otherwise dispose of
securities of Parent following the closing of such public offering, the Seller
will so agree on terms similar to the Parent and such other selling security
holders.
(d) Parent will pay all expenses
necessary to effect under the Securities Act any registration statements,
amendments or supplements filed pursuant to this Section 7.12 (other than
underwriters' discounts and commissions and brokerage commission and fees, if
any, payable with respect to shares sold by the Seller and other than legal fees
incurred by the Seller).
(e) Notwithstanding the provisions of
this Section 7.12, the Parent shall have the right at any time after it shall
have given written notice pursuant to
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this Section 7.12 (irrespective of whether any written request for inclusion of
Supplemental Registration Shares shall have already been made) to elect not to
file any such proposed Registration Statement, or to withdraw the same after the
filing but prior to the effective date thereof.
(f) Upon receipt of notice from Parent
that an event has occurred which requires a post-effective amendment to the
Registration Statement or a supplement to the prospectus included therein, the
Seller shall promptly discontinue the sale of its Supplemental Registration
Shares until it receives a copy of a supplemented or amended prospectus from
Parent, which Parent shall provide as soon as practicable after such notice.
(g) The Seller shall provide Parent in
writing such information respecting the Seller and its proposed distribution of
any of the Supplemental Registration Shares as shall be reasonably necessary in
order to assure compliance with federal and applicable state securities laws.
7.13 SELLER'S ACCESS TO RECORDS. After the Closing,
the Buyer shall provide Seller with reasonable access to the books and records
of Seller included in the Assets for the purpose of preparing its tax returns
and defending third-party claims.
8. CONDITIONS PRECEDENT TO CLOSING.
8.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
SELLER. Seller's obligation to consummate the transactions contemplated by this
Agreement shall be subject
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to the fulfillment, at or prior to Closing, of each of the following conditions
(any or all of which may be waived in writing, in whole or in part, by the
Seller):
(a) The Acquiring Companies shall have
performed and complied in all material respects with each obligation and
covenant required by this Agreement to be performed or complied with by them
prior to or at the Closing.
(b) The representations and warranties
of the Acquiring Companies contained herein shall be true and correct in all
material respects at and as of the Closing Date as if made at and as of such
time.
(c) Buyer shall have delivered to the
Seller the items set forth in Section 3.2(b) of this Agreement.
(d) Buyer shall have executed and
delivered a lease with Seller with respect to the space at 1530 Commerce Drive,
Stow, Ohio, at which the Seller's principal offices are located, in the form
attached hereto as Exhibit F (the "Lease").
(e) No action, suit or proceeding by any
person shall have been commenced and still be pending, no investigation by any
governmental or regulatory authority shall have been commenced and still be
pending, and no action, suit or proceeding by any person shall have been
threatened against the Buyer, the Parent, the Seller or the Shareholder, (a)
seeking to restrain, prevent or change the transactions contemplated hereby or
questioning the validity or legality of any such transactions or (b) which if
resolved adversely to any party, would materially and adversely affect the
business or condition, financial or otherwise, of the Buyer, the Parent or the
Seller.
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(f) All proceedings to be taken by the
Buyer and the Parent in connection with the transactions contemplated hereby and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Seller and its counsel, and the Seller and said counsel shall
have received all such counterpart originals or certified or other copies of
such documents as it or they may reasonably request.
(g) Buyer shall have delivered to the
Seller all such other certificates and documents as the Seller and its counsel
shall have reasonably requested.
8.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
ACQUIRING COMPANIES. The obligation of the Acquiring Companies to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment,
at or prior to Closing, of each of the following conditions precedent (any or
all of which may be waived in writing, in whole or in part, by the Acquiring
Companies):
(a) The Seller shall have performed and
complied in all material respects with each obligation and covenant required by
this Agreement to be performed or to be complied with by it on or prior to the
Closing Date.
(b) The representations and warranties of
the Seller contained herein or in any Schedule attached hereto shall be true and
correct in all material respects at and as of the Closing Date as if made at and
as of such time.
(c) The Seller shall have delivered or
caused delivery of the items set forth in Section 3.2(a) hereof.
(d) Except as otherwise set forth in this
Agreement, the Buyer shall have received written evidence, in form and substance
satisfactory to it, that all
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material consents, waivers, authorizations and approvals of, or filing with or
notices to, governmental entities and third parties required in order that the
transactions contemplated hereby be consummated have been obtained or made.
(e) There shall not have occurred since
the Balance Sheet Date any material damage or loss by theft, casualty or
otherwise, whether or not insured against by the Seller, of all or any material
portion of the Assets, or any material adverse change in or interference with
the Business or the properties, assets, condition (financial or otherwise) or
prospects of the Seller.
(f) Seller shall have executed and
delivered the Lease.
(g) Each of the Seller, the Shareholder,
Christian Kamm and all other affiliates of Shareholder identified by Buyer shall
have executed and delivered a five-year non-competition agreement (including
non-solicitation of employees) with the Buyer, in substantially the form
attached hereto as Exhibit G.
(h) Each employee of Seller set forth on
Schedule 8.2(h) attached hereto shall have sought employment by Buyer and, in
connection therewith, shall have executed Parent's standard non-competition and
confidentiality agreement. Christian Kamm shall have executed a consulting and
non-competition agreement with the Acquiring Companies, in substantially the
form attached hereto as Exhibit H.
(i) No action, suit or proceeding by any
person shall have been commenced and still be pending, no investigations by any
governmental or regulatory authority shall have been commenced and still be
pending, and no action, suit or proceeding by any person shall have been
threatened against the Buyer, the Parent, the Seller or the
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Shareholder, (a) seeking to restrain, prevent or change the transactions
contemplated hereby or questioning the validity or legality of any such
transactions or (b) which if resolved adversely to any party, would materially
and adversely affect the business or condition, financial or otherwise, of the
Buyer, the Parent or the Seller.
(j) [Reserved]
(k) All proceedings to be taken by the
Seller and the Shareholder in connection with the transactions contemplated
hereby and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Buyer and its counsel, and the Buyer and said counsel
shall have received all such counterpart originals or certified or other copies
of such documents as it or they may reasonably request.
(l) Each of the Seller, the Shareholder
and Plastic Components, Inc. shall have executed and delivered an
indemnification agreement with the Acquiring Companies, with respect to
environmental matters, in the form attached hereto as Exhibit I.
(m) Seller shall have delivered to the
Buyer all such other certificates and documents as the Acquiring Companies or
their counsel shall have reasonably requested.
9. TERMINATION, AMENDMENT AND WAIVER.
9.1 TERMINATION. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual written consent of Buyer,
Parent and Seller properly authorized, to the extent applicable, by their
respective Boards of Directors;
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(b) by any party hereto, except as
modified herein, (i) if it has become impossible for any material condition
specified in this Agreement to be satisfied and such condition has not been
waived by the party having the power to waive such condition within ten (10)
days after a written request for such waiver was made, or (ii) at any time with
respect to a condition that must be satisfied to a party's sole discretion, but
only by that party and if that party determines that such condition has not been
satisfied and that it will not be waived;
(c) by the Acquiring Companies, if there
shall have been any material breach by Seller of any obligation of Seller
hereunder and such breach shall not have been remedied within ten (10) days
after receipt by Seller of notice in writing from Buyer specifying the nature of
such breach and requesting that it be remedied; or
(d) by Seller, if there shall have been
any material breach by the Acquiring Companies of any obligation of the
Acquiring Companies hereunder and such breach shall not have been remedied
within ten (10) days after receipt by the Acquiring Companies of notice in
writing from Seller specifying the nature of such breach and requesting that it
be remedied.
9.2 EFFECT OF TERMINATION. In the event of
termination of this Agreement by either the Acquiring Companies or Seller as
provided in Section 9.1 above, this Agreement shall forthwith become void,
except that each party shall retain its right with respect to any breach of the
Agreement by the other party, in each case arising, accruing or related to
actions occurring prior to termination and Buyer's obligation of confidentiality
set forth in the Letter of Intent dated September 6, 1996 shall continue.
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9.3 AMENDMENT, EXTENSION AND WAIVER. Subject to
applicable law, at any time prior to the consummation of the transactions
contemplated hereby, Seller, Buyer and Parent may, by action taken by their
respective Boards of Directors, to the extent applicable, (i) amend this
Agreement, (ii) extend the time for the performance of any of the obligations of
the other, (iii) waive any inaccuracies in the representations and warranties of
the other contained herein or in any document, certificate or instrument
delivered pursuant hereto, or (iv) waive compliance with any of the covenants,
agreements or conditions of the other. This Agreement may not be amended, except
by an instrument in writing signed on behalf of each of the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party, but such waiver or failure to insist on 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, violation, default
or breach.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
10.1 SURVIVAL. All statements contained in any
certificate or other instrument delivered by or on behalf of any party pursuant
to this Agreement or in connection with the transactions contemplated by this
Agreement shall be considered representations and warranties by that party with
the same force and effect as if contained in this Agreement. All
representations, warranties, covenants and agreements by any party contained in
this Agreement shall survive the Closing notwithstanding any investigation at
any time made by or on behalf of any other party, and shall not be considered
waived by a party's consummation of the transactions contemplated by this
Agreement except as
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expressly set forth to the contrary. Notwithstanding the preceding two
sentences, none of the parties shall have any liability for misrepresentation or
breach of warranty except to the extent that notice of a claim (specifying the
nature of such claim in reasonable detail) is asserted in writing and delivered
to that party prior to eighteen (18) months from the Closing, except that, in
the case of a misrepresentation or breach of warranty relating to (a) any Tax or
Employee Plan, notice may be given at any time prior to the expiration of the
applicable statute of limitations, and (b) title (including, but not limited to,
the absence of Liens), notice may be given at any time.
10.2 INDEMNIFICATION.
(a) Subject to the provisions of Section
10.4 hereof, Seller shall indemnify and hold harmless the Acquiring Companies
against all loss, liability, damage or expense (including reasonable attorney's
fees and expenses of counsel in any matter, whether involving a third party or
between the indemnified and indemnified parties), net of any applicable
insurance proceeds ("Losses"), either of the Acquiring Companies shall suffer,
sustain or become subject to as a result of (i) any breach or inaccuracy of any
representation, warranty, covenant or other agreement of the Seller contained in
this Agreement, or a claim by a third party, including any environmental claims
regarding the presence of hazardous substances or wastes, which, without regard
to the merits of the claim, would constitute such a breach or misrepresentation,
(ii) any Tax of the Seller or any Tax of any other person for which the Seller
could be liable (whether (i) pursuant to Treasury regulation section 1.1502-6
(or any similar provision of state, local or foreign law), (ii) as a transferee
or successor, (iii) by contract (including any tax sharing agreement) or
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(iv) otherwise), including all Taxes attributable to the Business and the
operations of the Seller prior to the Closing and prior to the consummation of
the transactions contemplated hereby, (iii) any failure to comply with any "bulk
sales" laws applicable to the transactions contemplated hereby, or (iv) Seller's
failure to satisfy any and all liabilities not assumed by Buyer pursuant to this
Agreement. Indemnification payments pursuant to this Section 10.2 shall be made
by paying to the Indemnified Party amounts that, on an after-Tax basis
reflecting the Tax consequences, if any, of each payment by the Indemnified
Party of Taxes and the receipt of the payments from the Indemnifying Party
pursuant to this 10.2, are equal to the amount of the Losses suffered by the
Indemnified Party. The merger, consolidation, liquidation, dissolution or
winding up of, or any similar transaction with respect to, the Seller shall not
affect in any manner the obligations of the Seller pursuant to this Section
10.2(a) or any other term or provision of this Agreement, and the Seller
covenants and agrees to make adequate provision for its liabilities and
obligations hereunder in the event of any such transaction.
(b) Subject to the provisions of Section
10.4 hereof, each of the Acquiring Companies, jointly and severally, shall
indemnify and hold harmless Seller against all Losses that Seller may suffer,
sustain, or become subject to as a result of any breach or inaccuracy of any
representation, warranty, covenant or other agreement of the Acquiring Companies
contained in this Agreement, or a claim by a third party which, without regard
to the merits of the claim, would constitute a breach or misrepresentation. The
merger, consolidation, liquidation, dissolution or winding up of (or any similar
transaction with respect to) either of the Acquiring Companies shall not affect
in any
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<PAGE>
manner the obligations of the Acquiring Companies pursuant to this Section
10.2(b) or any other term or provision of this Agreement, and the Acquiring
Companies covenant and agree to make adequate provision for their respective
liabilities and obligations hereunder in the event of any such transaction.
(c) Each party acknowledges that reliance
shall not be an element of any claim by the other for breach of a warranty or
misrepresentation under this Agreement.
10.3 CONDITIONS OF INDEMNIFICATION FOR THIRD PARTY
CLAIMS. The obligations and liabilities of the parties under this Section with
respect to, relating to, caused (in whole or in part) by or arising out of
claims of third parties (individually, a "Third Party Claim" and collectively,
"Third Party Claims") shall be subject to the following conditions:
(a) The party entitled to be indemnified
hereunder (the "Indemnified Party") shall give the party obligated to provide
the indemnity (the "Indemnifying Party") prompt notice of any Third Party Claim
(the "Claim Notice"); provided that the failure to give such Claim Notice shall
not affect the liability of the Indemnifying Party under this Agreement unless
the failure materially and adversely affects the ability of the Indemnifying
Party to defend the Third Party Claim. If the Indemnifying Party promptly
acknowledges in writing its obligation to indemnify in accordance with the terms
and subject to the limitations of such party's obligation to indemnify contained
in this Agreement with respect to that claim, the Indemnifying Party shall have
a reasonable time to assume the defense of the Third Party Claim at its expense
and with counsel of its choosing, which counsel shall be reasonably satisfactory
to the Indemnified Party. Any Claim Notice shall
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identify, to the extent known to the Indemnified Party, the basis for the Third
Party Claim, the facts giving rise to the Third Party Claim, and the estimated
amount of the Third Party Claim (which estimate shall not be conclusive of the
final amount of such claim or demand). The Indemnified Party shall make
available to the Indemnifying Party copies of all relevant documents and records
in its possession.
(b) If the Indemnifying Party, within a
reasonable time after receipt of such Claim Notice, fails to assume the defense
of any Third Party Claim in accordance with Section 10.3(a), the Indemnified
Party shall (upon further notice to the Indemnifying Party) have the right to
undertake the defense, compromise or settlement of the Third Party Claim, at the
expense and for the account and risk of the Indemnifying Party.
(c) Anything in this Section 10.3 to the
contrary notwithstanding, (i) the Indemnifying Party shall not without the
written consent of the Indemnified Party, settle or compromise any Third Party
Claim or consent to the entry of judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of an unconditional release from all liability in respect of
the Third Party Claim; (ii) if such Third Party Claim involves an issue or
matter which the Indemnified Party believes could have a materially adverse
effect on the Indemnified Party's business, operations, assets, properties or
prospects of its business, the Indemnified Party shall have the right to control
the defense or settlement of any such claim or demand, at the expense of the
Indemnified Party without contribution from the Indemnifying Party; and (iii)
the Indemnified Party shall have the right to employ its own
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counsel to defend any claim at the Indemnifying Party's expense if (x) the
employment of such counsel by the Indemnified Party has been authorized by the
Indemnifying Party, or (y) counsel selected by the Indemnifying Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in the conduct of the defense of
such action or (z) the Indemnifying Party shall not have employed counsel to
assume the defense of such claim in accordance with Section 10.3(a).
(d) In the event that the Indemnified
Party should have a claim against the Indemnifying Party hereunder which does
not involve a claim or demand being asserted against or sought to be collected
from it by a third party, the Indemnified Party shall promptly send a Claim
Notice with respect to such claim to the Indemnifying Party. If the Indemnifying
Party does not notify the Indemnified Party within thirty (30) calendar days
that it disputes such claim, the amount of such claim shall be conclusively
deemed a liability of the Indemnifying Party hereunder.
(e) Nothing herein shall be deemed to
prevent any Indemnified Party from making a claim hereunder for potential or
contingent claims or demands, provided that (i) the Claim Notice sets forth (A)
the specific basis for any such potential or contingent claim or demand and (B)
the estimated amount thereof (to the extent then feasible) and (ii) the
Indemnified Party has reasonable grounds to believe that such a claim or demand
will be made.
10.4 LIMITATION ON INDEMNIFICATION. Notwithstanding
any other provision of Section 10.2, no party hereto shall have any obligation
to indemnify any other party pursuant to Section 10.2, unless and until the
Damages incurred by such other party,
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individually or in the aggregate, shall exceed $50,000, whereupon the party to
be indemnified shall be entitled to seek indemnification for the full amount of
Damages incurred by it in excess of $50,000 (and not for the first $50,000).
Notwithstanding any other provision of Section 10.2, in the absence of fraud,
except for breaches of representations and warranties as to title to the Assets,
the aggregate amount of Damages for which Seller shall be liable pursuant to
Section 10.2 (other than for knowing or intentional misrepresentations) shall
not exceed $500,000, provided, that if Parent or Buyer brings an action for
fraud against Seller and Parent or Buyer is not the prevailing party in such
action, Parent and Buyer shall pay Seller's legal expenses with respect to such
action.
11. POST-CLOSING MATTERS.
11.1 TRANSITION SERVICES. The Seller agrees to
provide reasonable assistance to the Buyer in connection with the transition of
the Business to the Buyer.
11.2 FURTHER ASSURANCES. The Seller hereby covenants
and agrees to (a) make, execute and deliver to the Buyer any and all powers of
attorney and other authority which the Seller may lawfully make, execute and
deliver, in addition to any such powers and authorities as are contained herein,
which may reasonably be or become necessary, proper or convenient to enable the
Buyer to reduce to possession, collect, enforce, own or enjoy any and all rights
and benefits in, to, with respect to, or in connection with, the Assets, or any
part or portion thereof, and (b) upon the Buyer's request, to take, in the
Seller's name, any and all steps and to do any and all things which may be or
become lawful and reasonably necessary, proper, convenient or desirable to
enable the Buyer to reduce to possession, collect, enforce, own and enjoy any
and all rights and benefits in, to,
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with respect to, or in connection with, the Assets, and each and every part and
portion thereof. The Seller also covenants and agrees with the Buyer, its
successors and assigns, that the Seller will do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, any and all
such further reasonable acts, instruments, papers and documents as may be
necessary to carry out and effectuate the intent and purposes of this Agreement.
From and after the Closing Date, Seller will promptly refer all inquiries with
respect to ownership of the Assets or the Business to Buyer.
11.3 PAYMENT OF LIABILITIES; DISCHARGE OF LIENS. The
Seller shall satisfy and discharge as the same shall become due, all of Seller's
liabilities, obligations, debts and commitments including but not limited to Tax
liabilities, in accordance with this Agreement, other than the Assumed
Liabilities.
11.4 TRANSFER OF PERMITS; ADDITIONAL CONSENTS.
Subsequent to the Closing, Seller shall use its reasonable efforts to
effectively transfer to Buyer all Permits which were not so transferred at or
prior to the Closing and to obtain all approvals, consents and authorizations
with respect to such transfers. In addition, subsequent to the Closing, to the
extent requested by Buyer, Seller shall use its reasonable efforts to obtain any
required consents of the other parties to the Scheduled Contracts included in
the Assets to the assignment thereof to the Buyer which were not obtained at or
prior to the Closing.
12. RISK OF LOSS. Prior to the Closing, the risk of loss
(including damage and/or destruction) of all of the Seller's property and
assets, including without limitation the Assets, shall remain with the Seller,
and the legal doctrine known as the "Doctrine of
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Equitable Conversion" shall not be applicable to this Agreement or to any of the
transactions contemplated hereby.
13. MISCELLANEOUS.
13.1 ENTIRE AGREEMENT. This Agreement, and the
Exhibits and Schedules to this Agreement constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and supersede all
prior negotiations, agreements, arrangements and understandings, whether oral or
written, among the parties hereto with respect to such subject matter,
(including, without limitation, the letter of intent dated September 6, 1996, as
amended, between the Seller and the Buyer).
13.2 NO THIRD PARTY BENEFICIARY. Nothing expressed
or implied in this Agreement is intended, or shall be construed, to confer upon
or give any person, firm, corporation, partnership, association or other entity,
other than the parties hereto and their respective successors and assigns, any
rights or remedies under or by reason of this Agreement.
13.3 AMENDMENT. This Agreement may not be amended or
modified in any respect, except by the mutual written agreement of the parties
hereto.
13.4 WAIVERS AND REMEDIES. The waiver by any of the
parties hereto of any other party's prompt and complete performance, or breach
or violation, of any provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation, and the failure by
any of the parties hereto to exercise any right or remedy which it may possess
hereunder shall not operate nor be construed as a bar
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<PAGE>
to the exercise of such right or remedy by such party upon the occurrence of any
subsequent breach or violation.
13.5 SEVERABILITY. If any term, provision, covenant
or restriction of this Agreement (or the application thereof to any specific
persons or circumstances) should be held by an administrative agency or court of
competent jurisdiction to be invalid, void or unenforceable, such term,
provision, covenant or restriction shall be modified to the minimum extent
necessary in order to render it enforceable within such jurisdiction, consistent
with the expressed objectives of the parties hereto. Further, the remainder of
this Agreement (and the application of such term, provision, covenant or
restriction to any other persons or circumstances) shall not be affected
thereby, but rather shall be enforced to the greatest extent permitted by law.
13.6 DESCRIPTIVE HEADINGS. Descriptive headings
contained herein are for convenience only and shall not control or affect the
meaning or construction of any provision of this Agreement.
13.7 COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by the separate parties hereto in separate
counterparts, each of which shall be deemed to be one and the same instrument.
13.8 NOTICES. All notices, consents, requests,
instructions, approvals and other communications provided for herein and all
legal process in regard hereto shall be in writing and shall be deemed to have
been duly given (a) when delivered by hand, (b) when received by facsimile
transmission, with printed confirmation of transmission and verbal (telephonic)
confirmation of receipt, (c) one day after being sent by a nationally-recognized
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overnight express service or (d) five (5) days after being deposited in the
United States mail, by registered or certified mail, return receipt requested,
postage prepaid, as follows:
If to the Seller: Wilkinson Company, Inc.
1444 West 10th Street
Suite 507
Cleveland, Ohio 44113
Attn: Christian Kamm
With a copy to: Wegman, Hessler, Vanderburg & O'Toole
6100 Rockside Woods Boulevard
Suite 315
Cleveland, Ohio 44131
Attn: Lawrence S. Crowther, Esq.
If to either of the
Acquiring Companies: c/o Hi-Rise Recycling Systems, Inc.
16255 N.W. 54th Avenue
Miami, Florida 33014
Attn: Chief Executive Officer
With a copy to: Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Gary M. Epstein, Esq.
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
13.9 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. None of the parties hereto shall assign any
of its rights or obligations hereunder except with the express written consent
of the other parties hereto.
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13.10 APPLICABLE LAW. This Agreement shall be
governed by, and shall be construed, interpreted and enforced in accordance
with, the internal laws of the State of Ohio.
13.11 EXPENSES. Each of the parties hereto agrees to
pay all of the respective expenses incurred by it in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby.
13.12 CONFIDENTIALITY. Except to the extent required
for any party to obtain any approvals or consents required pursuant to the terms
hereof, no party hereto shall divulge the existence of the terms of this
Agreement or the transactions contemplated hereby without the prior written
approval of all of the parties hereto, except and as to the extent (i) obligated
by law (including regulations of the SEC) or (ii) necessary for such party to
defend or prosecute any litigation in connection with the transactions
contemplated hereby.
13.13 ATTORNEYS' FEES. In the event any suit or other
legal proceeding is brought for the enforcement of any of the provisions of this
Agreement, the parties hereto agree that the prevailing party or parties shall
be entitled to recover from the other party or parties upon final judgment on
the merits reasonable attorneys' fees and expenses, including attorneys' fees
and expenses for any appeal, and costs incurred in bringing such suit or
proceeding.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
HI-RISE RECYCLING SYSTEMS, INC.
By: /s/ Donald Engel
------------------------------------
Donald Engel
Chief Executive Officer
WC ACQUISITION CORP.
By: /s/ Donald Engel
------------------------------------
Chief Executive Officer
WILKINSON COMPANY, INC.
By: /s/ Christian Kamm
------------------------------------
Name: Christian Kamm
Title: President
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SUMMARY OF SCHEDULES AND EXHIBITS REFERENCED IN
ASSET PURCHASE AGREEMENT
SCHEDULES:
Schedule 1.1(a) Listing of Seller's Machinery, Equipment, Chemicals, etc.
Schedule 1.1(c) Inventory
Schedule 1.1(d) Intellectual Property
Schedule 1.1(e) Contracts
Schedule 1.1(h) Accounts Receivable, Prepaid Expenses and Deposits
Schedule 1.1(k) Insurance Policies
Schedule 1.2(d) Excluded Assets
Schedule 2.4 Assumed Liabilities
Schedule 2.5 Purchase Price Allocation
Schedule 4.1 Jurisdictions where Seller is Qualified to do Business
Schedule 4.4(a) Required Non-Governmental Consents and Approvals
Schedule 4.4(b) Required Governmental Consents and Approvals
Schedule 4.4(c) Description of Permits
Schedule 4.5(b) Ownership of Assets
Schedule 4.6 Exceptions to Financial Statements
Schedule 4.6(i) September 30, 1996 Audited Balance Sheet
Schedule 4.6(ii) September 30, 1995 Unaudited Management Prepared Balance
Sheet
Schedule 4.6(iii) September 30, 1994 Unaudited Management Prepared Balance
Sheet
<PAGE>
Schedule 4.6(d) Increases in Employee Compensation
Schedule 4.7 Litigation
Schedule 4.8 Compliance with Laws
Schedule 4.9 Permits and Licenses
Schedule 4.10(a) Material Contracts and Agreements
Schedule 4.10(b) Restrictive Agreements
Schedule 4.10(c) Scheduled Contracts Not Assigned as of Closing
Schedule 4.12 Terminating Customers
Schedule 4.13 Employee Benefit Plans
Schedule 4.13(b) Known Non-Complying Employee Benefit Plan
Schedule 4.13(c) Defaults Under Employee Benefit Plans Caused by Consummation
of Asset Purchase Agreement
Schedule 4.14 Standard Forms of Warranties
Schedule 4.15 Trademarks and Patents
Schedule 4.16 Insurance Policies Regarding the Business or the Assets
Schedule 4.17(a) Known Environmental License Exceptions
Schedule 4.17(b) Known Environmental Compliance Exceptions
Schedule 4.17(c) Known Environmental Compliance Violations
Schedule 4.17(d) Environmental Legal Proceedings
Schedule 4.18 Seller's Notes, Accounts or Other Receivables
Schedule 4.19 Real Estate
Schedule 4.20 Guarantees
<PAGE>
Schedule 4.21(a) Taxes (Known Exceptions to Compliance and Extensions)
Schedule 4.22 Labor Matters - List of All Employees
Schedule 4.27 Prospectus, Annual Report and Quarterly Reports of Parent of
Buyer
Schedule 8.2(h) Employees of Seller Which Buyer Requests Non-Competition
Agreements (copy of Standard Form of Buyer)
EXHIBITS:
Exhibit A Bill of Sale
Exhibit B Assignment and Assumption Agreement
Exhibit C Escrow Agreement
Exhibit D Opinion of Seller's Counsel
Exhibit E Opinion of Buyer's Counsel
Exhibit F Lease Agreement
Exhibit G Seller Non-Competition Agreement
Exhibit H C. Kamm Consulting Agreement
Exhibit I Indemnification Agreement
<PAGE>
EXHIBIT A
BILL OF SALE
WHEREAS, HI-RISE RECYCLING SYSTEMS, INC., a Florida corporation,
("Hi-Rise"), WC ACQUISITION CORP., an Ohio corporation wholly-owned by Hi-Rise
(the "Buyer") and WILKINSON COMPANY, INC, an Ohio corporation (the "Seller"),
are parties to that certain Asset Purchase Agreement (the "Agreement"), dated as
of February 3, 1997 pursuant to which the Seller has agreed to convey certain
assets to the Buyer as identified in the Agreement ("Assets") in accordance with
the terms and provisions of the Agreement; and
WHEREAS, the Seller has warranted and represented, and does hereby
warrant and represent, to Buyer and to Hi-Rise that the Seller is duly and
validly authorized and empowered to make, execute and deliver this Bill of Sale
and to enter into the covenants, promises and undertakings herein contained.
NOW, THEREFORE, in consideration of the premises and payment of the
Purchase Price under the Agreement:
W I T N E S S E T H:
1. The Seller, pursuant to the Agreement, does hereby SELL, ASSIGN,
TRANSFER, CONVEY, SET OVER AND CONFIRM, to Buyer, its successors and assigns, to
have and to hold forever, all of Seller's right, title and interest of every
kind and character whatsoever in, to or with respect to the Assets, free and
clear of any and all Liens.
2. The Seller does covenant to and with Buyer and Hi-Rise that Seller
is the lawful owner of the Assets; that the Assets are free and clear of any and
all Liens, that Seller has the right to sell, assign and transfer the Assets to
Buyer; and that Seller will warrant and forever defend the sale, assignment and
transfer of the Assets unto Buyer against the claims and demands of all persons.
3. The Seller covenants and agrees to make, execute and deliver to
Buyer or to Hi-Rise any and all powers of attorney and other authority which
Seller may lawfully make, execute and deliver, in addition to any such powers
and authorities as are contained herein or in the Agreement, which may
reasonably be or become reasonably necessary, proper or convenient to enable
Buyer to reduce to possession, collect, enforce, own or enjoy any and all rights
and benefits in, to, with respect to, or in connection with, the Assets, and
each and every part and portion thereof, and upon the request of Buyer or
Hi-Rise, to take, in the Seller's name, any and all steps and to do any and all
things which may be or become lawful and reasonably necessary, proper,
convenient or desirable to enable Buyer to reduce to possession, collect,
enforce, own and enjoy any and all rights and benefits in, to, with respect to,
or in connection with, the Assets, and each and every part and portion thereof.
4. The Seller covenants and agrees with Buyer, Hi-Rise and their
successors and assigns, to do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged and delivered, any and all such further reasonable
acts, instruments, papers and documents as may be necessary to carry out and
effectuate the intent and purposes of the Agreement and this Bill of Sale.
<PAGE>
5. This Bill of Sale and the covenants, agreements, undertakings,
warranties and representations herein contained shall inure to the benefit of
Buyer, Hi-Rise, and their respective successors and assigns, and shall bind the
Seller and its successors and assigns.
6. Notwithstanding the foregoing, no provision of this Bill of Sale
shall in any way modify, replace, amend, change, rescind, waive or in any way
affect the express provisions (including the warranties, covenants, agreements,
conditions, representations or any of the obligations and indemnifications of
the Seller) set forth in the Agreement, this Bill of Sale being intended solely
to effect the transfer title to the Assets pursuant to and in accordance with
the Agreement.
7. Unless otherwise defined herein, capitalized terms used in this Bill
of Sale have the meanings given to them in the Agreement.
8. This Bill of Sale shall be governed by and shall be construed and
interpreted in accordance with the laws of the State of Ohio.
2
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Bill of Sale to be
executed as of this 3rd day of February, 1997.
WITNESSES: SELLER
WILKINSON COMPANY, INC., an Ohio corporation
_________________________
By:__________________________________
_________________________ Christian P. Kamm
Its : President and Chief Executive Officer
STATE OF_____________________________ )
) ss:
COUNTY OF____________________________ )
The foregoing instrument was acknowledged before me this 3rd of
February, 1997 by Christian P. Kamm as President and Chief Executive Officer of
Wilkinson Company, Inc., an Ohio corporation, on behalf of the corporation.
He/she/they personally appeared before me, is/are personally known to me or
produced________as identification, and [did] [did not] take an oath.
Notary:_____________________________
[NOTARIAL SEAL] Print Name:_________________________
Notary Public, State of_____________
My Commission expires:______________
Commission Number:__________________
3
<PAGE>
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is entered into as of this 3rd
day of February, 1997, by and between WILKINSON COMPANY, INC., an Ohio
corporation ("Assignor") and WC ACQUISITION CORP., an Ohio corporation and
HI-RISE RECYCLING SYSTEMS, INC., a Florida corporation and the sole shareholder
of Assignee ("Hi-Rise") (collectively "Assignee").
W I T N E S S E T H:
WHEREAS, the Assignor and the Assignee have entered into that certain
Asset Purchase Agreement, dated as of February 3, 1997 (the "Agreement"); and
WHEREAS, in order to consummate the transactions contemplated by the
Agreement, Assignee has agreed to assume and discharge as the same become due
the Assumed Liabilities on the terms and conditions set forth in the Agreement.
NOW, THEREFORE, in consideration of the premises and the consideration
hereinafter set forth, the receipt and sufficiency of which is hereby
acknowledged, each of the Assignor and the Assignee hereby agrees as follows:
1. DEFINED TERMS. All capitalized terms used and not
otherwise defined herein shall have the meanings set forth in the Agreement.
2. SALE AND ASSIGNMENT. Effective as of the Closing Date,
the Assignor has sold, assigned, transferred, conveyed and delivered to the
Assignee, free and clear of all Liens, and the Assignee has purchased
and acquired, all of the Assignor's right, title and interest in and to the
Assets.
3. ASSIGNMENT AND ASSUMPTIONS. The Assignor hereby assigns to
Assignee all of Assignor's rights under the Contracts and Assignor further
delegates to Assignee the Assumed Liabilities but only to the extent that such
liabilities and obligations arise and are to be performed subsequent to the
Closing Date and as otherwise provided in the Agreement. Assignee hereby assumes
and agrees to discharge as the same become due all of the Assumed Liabilities
arising after the Closing Date.
4. GOVERNING LAW. This Agreement shall be governed by, and
shall be construed and interpreted in accordance with, the laws of the State
of Ohio, without regard to the conflicts of laws principles thereof.
5. REPRESENTATIONS AND WARRANTIES. Notwithstanding the foregoing, no
provision of this Agreement shall in any way modify, replace, amend, change,
rescind,
<PAGE>
waive or in any way effect the express provisions (including the
warranties, covenants, agreements, conditions, representations or any of the
obligations and indemnifications, and the limitations relating thereto, of the
Assignor) set forth in the Agreement, this Agreement being intended solely to
effect the transfer of the Assets and the Assumed Liabilities pursuant to the
Agreement in accordance with the terms and conditions of the Agreement.
6. BENEFITS; BINDING EFFECT. This Agreement shall inure to
the benefit of, and shall be binding upon, the parties hereto and their
respective successors and assigns.
7. ATTORNEYS FEES AND COSTS. In the event a dispute arises involving
this Agreement and the parties hereto and suit is instituted, the prevailing
party in such litigation shall be entitled to recover reasonable attorneys' fees
and other costs and expenses from the prevailing party, whether incurred at the
trial level or in any appellate proceeding.
8. THIRD PARTIES. Nothing in this Agreement, express or implied, is
intended or shall be construed to confer upon, or to give to, any person or
entity other than Assignor and Assignee, any remedy or claim under or by reason
of this Agreement or any agreements, terms, covenants or conditions hereof, and
all of the agreements, terms, covenants and conditions in this Agreement shall
be for the sole and exclusive benefit of Assignor, Assignee, and their
respective successors and assigns.
2
<PAGE>
IN WITNESS WHEREOF, each of the Assignor and the Assignee has executed
and delivered this Agreement on the date first above written.
WITNESSES: ASSIGNOR:
WILKINSON COMPANY, INC., an Ohio
corporation
_______________________________ By:______________________________
_______________________________ Its:_____________________________
ASSIGNEE:
WC ACQUISITION CORP., an Ohio
corporation
_______________________________ By:______________________________
_______________________________ Its:_____________________________
HI-RISE RECYCLING SYSTEMS, INC.,
a Florida corporation
_______________________________ By:______________________________
_______________________________ Its:_____________________________
3
<PAGE>
EXHIBIT C
ESCROW AGREEMENT
ESCROW AGREEMENT dated as of February 3, 1997, by and among HI-RISE
RECYCLING SYSTEMS, INC., a Florida corporation ("Hi-Rise"), WC ACQUISITION
CORP., an Ohio corporation wholly-owned by Hi-Rise (the "Buyer"), WILKINSON
COMPANY, INC., an Ohio corporation (the "Seller"), and Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel, P.A., as escrow agent.
WHEREAS, pursuant to the Asset Purchase Agreement dated as of February
3, 1997 (the "Asset Purchase Agreement"), by and among Hi-Rise, the Buyer and
the Seller, the Seller has agreed to sell, and the Buyer has agreed to purchase,
the Assets of the Seller (all capitalized terms used and not otherwise defined
herein shall have the meanings given to them in the Asset Purchase Agreement);
and
WHEREAS, the Asset Purchase Agreement provides that a portion of the
Purchase Price for the Assets shall be payable by the issuance to the Seller of
the number of shares (the "Hi-Rise Shares") of common stock, $.01 par value (the
"Common Stock"), of Hi-Rise determined in accordance with Section 2.1(b) of the
Asset Purchase Agreement; and
WHEREAS, the Asset Purchase Agreement provides that all of the Hi-Rise
Shares (the "Escrow Shares") and Fifty Thousand Dollars ($50,000) of the cash
portion of the Purchase Price ("Escrow Funds") payable to the Seller for the
Assets shall be placed in escrow simultaneously with the closing of the
transactions contemplated by the Asset Purchase Agreement; and
WHEREAS, the parties hereto have designated Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel, P.A. to serve as the escrow agent hereunder
(such escrow agent, and its respective successors, designated as provided
herein, being hereinafter referred to as the "Escrow Agent").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein and in the Asset Purchase Agreement, and for other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. ESCROW AMOUNTS.
(a) The Seller hereby delivers to the Escrow Agent:
(i) the Escrow Shares, together with a stock power
duly endorsed in blank, and the Escrow Agent hereby acknowledges
receipt of the Escrow Shares and such stock power from the Seller. All
additional or different shares resulting from any recapitalization,
exchange, merger, consolidation, stock split or stock dividend on the
Escrow Shares, shall be deemed to be, and shall be held as part of, the
Escrow Shares.
(ii) the Escrow Funds, and the Escrow Agent hereby
acknowledges receipt of the Escrow Funds. The Escrow Funds together
with any and all interest or other
<PAGE>
distributions earned, accrued or paid thereon, and any and all proceeds
thereof, shall be deemed to be, and shall be held as part of the Escrow
Funds.
(b) The Escrow Shares, together with any and all interest or
other distributions earned, accrued or paid thereon, and any and all proceeds
thereof, and the Escrow Funds shall be hereafter collectively referred to as the
"Collateral." The Collateral shall be held and disposed of by the Escrow Agent
as hereinafter provided.
2. INTEREST IN THE COLLATERAL. Regardless of the actual disposition of
the Collateral pursuant to this Escrow Agreement, the Seller shall be considered
the owner of the Collateral for the reporting of all income earned with respect
to the Collateral for federal, state and local income tax purposes, and any
losses on the Collateral shall be deemed to have been sustained or incurred by
the Seller for such income tax purposes.
3. PURPOSE OF THE COLLATERAL. The Collateral shall be held by the
Escrow Agent hereunder to secure each of Hi-Rise and the Buyer in respect of any
required payments to Hi-Rise and/or the Buyer (a) for any adjustment to the
Purchase Price pursuant to Section 2(d) of the Asset Purchase Agreement or (b)
pursuant to the Seller's indemnification obligations under Section 10.2 of the
Asset Purchase Agreement.
4. HOLDING OF THE COLLATERAL. The Escrow Agent is hereby authorized
and directed to hold the Collateral in escrow, and to invest and reinvest the
Collateral in its name, as Escrow Agent, subject to the provisions hereinafter
set forth. The Escrow Agent may from time to time during the term hereof, at the
direction of the Seller (a) deposit any Collateral (other than the Escrow
Shares) in an interest bearing account (without any limitation or penalty for
withdrawal) with a bank or trust company organized under the laws of the United
States or any state of the United States and/or (b) invest any Collateral (other
than the Escrow Shares) in any one or more of the following: (i) certificates of
deposit of any bank or trust company organized under the laws of the United
States or any state of the United States having a final maturity within 30 days
of the date of purchase thereof, (ii) obligations of the United States
government or any instrumentality thereof having a final maturity within 30 days
of the date of purchase thereof, (iii) money market funds which invest only in
obligations insured by the United States government or (iv) any other
investments agreed upon in writing by Hi-Rise, the Buyer and the Seller. All
expenses of investing the Collateral shall be paid out of the interest earned
thereon. The Escrow Agent shall bear no responsibility for the selection of
investments permitted hereunder.
5. DISINVESTMENT OF THE COLLATERAL. If amounts shall be required for
disbursement from the Escrow Funds out of the escrow account (the "Escrow
Account") as provided in Section 6, the Escrow Agent shall, if required, cause
any such investments to be sold or otherwise converted to cash.
6. DISBURSEMENT OF THE COLLATERAL. Disbursements of the Collateral
from the Escrow Account shall be made only as follows:
2
<PAGE>
(a) In the event that Hi-Rise and/or the Buyer shall be
entitled to a payment from the Seller in respect of (i) any adjustment to the
Purchase Price pursuant to Section 2(d) of the Asset Purchase Agreement or (ii)
the Seller's indemnification obligations under Section 10.2 of the Asset
Purchase Agreement, the Escrow Agent shall disburse the amount of such payment
to the Buyer in accordance with Section 6(c) below.
(b) For purposes of this Section 6, any payment to which
Hi-Rise and/or the Buyer is entitled pursuant to Section 2(d) or Section 10.2 of
the Asset Purchase Agreement is referred to in this Section 6 as a "Payment."
(c) If Hi-Rise and/or the Buyer shall request a Payment, the
Escrow Agent shall on or as soon as practicable after the 20th day after receipt
of a written request therefor (a "Payment Notice") from Hi-Rise and/or the Buyer
delivered to the Escrow Agent and to the Seller, disburse the Payment from the
Collateral to Hi-Rise and/or the Buyer, as applicable, unless the Escrow Agent
shall have received a written objection to the disbursement of the Payment by
written notice (an "Objection Notice") from the Seller to the Escrow Agent,
Hi-Rise and the Buyer by the 19th day after Hi-Rise and/or the Buyer delivers
the Payment Notice. If the Escrow Agent shall have received an Objection Notice
within the time period permitted above, the Escrow Agent shall not disburse any
Collateral held by it hereunder with respect to the Payment which is the subject
of such Objection Notice until (i) final adjudication of the matter by
arbitration to be conducted in Miami, Florida or (ii) the mutual agreement of
Hi-Rise, the Buyer and the Seller. Notwithstanding any other provision contained
herein, in the event of such a Payment Notice and/or Objection Notice, the
provisions of this Escrow Agreement shall continue in full force and effect
until the first to occur of the events described in the immediately preceding
sentence. Subject to the foregoing sentence, unless Hi-Rise and/or the Buyer
shall have delivered to the Escrow Agent and to the Seller a Payment Notice
requesting a Payment pursuant to Section 6(a) hereof, the balance of the
Collateral, if any, shall be disbursed on the fifth day following the eighteen
(18) month anniversary of the Closing Date by the Escrow Agent, less the amount
of all Payment(s) with respect to which Hi-Rise and/or the Buyer shall have
delivered Payment Notice(s).
(d) Any Payment to be made to Hi-Rise and/or the Buyer from
the Collateral pursuant to this Section 6 shall be made first from the Escrow
Funds to the extent thereof, and then from the Escrow Shares. Any Payment to
Hi-Rise and/or the Buyer from the Escrow Shares shall be made by the delivery of
certificates representing a number of Escrow Shares equal in value (as
determined below) to such Payment, free and clear of all Liens, duly endorsed in
blank or accompanied by stock powers duly endorsed in blank. For purposes of
this Section 6, the value of the Escrow Shares for purpose of a Payment shall be
$3.9333 per share, regardless of the then current trading prices of the Common
Stock.
(e) Upon the disbursement of the Collateral in full by the
Escrow Agent in accordance with the provisions of this Section 6, this Escrow
Agreement and the obligations of the Escrow Agent hereunder shall terminate.
3
<PAGE>
7. LIMITATIONS ON REVOCATION, TERMINATION OR MODIFICATION OF THIS
AGREEMENT. This Escrow Agreement cannot be changed or terminated orally and may
be changed only with the written consent of Hi-Rise, the Buyer, the Seller and
the Escrow Agent, except that the consent of the Escrow Agent shall not be
required unless it would be adversely affected by the change.
8. AGREEMENTS WITH ESCROW AGENT. To induce the Escrow Agent to act
hereunder, it is agreed by Hi-Rise, the Buyer and the Seller that:
(a) The Escrow Agent does not have and will not have any
interest in the Collateral but is serving only as an escrow holder and has only
possession thereof.
(b) The Escrow Agent makes no representation as to the
validity, genuineness or collectibility of any Collateral held by or delivered
to it.
(c) The Escrow Agent may act or refrain from acting in
reliance upon any instrument or signature furnished to it hereunder and
reasonably believed by it to be genuine and may assume that any person
purporting to give any writing, notice, advice or instruction in connection with
the provisions hereof has been duly authorized to do so.
(d) The Escrow Agent may resign and be discharged from its
duties and obligations hereunder by giving notice of such resignation to
Hi-Rise, the Buyer and the Seller, specifying the date upon which such
resignation shall take effect; provided, however, that such date shall be not
less than 60 days from the date of such notice. Hi-Rise, the Buyer and the
Seller shall also have the right, by mutual agreement, to terminate the
appointment of the Escrow Agent hereunder by giving to it notice of such
termination, specifying the date upon which such termination shall take effect
and designating a successor Escrow Agent. In any such event, Hi-Rise, the Buyer
and the Seller shall, by mutual agreement, reasonably approve and designate a
successor Escrow Agent to such resigning or terminated Escrow Agent. Upon demand
of a successor Escrow Agent, all property in the Escrow Account shall be turned
over and delivered to such successor Escrow Agent who shall, thereupon, be bound
by all of the provisions hereof.
(e) The Escrow Agent may act relative hereto upon advice of
counsel selected by it in reference to any matter connected herewith, and shall
not be liable to any of the parties hereto, or their respective heirs,
successors and assigns, for any action taken on the advice of counsel or for any
mistake of fact or error of judgment, or for any acts or omissions of any kind
unless caused by its willful misconduct or gross negligence.
(f) The Escrow Agent shall hold the Collateral as a fiduciary
and shall give the Collateral such degree of care as it gives other similar
property held in a fiduciary capacity.
(g) This Escrow Agreement sets forth exclusively the duties
of the Escrow Agent with respect to any and all matters pertinent hereto and no
implied duties or obligations shall be read into this Escrow Agreement against
the Escrow Agent.
(h) In the event of any bona fide disagreement between any of
the parties to this Escrow Agreement resulting in adverse claims or demands
being made in connection with the
4
<PAGE>
subject matter of this Escrow Agreement, or in the event that the
Escrow Agent should, in good faith, be in doubt as to what action it
should take hereunder, the Escrow Agent may, at its option, refuse to
comply with any claims or demands on it, or refuse to take any other action
hereunder, so long as such disagreement continues or such doubt exists, and in
any such event, the Escrow Agent shall not be or become liable for damages,
interest, or in any other way or to any person for its failure or refusal to
act, and the Escrow Agent shall be entitled to continue so to refrain from
acting until (i) the rights of all parties shall have been fully and finally
adjudicated by a panel of arbitrators or by the mutual agreement of Hi-Rise, the
Buyer and the Seller and (ii) the Escrow Agent shall have received appropriate
evidence of the foregoing, including, at its election, an opinion of counsel
that any such adjudication is final and unappealable or that any such agreement
is binding upon all of the interested persons. In the alternative, the Escrow
Agent may, but shall not be obligated to, file a suit in interpleader (the
parties hereto consenting to the filing of such action in the appropriate state
court in Dade County, Florida) for a declaratory judgment for the purpose of
having the respective rights of the claimants adjudicated, and may deposit with
such court the amount of the Collateral held by it in the Escrow Account, in
which event Hi-Rise, the Buyer and the Seller agree to pay all costs, expenses
and attorneys' fees incurred by the Escrow Agent in connection therewith, the
amount thereof to be fixed and such judgment therefor to be rendered by the
court in such suit.
(i) Each of Hi-Rise, the Buyer and the Seller hereby releases
the Escrow Agent from any act done or omitted to be done by the Escrow Agent in
good faith in the performance of its duties hereunder, and each of Hi-Rise, the
Buyer and the Seller agrees to indemnify the Escrow Agent for, and to hold it
harmless against, any loss, liability or expense incurred by the Escrow Agent,
arising out of or in connection with its entering into this Escrow Agreement and
carrying out its duties hereunder, other than from its own willful misconduct or
gross negligence, including the costs and expenses of defending itself against
any claim or liability in the premises.
(j) This Escrow Agreement sets forth exclusively the duties
of the Escrow Agent with respect to any and all matters pertinent hereto. The
Escrow Agent shall not refer to, and shall not be bound by, the provisions of
any other agreement with respect to the subject matter hereof.
(k) The parties acknowledge that Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel, P.A. has acted and will continue to act as
legal counsel to Hi-Rise and the Buyer in connection with the transactions
contemplated by the Asset Purchase Agreement.
9. COMPENSATION. No compensation shall be paid to the Escrow Agent for
the services to be rendered by it hereunder. The Buyer, Hi-Rise and the Seller
agree to reimburse the Escrow Agent for all reasonable expenses, disbursements
and advances incurred or made by it in the performance of its duties hereunder
(including reasonable fees, expenses and disbursements involved in investing or
reinvesting the Collateral) and jointly and severally agree to reimburse,
indemnify and hold harmless the Escrow Agent from any amounts that the Escrow
Agent is obligated to pay in the way of such disbursements and advances. The
immediately preceding
5
<PAGE>
agreements contained in this Section 9 shall survive despite any termination of
this Escrow Agreement or the resignation or removal of the Escrow Agent.
10. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given on the date delivered, if delivered by hand
against receipt, or one business day after being sent overnight mail or by a
nationally recognized overnight courier, return receipt requested, or three days
after mailing if sent by prepaid, registered United States mail, return receipt
requested, and addressed as follows:
IF TO SELLER:
Wilkinson Company,
1444 West 10th Street
Suite 507
Cleveland, Ohio 44113
Attention: Christian Kamm
with a copy to:
Wegman, Hessler, Vanderburg & O'Toole
6100 Rockside Woods Boulevard
Suite 315
Cleveland, Ohio 44131
Attention: Lawrence S. Crowther, Esq.
IF TO HI-RISE OR BUYER:
c/o Hi-Rise Recycling Systems, Inc.
16255 N.W. 54th Avenue
Miami, Florida 33014
Attention: Chief Executive Officer
with a copy to:
Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Gary M. Epstein, Esq.
6
<PAGE>
IF TO THE ESCROW AGENT:
Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Gary M. Epstein, Esq.
or to such other address as any party may from time to time designate by notice
to the other parties, and any notice or other communication given hereunder
shall be effective upon receipt.
11. VOTING OF ESCROW SHARES; DIVIDENDS. The Seller shall be
entitled to vote the Escrow Shares. Any distributions, additions or dividends
declared upon the Escrow Shares shall be deposited in escrow with the
Escrow Agent hereunder and disbursed as provided in Section 6 hereof.
12. MISCELLANEOUS.
(a) This Escrow Agreement shall be governed by, and construed
in accordance with, the laws of the State of Florida applicable to agreements
made and to be entirely performed within such state.
(b) This Escrow Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute a single instrument.
(c) The provisions contained in this Escrow Agreement shall
be binding upon and shall inure to the benefit of each of Hi-Rise, the Buyer,
Seller and the Escrow Agent, and their respective heirs, legal representatives,
successors and assigns.
(d) The Buyer, Hi-Rise and the Seller will cooperate with the
Escrow Agent and deliver to the Escrow Agent such additional information and
documents as the Escrow Agent shall reasonably request in the performance of its
obligations hereunder, including such documents as it shall reasonably request
to evidence termination of this Escrow Agreement and to evidence its consent to
the final delivery of the Collateral in accordance with the terms hereof.
(e) No provision of this Agreement shall be construed against
or interpreted to the disadvantage of any party hereto by any court or other
governmental or judicial authority by reason of such party having or being
deemed to have structured, drafted or dictated such provision.
* * *
7
<PAGE>
IN WITNESS WHEREOF, this Escrow Agreement has been duly executed as of
the day and year first above written.
HI-RISE RECYCLING SYSTEMS, INC., a Florida
corporation
By:________________________________________
Its:_______________________________________
WC ACQUISITION CORP., an Ohio
corporation
By:________________________________________
Its:_______________________________________
WILKINSON COMPANY, INC., an Ohio
corporation
By:________________________________________
Its:_______________________________________
ESCROW AGENT:
GREENBERG, TRAURIG, HOFFMAN,
LIPOFF, ROSEN & QUENTEL, P.A.
By:________________________________________
Its:_______________________________________
8
<PAGE>
EXHIBIT D
[LETTERHEAD OF WEGMAN, HESSLER, VANDERBURG & O'TOOLE]
February 3, 1997
Hi-Rise Recycling Systems, Inc.
WC Acquisition Corp.
16255 N.W. 54th Avenue
Miami, Florida 33014
Attn: Chief Executive Officer
RE: ASSET PURCHASE AGREEMENT BY AND AMONG HI-RISE RECYCLING SYSTEMS,
INC., WC ACQUISITION CORP. AND WILKINSON COMPANY, INC.
Gentlemen:
We have acted as legal counsel for EFCO, Inc., an Ohio corporation (the
"Parent") in connection with the Asset Purchase Agreement, dated as of February
3, 1997 (sometimes referred to as the "Agreement"), among Wilkinson Company,
Inc., an Ohio corporation (the "Seller"), Hi-Rise Recycling Systems, Inc., a
Florida corporation ("Hi-Rise") and WC Acquisition Corp., an Ohio corporation
("WC", sometimes collectively referred to with Hi-Rise as "Buyer"). The Parent
is the Sole Shareholder of the Seller. Unless otherwise provided herein, terms
used herein that are defined in the Agreement and not defined herein shall have
the meanings attributed thereto in the Agreement. This opinion letter is being
furnished to you pursuant to Section 3.2(a)(v) of the Agreement. We have also
acted as legal counsel for Seller in connection with the Agreement as set forth
in a separate opinion of even date herewith.
We have examined the originals, or copies certified to our
satisfaction, of the following documents, instruments and agreements, in each
case dated February 3, 1997, unless otherwise stated:
1. The Asset Purchase Agreement dated February 3, 1997;
2. The Noncompetition Agreement;
3. The Indemnification Agreement;
The Noncompetition Agreement and the Indemnification Agreement are
sometimes referred to herein collectively as the "Parent Purchase Documents".
In addition to our review and examination of the Parent Purchase
Documents, we have reviewed and examined the corporate minute books and stock
transfer records of the Parent, and such other certificates of public officials,
officers of the Parent, and other documents and
<PAGE>
Hi-Rise Recycling Systems, Inc.
February 3, 1997
Page 2
questions of law as we have deemed relevant or necessary as a basis for the
opinions hereinafter set forth.
In this examination, we have assumed (i) the genuineness of all
signatures, except those of the officers of the Parent (ii) the legal capacity
of all natural persons, and (iii) the authenticity of all documents submitted to
us as originals and the conformity to original documents of documents submitted
to us as certified or photostatic copies.
Except for obtaining a copy of a Certificate of Good Standing of the
Seller from the Secretary of the State of Ohio, we have neither examined nor
requested an examination of the indices or records of any court or governmental
or other agency, authority, instrumentality or entity, nor have we made inquiry
of any person or entity, except as expressly set forth in this opinion. In
addition, except for obtaining certified copies of resolutions of the board of
directors and sole shareholder of the Seller ("Certificates"), we have not
independently verified or investigated the accuracy or completeness of any
factual information and, because the scope of our examination did not include
such verification, we assume no responsibility for the accuracy or completeness
of any such information. In all instances where any opinion herein is qualified
"to the best of our knowledge" or that "we have no knowledge," we have relied
solely on the Certificates and the absence of any contrary knowledge by the
attorneys of our firm who have given substantive attention to the transactions
contemplated by the Parent Purchase Documents, and we have not made (nor do we
acknowledge any duty to make) any independent or other investigation with
respect thereto, although nothing has come to our attention that leads us to
question the accuracy or completeness of such representations or Certificates.
Subject to the foregoing and to any other limitation or qualification
expressly set forth herein, we are of the opinion that:
(a) The Parent is a corporation duly incorporated and organized and is
validly existing and in good standing under the laws of the State of Ohio.
(b) The Parent is duly qualified to carry on its business as it is
currently being conducted in each jurisdiction where such qualification is
required except for those jurisdictions in which the failure to be so qualified
would not, taken in the aggregate, have a material adverse effect upon the
financial condition, properties, or operations of the Parent.
(c) The entering into, execution and delivery of, and the performance
under, the Parent Purchase Documents by the Parent (1) have been duly authorized
by all requisite corporate action, (2) will not violate (i) any provision of
law, (ii) any provision of the Articles of Incorporation or code of regulations
of Parent, (iii) to the best of our knowledge, any material written agreement or
instrument to which Parent is a party or by which it or any of its assets
<PAGE>
Hi-Rise Recycling Systems, Inc.
February 3, 1997
Page 3
are bound, (iv) to the best of our knowledge, any judgment, decree, or order of
any court or of any federal, state, or other regulatory authority or other
governmental body having jurisdiction over the Parent and (3) to the best of our
knowledge, do not require the filing, registration with or consent, waiver,
approval, license, or authorization of any public authority that has not been
made or obtained.
(d) The officers of the Parent executing and delivering the Parent
Purchase Documents have been duly authorized to do so, and all Parent Purchase
Documents are valid and binding obligations of Parent enforceable in accordance
with their respective terms, except as the enforceability thereof (1) may be
subject to or limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium, or similar laws relating to or affecting the rights of creditors
generally and (2) is subject to general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
The foregoing opinions are subject to the following and further
assumptions, exceptions, limitations, qualifications and exceptions:
(a) Our opinions concerning the Parent Purchase Documents or any of the
rights granted to Buyer or any other party (collectively the "Other Parties")
pursuant to any of the Parent Purchase Documents are subject to and affected by
(i) bankruptcy, avoidance, insolvency, reorganization, moratorium and other laws
affecting the rights and remedies of creditors generally including, without
limitation, all statutory and other laws relating to fraudulent conveyances, and
(ii) general principles of equity (regardless of whether the enforceability of
such rights is considered in a proceeding in equity or at law). Moreover, the
exercise of the rights and remedies under the Parent Purchase Documents could be
subject to limitation if: (I) enforcement of such rights and remedies by the
Buyer and/or any of the Other Parties is not reasonably necessary for the
protection of the Buyer and/or any of the Other Parties is not applicable, (II)
the enforcement of the covenants, rights and remedies violates the obligation of
the Buyer and/or any of the Other Parties to act in good faith, or (III) any
default or defaults of the provisions of the Parent Purchase Documents are not
material.
(b) Certain of the remedial provisions in the Parent Purchase Documents
may be limited or rendered unenforceable under the laws of the State of Ohio. In
our opinion, however, subject to the other assumptions, exceptions, limitations
and qualifications hereof, the unenforceability of such provisions does not
render the Parent Purchase Documents invalid as a whole and the Buyer and/or any
of the Other Parties may exercise remedies that would normally be available to
creditors.
<PAGE>
(c) We express no opinion with respect to any provision in any of the
Parent Purchase Documents purporting to allow the collection of attorneys' fees
or other expenses of enforcement.
(d) We express no opinion with respect to: (a) the power or authority
of Buyer to enter the transaction contemplated by Parent Purchase Documents; or
(b) compliance by Buyer with any federal or state law, rule, regulation or
restriction which is or was required to be complied with by Buyer (as opposed to
compliance therewith by Parent) in order to enforce any rights of Buyer under
any of the Parent Purchase Documents.
(e) We have not been engaged to analyze any competitive factors
involved in the transactions contemplated by the Parent Purchase Documents and,
accordingly, we express no opinion as to any violations of law that might result
from any competitive effect, actual or potential, of the transactions
contemplated by the Parent Purchase Documents.
(f) We express no opinion with respect to compliance and/or exemption
from Federal Securities laws including the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, the Trust Indenture Act of
1939, as amended, or the Blue Sky laws of any state within the United States of
America.
The opinions herein expressed are limited to matters of Ohio and United
States federal law. We express no opinion as to the effect or applicability of
the laws of any other jurisdiction.
The opinions expressed herein are as of the date hereof, and we assume
no obligation to update or supplement such opinions to effect any facts or
circumstances that may hereafter come to our attention or any changes in law
that may hereafter occur.
This opinion is being issued and delivered to you, is intended solely
for your use, in respect of the transactions contemplated by the Parent Purchase
Documents and may not otherwise be filed publicly or otherwise disclosed or
relied upon by any other person for any purpose without obtaining our prior
written consent, except for any good faith disclosure made (a) to the certified
public accountants of the Buyer, (b) in compliance with any legal process,
order, or decree issued by any court or agency of government of competent
jurisdiction, or (c) to any governmental agency with regulatory authority over
the Buyer or its activities.
Very truly yours,
WEGMAN, HESSLER,
VANDERBURG & O'TOOLE
<PAGE>
[LETTERHEAD OF WEGMAN, HESSLER, VANDERBURG & O'TOOLE]
February 3, 1997
Hi-Rise Recycling Systems, Inc.
WC Acquisition Corp.
16255 N.W. 54th Avenue
Miami, Florida 33014
Attn: Chief Executive Officer
RE: ASSET PURCHASE AGREEMENT BY AND AMONG HI-RISE RECYCLING
SYSTEMS, INC., WC ACQUISITION CORP. AND WILKINSON COMPANY, INC.
Gentlemen:
We have acted as legal counsel for Wilkinson Company, Inc., an Ohio
corporation (the "Seller") in connection with the Asset Purchase Agreement,
dated as of February 3, 1997 (sometimes referred to as the "Agreement"), among
the Seller, Hi-Rise Recycling Systems, Inc., a Florida corporation ("Hi-Rise")
and WC Acquisition Corp., an Ohio corporation ("WC", sometimes collectively
referred to with Hi-Rise as "Buyer"). Unless otherwise provided herein, terms
used herein that are defined in the Agreement and not defined herein shall have
the meanings attributed thereto in the Agreement. This opinion letter is being
furnished to you pursuant to Section 3.2(a)(v) of the Agreement.
We have examined the originals, or copies certified to our
satisfaction, of the following documents, instruments and agreements, in each
case dated February 3, 1997, unless otherwise stated:
1. The Asset Purchase Agreement dated February 3, 1997;
2. The Escrow Agreement;
3. The Lease Agreement;
4. Assignment and Assumption Agreement; and
5. The Noncompetition Agreement
6. The Bill of Sale
7. The Indemnification Agreement
The Asset Purchase Agreement, the Escrow Agreement, the Lease
Agreement, the Assignment and Assumption Agreement, the Noncompetition
Agreement, the Bill of Sale and the Indemnification Agreement instruments as
executed by the Seller and Buyer are sometimes referred to herein collectively
as the "Asset Purchase Documents".
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Hi-Rise Recycling Systems, Inc.
February 3, 1997
Page 2
In addition to our review and examination of the Asset Purchase
Documents, we have reviewed and examined the corporate minute books and stock
transfer records of the Seller, and such other certificates of public officials,
officers of the Seller, and other documents and questions of law as we have
deemed relevant or necessary as a basis for the opinions hereinafter set forth.
In this examination, we have assumed (i) the genuineness of all
signatures, except those of the officers of the Seller (ii) the legal capacity
of all natural persons, and (iii) the authenticity of all documents submitted to
us as originals and the conformity to original documents of documents submitted
to us as certified or photostatic copies.
Except for obtaining a copy of a Certificate of Good Standing of the
Seller from the Secretary of the State of Ohio, we have neither examined nor
requested an examination of the indices or records of any court or governmental
or other agency, authority, instrumentality or entity, nor have we made inquiry
of any person or entity, except as expressly set forth in this opinion. In
addition, except for obtaining certified copies of resolutions of the board of
directors and sole shareholder of the Seller ("Certificates"), we have not
independently verified or investigated the accuracy or completeness of any
factual information and, because the scope of our examination did not include
such verification, we assume no responsibility for the accuracy or completeness
of any such information. In all instances where any opinion herein is qualified
"to the best of our knowledge" or that "we have no knowledge," we have relied
solely on the Certificates and the absence of any contrary knowledge by the
attorneys of our firm who have given substantive attention to the transactions
contemplated by the Asset Purchase Documents, and we have not made (nor do we
acknowledge any duty to make) any independent or other investigation with
respect thereto, although nothing has come to our attention that leads us to
question the accuracy or completeness of such representations or Certificates.
Subject to the foregoing and to any other limitation or qualification
expressly set forth herein, we are of the opinion that:
(a) The Seller is a corporation duly incorporated and organized and is
validly existing and in good standing under the laws of the State of Ohio.
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Hi-Rise Recycling Systems, Inc.
February 3, 1997
Page 3
(b) The Seller is duly qualified to carry on its business as it is
currently being conducted in each jurisdiction where such qualification is
required except for those jurisdictions in which the failure to be so qualified
would not, taken in the aggregate, have a material adverse effect upon the
financial condition, properties, or operations of the Seller.
(c) Seller has full corporate power and authority to own its properties
and assets, to carry on their business as it is currently being conducted, and
to enter into, execute, deliver, and perform under the Asset Purchase Documents.
(d) The entering into, execution and delivery of, and the performance
under, the Asset Purchase Documents by the Seller (1) have been duly authorized
by all requisite corporate action, (2) will not violate (i) any provision of
law, (ii) any provision of the Articles of Incorporation or code of regulations
of Seller, (iii) to the best of our knowledge, any material written agreement or
instrument to which Seller is a party or by which it or any of its assets are
bound, (iv) to the best of our knowledge, any judgment, decree, or order of any
court or of any federal, state, or other regulatory authority or other
governmental body having jurisdiction over the Seller and (3) to the best of our
knowledge, do not require the filing, registration with or consent, waiver,
approval, license, or authorization of any public authority that has not been
made or obtained.
(e) The officers of the Seller executing and delivering the Asset
Purchase Documents have been duly authorized to do so, and all Asset Purchase
Documents are valid and binding obligations of Seller enforceable in accordance
with their respective terms, except as the enforceability thereof (1) may be
subject to or limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium, or similar laws relating to or affecting the rights of creditors
generally and (2) is subject to general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
The foregoing opinions are subject to the following and further
assumptions, exceptions, limitations, qualifications and exceptions:
(a) Our opinions concerning the Asset Purchase Documents or any of the
rights granted to Buyer or any other party (collectively the "Other Parties")
pursuant to any of the Asset Purchase Documents are subject to and affected by
(i) bankruptcy, avoidance, insolvency, reorganization, moratorium and other laws
affecting the rights and remedies of creditors generally including, without
limitation, all statutory and other laws relating to fraudulent conveyances, and
(ii) general principles of equity (regardless of whether the
<PAGE>
Hi-Rise Recycling Systems, Inc.
February 3, 1997
Page 4
enforceability of such rights is considered in a proceeding in equity or at
law). Moreover, the exercise of the rights and remedies under the Asset Purchase
Documents could be subject to limitation if: (I) enforcement of such rights and
remedies by the Buyer and/or any of the Other Parties is not reasonably
necessary for the protection of the Buyer and/or any of the Other Parties is not
applicable, (II) the enforcement of the covenants, rights and remedies violates
the obligation of the Buyer and/or any of the Other Parties to act in good
faith, or (III) any default or defaults of the provisions of the Asset Purchase
Documents are not material.
(b) Certain of the remedial provisions in the Asset Purchase Documents
may be limited or rendered unenforceable under the laws of the State of Ohio. In
our opinion, however, subject to the other assumptions, exceptions, limitations
and qualifications hereof, the unenforceability of such provisions does not
render the Asset Purchase Documents invalid as a whole and the Buyer and/or any
of the Other Parties may exercise remedies that would normally be available to
creditors.
(c) We express no opinion with respect to any provision in any of the
Asset Purchase Documents purporting to allow the collection of attorneys' fees
or other expenses of enforcement.
(d) We express no opinion with respect to: (a) the power or authority
of Buyer to enter the transaction contemplated by Asset Purchase Documents; or
(b) compliance by Buyer with any federal or state law, rule, regulation or
restriction which is or was required to be complied with by Buyer (as opposed to
compliance therewith by Seller) in order to enforce any rights of Buyer under
any of the Asset Purchase Documents.
(e) We have not been engaged to analyze any competitive factors
involved in the transactions contemplated by the Asset Purchase Documents and,
accordingly, we express no opinion as to any violations of law that might result
from any competitive effect, actual or potential, of the transactions
contemplated by the Asset Purchase Documents.
(f) We express no opinion with respect to compliance and/or exemption
from Federal Securities laws including the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, the Trust Indenture Act of
1939, as amended, or the Blue Sky laws of any state within the United States of
America.
The opinions herein expressed are limited to matters of Ohio and United
States federal law except for purposes of the opinions expressed in this letter
with regard to the
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Hi-Rise Recycling Systems, Inc.
February 3, 1997
Page 5
Escrow Agreement which is governed by the laws of the State of Florida, we have
assumed, with your permission, that the relevant substantive laws of the State
of Florida are substantially similar to the laws of the State of Ohio. We
express no opinion as to the effect or applicability of the laws of any other
jurisdiction.
The opinions expressed herein are as of the date hereof, and we assume
no obligation to update or supplement such opinions to effect any facts or
circumstances that may hereafter come to our attention or any changes in law
that may hereafter occur.
This opinion is being issued and delivered to you, is intended solely
for your use, in respect of the transactions contemplated by the Asset Purchase
Documents and may not otherwise be filed publicly or otherwise disclosed or
relied upon by any other person for any purpose without obtaining our prior
written consent, except for any good faith disclosure made (a) to the certified
public accountants of the Buyer, (b) in compliance with any legal process,
order, or decree issued by any court or agency of government of competent
jurisdiction, or (c) to any governmental agency with regulatory authority over
the Buyer or its activities.
Very truly yours,
WEGMAN, HESSLER,
VANDERBURG & O'TOOLE
<PAGE>
EXHIBIT E
[LETTERHEAD OF GREENBERG TRAURIG]
February 3, 1997
Wilkinson Company, Inc.
1530 Commerce Drive
Stow, Ohio 44224
Re: Asset Purchase Agreement by and Among Hi-Rise Recycling
Systems, Inc., WC ACQUISITION CORP. AND WILKINSON COMPANY, INC.
Gentlemen:
We have acted as legal counsel for Hi-Rise Recycling Systems, Inc., a
Florida corporation (the "Company), and its wholly-owned subsidiary, WC
Acquisition Corp., an Ohio corporation, ("WC"), in connection with the Asset
Purchase Agreement, dated as of February 3, 1997 (the "Agreement"), among the
Company, WC, and Wilkinson Company, Inc., an Ohio corporation ("Wilkinson").
Unless otherwise provided herein, terms used herein that are defined in the
<PAGE>
Wilkinson Company, Inc.
February 3, 1997
Page 2
Agreement and not defined herein shall have the meanings attributed thereto in
the Agreement. This opinion letter is being furnished to you pursuant to Section
3.2(b)(iv) of the Agreement.
A. BASIS OF OPINION.
As the basis for the conclusions expressed in this opinion
letter, we have examined, considered and relied upon the following:
1. The Agreement.
2. The Assignment and Assumption Agreement.
3. The Escrow Agreement.
4. The Lease.
5. The Non-Competition Agreement.
6. The Consulting Agreement.
7. The Indemnification Agreement.
8. The Articles of Incorporation, Bylaws, corporate
minute books and corporate stock certificate books of the Company and WC.
9. A Certificate, dated as of the date hereof,
containing certain representations to our firm executed by the Chief Executive
Officer of the Company.
10. A certificate or other evidence of good standing of each
of the Company and WC issued as of a recent date by the Secretaries of State of
the States of Florida and Ohio, respectively.
11. Such material agreements and other documents and such
matters of law as we have considered necessary or appropriate for the expression
of the opinions contained herein.
For the purposes of this opinion letter, the Agreement, the Assignment
and Assumption Agreement, the Escrow Agreement, the Lease, the Non-Competition
Agreement, the Consulting Agreement and the Indemnification Agreement are herein
collectively referred to as the "Purchase Agreements" and the Purchase
Agreements and the other documents and information referred to in this Section A
are herein collectively referred to as the "Documents."
B. ASSUMPTIONS.
In rendering the opinions set forth in Section C below, we
have assumed without investigation the genuineness of all signatures, except
those of the Company and WC, and the
<PAGE>
Wilkinson Company, Inc.
February 3, 1997
Page 3
________________
authenticity of all Documents submitted to us as originals, the conformity to
authentic original Documents of all Documents submitted to us as copies and the
veracity of all Documents.
As to questions of fact material to the opinions hereinafter
expressed, we have, without independent investigation, relied upon the
representations and warranties of the Company and WC made in the Documents. With
respect to the opinions set forth in clause (d) of paragraph 3 of Section C
below, we point out that we have made no inquiry or search of any records of any
court, governmental agency, administrative body or other entity which may have
jurisdiction over the Company or WC.
We have also assumed for the purposes of the opinions
expressed herein that the Purchase Agreements are the valid and binding
obligations of each of the parties thereto (other than the Company and WC).
C. OPINIONS.
Based solely upon our examination and consideration of the
Documents, and in reliance thereon, and subject to the comments, assumptions,
exceptions, qualifications and limitations set forth in Sections B and D hereof,
we are of the opinion that:
1. Each of the Company and WC is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation. Each of the Company and WC has the corporate power to own,
manage, lease and hold its properties and to carry on its business as and where
such properties are presently located and such business is presently conducted.
To our knowledge, each of the Company and WC is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction where the
character of its properties or the nature of its business requires it to be so
qualified, except where the failure to be so qualified would not have a material
adverse effect on the Company or WC.
2. The execution of the Purchase Agreements and the
performance of the transactions contemplated thereby have been duly and validly
authorized and approved by all corporate action necessary on behalf of each of
the Company and WC. Each of the Purchase Agreements constitutes, or upon
execution and delivery will constitute, the legal, valid and binding obligation
of each of the Company and WC, enforceable in accordance with their respective
terms.
3. Neither the execution and delivery by the Company or WC of
the Purchase Agreements nor the consummation by the Company or WC of the
transactions contemplated thereby nor compliance by the Company or WC with any
of the provisions thereof violates or will violate or constitutes or will
constitute a breach of, or a default under, (a) the articles of incorporation or
bylaws of the Company or WC, (b) to the best of our knowledge, any provision of
law, (c) to the best of our knowledge, any material agreement, indenture, lease
or other instrument to which the Company or WC is a party or by which any of
their respective properties is bound or (d) to the best of our knowledge, any
judgment, decree or order of any court or of
<PAGE>
Wilkinson Company, Inc.
February 3, 1997
Page 4
________________
any federal, state or other regulatory authority or other governmental body
having jurisdiction over the Company or WC.
4. The Hi-Rise Shares have been duly and validly authorized
and, when issued in accordance with the Agreement, will be validly issued, fully
paid and non-assessable. Assuming that the representations and warranties made
by the Company, WC and Wilkinson in the Agreement were true and correct when
made and as of the date hereof, no registration under the Securities Act of
1933, as amended, is required in connection with the issuance of the Hi-Rise
Shares to Wilkinson pursuant to the Agreement.
D. COMMENTS, ASSUMPTIONS, LIMITATIONS, QUALIFICATIONS AND
EXCEPTIONS.
The opinions expressed in Section C above are based upon and
subject to, the further comments, assumptions, limitations, qualifications and
exceptions set forth below:
1. As used herein, the phrases "to our knowledge," "to the
best of our knowledge" or "known to us" refer only to the knowledge of attorneys
within our firm who have given substantive attention to the Company and WC,
after due inquiry of the matters that follow such statement and does not (i)
include constructive notice of matters or information, or (ii) except for our
conversations with certain Company employees and review of the Documents, imply
that we have undertaken any independent investigation with any persons outside
of our firm. Furthermore, such reference means only that we do not know of any
fact or circumstance contradicting the statement that follows, and does not
imply that we know the statement to be correct.
2. We are licensed to practice law only in the State of
Florida and do not hold ourselves out to be experts on the laws of any
jurisdiction other than the laws of the State of Florida, the General Business
Corporation Law of the State of Delaware and the Federal securities laws of the
United States of America. Accordingly, the opinions expressed herein are
specifically limited to the laws of the State of Florida, the General Business
Corporation Law of the State of Delaware, and the Federal securities laws of the
United States of America. For purposes of the opinion expressed in paragraph 2
of Section C, we have assumed, with your permission, that the substantive laws
of the State of Ohio are substantially similar to the laws of the State of
Florida.
3. No opinion is expressed as to the enforceability of the
obligations of the Company and WC under the Purchase Agreements to the extent
that enforceability of the rights, obligations and agreements and remedies
thereunder are subject to, affected or limited by: (i) rights of the United
States of America under the Federal Tax Lien Act of 1966; (ii) applicable
liquidation, conservatorship, bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization or similar debtor relief laws from time to
time in effect under state or Federal law; (iii) general principles of equity
(whether considered in a proceeding in equity or at law); (iv) the exercise of
the discretionary powers of any court or other authority before which may be
brought any proceeding seeking equitable remedies, including, without
limitation, specific performance
<PAGE>
Wilkinson Company, Inc.
February 3, 1997
Page 5
________________
and injunctive relief; or (v) public policy or other applicable limitations on
indemnification or contribution under the Federal securities laws.
4. Although we have acted as counsel to the Company in
connection with certain other matters, our engagement is limited to certain
matters about which we have been consulted. Consequently, there may exist
matters of a legal nature involving the Company and WC in connection with which
we have not been consulted and have not represented the Company and WC.
5. This opinion letter is limited to the matters stated herein
and no opinions may be implied or inferred beyond the matters expressly stated
herein.
6. The opinions expressed herein are as of the date hereof,
and we assume no obligation to update or supplement such opinions to reflect any
facts or circumstances that may hereafter come to our attention or any changes
in law that may hereafter occur.
7. This opinion letter has been issued solely for the benefit
of Wilkinson and its counsel and no other person or entity shall be entitled to
rely hereon without the express written consent of this firm. Without our prior
written consent, this opinion letter may not be quoted in whole or in part or
otherwise referred to in any document or report and may not be furnished to any
person or entity.
Respectfully submitted,
GREENBERG, TRAURIG, HOFFMAN,
LIPOFF, ROSEN & QUENTEL, P.A.
By:
---------------------
Fern S. Watts
<PAGE>
EXHIBIT F
LEASE
THIS LEASE, dated as of the _____ day of ____________, 1997, by and
between WC ACQUISITION CORP., an Ohio corporation (herein called "Tenant") and
WILKINSON COMPANY, INC., an Ohio corporation (herein called "Landlord").
W I T N E S S E T H:
1. PREMISES. Landlord, in consideration of the rents to be paid and the
covenants and agreements to be performed by the Tenant, hereby lets and Tenant
hereby leases the following described portion of the real property more
particularly described on Exhibit A attached hereto (the "Total Premises") with
the buildings, improvements, and appurtenances therein and thereunto belonging
located in the City of Stow, County of Summit, and the State of Ohio:
Being a designated area containing approximately 6,440 square
feet of office space located on the second floor along the
northwest corner of the facility located at 1530 Commerce
Drive, Stow, Ohio, as outlined in red on the Exhibit B-1,
attached hereto and made a part hereof, and 49,800 square feet
of manufacturing and warehousing space located on the
northeast corner of the facility as outlined in red on the
attached Exhibit B-2, together with the right of ingress and
egress to and from the facility (all of the above hereinafter
referred to as "Leased Premises").
2. PARKING. Landlord gives and grants unto the Tenant an area for
parking designated in orange on the attached Exhibit B-2, the same to be used
and enjoyed by the Tenant and the Tenant's employees, invitees and customers.
3. AUTHORIZED USE. Tenant is hereby authorized to use the Leased
Premises for general manufacturing, warehousing and office purposes only. Said
Leased Premises shall
<PAGE>
be used for no other purposes and shall not be otherwise occupied except upon
and with the written consent of Landlord first had, such consent not to be
unreasonably withheld.
4. TERM OF LEASE. The term of the Lease shall be for a period of three
(3) years, commencing __________, 1997, and ending _______________, 2000,
provided, however, that Tenant may renew this Lease for an additional period of
two (2) years commencing on _________________, 2000, and ending _____________,
2002, by giving Landlord written notice of Tenant's exercise of such option to
renew not later than ____________________, 1999.
5. RENT. Tenant agrees to pay as rent for the Leased Premises, in
addition to any other sum herein provided to be paid, the amounts set forth
below:
PERIOD RENT
_______________________, 1997 through $13,058 per month prorated at the rate of
December 31, 1997: $435.27 per day for any partial month.
January 1, 1998 through December 31, Rent per annum shall be an amount equal
1998 and each calendar year to the sum of (i) $156,696 plus (ii) if
thereafter during the initial and any greater than zero, the product of the
renewal term of the Lease. multiplication of $156,696 by a fraction,
the numerator of which shall be the Index
in the Anniversary Month less the Base
Index, and the denominator of which shall
be the Base Index where the "Index" shall
mean the revised Consumer Price Index All
Items for All Urban Consumers (1982-84=
100) for Cleveland, Ohio as compiled and
published by the Bureau of Labor
Statistics of the United States
Department of Labor, the "Base Index"
shall mean the Index in effect in the
month of November 1996 and the
"Anniversary Month" shall mean November
of the calendar year just ended,
provided, however, that the increase in
rent for any calendar year shall not
exceed five percent (5%) above the rent
in effect during the immediately
preceding calendar year.
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<PAGE>
Said rent shall be paid to Landlord, located at ______________, or such other
place as may be designated in writing from time to time by Landlord. Rent shall
be paid in equal installments on the first (1st) day of each calendar month.
6. POSSESSION. This Lease has been entered into pursuant to the terms
of that certain Asset Purchase Agreement dated as of February ______, 1997, by
and among Landlord as Seller, Hi-Rise Recycling Systems, Inc., a Florida
corporation and the parent corporation of Tenant, and Tenant, as Buyer, under
the terms of which Tenant has purchased substantially all of Landlord's assets
located on the Leased Premises. Accordingly, Tenant is in possession of the
Leased Premises.
7. MAINTENANCE AND REPAIR. Tenant shall make all such repairs as are
required in order to maintain the Leased Premises in the condition in which the
same existed at the date of this Lease, except that Tenant shall not be
responsible or liable for repairs required by "structural damage" or damages
resulting from water, sewer or gas lines, or equipment existing outside the
interior walls of the Leased Premises. The term "structural damage" is defined
as damage to supporting walls, columns, beams, foundations, and any roofs.
Landlord shall be responsible for and shall make all repairs required by
structural damage as expeditiously as possible. Landlord shall be responsible
for and maintain the water, sewer and gas lines and electrical transformer
outside the interior walls of the Leased Premises.
8. OPERATION OF THE PREMISES AND INDEMNIFICATION. Tenant covenants to
Landlord that it will operate its business at or in the vicinity of the Leased
Premises in a safe and careful manner and in substantial conformance with all
laws and regulations applicable to its business. Tenant agrees that all Tenant's
parts, equipment, inventory,
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<PAGE>
fixtures, leasehold improvements or other property located in, on or about the
Leased Premises shall be at the sole responsibility, risk and cost of the Tenant
during the term of this Lease and any renewal or extension thereof. In the event
of loss, damage or injury to said property due to any cause whatsoever, except
the willful act or omission or negligence of Landlord, its employees or agents,
Landlord is expressly relieved of any claims, actions, damages, liability and
expense therein.
Tenant will defend, indemnify and save Landlord harmless from and
against any and all claims, actions, damages, liability and expense in
connection with loss, damage or injury to persons or property occurring in, on
or about, or arising out of the use or occupancy of the Leased Premises, or the
conduct or operation of Tenant's business, or occasioned wholly or in part by
any negligent or unlawful act or omission of Tenant, Tenant's agents,
contractors (including subcontractors), customers or employees. Landlord will
defend, indemnify, and save Tenant harmless from and against any and all claims,
actions, damages, liability and expense in connection with a loss, damage, or
injury to persons or property occurring in, on or about, or arising out of the
use or occupancy of the balance of the Total Premises or the conduct or
operation of Landlord's or any other tenant's business, or occasioned wholly or
in part by any negligent or unlawful act or omission of Landlord or such other
tenant or their respective agents, contractors (including subcontractors)
customers or employees.
Nothing in this Article 8 shall be deemed to be a waiver or release of
any claims or demands for personal injury, property damage, or otherwise against
Landlord caused by the negligent or willful acts or omissions of the Landlord.
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<PAGE>
9. IMPROVEMENTS. Tenant shall have the right to decorate, remodel,
alter and improve the Leased Premises and shall have the right to remove any
improvements made by Tenant, provided that any physical injury to the Leased
Premises caused by such removal shall be repaired by Tenant. Tenant shall make
no structural changes in the Leased Premises without Landlord's prior written
consent, such consent not to be unreasonably withheld; the term "structural
changes" to include, without limitation, changes in supporting walls, columns,
beams, floors, sub-floors and any roofs.
10. TRADE FIXTURES. All fixtures, machinery and equipment on the Leased
Premises, and advertising signs, shall remain Tenant's property and, at Tenant's
election, may be removed prior to termination of Tenant's occupancy, provided,
however, that Tenant shall repair any physical damage to the Leased Premises
occasioned by removal thereof.
11. DAMAGE OR DESTRUCTION. If all or a portion of the Leased Premises
are destroyed or so damaged by fire, casualty, act of God, or other cause as to
be unfit for use and occupancy by Tenant, then the rent otherwise due for the
period during which all or a portion of the Leased Premises are unfit for use or
occupancy by Tenant shall be abated in the same proportion as the area of the
Leased Premises unfit for use and occupancy by Tenant bears to the total area of
the Leased Premises.
Landlord shall make all repairs as expeditiously as possible. If such
damage can reasonably be repaired within thirty (30) days of the date of the
occurrence of such damage, Tenant shall not be allowed to terminate this Lease.
If such repair cannot reasonably be completed within thirty (30) days,
the Tenant shall have the right to terminate this Lease by written notice to the
Landlord.
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<PAGE>
12. CONDEMNATION. If during the term of this Lease, part of the Leased
Premises shall be taken for public use in condemnation proceedings or other
exercise of the right of eminent domain and if the balance of the Leased
Premises, in the judgment of Tenant reasonably exercised, is not suitable for
Tenant's business thereon, Tenant at its option may cancel and terminate this
Lease by written notice to the Landlord. Should Tenant elect to continue the
Lease, the monthly rental thereafter to be paid shall be reduced by an amount
which bears the same ratio to the rent herein provided as the area taken bears
to the total area of the Leased Premises prior to such taking. In the event all
of the Leased Premises shall be taken for public use, this Lease and the rights
and obligations of Tenant and Landlord hereunder shall terminate as of the date
possession is taken by the condemning authority. All rentals shall be paid up to
such date and Tenant shall have no claim against Landlord for the value of any
unexpired term of this Lease. Tenant shall have the right to recover from the
condemning authority the value of the leasehold improvements installed by
Tenant.
Should Tenant pursue any claim against the condemning authority for the
value of the unexpired term of said Lease, then Tenant shall not be relieved of
the responsibility for payment to Landlord of the entire amount remaining due
for the balance of the term of said Lease.
13. INSURANCE. Tenant agrees, at its expense, to carry and keep in
force comprehensive public liability insurance in which the limits shall be not
less than $500,000/$1,000,000 combined bodily injury and $500,000 property
damage. Each policy of comprehensive public liability insurance shall contain a
clause that the insurer will not
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<PAGE>
cancel or materially change the insurance without first giving Landlord ten (10)
days prior written notice and shall name Landlord as an additional insured. A
certificate of insurance for each policy required by this section and evidence
of workers' compensation coverage for Tenant's employees located on the Leased
Premises shall be provided to the Landlord at the commencement of the Lease
term, and upon each successive insurance renewal period.
Tenant shall pay to the Landlord an "additional insurance charge" based
on the additional cost of Property Damage Insurance to the Landlord attributable
to the Tenant's use of the facility. Such additional insurance charge shall be
computed, at the time of billing from the Landlord's insurance carrier, based on
the required premium to be paid by the Landlord as compared to the premium that
would have had to be paid if the Tenant were not leasing any portion of the
Total Premises. Tenant, at its option, may obtain quotations from its insurance
carrier for coverage comparable to that provided by Landlord's insurance
carrier. Tenant's additional insurance charge is limited to the lesser of the
comparable coverage quotations. However, selection of an acceptable insurance
carrier remains at the sole discretion of the Landlord. Such additional
insurance charge shall be paid promptly to the Landlord at the address at which
rent is then paid.
14. TAXES AND ASSESSMENTS. Landlord shall pay to the public officers
charged with the collection thereof all real estate taxes and assessments which
shall during the term hereby demised be laid, assessed, levied, or imposed upon,
or become due and payable and a lien upon, the Leased Premises or any part
thereof. Tenant shall pay to Landlord, within ten (10) days of written demand
received from Landlord, that portion of any increase in real estate taxes and
assessments as bears the same ratio to the full amount of any such increase
- 7 -
<PAGE>
in real estate taxes and assessments as the area of the Leased Premises bears to
the area of the Total Premises.
15. HVAC AND UTILITIES. Landlord shall provide heating and cooling to
the Leased Premises. Tenant shall pay as and when due all utilities directly
metered to the Leased Premises. Tenant shall pay a utility charge to Landlord
for water and sewer usage during the term of this Lease on a monthly basis,
payable on or before the first (1st) day of each and every month based upon the
previous twelve (12) months actual water usage by the Total Premises and the
prevailing rates. Tenant's utility charge shall bear the same relation to the
total cost of water usage by the Total Premises as the area of the Leased
Premises bears to the area of the Total Premises. The utility charge required by
this paragraph shall be paid to the Landlord at the address at which rent is
then paid.
16. SIGNS. Tenant may place and maintain such legally permissible signs
on the Leased Premises at it shall desire, and Tenant shall have the exclusive
right to place and maintain such signs on the Leased Premises, except that
during the sixty (60) days prior to the expiration of the term of this Lease,
Landlord shall have the right to place upon the Leased Premises notices or signs
"for rent" or "for sale" which shall not be removed, obliterated, or hidden by
Tenant.
17. ACCESS TO FACILITIES CONTROLLED BY LANDLORD. Landlord hereby grants
to Tenant, for use of its employees and guests, the right to use the cafeteria,
restrooms and medical supply room located along the easterly wall of Landlord's
main building located at 1530 Commerce Drive.
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<PAGE>
18. SECURITY DEPOSIT. A security deposit in the amount of one (1)
month's rent shall be provided by the Tenant to the Landlord at the inception of
this Lease. Such security deposit shall be returned promptly at the end of the
term of this Lease, provided, however, that Tenant has returned the Leased
Premises to the Landlord in accordance with the terms of this Lease.
19. DEFAULT. If Tenant shall (a) fail to pay rent within ten (10) days
after the same shall become due, (b) default in keeping or performing any
covenants or conditions hereof where such default shall continue for thirty (30)
days after written notice thereof from Landlord to Tenant, or (c) abandon or
vacate the Leased Premises, then Landlord may cancel and terminate this Lease
and enter upon and take possession of the Leased Premises. In the event any
monthly payment required to be made herein shall be overdue for a period in
excess of ten (10) days, Landlord shall be entitled to a late charge of .049%
per day for each day in excess of ten (10) days until paid. If Landlord shall
default in the performance of any covenant or agreement herein contained, and
such default shall continue for thirty (30) days after Tenant shall give
Landlord written notice thereof, then Tenant at its option may (a) cease paying
rent for such time as such default shall continue, (b) pay any sums necessary to
perform any obligation of Landlord hereunder with respect to which Landlord
shall be in default, and deduct such sums from the rents thereafter to become
due hereunder, or (c) cancel and terminate this Lease by giving to Landlord not
less than five (5) days notice of such cancellation and termination, and upon
the expiration of the time fixed in such notice, this Lease and the term hereof
shall expire.
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<PAGE>
20. SURRENDER AND HOLDOVER. Tenant agrees to surrender possession of
the Leased Premises to Landlord at the end of the term. If after the expiration
of the term of this Lease, Tenant shall remain in possession of the Leased
Premises and continue to pay rent without a written agreement as to such
possession Tenant shall be regarded as a tenant from month to month and the
rent, taxes, insurance, assessments, and utility charges shall be payable at the
rate and in the manner herein provided. Further, all the terms, provisions and
covenants of this Lease not inconsistent with a month to month tenancy shall
remain in full force and effect.
21. LANDLORD RIGHT OF ENTRY. Landlord, during the term of this Lease,
at reasonable times and during usual business hours with prior notice, may enter
the Leased Premises to view them, and, except in case of renewal or extension,
at any time within two (2) months next preceding the expiration of the then
current term, may show the Leased Premises to others for the purpose of rental
or sale.
22. QUIET ENJOYMENT. If Tenant shall perform each and every covenant
herein agreed to be performed by it, Tenant shall at all times during the Lease
term have peaceable and quiet enjoyment and possession of the Leased Premises
without any manner of hindrance from Landlord or any person lawfully claiming
the Leased Premises and Landlord shall warrant and defend Tenant in the
enjoyment and peaceable possession of the Leased Premises during said term and
any extension or renewal thereof.
23. ASSIGNMENT AND SUBLETTING.
(a) Landlord may assign this Lease to any person or entity
acquiring title to the Total Premises. Tenant agrees to execute and deliver
within ten (10) days of
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<PAGE>
Landlord's written request an Assignment and Assumption of Lease agreement in
substantially the form attached hereto as Exhibit C in connection with any sale
of the Total Premises by Landlord.
(b) Tenant may assign this Lease and sublet the Leased
Premises, or any part thereof, at any time during the term hereof without the
prior written consent of the Landlord, provided, however, that Tenant shall
remain fully responsible to Landlord for the payment and performance of all of
Tenant's obligations under the terms of the Lease unless Landlord shall consent
in writing to such assignment and/or sublease. Landlord shall not unreasonably
withhold its consent to any assignment or sublease proposed by Tenant.
24. NOTICES. Any notice specified herein to be given to Landlord or to
Tenant shall be made in writing and shall be binding on such party from the time
when such notice shall have been deposited in the United States mail, postage
prepaid for certified mail, addressed, if to Landlord to Wilkinson Company, Inc.
at the address at which rent is then paid, and, if to Tenant, as follows:
WC Acquisition Corp.
--------------------
--------------------
The place to which notices are to be mailed may be changed from time to
time by either party by written notice given to the other party.
25. ENTIRETY OF AGREEMENT. No obligation, agreement or understanding on
the part of either party to be performed shall be implied from any of the terms
and provision of this Lease, all obligations, agreements, and understandings
being expressly set forth herein.
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<PAGE>
26. SUCCESSORS AND ASSIGNS. This Lease and the covenants herein
contained shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, if applicable.
27. NO WAIVER. No waiver of any covenant, condition or breach of any
covenant or condition of this Lease shall be taken to constitute a waiver of any
subsequent breach of such covenant or condition nor to justify or authorize the
non-observance of any other occasion of the same or of any other covenant or
condition hereof, nor shall the acceptance of rent by the Landlord at any time
when the Tenant is in default under any covenant or condition hereof be
construed as a waiver of such default.
28. MEMORANDUM OF LEASE. Landlord and Tenant agree that either party
may prepare and shall, if requested, execute and deliver, a memorandum of this
Lease, for recording in the records of Summit County, Ohio.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused multiple
counterparts of this Lease to be executed by their respective officers thereunto
duly authorized as of the day and year first above written.
Signed and acknowledged in WILKINSON COMPANY, INC.
the presence of:
________________________________________ By:_________________________________
Print Name:_____________________________ Its:________________________________
________________________________________
Print Name:_____________________________
Witnesses as to Wilkinson Company, Inc.
Signed and acknowledged in WC ACQUISITION CORP.
the presence of:
________________________________________ By:_________________________________
Print Name:_____________________________ Its:________________________________
________________________________________
Print Name:_____________________________
Witnesses as to WC Acquisition Corp.
CORPORATE GUARANTY OF LEASE
The undersigned, Hi-Rise Recycling Systems, Inc., a Florida
corporation, in consideration of the leasing of the Leased Premises described in
the attached Lease to WC ACQUISITION CORP., an Ohio corporation, its wholly
owned subsidiary, (the "Tenant"), does hereby absolutely, unconditionally and
irrevocably guarantee to Landlord the full and complete performance of all of
Tenant's covenants and obligations under such Lease and
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<PAGE>
the full payment by Tenant of all rentals, additional rentals and other charges
and amounts required to be paid thereunder.
The undersigned does hereby waive all requirements of notice of the
acceptance of this guaranty and all requirements of notice of breach or
non-performance by Tenant. The undersigned further waives any demand by Landlord
and/or prior action by Landlord of any nature whatsoever against Tenant. The
undersigned's obligations hereunder shall remain fully binding although Landlord
may have waived one or more defaults by tenant, extended the time of performance
by Tenant, modified or amended the Lease, released, returned or misapplied other
collateral given later as additional security (including other guarantees) and
released Tenant from the performance of its obligations under such Lease.
This guarantee shall be binding upon the undersigned and its respective
successors, successors in interest, representatives and assigns and shall
continue to effect subsequent to any assignment of the Lease by Landlord or
Tenant or by operation of law.
IN WITNESS to the above, the undersigned has signed this guaranty on
____________, 1997.
SIGNED AND ACKNOWLEDGED HI-RISE RECYCLING SYSTEMS, INC.
IN THE PRESENCE OF:
________________________________________ By:________________________________
Print Name:_____________________________ Its:_______________________________
________________________________________
Print Name:_____________________________
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<PAGE>
STATE OF OHIO )
) SS.
COUNTY OF _______ )
On this ____ day of _____________, 1997 before me, a Notary Public in
and for said County and State, personally appeared _________________________, of
Wilkinson Company, Inc. (Landlord) who executed the foregoing instrument as an
officer on behalf of Wilkinson Company, Inc. under the Lease therein mentioned,
and who acknowledged that the same is his free act and deed as such officer and
the free act and deed of such corporation.
IN WITNESS WHEREOF, I have hereunto subscribed by name and affixed my
official seal on the day and year aforesaid.
(SEAL)
________________________________
NOTARY PUBLIC
STATE OF _________ )
) SS.
COUNTY OF ________ )
On this ______ day of ______________, 1997 before me, a Notary Public
in and for said County and State, personally appeared ____________________, of
WC Acquisition Corp. (Tenant), who executed the foregoing instrument as an
officer of WC Acquisition Corp. under the Lease therein mentioned, and who
acknowledged that the same is his free act and deed as such officer and the free
act and deed of such corporation.
IN WITNESS WHEREOF, I have hereunto subscribed by name and affixed my
official seal on the day and year aforesaid.
(SEAL)
________________________________
NOTARY PUBLIC
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<PAGE>
STATE OF _________ )
) SS.
COUNTY OF ________ )
On this ________ day of ______________, 1997 before me, a Notary Public
in and for said County and State, personally appeared ______________________, of
Hi-Rise Recycling Systems, Inc., (Guarantor) who executed the foregoing
instrument as an officer of Hi-Rise Recycling Systems, Inc. under the Guaranty
therein mentioned, and who acknowledged that the same is his free act and deed
as such officer and the free act and deed of such corporation.
IN WITNESS WHEREOF, I have hereunto subscribed by name and affixed my
official seal on the day and year aforesaid.
(SEAL)
________________________________
NOTARY PUBLIC
This instrument was prepared by:
John E. Mellyn, Jr.
Hahn Loeser & Parks LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
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<PAGE>
EXHIBIT G
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT ("Agreement") is made and entered into
as of the 3rd day of February, 1997, by and among HI-RISE RECYCLING SYSTEMS,
INC., a Florida corporation ("Hi-Rise"), WC ACQUISITION CORP., an Ohio
corporation and a wholly-owned subsidiary of Hi-Rise (the "Buyer"), EFCO, INC.,
an Ohio corporation (the "Parent"), WILKINSON COMPANY, INC., an Ohio corporation
and a wholly-owned subsidiary of the Parent (the "Seller"), and CHRISTIAN KAMM
("Kamm").
WHEREAS, pursuant to the Asset Purchase Agreement dated as of February
3, 1997 (the "Asset Purchase Agreement") by and among Hi-Rise, the Buyer and the
Seller, the Buyer has agreed, among other things, to purchase substantially all
of the assets of the Seller; and
WHEREAS, Hi-Rise and Buyer (collectively, the "Acquiring Companies")
desire to assure that Parent, Seller and Kamm (collectively, the
"Non-Competition Entities") will not engage in activities which would be
competitive or harmful to the business to be conducted by the Buyer; and
WHEREAS, it is a condition precedent to the Acquiring Companies'
obligation to consummate the transactions contemplated by the Asset Purchase
Agreement that the Non-Competition Entities execute and deliver this Agreement,
and the execution and delivery hereof by the Non-Competition Entities are a
material inducement to and constitute part of the consideration for the
consummation by the Acquiring Companies of the transactions contemplated by the
Asset Purchase Agreement.
NOW, THEREFORE, in order to induce the Acquiring Companies to
consummate the transactions contemplated by the Asset Purchase Agreement, the
Non-Competition Entities hereby agree with the Acquiring Companies as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Affiliate" means as to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the specified Person.
(b) "Competing Business" means the sale, manufacture,
distribution and installation of sheet metal fabrication products, including
metal kick plates, corner guards, door edge protectors, lighted hand rails,
bumper rail systems, conveyor systems, linen and rubbish chutes, multiple chute
systems, recycling systems and accessories associated therewith and all
activities in pursuing the foregoing.
(c) "Person" means any natural person, corporation, limited
partnership, general partnership, joint stock company, joint venture, limited
liability company, limited liability partnership, association, firm, company,
trust, bank, trust company, governmental authority or other organization whether
or not a legal entity.
<PAGE>
(d) Any capitalized terms not otherwise defined herein shall
have the meaning ascribed to same in the Asset Purchase Agreement.
2. NON-COMPETITION. (a) During the five (5) year period commencing on
the date hereof and ending February 3, 2002 (the "Restricted Period"), each of
the Non-Competition Entities will not, jointly or severally, directly or
indirectly, on its own behalf or on behalf of any Person:
(i) engage in, acquire an ownership interest in, or become a
shareholder, officer, director, partner, creditor, trustee, consultant,
independent contractor, agent or employee of any Person that is engaged in, or
competes with, directly or indirectly, any business of the type and character as
the Competing Business;
(ii) solicit any Person who is or has been a customer or
prospective customer of the Seller, on its own behalf or on behalf of others as
a shareholder, officer, director, partner, creditor, trustee, consultant,
independent contractor, agent or employee, with regard to any Competing
Business; and
(iii) attempt to employ or enter into any contractual
arrangement with any current employee of the Acquiring Companies or former
employee of Seller who left the employ of the Seller less than one (1) year
prior to the date of this Agreement, without the prior written consent of the
Acquiring Companies.
(b) Notwithstanding the foregoing provisions of Section 2(a) hereof:
(i) Parent may continue to engage in and/or outsource the
fabrication and sale of light gauge sheet metal utilized in connection with the
manufacturing, installation and repair of furnaces;
(ii) Kamm may continue to be employed as a laborer to install
chutes, provided that he does not engage in the solicitation of jobs or orders;
and
(iii) the Non-Competition Entities may own an aggregate of up
to five percent (5%) of the stock of a publicly traded company engaged in a
Competing Business.
3. REASONABLENESS OF RESTRICTIONS. In the event that any provision
relating to the time period or any other restriction set forth in Section 2
hereof shall be declared by a court of competent jurisdiction to exceed the
maximum time period or limits of other restrictions that the court deems
reasonable and enforceable, the time period or limits of other restrictions
which the court finds to be reasonable and enforceable shall be deemed to
become, and thereafter shall be, the maximum time period or limit of such other
restriction.
4. ACKNOWLEDGMENTS. In light of the contemporaneous sale of the Assets
to Buyer pursuant to the Asset Purchase Agreement and the remuneration provided
to the Seller pursuant thereto, each of the Non-Competition Entities hereby
specifically acknowledges and agrees, with the advice of counsel, that the
provisions of the covenants set forth in this Agreement, including the covenants
in Section 2 against solicitation and competition (including the time and other
limits) are reasonable and appropriate and that the Acquiring Companies will
suffer irreparable injury as a result of the breach or violation of this
Agreement by the Non-Competition Entities.
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<PAGE>
5. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
6. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner so as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
7. WAIVER. No provision of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by the party to be bound thereby. No waiver by any party
hereto at any time of any breach by any other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
8. SPECIFIC PERFORMANCE. The Acquiring Companies will be entitled to
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provisions of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of Section 2 of this Agreement and that the Acquiring Companies may
in their sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement without
the necessity of posting a bond and shall be entitled to such relief in order to
enforce or prevent any violations of the provisions of this Agreement.
9. NOTICES. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be in writing and shall be deemed to have been duly given, when
delivered by hand, one day after being sent by overnight mail or overnight
courier with confirmed delivery, or five (5) days after being deposited in the
United States mail, by registered or certified mail, return receipt requested,
postage prepaid, as follows:
If to any of the Non-Competition c/o Christian Kamm
Entities: 1444 West 10th Street
Suite 507
Cleveland, Ohio 44113
With a copy to: Wegman, Hessler, Vanderburg & O'Toole
6100 Rockside Woods Boulevard
Suite 315
Cleveland, Ohio 44131
Attention: Lawrence S. Crowther, Esq.
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<PAGE>
If to either of the Acquiring Hi-Rise Recycling Systems, Inc.
Companies: 16255 N.W. 54th Avenue
Miami, Florida 33014
Attention: Chief Executive Officer
With a copy to: Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Fern S. Watts, Esq.
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
10. BINDING EFFECT. This Agreement shall be binding upon the
Non-Competition Entities and their respective successors and assigns and shall
be binding upon and inure to the benefit of the Acquiring Companies and their
respective successors and assigns.
11. AMENDMENT; ENTIRE AGREEMENT. This Agreement may not be changed
orally but only by an agreement in writing agreed to by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought. This Agreement embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter of this Agreement, and
supersedes and replaces all prior agreements, understandings and commitments
with respect to such subject matter.
12. GOVERNING LAW. This Agreement shall be governed by, construed,
applied and enforced in accordance with the internal laws of the State of Ohio,
without regard to the conflicts of laws principles thereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
day and year first above written.
HI-RISE RECYCLING SYSTEMS, INC.,
a Florida corporation
By:____________________________________________
Its:___________________________________________
WC ACQUISITION CORP., an Ohio corporation
By:____________________________________________
Its:___________________________________________
WILKINSON COMPANY, INC., an Ohio corporation
By:____________________________________________
Its:___________________________________________
EFCO, INC., an Ohio corporation
By:____________________________________________
Its:___________________________________________
_______________________________________________
CHRISTIAN KAMM
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<PAGE>
EXHIBIT H
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") entered into as of this
3rd day of February, 1997 by and among HI-RISE RECYCLING SYSTEMS, INC., a
Florida corporation (the "Parent"), WC ACQUISITION CORP., an Ohio corporation
and a wholly-owned subsidiary of the Parent (the "Buyer" and, together with the
Parent, the "Acquiring Companies" ), and CHRISTIAN KAMM (the "Consultant").
W I T N E S S E T H:
WHEREAS, the Parent, the Buyer and Wilkinson Company, Inc., an
Ohio corporation (the "Seller"), have entered into an Asset Purchase Agreement,
dated as of February 3, 1997 (the "Asset Purchase Agreement"), pursuant to
which, among other things, the Buyer has agreed to purchase substantially all of
the assets of the Seller, on the terms and conditions set forth therein; and
WHEREAS, the Consultant has been the President and Chief
Executive Officer of the Seller and has special skills and knowledge regarding
the Seller's Business (as defined in the Asset Purchase Agreement); and
WHEREAS, the Acquiring Companies desire to retain the services
of the Consultant and the Consultant desires to be retained by the Acquiring
Companies, on the terms and conditions set forth herein; and
WHEREAS, it is a condition precedent to the Acquiring
Companies' obligation to consummate the transactions contemplated by the Asset
Purchase Agreement that the Consultant execute and deliver this Agreement, and
the execution and delivery hereof by the Consultant are a material inducement to
and constitute part of the consideration for the consummation by the Acquiring
Companies of the transactions contemplated by the Asset Purchase Agreement.
NOW, THEREFORE, in order to induce the Acquiring Companies to
consummate the transactions contemplated by the Asset Purchase Agreement, and
for and in consideration of the mutual covenants and agreements set forth below,
and other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the Consultant hereby agrees with the Acquiring
Companies as follows:
1. ENGAGEMENT. The Acquiring Companies hereby engage the Consultant to
perform consulting services for the Acquiring Companies, and the Consultant
hereby agrees to perform such services for the Acquiring Companies, on the terms
and for the period hereinafter specified. The Consultant agrees to perform such
consulting services for the Acquiring Companies as the Acquiring Companies shall
from time to time reasonably request on the terms and for the period hereunder
specified, which services shall include without limitation assisting the
Acquiring Companies in the orderly transition of the management and operation of
Seller's Business to the Buyer. The Consultant further agrees to devote no less
than an aggregate of thirty-five (35) business days during the first four (4)
months of the Consulting Period to the performance of consulting services for
the Acquiring Companies hereunder, provided that the Consultant shall not be
obligated to devote more than two (2) business days each week to the performance
of such services. During the remainder of the Consulting Period, the Consultant
agrees to devote such of his business time and energies by telephone during
<PAGE>
normal business hours as the Acquiring Companies shall reasonably request to the
performance of such services. Attached hereto as Exhibit A is a general
timeframe with respect to the performance of consulting services by the
Consultant hereunder.
2. TERM OF ENGAGEMENT. The term of the Consultant's engagement
hereunder (the "Consulting Period") shall commence February 3, 1997 and, unless
sooner terminated in accordance with Section 4 hereof, shall terminate on
February 3, 1998, unless further extended upon mutual agreement of the parties.
3. REIMBURSEMENT FOR EXPENSES.
The Acquiring Companies shall reimburse the Consultant for all
reasonable business expenses incurred or paid by him during the Consulting
Period, or any renewal thereof, in the performance of his services under this
Agreement, so long as Consultant furnishes to the Acquiring Companies
appropriate documentation required by the Internal Revenue Code in connection
with such expenses and, in the case of any expense in excess of $1,000, has
obtained the prior written consent of the Acquiring Companies. The Consultant
agrees to furnish such other related documentation and accounting back-up as the
Acquiring Companies may from time to time reasonably request.
4. TERMINATION. The Consulting Period or any renewal thereof shall be
terminated upon the occurrence of any of the following events:
(a) DEATH. The Consulting Period or any renewal thereof shall
automatically terminate without notice on the date on which the Consultant's
death occurs.
(b) TERMINATION BY ACQUIRING COMPANIES. The Acquiring
Companies may terminate the Consulting Period or any renewal thereof in their
sole and absolute discretion at any time upon giving written notice to such
effect to the Consultant.
(c) DISABILITY. The Consulting Period or any renewal thereof
shall terminate on the date on which the Consultant becomes incapacitated by
reason of sickness, accident or other physical or mental disability and shall be
unable to perform his normal duties hereunder.
5. INTELLECTUAL PROPERTY; CONFIDENTIALITY
(a) INTELLECTUAL PROPERTY. During the Consulting Period or
any renewal thereof, the Consultant will disclose to the Acquiring Companies all
ideas, inventions and business plans developed by the Consultant during such
period which relate directly to the business of the Buyer, including without
limitation any process, operation, product or improvement which may be
patentable or copyrightable. The Consultant agrees that such will be the
property of the Acquiring Companies and that the Consultant will, at the
Acquiring Companies' request and cost, do whatever is reasonably necessary to
secure the rights thereto by patent, copyright or otherwise for the Acquiring
Companies.
(b) CONFIDENTIALITY. During the Consulting Period and for a
period of ten (10) years thereafter, the Consultant agrees that the Consultant
will not divulge to anyone (other than the Acquiring Companies, or any persons
employed or designated by the Acquiring Companies) any knowledge or information
of any type whatsoever of a confidential nature relating to the business of the
Acquiring Companies or any of their affiliates, including, without limitation,
all types of trade secrets and processes used in the operation of their
businesses (collectively, "Confidential Information"). The Consultant further
agrees not to disclose, publish or make use of any such knowledge or information
of a confidential nature without the prior written consent of the Acquiring
Companies. For purposes of this Agreement, Confidential Information shall not
include information, other than proprietary information with respect to the
Seller which shall constitute Confidential
2
<PAGE>
Information, which (i) is or becomes generally available to the public other
than as a result of a disclosure by the Consultant or his representatives, (ii)
was available to the Consultant on a non-confidential basis prior to its
disclosure to the Consultant by the Acquiring Companies, or (iii) becomes
available to the Consultant on a non-confidential basis from a source other than
the Acquiring Companies; provided, however, that such source is not bound by a
confidentiality agreement with the Acquiring Companies.
6. BREACH BY CONSULTANT. The parties hereto recognize that the services
to be rendered under this Agreement by the Consultant are special, unique and
extraordinary in character, and that in the event of the breach by the
Consultant of any of the terms and conditions of this Agreement to be performed
by the Consultant, the Acquiring Companies shall be entitled, if they so elect,
to institute and prosecute proceedings in any court of competent jurisdiction in
the State of Ohio, either at law or in equity, without the necessity of posting
a bond or other security, to institute suit to obtain damages for any breach of
this Agreement, or to enforce the specific performance thereof by the
Consultant.
7. WAIVER OF BREACH. The waiver by either of the Acquiring Companies or
the Consultant of a breach of any provision of this Agreement shall not operate
as or be deemed a waiver of any subsequent breach by either of the Acquiring
Companies or the Consultant.
8. ASSIGNMENT. This Agreement is a personal contract and the rights and
interests of the Consultant herein may not be sold, transferred, assigned,
pledged or hypothecated. This Agreement may not be sold, transferred, assigned,
pledged or hypothecated by the Acquiring Companies without the prior written
consent of the Consultant. The rights and obligations of the Acquiring Companies
hereunder shall be binding upon and run in favor of the successors and assigns
of the Acquiring Companies.
9. GOVERNING LAW; CAPTIONS. This Agreement contains the entire
agreement between the parties and shall be governed by the laws of the State of
Ohio. It may not be changed orally, but only by an agreement in writing signed
by all the parties. Paragraph headings are for convenience of reference only and
shall not be considered a part of this Agreement.
10. PRIOR AGREEMENTS. This Agreement supersedes and terminates any
prior agreements between the Acquiring Companies and the Consultant relating to
the subject matter herein addressed.
11. NOTICES. Any notice or other communication required or permitted
hereunder shall be sufficiently given if delivered in person, or one business
day after sent by overnight mail or overnight courier return receipt requested,
or three days after depositing by registered or certified mail, postage prepaid,
(i) in the case of either of the Acquiring Companies, addressed as follows: c/o
Hi-Rise Recycling Systems, Inc., 16255 N. W. 54thth Avenue, Miami, Florida
33014, Attention: Chief Executive Officer, or (ii) in the Consultant's case,
addressed as follows: 1444 West 10th Street, Suite 507, Cleveland, Ohio 44113 or
such other address as shall be furnished in writing by either party to the
other.
12. VALIDITY. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
* * *
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IN WITNESS WHEREOF, the Acquiring Companies and the Consultant have
executed this Agreement, on and as of the date and year first above written.
HI-RISE RECYCLING SYSTEMS, INC, A FLORIDA
CORPORATION
By:_____________________________________________
Donald Engel
Chief Executive Officer
WC ACQUISITION CORP., AN OHIO CORPORATION
By:_____________________________________________
Donald Engel
Chief Executive Officer
________________________________________________
CHRISTIAN KAMM
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<PAGE>
EXHIBIT I
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is entered into as of the 3rd day of
February, 1997, by and among WILKINSON COMPANY, INC., an Ohio corporation (the
"Seller"), EFCO, INC., an Ohio corporation and the sole shareholder of the
Seller ("EFCO"), WC ACQUISITION CORP., an Ohio corporation (the "Buyer"), and
HI-RISE RECYCLING SYSTEMS, INC., a Florida corporation and the sole shareholder
of the Buyer (the "Parent"). (The Seller and EFCO are sometimes herein referred
to collectively as the "Indemnifying Parties" and the Buyer and the Parent are
sometimes herein referred to collectively as the "Indemnified Parties".)
W I T N E S S E T H:
WHEREAS, the Seller, the Buyer and the Parent are parties to an Asset
Purchase Agreement dated as of the date hereof (the "Asset Purchase Agreement");
and
WHEREAS, in connection with the consummation of the transactions
contemplated by the Asset Purchase Agreement, the Seller and the Buyer are
entering into a lease dated the date hereof (the "Lease") pursuant to which the
Buyer is leasing from the Seller certain space at which the Seller's principal
offices are located at 1530 Commerce Drive, Stow, Ohio (the "Property"); and
WHEREAS, it is a condition precedent to the obligation of the
Indemnified Parties to consummate the transactions contemplated by the Asset
Purchase Agreement that the Indemnifying Parties execute and deliver this
Agreement, and the execution and delivery hereof by the Indemnifying Parties are
a material inducement to the consummation by the Indemnified Parties of the
transactions contemplated by the Asset Purchase Agreement and the Lease;
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived from this Agreement, the Asset Purchase Agreement and the
Lease, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. INDEMNITY. Each of the Indemnifying Parties hereby agrees to
indemnify, hold harmless and defend the Indemnified Parties and their respective
directors, officers, employees, successors and assigns against any and all
claims, losses, damages (including all foreseeable and unforeseeable
consequential damages), liabilities, fines, penalties, charges, interest,
administrative and judicial proceedings and orders, judgments, remedial action
requirements, enforcement actions of any kind, and all costs and expenses
(collectively, "Damages") incurred in connection therewith (including but not
limited to reasonable
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attorneys' fees and expenses), directly or indirectly resulting in whole or in
part from any Environmental Claims (as defined below) for actions, events, or
conditions occurring or existing before the effective date of this Agreement.
The Indemnified Parties shall give the Indemnifying Parties reasonable notice of
any Environmental Claim and shall allow the Indemnifying Parties the opportunity
to supervise any Cleanup (as defined below); provided, that the Indemnified
Parties shall not lose their rights to indemnification hereunder unless their
failure to give any such notice shall result in material damage or prejudice to
the Indemnifying Parties. Notwithstanding any other provision of this Section 1,
the aggregate amount of Damages for which the Indemnifying Parties shall be
liable pursuant to this Section 1 shall not exceed $100,000, except for Damages
with respect to actions, events or conditions involving PCBs (as defined below).
These indemnification provisions shall survive for a period of four (4) years
from and after the effective date of this Agreement.
2. CLEANUP BY INDEMNIFYING PARTIES IN COMPLIANCE WITH ENVIRONMENTAL
LAWS.
(a) The Indemnifying Parties agree to assess and remediate (or cause to
be remediated) the Property or correct any and all Hazardous Conditions (as
hereinafter defined) in compliance with all applicable Environmental Laws
existing as of the date hereof (the "CLEANUP"), at their sole cost and expense.
The Indemnifying Parties shall effect such assessment, remediation, or
corrective action in a reasonably expeditious manner, but in no event no later
than February 3, 1999, under the control and supervision of contractors
reasonably approved by the Indemnified Parties. The Indemnifying Parties shall
not cause or permit the Property or any activity conducted thereon in connection
with such assessment, remediation, or corrective action to be in violation of
any Environmental Laws, including but not limited to those governing soil and
ground water conditions. The Indemnifying Parties shall pay for all costs
incurred to operate, inspect, and maintain any remedial system required for the
Cleanup of the Property, as modified and approved by all appropriate
governmental entities, until the remediation of the Property is completed, the
remediation equipment is removed, and the Property restored as described
immediately below. The Cleanup of the Property shall be considered complete on
the date that a Site Rehabilitation Completion Order (the SRCO) or No Further
Action Letter (or their equivalent) is issued by the appropriate governmental
entity and received by the Indemnifying Parties. Upon receipt of the SRCO or its
equivalent, the Indemnifying Parties shall, at their sole cost and expense,
remove all remedial equipment and remove and properly dispose of any soils,
monitoring well waste water, and related remedial materials from the Property
within thirty days of such receipt, without unreasonably interfering with the
Indemnified Parties' use of the Property. The Indemnifying Parties shall pay all
costs incurred in any restoration or rights associated with or necessitated by
such removal. The provisions of this Section 2 shall survive from and after the
effective date of this Agreement.
(b) The Indemnifying Parties agree that the Indemnified Parties may
engage their own environmental consultants to monitor the Cleanup. The
Indemnifying Parties shall reasonably cooperate with, and provide reasonable
access to the Property to, such environment consultants. Upon completion of the
Cleanup, the Indemnifying Parties shall
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obtain a Phase II Environmental Report with respect to the Property and furnish
a copy thereof to the Indemnifying Parties and such consultants.
3. REIMBURSEMENT OF RENT. If the Cleanup unreasonably interferes with
the Indemnified Parties' operations at the Property such that the Indemnified
Parties are unable to conduct business at the Property solely as a result of the
Cleanup, the Indemnifying Parties shall reimburse the Indemnified Parties for
the rent paid by them for the Property during the period that the Indemnified
Parties are unable to conduct business at the Property.
4. DEFINITIONS. As used in this Agreement, the following terms shall
have the respective meanings set forth below:
a. "HAZARDOUS CONDITION" means any hazardous condition
existing at the Property (including the air, surface or subsurface conditions of
the Property), which would, under applicable Environmental Laws, require
investigation, assessment or corrective action or which would pose a hazard to
human health or the environment.
b. "HAZARDOUS MATERIALS" means, except as specifically
exempted or permitted under applicable "Environmental Law" (as hereinafter
defined), any hazardous or toxic substance, pollutant, contaminant or petroleum
substance, as such terms are defined in or regulated by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), 42 U.S.C. section 9601 et seq., and as expanded by other federal,
state and local environmental laws, and shall include, without limitation, any
petroleum products not regulated by CERCLA, any flammable explosives,
radioactive materials, radon, any asbestos-containing materials, any
polychlorinated biphenyls ("PCBS"), any paints, solvents, chemicals, metals,
petroleum products or other substances with hazardous, carcinogenic or toxic
characteristics or other pollutants under any applicable federal, state or local
laws, ordinances, rules or regulations now or hereinafter in effect.
c. "ENVIRONMENTAL CLAIMS" means any enforcement, cleanup,
removal, remedial or other governmental or regulatory actions threatened,
instituted or completed against or with respect to the Property from time to
time pursuant to any applicable Environmental Laws, and any material claims
threatened or made by any non-governmental party against or with respect to the
Property relating to damage, contribution, cost recovery, compensation, loss or
injury resulting from any Hazardous Materials or any violation of any applicable
Environmental Laws.
d. "ENVIRONMENTAL LAWS" means any applicable present or future
federal, state or local laws, ordinances, rules or regulations pertaining to
Hazardous Materials, industrial hygiene, environmental conditions, or
occupational safety and health requirements,
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including without limitation the following statutes and regulations, as amended
from time to time:
i) Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. sections 135 ET
SEQ.;
ii) Toxic Substance Control Act, 15 U.S.C.
section 2601 ET SEQ.;
iii) Occupational Safety and Health Act, 29
U.S.C. section 651 ET SEQ. as such Act
relates to environmental matters;
iv) Federal Clean Water Act, 33 U.S.C. section
1151 ET SEQ.;
v) Federal Water Pollution Control Act, 33
U.S.C. section 1251;
vi) Safe Drinking Water Act, 42 U.S.C. section
30 ET SEQ.;
vii) National Environmental Policy Act, 42 U.S.C.
section 1857 ET SEQ.;
viii) Resource Conservation and Recovery Act, 42
U.S.C. section 6901 ET SEQ.;
ix) Federal Clean Air Act, 42 U.S.C. section
7401 ET SEQ.;
x) Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA" or
"SUPERFUND"), 42 U.S.C. section 9601 ET
SEQ.;
xi) Hazardous Materials Transportation Act, 49
U.S.C. sections 1801 ET SEQ.;
xii) Regulations of the Environmental Protection
Agency, 33 C.F.R. and 40 C.F.R.; and
xiii) Chapters 3734 and 6111 of the Ohio Revised
Code and rules related thereto.
e. A "RELEASE" of Hazardous Materials includes disposal,
discharging, injecting, spilling, leaking, leaching, dumping, emitting,
escaping, emptying, seeping, placing, and the like, into or upon any land or
water or air, or otherwise entering into the environment.
5. AMENDMENT; WAIVER. This Agreement may not be amended or modified in
any respect, except by the mutual written agreement of the parties hereto. No
provision of
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this Agreement may be modified, waived, or discharged unless such waiver,
modification, or discharge is agreed to in writing and signed by the party to be
bound thereby. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the separate parties hereto in separate counterparts, each
of which shall be deemed to be one and the same instrument.
7. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, that the Indemnifying Parties may
not assign this Agreement.
8. APPLICABLE LAW. This Agreement shall be governed by, and shall be
construed, interpreted and enforced in accordance with, the internal laws of the
State of Ohio.
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IN WITNESS WHEREOF, the parties hereto have set their hands as of the
day and year first above written.
WILKINSON COMPANY, INC.
By:_____________________________________
EFCO, INC.
By:_____________________________________
WC ACQUISITION CORP.
By:_____________________________________
HI-RISE RECYCLING SYSTEMS, INC.
By:_____________________________________
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