Exhibit 10.4

 

mEMbership Interest Purchase Agreement

 

This Membership Interest Purchase Agreement (this “Agreement”) is entered into
as of January 17, 2018 (the “Effective Date”), by and among Mobile Science
Technologies, Inc., a Georgia corporation (“Buyer”), Meridian Waste Solutions,
Inc., a New York corporation (“Parent”); Jefferson Patrick Locke (“Locke”) and
Jonathan Moore Lewis (“Lewis”) (collectively the “Sellers” and each individually
sometimes a “Seller”).  Buyer and the Sellers are referred to collectively
herein as the “Parties” and each a “Party”.

 

BACKGROUND FACTS

 

Locke and Lewis own all legal and beneficial right, title and interest in and to
all of the membership interests in Red X Medical LLC, a Georgia limited
liability company (“Company”).

 

The Company owns and operates a medical waste disposal business (the
“Business”).

 

Buyer desires to purchase and acquire from Sellers all of the issued and
outstanding membership interests of the Company, and Sellers desire to sell all
of the issued and outstanding membership interests of the Company to Buyer, all
in accordance with the terms and conditions set forth in this Agreement.

 

Parent as the sole shareholder of Buyer will be materially benefitted from
Sellers’ performance of their obligations hereunder, and as such has agreed to
be bound by certain terms of this Agreement.

 

RECITAL OF CONSIDERATION

 

Now, therefore, in consideration of the premises and the mutual covenants and
agreements contained herein, the receipt and sufficiency of which is hereby
acknowledged, the Parties, intending to be legally bound, agree as follows:

 

Section 1
DEFINITIONS AND USAGE

 

1.1 Definitions.  For purposes of this Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires, initially capitalized
terms used in this Agreement have the meanings set forth in Schedule 1.1.

 

1.2 Interpretation and Usage.  In this Agreement, unless a clear contrary
intention appears: (a) the singular number includes the plural number and vice
versa; (b) reference to any Person includes such Person’s successors and assigns
but, if applicable, only if such successors and assigns are not prohibited by
this Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually; (c) reference to any gender
includes the other gender and the neutral, as applicable; (d) reference to any
agreement, document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof; (e) reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified, replaced or reenacted, in whole or
in part, and in effect from time to time, including rules and regulations
promulgated thereunder, and reference to any section or other provision of any
Legal Requirement means that provision of such Legal Requirement from time to
time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other provision; (f)
“hereunder,” “hereof,” “hereto,” and words of similar import will be deemed
references to this Agreement as a whole and not to any particular Section or
other provision hereof or any Exhibit or Schedule attached hereto; (g)
“including” (and with correlative meaning “include” and “includes”) means
including, without limiting the generality of any description preceding such
term, and will be deemed to be followed by the words “without limitation”; (h)
Section headings are provided for convenience of reference only and will not
affect the construction or interpretation of any provision hereof; (i) any
references to “Section”, “Schedule” or “Exhibit” followed by a number or letter
or combination of the two refers to the corresponding Section, Schedule or
Exhibit of or to this Agreement; (j) with respect to the determination of any
period of time, “from” means “from and including” and “to” means “to but
excluding”; and (k) references to documents, instruments or agreements will be
deemed to refer as well to all addenda, exhibits, schedules or amendments
thereto.

 

 -1- 

 

 

1.3 Legal Representation of the Parties.  This Agreement was negotiated by the
Parties with the benefit of legal representation, and any rule of construction
or interpretation otherwise requiring this Agreement to be construed or
interpreted against any Party will not apply to any construction or
interpretation hereof.

 

1.4 Incorporation by Reference.  The Parties agree that the Background Facts set
forth above are true and correct and are hereby incorporated herein by this
reference.

 

Section 2
PURCHASE OF THE MEMBERSHIP INTERESTS FROM THE SELLERS

 

2.1 Purchase and Sale of Membership Interests. On and subject to the terms and
conditions of this Agreement, Buyer agrees to purchase from Sellers, and Sellers
agree to sell to Buyer, all of the membership interests in the Company (the
“Membership Interests”), free and clear of all Liens, for the consideration
specified in Section 2.2.

 

2.2 Purchase Price (“Purchase Price”).

 

A.Tranche I. For and in consideration of the sale, assignment, transfer and
conveyance of the Membership Interests by Sellers, on the sixtieth (60th) day
after Closing, Buyer shall reimburse Richie Stephens for all documented direct
operating costs of the Company as well as all costs incurred by the Company in
obtaining any Permit to allow the Company to operate a medical waste disposal
facility on the Real Property (as hereinafter defined) described in the Real
Estate Purchase Contract (as hereinafter defined), such reimbursement not exceed
the sum of Seventy Five Thousand and no/100ths Dollars ($75,000.00);

 

B.Tranche II. For and in consideration of the sale, assignment, transfer and
conveyance of the Membership Interests by Sellers, so long as the Post Closing
Contingencies set forth in Section 5.3 hereof have been satisfied by the
Contingency Deadline (as defined in Section 5.3), and subject to the provisions
of Section 7.7 hereof, then within thirty (30) days of the fulfillment of the
Tranche II Post Closing Contingencies, (a) Parent will issue to the Sellers One
Hundred Thousand (100,000) shares of Parent’s restricted common stock, par value
$0.025 per share (the “Initial Purchase Price Shares”) and (b) Buyer will pay to
the Sellers in cash the sum of Two Hundred Thousand and no/100ths Dollars
($200,000.00) via wire transfer. The funds and shares to be paid pursuant to
this subparagraph, if any, shall be distributed among Sellers as set forth on
Schedule 2.2.

 

 -2- 

 

 

C.Tranche III. For and in consideration of the sale, assignment, transfer and
conveyance of the Membership Interests by Sellers, so long as the Remaining Post
Closing Contingencies set forth in Section 5.3 hereof have been satisfied by the
Contingency Deadline (as defined in Section 5.3), and subject to the provisions
of Section 7.7 hereof, then on March 1st of 2020, 2021 and 2022, the Buyer shall
pay a cash bonus (the “Cash Bonus”) to Sellers equal twenty five percent (25%)
of the positive combined earnings before interest, taxes and depreciation,
excluding Accounts Receivables and capital expenditures as determined by the
Company’s accountants (the “Positive CA EBITDA”) of the Company as determined by
the Company’s for the immediately preceding calendar year. Each date on which
any Cash Bonus is to be paid shall be hereinafter referred to as a “Cash Bonus
Payment Date”. The Cash Bonus shall be distributed among Sellers as set forth on
Schedule 2.2.

 

D.Tranche IV. For and in consideration of the sale, assignment, transfer and
conveyance of the Membership Interests by Sellers, so long as the Remaining Post
Closing Contingencies set forth in Section 5.3 hereof have been satisfied by the
Contingency Deadline (as defined in Section 5.3), and subject to the provisions
of Section 7.7 hereof, then on or before April 1, 2020, Parent shall issue to
Sellers, shares of Parent’s restricted common stock (the “Tranche IV Shares”)
with a value (the “Tranche IV Share Value”) equal to the product of five
multiplied by the result of the following computation: the Combined Entities
Positive CA EBITDA for calendar year 2019, if any, (x) plus the amount by which
the earnings before interest, taxes and depreciation, excluding Accounts
Receivables and capital expenditures, as determined by the Company’s accountants
(“CA EBITDA”), of the Combined Entities for calendar year 2018 exceeds
($454,000.00) OR (y) less the amount by which the Combined Entities’ CA EBITDA
for calendar year 2018 is less than ($454,000.00), whichever is applicable, AND,
(z) less the Cash Bonus, if any, to be paid on March 1, 2020. Notwithstanding
anything to the contrary contained in this Section 2.2D, no Tranche IV Shares
shall be issued pursuant to this Section 2.2D unless the Company shall have a
Positive CA EBITDA for the 2019 calendar year. The Tranche IV Shares shall be
distributed among Sellers as set forth on Schedule 2.2.

 

The number of Tranche IV Shares to be issued as set forth herein shall be
calculated by dividing the Tranche IV Share Value by the VWAP of the Parent’s
restricted common stock as of the last Trading Day prior April 1, 2020. “VWAP”
means, for a particular date, the volume-weighted average price of the Common
Stock on the principal market on which the common stock is traded (the
“Principal Market”) for a particular Trading Day as reported by Bloomberg.
“Trading Day” means any day during which the Principal Market shall be open for
business.

 

 -3- 

 

 

E.Tranche V. For and in consideration of the sale, assignment, transfer and
conveyance of the Membership Interests by Sellers, so long as the Remaining Post
Closing Contingencies set forth in Section 5.3 hereof have been satisfied by the
Contingency Deadline (as defined in Section 5.3), and subject to the provisions
of Section 7.7 hereof, then, on April 1st of 2021, 2022, 2023 and 2024 (each an
“Anniversary Earnout Payment Date”), Parent shall issue to Sellers shares of the
Parent’s restricted common stock (the “Tranche V Shares”) based upon a value
(the “Tranche V Share Value(s)”) equal to product of the Applicable Year
Multiplier (as hereinafter defined) multiplied by the positive difference
between the Positive CA EBITDA of the Combined Entities for the immediately
preceding calendar year, if any, less (y) the applicable Cash Bonus, if any,
paid on the immediately preceding Cash Bonus Payment Date and (z) less the CA
EBITDA of the Combined Entities for the calendar year immediately preceding such
immediately preceding calendar year. The “Applicable Year Multiplier” to be used
in calculating the Tranche V Share Values shall be 4 for the1st Anniversary
Earnout Payment Date (April 1, 2021), 3 for the 2nd Anniversary Earnout Payment
Date (April 1, 2022), 2 for the 3rd Anniversary Earnout Payment Date (April 1,
2023), and 1 for the fourth Anniversary Earnout Payment Date (April 1, 2024).
Notwithstanding anything to the contrary contained in this Section 2.2E, no
Tranche V Shares shall be issued on any Anniversary Earnout Payment Date unless
the Combined Entities shall have had a Positive CA EBITDA for the calendar year
immediately preceding such Anniversary Earnout Payment Date. The Tranche V
Shares, if issued, shall be distributed among Sellers as set forth on Schedule
2.2.

 

The number of Tranche V Shares to be issued as set forth herein shall be
calculated by dividing the Tranche V Share Value for the applicable Anniversary
Earnout Payment Date by the VWAP of the Parent’s restricted common stock as of
the last Trading Day prior to the applicable Anniversary Earnout Payment Date.
“VWAP” means, for a particular date, the volume-weighted average price of the
Common Stock on the principal market on which the common stock is traded (the
“Principal Market”) for a particular Trading Day as reported by Bloomberg.
“Trading Day” means any day during which the Principal Market shall be open for
business.

 

F.Tranche VI. For and in consideration of the sale, assignment, transfer and
conveyance of the Membership Interests by Sellers, so long as the Remaining Post
Closing Contingencies set forth in Section 5.3 hereof have been satisfied by the
Contingency Deadline (as defined in Section 5.3), and subject to the provisions
of Section 7.7 hereof, then, upon the Company’s closing (each such closing to be
referred to as a “Large Entity Closing”) of any acquisition on or before
December 31, 2022 of any third party entity (“Large Acquired Entity”) which is
then engaged primarily in a business directly competitive with the Business for
a purchase price which includes the Parent’s issuance of more than Twenty Five
Thousand (25,000) shares of the Parent’s restricted common stock, then:

 

(i) On the sixtieth day after any such Large Entity Closing, (a) Buyer shall pay
to Sellers, in cash, an amount equal to two percent (2.0%) of the portion of the
Net Large Entity Purchase Price paid in cash at the Large Entity Closing by
Buyer; and, (b) Parent shall issue to Sellers an amount of shares of Parent’s
restricted common stock equal to two percent (2.0%) of the shares of Parent’s
restricted common stock issued to the sellers of such Large Acquired Entity at
the Large Entity Closing; and

 

 -4- 

 

 

(ii) Commencing April 1, 2019, and continuing on the 1st day of April for each
consecutive year, through and including April 1, 2023 (each such date to be
referred to as a Tranche VI Payment Date, Parent shall issue to Sellers shares
of the Parent’s restricted common stock (the “Tranche VI” Shares”) based upon a
value (the “Tranche VI Share Value(s)”) equal to two percent (2.0%) of such
Large Acquired Entity’s Positive CA EBITDA for any immediately preceding
calendar year, or portion of such immediately preceding calendar, year during
which such Large Acquired Entity was owned by Buyer.

 

The Tranche VI Shares, if issued, shall be distributed among Sellers as set
forth on Schedule 2.2.

 

The number of Tranche VI Shares to be issued as set forth herein shall be
calculated by dividing the Tranche VI Share Value for the applicable Tranche VI
Payment Date by the VWAP of the Parent’s restricted common stock as of the last
Trading Day prior to the applicable Tranche VI Payment Date. “VWAP” means, for a
particular date, the volume-weighted average price of the Common Stock on the
principal market on which the common stock is traded (the “Principal Market”)
for a particular Trading Day as reported by Bloomberg. “Trading Day” means any
day during which the Principal Market shall be open for business.

  

2.3 Closing Date. Unless Buyer and Sellers otherwise agree, the purchase and
sale of the Membership Interests will take place by facsimile transmission or by
electronic mail in PDF format of all required documents (with the original
executed documents to be delivered by overnight courier) to the offices of
Richard J. Dreger, located at 11660 Alpharetta Highway, Building 700, Suite 730,
Roswell, Georgia 30076, and will occur within at least five Business Days after
satisfaction of the required conditions as set forth in this Agreement (“Closing
Date” or “Closing”).  At Closing, all of Sellers’ right, title and interest in
and to the Membership Interests and in any such right, title or interest that
Sellers may have or had with respect to the Business will be transferred and
conveyed to Buyer free and clear of all Liens.

 

2.4 Payment of Current Sellers Liabilities; Retained Liabilities.

 

(a) Schedule 2.4 (to be updated immediately prior to Closing) lists, in each
case to the extent applicable: (i) the amount of the aggregate Indebtedness of
the Company outstanding on the Closing Date; (ii) the aggregate amount of all
undischarged judgments against the Company; (iii) the aggregate amount of all
obligations secured by Tax liens against the Company, (iv) the total of the
aggregate mortgage debt secured by, and the judgment liens encumbering, and the
federal Tax liens filed against, any of the Assets, including the Properties,
(v) the amount of any and all Liabilities or obligations of the Company pursuant
to any employment Contract, severance agreement or Contract, any bonus program
or plan, all Employee Benefit Plans and all other employee benefit plans and
other employee benefits, and any  Liability relating to payroll, vacation, sick
leave, workers' compensation, unemployment benefits, pension benefits, employee
stock option or profit-sharing plans, health care plans or benefits or any other
employee plans or benefits of any kind for the current or former employees of
the Company; (vi) any Liability arising out of or relating to services performed
by the Company in connection with the Business before the Closing Date; (vii)
any Liability under the Company Contract that arises after the Closing Date out
of or relating to any Breach or other action that occurred before the Closing
Date; (viii) any Liability under any Excluded Contract; (ix) any Liability for
Taxes including (A) any Taxes relating to or arising as a result of the
operation of the Business prior to the Closing Date, (B) any Taxes that will
arise as a result of the sale of the Membership Interests pursuant to this
Agreement and (C) any deferred Taxes of any nature; (x) any Environmental,
Health and Safety Liability arising out of or relating to the operation of the
Business and the operation and occupation of the Properties or the leasing,
ownership or operation of any Asset; (xi) (A) any Liability under any
employment, severance, retention or termination agreement with any employee of
the Company, (B) any Liability arising out of or relating to any employee
grievance whether or not the affected employees are hired by Buyer; and (C) any
Liability to indemnify, reimburse or advance amounts to any officer, director,
member, manager, employee or agent of the Company; (xii) any Liability arising
out of any Proceeding or Current Litigation with respect to the Company, the
Business or the Assets, (xiii) any Liability arising out of or resulting from
either Seller’s or the Company’s compliance or noncompliance with any Legal
Requirement or Order of any Governmental Body; (xiv) any Liability of Sellers
under this Agreement or any other document executed in connection with the
Contemplated Transactions; (xv) any known accrued Liability of the Company based
upon such Seller's acts or omissions, or the Company’s acts or omissions
occurring prior to the Closing Date; (subsections (i)-(xvi), collectively
“Current Sellers Liabilities” and each a “Current Seller Liability”). 

 

 -5- 

 

 

(b) At Closing, Sellers will pay all Current Seller Liabilities not previously
discharged by such Seller.  At Closing, Sellers will promptly obtain a release
and discharge of all Indebtedness and all Current Seller Liabilities and will
file all applicable lien discharges and releases from such creditors and deliver
copies of such filings to Buyer, except for the liens created by the bank loans
set forth in Section 2.4, which will continue to be liabilities of the Company. 
In addition, at Closing Sellers shall also pay: (i) all Indebtedness and
Liabilities of every kind or nature of the Company as of the Closing; (ii) all
Liabilities, costs, fees and expenses associated with, resulting from or
associated with any Proceeding or other litigation matter of the Company pending
as of the Closing; and (iii) all Indebtedness and Liabilities of every kind or
nature of the Company as of the Closing, not disclosed on Schedule 2.4
(collectively, subsections (i) – (iv) and the Current Seller Liabilities, the
“Retained Liabilities”). All Retained Liabilities not paid at Closing shall
remain the exclusive responsibility of Sellers and will be assigned to,
retained, paid, performed and discharged exclusively by Sellers and will not be
retained by the Company nor assumed or acquired by, or conveyed or transferred
to, Buyer or any Related Person of Buyer.  Sellers shall at all times indemnify,
defend and hold Buyer and any Related Person of Buyer and the Company harmless
from and against any claim or liability arising from the Retained Liabilities
and Current Seller Liabilities.

 

2.5 Closing Obligations.

 

(a) Deliveries by Sellers.  At the Closing, Sellers will deliver to Buyer: (i)
the various certificates, instruments, and documents referred to in Section 6.1;
and (ii) certificates representing all of the issued and outstanding Membership
Interests of the Company, endorsed in blank or duly executed assignment
documents in form and substance approved by Buyer.

 

(b) Deliveries by Buyer.  At the Closing, Buyer will deliver to Sellers: (i) the
various certificates, instruments, and documents referred to in Section 6.2; and
(ii) the applicable consideration specified in Section 2.2.

 

 -6- 

 

 

2.6 Intentionally Omitted.

 

2.7 Closing Costs; Expenses. 

 

(a) Sellers agree to pay all documentary stamp tax or other transfer taxes
relating to the transfer of the Membership Interests to Buyer. Sellers shall be
solely responsible for all State or Federal income Taxes or similar Taxes
imposed on Sellers as a result of the Contemplated Transactions. Sellers
acknowledge and agree that neither the Buyer nor the Company shall have a duty
or obligation to pay any Taxes attributable to Sellers as a result of the
purchase and sale of the Membership Interests.

 

(b) Each Party shall be solely responsible for any legal or accounting fees,
brokerage or finders’ fees or agents’ commissions or other similar payments
incurred by or agreed to by such Party in connection with the execution and
delivery of this Agreement or the completion of the Contemplated Transactions.

 

Section 3
REPRESENTATIONS AND WARRANTIES CONCERNING
PURCHASE AND SALE OF THE MEMBERSHIP INTERESTS OF THE COMPANY

 

3.1 Representations and Warranties of Sellers.  In order to induce Buyer to
enter into this Agreement and consummate the Contemplated Transactions, each
Seller represents and warrants to Buyer as follows (except otherwise disclosed
on the Schedules) as follows with respect to such Seller:

 

(a) Authorization of Transaction.  Such Seller has all right, power and capacity
to execute and deliver this Agreement, and all other agreements, documents and
written instruments to be executed by such Seller in connection with the
Contemplated Transactions, and to perform his obligations under this Agreement
and all such other agreements, documents and written instruments.

 

(b) No Conflict with Restrictions; No Default.  To Sellers’ Knowledge, neither
the execution, delivery, and performance of this Agreement nor such Seller’s
performance of and compliance with the terms and provisions contemplated hereby
(i) will conflict with, violate, or result in a Breach of any of the terms,
covenants, conditions, or provisions of any Legal Requirements in effect on the
date hereof applicable to, or any Order, Consent or Governmental Authorization
of any Governmental Body directed to, or binding on such Seller, (ii) will
conflict with, violate, result in a Breach of, or constitute a default under any
of the terms, conditions, or provisions of any agreement or instrument to which,
such Seller is a party or by which such Seller is or may be bound or to which
any of their properties or assets are subject, (iii) will conflict with,
violate, result in a Breach of, constitute a default under (whether with notice
or lapse of time or both), accelerate or permit the acceleration of the
performance required by, give to others any material interests or rights, or
require any Consent under any indenture, mortgage, lease agreement, or
instrument to which such Seller is a party or by which such Seller or such
Seller’s property or assets is or may be bound, or (iv) will result in the
creation or imposition of any Lien upon any of the Properties or Assets of the
Company, or upon the Membership Interests, or cause Buyer (or any Related Person
thereof) or the Company to become subject to, or to become liable for the
payment of, any Tax for which liability has accrued prior to the date of
Closing.

 

(c) Consents; Governmental Authorizations.  Except as set forth on Schedule
3.1(c), such Seller is not required to give any notice to, or obtain any Consent
from, any Person in connection with the execution and delivery of this Agreement
or the consummation of any of the Contemplated Transactions.  Any registration,
declaration, or filing with, or Consent, or Governmental Authorization or Order
by any Governmental Body that is required in connection with the valid
execution, delivery, acceptance, and performance by such Seller under this
Agreement or the consummation by such Seller of any transaction contemplated
hereby has been completed, made, or obtained on or before the Closing Date.

 

 -7- 

 

 

(d) Litigation.  Except as set forth in Schedule 3.1(d), there are no
Proceedings pending or, to the Knowledge of such Seller, threatened against or
affecting such Seller or any of their properties, assets, rights, or Business in
any court or before or by any Governmental Body that could, if adversely
determined (or, in the case of an investigation, could lead to any Proceeding
that could, if adversely determined), reasonably be expected to materially
impair such Seller’s ability to perform their obligations under this Agreement
or to have a Material Adverse Effect on the Company; and such Seller has not
received any currently effective notice of any default; and such Seller is not
in default, under any applicable Order of any Governmental Body that could
reasonably be expected to impair such Seller’s ability to perform its
obligations under this Agreement or to have a Material Adverse Effect on the
Company.

 

(e) Brokers’ Fees.  Except as set forth on Schedule 3.1(e), such Seller has no
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the Contemplated Transactions.

 

(f) Membership Interests.  As of the Closing Date, such Seller holds and will
hold of record and own and will own beneficially all of the issued and
outstanding Membership Interests of the Company, free and clear of any
restrictions on transfer, Taxes, Liens, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands.  Such Seller is not a
party to any option, warrant, purchase right, or other Contract or commitment
that could require such Seller to sell, transfer, or otherwise dispose of any
Membership Interests or other equity interests of the Company (other than this
Agreement).  Such Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any Membership
Interests.  At Closing, upon payment of the Purchase Price as herein provided
pursuant to Section 2.2A and B, good and valid title to such Seller’s Membership
Interests described in Section 4.2 will pass to Buyer, free and clear of all
Liens), restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands.  Such Seller’s
Membership Interest is not certificated.

 

(g) Valid Offering.  Assuming the accuracy of the representations and warranties
of Buyer set forth herein, the offer, sale, and issuance of the Membership
Interests of the Company as contemplated herein will be exempt from the
registration requirements of the Securities Act, and will be exempt from
registration and qualification under the registration or qualification
requirements of all applicable state securities laws. Such Seller has not taken
and will not take any action that would cause the loss of any such exemption. 
Assuming the accuracy of the representations and warranties of Buyer set forth
herein, the offer, sale, exchange, and issuance of the Membership Interests of
the Company as contemplated herein will comply with all applicable Legal
Requirements.

 

(h) Investment Intent.  Such Seller is acquiring the Initial Purchase Price
Shares, the Tranche IV Shares, the Tranche V Sharers and the Tranche VI Shares
(collectively the “Purchase Price Shares”) for their own account with the
present intention of holding such securities for purposes of investment, and
that they each have no intention of distributing such Purchase Price Shares or
selling, transferring or otherwise disposing of such Purchase Price Shares in a
public distribution, in any of such instances, in violation of the federal
securities laws of the United States of America.

 

 -8- 

 

 

(i) Resale Limitations.  Such Seller is fully aware of the restrictions on sale,
transferability and assignment of the Purchase Price Shares, and that he must
bear the economic risk of retaining ownership of such securities for an
indefinite period of time. Such Seller is aware that (a) the Purchase Price
Shares will not be registered under the Securities Act; and (b) because the
issuance of the Purchase Price Shares has not been registered under the
Securities Act, an investment in the Purchase Price Shares cannot be readily
liquidated if the holder desires to do so, but rather may be required to be held
indefinitely.

 

(j) Information on Sellers.  Such Seller is an “accredited investor,” as such
term is defined in Regulation D promulgated under the Securities Act, or is
otherwise experienced in investments and business matters, has made investments
of a speculative nature and has such knowledge and experience in financial, tax
and other business matters as to enable him to evaluate the merits and risks of,
and to make an informed investment decision with respect to, this Agreement. 
Such Seller understands that his or its acquisition of the Purchase Price Shares
is a speculative investment, and such Seller represents that he is able to bear
the risk of such investment for an indefinite period, and can afford a complete
loss thereof. 

 

3.2 Representations and Warranties of Buyer and Parent.  In order to induce
Sellers to enter into this Agreement and consummate the Contemplated
Transactions, Buyer and Parent represent and warrant to Sellers that the
statements contained in this Section 3.2 are correct and complete (except
otherwise disclosed on the Schedules):

 

(a) Organization of Buyer.  Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Georgia. Buyer is
duly authorized to conduct business and is in good standing under the laws of
each jurisdiction where such qualification is required.  Parent is a corporation
duly, validly existing, and in good standing under the laws of the State of New
York.  Parent is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required.

 

(b) Authorization of Transaction.  Buyer and Parent have full power and
authority to execute and deliver this Agreement, and all other agreements and
written instruments to which Buyer and Parent are parties as contemplated
hereby, and to perform its obligations hereunder and thereunder.  This
Agreement, and such other agreements and written instruments, constitute the
valid and legally binding obligation of Buyer and Parent, as applicable,
enforceable in accordance with its terms and conditions, except as enforcement
thereof may be limited by applicable Insolvency Laws.  The execution, delivery,
and performance of this Agreement and all other agreements contemplated hereby
have been duly authorized by Buyer and Parent. Buyer and Parent have all right,
power and capacity to execute and deliver this Agreement, and all other
agreements, documents and written instruments to be executed by Buyer and
Parent, as applicable, in connection with the Contemplated Transactions, and to
perform their obligations under this Agreement and all such other agreements,
documents and written instruments.

 

(c) Litigation.  There are no Proceedings pending or, to the Knowledge of Buyer,
threatened against or affecting Buyer or Parent or any of their properties,
assets, rights, or Business in any court or before or by any Governmental Body
that could, if adversely determined (or, in the case of an investigation, could
lead to any Proceeding that could, if adversely determined), reasonably be
expected to materially impair Buyer’s or Parent’s ability to perform its
obligations under this Agreement; and Buyer or Parent have not received any
currently effective notice of any default; and Buyer or Parent is not in
default, under any applicable Order of any Governmental Body that could
reasonably be expected to impair Buyer’s or Parent’s ability to perform their
obligations under this Agreement.

 

(d) Brokers’ Fees.  Buyer and Parent have no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
Contemplated Transactions.

 

 -9- 

 

 

(e) No Conflict with Restrictions; No Default.  Other than as set forth in
Schedule 3.2(e), neither the execution, delivery, and performance of this
Agreement nor Buyer’s or Parent’s performance of and compliance with the terms
and provisions contemplated hereby (i) will conflict with, violate, or result in
a Breach of any of the terms, covenants, conditions or provisions of any Legal
Requirements in effect on the date hereof applicable to, or any Order, Consent
or Governmental Authorization of any Governmental Body directed to, or binding
on such Buyer or Parent, (ii) will conflict with, violate, result in a Breach
of, or constitute a default under any of the terms, conditions, or provisions of
any agreement or instrument to which Buyer or Parent is a party or by which
Buyer or Parent is or may be bound or to which any of their properties or assets
are subject, or (iii) will conflict with, violate, result in a Breach of,
constitute a default under (whether with notice or lapse of time or both),
accelerate or permit the acceleration of the performance required by, give to
others any material interests or rights, or require any Consent under any
indenture, mortgage, lease agreement, or instrument to which such Buyer or
Parent is a party or by which such Buyer or Parent or such Buyer’s or Parent’s
property or assets are or may be bound.

 

(f) Consents; Governmental Authorizations.  Except as set forth on Schedule
3.2(f), Buyer and Parent are not required to give any notice to, or obtain any
Consent from, any Person in connection with the execution and delivery of this
Agreement or the consummation of any of the Contemplated Transactions.  Any
registration, or filing with, or Consent, or Governmental Authorization or Order
by any Governmental Body that is required in connection with the valid
execution, delivery, acceptance, and performance by such Buyer or Parent under
this Agreement or the consummation by such Buyer or Parent of any transaction
contemplated hereby has been completed, made or obtained on or before the
Closing Date.

 

(g) Investment Intent.  Such Buyer is acquiring the Membership Interests for its
own account with the present intention of holding such securities for purposes
of investment, and that the Buyer has no intention of distributing such
Membership Interests or selling, transferring or otherwise disposing of such
Membership Interests in a public distribution, in any of such instances, in
violation of the federal securities laws of the United States of America.

 

(h) Resale Limitations.  Such Buyer is fully aware of the restrictions on sale,
transferability and assignment of the Membership Interests, and that Buyer must
bear the economic risk of retaining ownership of such securities for an
indefinite period of time. Such Buyer is aware that (a) the Membership Interests
will not be registered under the Securities Act; and (b) because the issuance of
the Membership Interests has not been registered under the Securities Act, an
investment in the Membership Interests cannot be readily liquidated if the Buyer
desires to do so, but rather may be required to be held indefinitely.

 

(i) Information on Buyer.  Buyer is an “accredited investor,” as such term is
defined in Regulation D promulgated under the Securities Act, or is otherwise
experienced in investments and business matters, has made investments of a
speculative nature and has such knowledge and experience in financial, tax and
other business matters as to enable Buyer to evaluate the merits and risks of,
and to make an informed investment decision with respect to, this
Agreement. Buyer understands that its acquisition of the Membership Interests is
a speculative investment, and Buyer represents that he is able to bear the risk
of such investment for an indefinite period, and can afford a complete loss
thereof.

 

 -10- 

 

 

SECTION 4

REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY

 

Sellers represent and warrant to Buyer that the statements contained in this
Section 4 are true, correct and complete as of the Effective Date and as of the
Closing Date, except as set forth in the disclosure schedule delivered by
Sellers to Buyer on the date hereof (the “Disclosure Schedule”).  The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4.

 

4.1 Organization, Qualification, and Power.  The Company is a limited liability
company duly organized, validly existing, and in good standing under the laws of
the State of Georgia. To Sellers’ Knowledge the Company is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required.  The Company has full power and authority
and all licenses, Consents, Permits, Approvals, and authorizations necessary to
carry on the Business in which the Company is engaged and to own and use the
Property owned and used by the Company. Schedule 4.1 lists the members,
managers, directors and officers of the Company. Sellers have delivered to Buyer
copies all of operating agreements, articles of organization, certificates of
good standing, and all other corporate documents of the Company, all of which
are correct and complete.  The Company is not in default under or in violation
of any provision of its Organizational Documents.

 

4.2 Capitalization. (i) One Hundred Percent (100%) membership interests of the
Company are issued and outstanding. All of the issued and outstanding Membership
Interests have been duly authorized, are validly issued, fully paid, and
nonassessable.  The Membership Interests are held of record by the Sellers free
and clean of any restriction on transfer, Taxes, Liens, options, warrants,
purchase rights, contracts, commitments, equities, claims and demands (except
restrictions under the Securities Act and state securities laws).  Except as set
forth on Schedule 4.2, no other Person has any right, title or interest in or to
the Membership Interests or any other equity interest of the Company.  There are
no outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require the Company to issue, sell, or otherwise cause to become
outstanding any of its membership interests or any other equity interest or
other security.  There are no outstanding or authorized appreciation, phantom
stock, profit participation, or similar rights with respect to the Company. 
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the Membership Interests. Schedule 4.2 contains and
complete and accurate capitalization of the Company and the respective ownership
of the Membership Interests by the Sellers.  The Sellers are the sole members of
the Company.  

 

4.3 No Conflict; Consents.

 

(a) Except as set forth on Schedule 4.3(a), neither the execution and delivery
of this Agreement by Sellers, nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time): (i) Breach or otherwise conflict with any provision of the
Organizational Documents of the Company, or contravene any resolution adopted by
the officers, managers, or members of the Company; (ii) Breach or otherwise
conflict with any Legal Requirement or Order to which the Company may be subject
or give any Governmental Body or other Person the right to challenge the
Contemplated Transactions or to exercise any remedy or obtain any relief under
any Legal Requirement or any Order to which the Company may be subject; (iii)
Breach or otherwise conflict with or result in a violation or Breach of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held or being applied for by or on behalf of the Company or that
otherwise relates to the Company or the Assets, Properties or the Business of
the Company; (iv) cause Buyer (or any Related Person thereof) to become subject
to, or to become liable for the payment of, any Tax, which accrued prior to the
date of Closing; (v) Breach or otherwise conflict with any provision of, or give
any Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or payment under, or to cancel,
terminate or modify, any contract or agreement to which the  Company is a party
or by which the Company  is bound; or (vi) result in the imposition or creation
of any Lien on any of the Company’s Business, or Assets, including the
Properties.

 

 -11- 

 

 

(b) Except as set forth on Schedule 4.3(b), the Company is not required to give
any notice to, or obtain any Consent from, any Person in connection with the
execution and delivery of this Agreement or the consummation of any of the
Contemplated Transactions, including any Consent required in order to preserve
and maintain all Governmental Authorizations required for the ownership and
continued operation of the Business of the Company either before or after
Closing and the consummation of the Contemplated Transactions. Any registration,
declaration, or filing with, or Consent, or Governmental Authorization or Order
by, any Governmental Body with respect to the Company that is required in
connection with the consummation of the Contemplated Transactions has been
completed, made, or obtained on or before the Closing Date.

 

4.4 Brokers’ Fees.  The Company has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the Contemplated
Transactions.

 

4.5 Books and Records.  The books, records, financial statements and other
financial records of the Company, all of which have been made available to
Buyer, are complete and correct and represent actual, bona fide transactions and
have been maintained in accordance with sound business practices and GAAP. 

 

4.6 Title to Assets.  The Company has good and marketable title to all of the
Assets, free and clear of all Liens. The Assets are not leased and the Company
has not otherwise granted to any Person the right to use, operate or own the
Assets or any portion thereof.  There are no outstanding options, rights of
first offer or rights of first refusal to purchase any of Assets, or any portion
thereof, or interest therein.  The Assets of the Company constitute all the
Assets, tangible and intangible, of any nature whatsoever, necessary to operate
the Business in the manner presently operated by the Company and include all of
the operating assets of the Company.

 

4.7 Description of Assets.  The assets of the company constitute only (a) the
Properties (b) the Company Contracts, (c) the Permits, Approvals, Consents,
Governmental Authorizations, licenses and other permits and approvals obtained
to date by the Sellers or that will be obtained by Sellers prior to Closing to
conduct the Business of the Company, including all right, title and interest
thereto, as set forth on Schedule 4.7(c), (d) all data, documentation, books and
records related to the Company or Business, including research and engineering
reports and drawings, permit records, title reports and policies, surveys
relating to the Properties, correspondence and all other similar documents and
records, including all right, title and interest thereto, as set forth on
Schedule 4.7(d), (e) all Intangible Personal Property, (f) the Tangible Personal
Property listed on Schedule 4.7(f), and (g) the Intellectual Property Assets
(collectively, the “Assets”).  Complete and correct copies of all the
documentation related to the Assets have been provided to Buyer.  The Company
owns no other assets.

 

4.8 Condition of Tangible Personal Property.  Except as disclosed on Schedule
4.8, (a) each item of Tangible Personal Property (including all Tangible
Personal Property set forth on Schedule 4.7(f)) is in good repair and good
operating condition, ordinary wear and tear excepted, is suitable for immediate
use in the Ordinary Course of Business, is free from latent and patent defects
and is being operated and maintained in all material respects in accordance with
industry standards and prescribed operating instructions (if any) necessary to
ensure the effectiveness of equipment warranties and/or service plans, and (b)
no item of Tangible Personal Property is in need of repair or replacement other
than as part of routine maintenance in the Ordinary Course of Business.  All
Tangible Personal Property owned or leased by the Company are and will be as of
Closing in the possession of the Company.

 

 -12- 

 

 

4.9 Subsidiaries.  The Company does not own and have no right to acquire,
directly or indirectly, any outstanding capital stock of, or other equity
interests in, any Person.

 

4.10 No Adverse Change.  Since the formation of the Company, there has not been
any Material Adverse Change in the Business, operations, prospects, Assets,
results of operations or condition (financial or other) of the Company, and, to
the Knowledge of Sellers, no event has occurred or circumstance exists that may
result in such a Material Adverse Change.  Neither Sellers nor the Company have
received any notice or other communication (written or oral) from any
Governmental Body or any other Person regarding the ability of the Company to
own or operate the Business or the Assets, or the intention of any Governmental
Body to challenge or oppose the Company’s ownership or operation of the Business
or the Assets. No action has been taken by the Sellers, the Company or any other
officer, director, manager, or member that would have a Material Adverse Effect
on the Company or the Contemplated Transactions or the Business, and the Company
has conducted the Business only in the Ordinary Course of Business.  Without
limiting the generality of the foregoing, since July 1, 2017:

 

(a) the Company has not sold, leased, transferred, or assigned any of its
Assets, tangible or intangible;

 

(b) except for the Company Contracts and except as set forth on Schedule
4.10(b), the Company has not entered into any agreement, Contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
outside the Ordinary Course of Business;

 

(c) except as set forth on Schedule 4.10(c), no party (including the Company)
has accelerated, terminated, modified, given rise to a notice of default, or
cancelled any agreement, Contract, lease, Permit, Governmental Authorization, or
license (or series of related agreements, contracts, leases, and licenses) to
which the Company is a party or by which it is bound or which affect the Company
and or the Assets and Business;

 

(d) the Company has not granted any Liens, which will continue to be liabilities
of the Company, upon any of its Assets, tangible or intangible;

 

(e) except as set forth on Schedule 4.10(e), the Company has not made any
capital expenditure (or series of related capital expenditures) outside the
Ordinary Course of Business;

 

(f) The Company has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions);

 

(g) except as set forth on Schedule 4.10(g), the Company has not issued any
note, bond, or other debt security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed money or capitalized lease obligation;

 

(h) there has been no acceleration of Accounts Receivable, (ii) delay or
postponement of the payment of accounts payable or other Liabilities, or (iii)
change in any material respect in the Company’s practices in connection with the
payment of accounts payable in respect of purchases from suppliers;

 

 -13- 

 

 

(i) the Company has not cancelled, compromised, waived, or released any right or
claim (or series of related rights and claims) or suffered any extraordinary
loss;

 

(j) the Company has not transferred, assigned, or granted any license or
sublicense of any rights under or with respect to any Intellectual Property
Assets;

 

(k) except as set forth on Schedule 4.10(k), there has been no change made or
authorized in the Organizational Documents of the Company;

 

(l) the Company has not issued, sold, pledged or otherwise disposed of any of
its equity interests, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of
equity interests or securities;

 

(m) Except as shown on Schedule 4.10(m), the Company has not declared or set
aside any dividend with respect to its equity interests (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its equity interests;

 

(n) except as set forth on Schedule 4.10(n), the Company has not experienced any
damage, destruction, or loss (whether or not covered by insurance) to its
property and Assets, including any Property or any Business;

 

(o) except as set forth on Schedule 4.10(o), the Company has not made any loan
to, or entered into any other transaction with, any of its members, managers,
officers, directors, or employees;

 

(p) except as set forth on Schedule 4.10(p), the Company has not entered into
any employment Contract, severance or other benefit agreement, consulting
agreement or collective bargaining agreement, written or oral, or modified the
terms of any existing such Contract or agreement;

 

(q) the Company has not granted any increase in the base compensation of any of
its officers, directors, members, managers or employees outside the Ordinary
Course of Business;

 

(r) the Company has not adopted, amended, modified, or terminated any bonus,
profit sharing, incentive, severance, or other plan, contract, or commitment for
the benefit of any of its members, managers, officers, directors and employees
(or taken any such action with respect to any other Employee Benefit Plan);

 

(s) the Company has not made any other change in employment terms for any of its
directors, officers, members, managers and employees outside the Ordinary Course
of Business;

 

(t) the Company has not made or pledged to make any charitable or other capital
contribution;

 

(u) there has not been any other material occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business involving
the Company;

 

(v) except as set forth on Schedule 4.10(v), the Company has not discharged, in
whole or in part, a material Liability or Lien outside the Ordinary Course of
Business;

 

 -14- 

 

 

(w) there has been no indication by any customer or supplier of the Business of
an intention to discontinue or change the terms of its relationship with the
Company or the Business;

 

(x) the Company has not disclosed any Confidential Information, except as to
provide to its Independent Contractors who are subject to similar
confidentiality provisions;

 

(y) there has been no change in the accounting methods, principles or practices
for financial accounting with respect to the Company (except for those changes
required by the Company’s independent auditors to comply with GAAP) or for IRS
reporting purposes; and

 

(z) neither the Sellers nor the Company have committed to do any of the
foregoing.

 

4.11 Undisclosed Liabilities; Financial Statements; Accounts Receivable. 

 

(a) Except as specifically disclosed on Schedule 4.11(a), the Company has not
incurred any Liability (and there is no Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of the Company giving rise to any Liability), except for the Current
Seller Liabilities and Retained Liabilities to be paid by Sellers at Closing
pursuant to Section 2.4 (none of which results from, arises out of, relates to,
is in the nature of, or was caused by any Breach of contract, Breach of
warranty, tort, infringement, or violation of any Legal Requirement.)

 

(b) Schedule 4.11(b) sets forth the following financial statements
(collectively, the “Financial Statements”): (a) unaudited balance sheets and
statements of income, changes in stockholders’ equity, and cash flow (the “Most
Recent Financial Statements”) as of and for the twelve (12) months ended
November 1, 2017 (the “Most Recent Fiscal Month End”), for the Company.  In
addition, on or before Closing, Sellers will provide Buyer with the Closing
Balance Sheet in accordance with Section 6.1(j).  The Closing Balance Sheet and
the Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Company as of
such dates and the results of operations of the Company for such periods, are
correct and complete, and are consistent with the books and records of the
Company (which books and records are correct and complete); provided, however,
that the Most Recent Financial Statements are subject to normal year-end
adjustments (which will not be material individually or in the aggregate) and
lack footnotes and other presentation items.

 

(c) All Accounts Receivable that are reflected in the Financial Statements
and/or in the business records of the Company represent valid obligations
arising from sales actually made or services actually performed by the Company
in the Ordinary Course of Business. Except as set forth in Schedule 4.11(c),
there is no contest, defense or right of set-off currently being claimed or, to
the Knowledge of Sellers, expected to be claimed, by any account debtor with
respect to any Account Receivable, or any part thereof. 

 

4.12 Permits.

 

(a) Schedule 4.12(a) contains (i) a complete and accurate list of all permits,
licenses, Consents, Governmental Authorizations and Approvals owned by the
Company that are necessary or required to own, construct, operate and develop
the Business, the Assets and the Properties (collectively, the “Permits”).
Schedule 4.12(a) also contains a complete and accurate list of all permits,
Governmental Authorizations, Consents, licenses, and approvals for which the
Company or Sellers have made application with respect to the ownership,
operation, construction, and development of the Business and the Properties
where such application is still pending as of the date hereof and at Closing. 
The Company has not received any notice (written or oral) from any Governmental
Body of rejection of any such application or any notice (written or oral) that
any such application is being considered for rejection. Each Permit is valid and
in full force and effect.  The Permits listed or required to be listed in
Schedule 4.12(a) and 4.7(c) collectively constitute all of the Permits necessary
or required to permit the Company to lawfully conduct and operate each Business
on each Property in accordance with all Legal Requirements. The Company is, and
at all times has been, in full compliance with all of the terms and requirements
of each Permit listed or required to be listed in Schedule 4.12(a) and 4.7(c). 

 

 -15- 

 

 

(b) Sellers have delivered, or has caused to be delivered, to Buyer (or its
Representatives) copies of (i) all Permits and Approvals and applications
therefor referred to above in this Section 4.12 and in Section 4.7, and (ii) all
other correspondence between Sellers or the Company (or their Representatives)
and the applicable Governmental Bodies in connection with such Permits and
applications therefor.

 

(c) No event has occurred or circumstance exists that may (with or without
notice or lapse of time) (A) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement of any Permit
listed or required to be listed in Schedule 4.12(a) and 4.7(c) or (B) result
directly or indirectly in the revocation, withdrawal, suspension, cancellation
or termination of, or any modification to, any Permit or Approval.

 

(d) Neither Sellers nor the Company has received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible or potential violation of or
failure to comply with any term or requirement of any Permit or (B) any actual,
proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of or modification to any Permit; and

 

(e) All applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Schedule 4.12(a)
and 4.7(c) have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Permits have been duly made on a timely basis with the
appropriate Governmental Bodies.

 

4.13 Governmental Authorizations.

 

(a) Schedule 4.13(a) contains a complete and accurate list of each Governmental
Authorization (including document title or name, issuing authority and
identifying number) held by the Company or the Sellers that relates in any way
to the Company, the Assets, including the Properties, or the Business.  Sellers
have delivered to Buyer a true and complete copy of all such Governmental
Authorizations. Each Governmental Authorization listed or required to be listed
on Schedule 4.13(a) is valid and in full force and effect.  The Company has at
all times since the formation of the Company has been in compliance with all of
the terms and requirements of each Governmental Authorization identified or
required to be identified on Schedule 4.13(a).  No event has occurred or
circumstance exists that may (with or without notice or lapse of time) (a)
constitute or result directly or indirectly in a material violation of or a
material failure to comply with any term or requirement of any Governmental
Authorization listed or required to be listed on Schedule 4.13(a), or (b) result
directly or indirectly in the revocation, withdrawal, suspension, cancellation
or termination of, or any modification to, any Governmental Authorization listed
or required to be listed on Schedule 4.13(a).

 

 -16- 

 

 

(b) Neither the Company nor the Sellers have received at any time since the
formation of the Company any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (i) any
actual, alleged, possible or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization relating to the
Company, any Business or the Assets, including any Property, or (ii) any actual,
proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of or modification to any Governmental Authorization
relating to the Company, the Business or the Assets, including the Properties. 
Any registration, declaration, or filing with, or Consent, or other Governmental
Authorization or order by, any Governmental Body that is required in connection
with the valid execution, delivery, acceptance, and performance by Sellers and
the Company under this Agreement, or the consummation by Sellers of any
Contemplated transaction under this Agreement, have been or will be completed,
made, or obtained on or before the Closing Date.

 

(c) All applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed on Schedule 4.13(a)
have been duly filed on a timely basis with the appropriate Governmental Bodies,
and all other filings required to have been made with respect to such
Governmental Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.

 

(d) The Governmental Authorizations listed or required to be listed on
Schedule 4.13(a) collectively constitute all of the Governmental Authorizations
necessary to permit the Company to lawfully own, operate, construct and develop
each Business on each Property and to otherwise operate and conduct the Business
in the manner in which the Company is currently conducted. Such Governmental
Authorizations also collectively constitute all of the Governmental
Authorizations necessary to permit the Company to own, occupy, operate, improve,
develop and use the Assets, including the Properties, and the Business in the
manner in which the Company currently own occupy, operate, improve, develop and
use the Assets, including the Properties and operate the Business, and are valid
and in full force and effect.

 

4.14 Compliance With Legal Requirements.

 

(a) Except as set forth in Schedule 4.14, (i) the Company is, and at all times
have been, in full compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of the Business or the ownership
or use of any of their Assets, including the Properties; (ii) no event has
occurred or circumstance exists that (with or without notice or lapse of time)
(A) may constitute or result in a violation by the Company of, or a failure on
the part of the Company to comply with, any Legal Requirement or (B) may give
rise to any obligation on the part of the Company to undertake, or to bear all
or any portion of the cost of, any Remedial Action of any nature; and (iii)
neither the Sellers nor the Company has received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement or (B) any actual, alleged,
possible or potential obligation on the part of the Company to undertake, or to
bear all or any portion of the cost of, any Remedial Action of any nature.

 

4.15 Tax Matters.

 

(a) From the date of their organization, each of the Company has been taxed and
treated as a partnership under subchapter K of the Code for federal and/or state
income tax purposes.

 

 -17- 

 

 

(b) The Company has filed all Tax Returns that they were required to file under
applicable Legal Requirements and regulations. All such Tax Returns were correct
and complete in all respects and have been prepared in substantial compliance
with all applicable laws and regulations. All Taxes due and owing by the Company
(whether or not shown on any Tax Return) have been paid. The Company is not
currently the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction where the
Company does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due
and payable) upon any of the Assets of the Company. As of the Closing Date, the
Company will have paid all Taxes (other than Taxes not yet due and payable) and
with respect to any Taxes that are not yet due and payable as of the Closing
Date, the Company has adequately reserved for such Taxes, except as described on
Schedule 4.15(b).

 

(c) The Company has withheld and paid all Taxes required to have been withheld
and paid in connection with any amounts paid or owing to any employee,
independent contractor, creditor, member, or other third party.

 

(d) Neither Sellers, nor any member, manager, director or officer (or employee
responsible for Tax matters) of the Company, expect any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. No
foreign, federal, state, or local tax audits or administrative or judicial Tax
proceedings are pending or being conducted with respect to the Company. The
Company has not received from any foreign, federal, state, or local taxing
authority (including jurisdictions where the Company has not filed Tax Returns)
any (i) written notice indicating an intent to open an audit or other review,
(ii) request for information related to Tax matters, or (iii) notice of
deficiency or proposed adjustment for any amount of Tax proposed, asserted, or
assessed by any taxing authority against the Company.

 

(e) Schedule 4.15(e) sets forth all federal, state, local, and foreign income
Tax Returns filed with respect to the Company for taxable periods ended on or
after the formation of Company, indicates whether those Tax Returns that have
been audited, and indicates those Tax Returns that currently are the subject of
audit. Sellers have delivered to Buyer correct and complete copies of all
federal income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by the Company filed or received since the
formation of the Company.

 

(f) The Company has not waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.

 

(g) The Company is not a party to any agreement, contract, arrangement or plan
that has resulted or would result, separately or in the aggregate, in the
payment of (i) any “excess parachute payment” within the meaning of Code Section
280G (or any corresponding provision of state, local or foreign Tax law) and
(ii) any amount that will not be fully deductible as a result of Code Section
162(m) (or any corresponding provision of state, local or foreign Tax law). The
Company has not been a United States real property holding corporation within
the meaning of Code Section 897(c)(2) during the applicable period specified in
Code Section 897(c)(1)(A)(ii).

 

(h) The Company is not a party to or bound by any Tax allocation or sharing
agreement. The Company (i) has not been a member of an Affiliated Group filing a
consolidated federal income Tax Return or (ii) has Liability for the Taxes of
any Person under Treasury Regulations Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.

 

(i) Schedule 4.15(i) sets forth the tax basis of the Company in its depreciable
assets as of December 31, 2016, the most recent practicable date, as well as on
an estimated pro forma basis immediately prior to the Closing (without giving
effect to the consummation of the Contemplated Transactions).

 

 -18- 

 

 

(j) Except as set forth on Schedule 4.15(j), the unpaid Taxes of the Company (i)
did not, as of the most recent fiscal month end of the Company, 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 of the Company 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 Company in filing its Tax
Returns. Since the date of the most recent balance sheet of the Company, the
Company has not incurred any liability for Taxes arising from extraordinary
gains or losses, as that term is used in GAAP, outside the Ordinary Course of
Business consistent with past custom and practice.

 

(k) The Company will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any: (i) change in
method of accounting for a taxable period ending on or prior to the Closing
Date, (ii) “closing agreement” as described in Code Section 7121 (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed on or prior to the Closing Date, (iii) intercompany transactions or any
excess loss account described in Treasury Regulations under Code Section 1502
(or any corresponding or similar provision of state, local or foreign income Tax
law), (iv) installment sale or open transaction disposition made on or prior to
the Closing Date, or (v) prepaid amount received on or prior to the Closing
Date.

 

4.16 Condition of the Properties.

 

(i) To Sellers’ Knowledge, there are no structural deficiencies or latent or
patent defects affecting any of the Improvements on any Property and there are
no facts or conditions affecting any of the Improvements which would,
individually or in the aggregate, interfere in any respect with the use or
occupancy of the Improvements or any portion thereof.

 

(ii) To Sellers’ Knowledge, there is no condemnation, expropriation or other
proceeding in eminent domain, pending or threatened, affecting any of the
Properties or any portion thereof or interest therein.  To Sellers’ Knowledge,
there is no injunction, decree, order, writ or judgment outstanding, nor any
claims, litigation, administrative actions or similar proceedings, pending or
threatened, relating to the ownership, lease, use or occupancy of each Property
or any portion thereof.

 

(iii) Schedule 4.16(iii) lists each Real Property Lease to which the Company is
a party.  Each Real Property Lease is legal, valid, binding, enforceable and in
full force and effect. Except as set forth on Schedule 4.16(iii), the
Contemplated Transactions do not require the Consent of any other party to such
Real Property Lease, will not result in a Breach of or default under such Real
Property Lease, and will not otherwise cause such Real Property Lease to cease
to be legal, valid, binding, enforceable and in full force and effect on
identical terms following the Closing. The possession and quiet enjoyment of the
any Property under any Real Property Lease has not been disturbed and there are
no currently unresolved disputes with respect to such Real Property Lease. 
Neither the Company, nor, to the Knowledge of either Seller, any other party to
such Real Property Lease, is in Breach or default under the Real Property Lease,
and, to the Knowledge of either Seller, no event has occurred or circumstance
exists which, with the delivery of notice, the passage of time or both, would
constitute such a Breach or default, or permit the termination, modification or
acceleration of rent under such Real Property Lease. No security deposit or
portion thereof deposited with respect to such Real Property Lease has been
applied in respect of a breach or default under such Real Property Lease which
has not been redeposited in full. The Company does not owe, or will owe in the
future, any brokerage commissions or finder’s fees with respect to such Real
Property Lease.  Except as shown on Schedule 4.16(iii), the other party to each
Real Property Lease is not an affiliate of, and otherwise does not have any
economic interest in Sellers or its respective Related Persons.  Except as shown
on Schedule 4.16(iii), neither Sellers nor the Company has subleased, licensed
or otherwise granted any Person the right to use or occupy any Property or any
portion thereof. Except as shown on Schedule 4.16(iii), neither Sellers nor the
Company has collaterally assigned or granted any other security interest in any
Property subject to a Real Property Lease or any interest therein.  Except as
shown on Schedule 4.16(iii), there are no Liens or other encumbrances on the
estate or interest created by any Real Property Lease.

 

 -19- 

 

 

(iv) Each Property has legal access to a public right-of-way. Neither Sellers
nor the Company shall grant, convey, dispose of, sell, encumber, assign or
transfer any interest in any Property, including but not limited to any
contract, option, lease, easement, or other agreement granting any interest
whatsoever in the Properties, without the prior written consent of Buyer, which
consent shall not be unreasonably withheld or delayed. 

 

4.17 Conveyance of Entire Interest In the Company and the Assets.  At Closing,
all of Sellers’ right, title and interest in and to the Membership Interests and
in such right, title or interest that Sellers may have or had with respect to
the Business and the Assets of the Company, including the Properties of the
Company will be transferred and conveyed to Buyer free and clear of all Liens.

 

4.18 Contracts.

 

(a) The only Contracts to which the Company is a party are described in
Schedule 4.18(a) (“Company Contracts”), and correct and complete copies of all
such Contracts have been provided to Buyer.

 

(b) The Sellers do not have and may not acquire any rights under the Company
Contracts, and Sellers do not have and will not become subject to any obligation
or Liability under the Company Contracts, that relates to the Business of the
Company.

 

(c) Except as set forth on Schedule 4.18(c), the Company Contracts are legal,
valid, binding, enforceable, and in full force and effect (except as enforcement
thereof may be limited by applicable Insolvency Laws), and will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the Contemplated Transactions; (ii) none of
the Company Contracts will upon completion or performance thereof have a
Material Adverse Effect on the Business, Assets or condition of the Company or
the ownership, operation, construction and development of the Business by the
Company; (iii) the Company is, and at all times have been, in compliance with
all applicable terms and requirements of the Company Contracts; (iv) no event
has occurred or circumstance exists that (with or without notice or lapse of
time) may contravene, conflict with or result in a Breach of, or give the
Company or other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or payment under, or to
cancel, terminate or modify, the Company Contracts; (v) no party to the Company
Contracts has threatened to terminate its business relationship with the Company
for any reason; (vi) Neither Sellers or the Company have given to or received
from any other Person any notice or other communication (whether oral or
written) regarding the actual, alleged, possible or potential Breach of the
Company Contracts; and (vii) no event has occurred or circumstance exists under
or by virtue of the Company Contracts that (with or without notice or lapse of
time) would cause the creation of any Lien affecting any of the Assets.

 

(d) There are no renegotiations of, attempts to renegotiate or outstanding
rights to renegotiate any material amounts paid or payable to the Company under
the Company Contracts with any Person having the contractual or statutory right
to demand or require such renegotiation and no such Person has made written
demand for such renegotiation.

 

 -20- 

 

 

(e) Any Company Contracts relating to the sale or provision of services by the
Company has been entered into in the Ordinary Course of Business of the Company
and has been entered into without the commission of any act alone or in concert
with any other Person, or any consideration having been paid or promised, that
is or would be in violation of any Legal Requirement.

 

4.19 Powers of Attorney.  There are no outstanding powers of attorney executed
on behalf of the Company, except as may be contained within loan documents or
lease agreements.

 

4.20 Litigation.  Except as set forth in Schedule 4.20 (which lists pending or
threatened Proceedings, all of which are referred to as “Current Litigation
Matters”), there is no pending or, to Sellers’ Knowledge, threatened Proceeding:
(i) by or against the Company; (ii) that otherwise relates to or may affect the
Business of, or any of the Assets owned or used by, the Company; or (iii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Contemplated Transactions, the
Business or the Assets, or the ownership, construction, development, or
operation of any of the Properties in furtherance of the Business.  To Sellers’
Knowledge no event has occurred or circumstance exists that is reasonably likely
to give rise to or serve as a Basis for the commencement of any such
Proceeding.  Except as set forth in Schedule 4.20, (i) there is no Order to
which the Company, the Business or any of the Assets is subject or that in any
way relates to or could reasonably be expected to affect the Company, the
Business or the Assets, or the ownership, construction, development, or
operation of the Properties; and (ii) no officer, director, member, manager,
agent or employee of the Company is subject to any Order that prohibits such
officer, director member, manager, agent or employee from engaging in or
continuing any conduct, activity or practice relating to the Business of the
Company.  Except as set forth on Schedule 4.20, (i) each of Sellers and the
Company is, and at all times have been, in compliance with all of the terms and
requirements of any Order, (ii) no event has occurred or circumstance exists
that is reasonably likely to constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply with any term or requirement
of any such Order, and (iii) neither Sellers nor the Company has received any
notice or other communication (whether written or oral) from any Governmental
Body or any other Person regarding any actual, alleged, possible or potential
violation of, or failure to comply with, any term or requirement of any such
Order.

 

4.21 Employees.  Schedule 4.21 sets forth for all employees of the Company:  the
(i) name, (ii) job title, (iii) date of hiring or engagement, (iv) date of
commencement of employment or engagement, (v) current compensation paid or
payable and any change in compensation since the formation of the Company, (vi)
sick and vacation leave that is accrued but unused, (vii) service credited for
purposes of vesting and eligibility to participate under any Employee Benefit
Plan, or any other employee benefit plan and (viii) details of any disciplinary
problems within the past two (2) years. No retired employees of the Company, or
their dependents, are receiving benefits or are scheduled to receive benefits in
the future from the Company. No officer, director, agent, member, manager,
employee, consultant, or independent contractor of the Company is bound by any
Contract that purports to limit the ability of such officer, director, member,
manager, agent, employee, consultant, or independent contractor (a) to engage in
or continue or perform any conduct, activity, duties or practice relating to the
Business of the Company or (b) to assign to the Company or to any other Person
any rights to any invention, improvement, or discovery. No former or current
officer, director, member, manager, agent, employee, consultant, or independent
contractor of the Company is a party to, or is otherwise bound by, any Contract
that in any way adversely affected, affects, or will affect the ability of the
Company to conduct the Business as heretofore carried on by the Company. All
salaries, wages and other compensation and benefits payable to each officer,
director, agent, member, manager, employee, consultant, or independent
contractor of the Company has been accrued and paid by the Company when due for
all periods through the Closing Date and will have been paid by the Company when
due for all periods through the Closing Date. The employment of each employee
who is employed by the Company can be terminated by the Company upon not more
than fourteen (14) days’ notice without severance, penalty or premium, other
than payment of accrued salaries, wages and vacation benefits. Except as set
forth on Schedule 4.21, the Company does not own or maintain any Employee
Benefit Plan pursuant to which any employee or former employee is entitled to
benefits that the Company maintains, to which the Company contributes or has any
obligation to contribute, or with respect to which the Company has any Liability
or potential Liability  Neither Sellers nor the Company have violated the Worker
Adjustment and Retraining Notification Act (the “WARN Act”) or any similar state
or local Legal Requirement.

 

 -21- 

 

 

4.22 Labor Disputes; Compliance.

 

(a) The Company has complied in all respects at all times with all Legal
Requirements, including all Occupational Safety and Health Laws, relating to
employment practices, terms and conditions of employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, payment of
social security and similar Taxes, collective bargaining and other requirements
under applicable Legal Requirements.  The Company is not liable for the payment
of any Taxes, including any social security and similar Taxes, fines, penalties,
interest, back wages, front pay, liquidated or compensatory damages, exemplary
damages or other amounts, however designated, for failure to comply with any of
the foregoing Legal Requirements.

 

(b) The Company has not been, and are not now, a party to any collective
bargaining agreement or other labor Contract.  There has not been, there is not
presently pending or existing, and to Seller’s Knowledge, there is not
threatened, any strike, slowdown, picketing, work stoppage or employee grievance
process involving the Company.  No event has occurred or circumstance exists
that could provide the Basis for any work stoppage or other labor dispute. There
has not been, there is not presently pending or existing, and, to the Knowledge
of Sellers, there is not overtly threatened any Proceeding, charge, grievance
proceeding or other claim against or affecting the Company (or any director,
officer, manager, member or employee thereof) relating to the actual or alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission
or any comparable Governmental Body, and there is no organizational activity or
other labor dispute against or affecting the Company or the Business.  There is
no organizational activity or other labor dispute against or affecting the
Business or the Company and no application or petition for an election of or for
certification of a collective bargaining agent is pending.  No grievance or
arbitration Proceeding exists that might have a Material Adverse Effect upon the
Company or the conduct of the Business.  Neither the Company nor the Sellers
have been served notice of, and Sellers and the Company does not otherwise have
Knowledge of, any grievance or arbitration Proceeding by any employee of the
Company that might have an adverse effect upon the Company, the Assets or the
conduct of the Business.  There has been no charge of discrimination filed
against or, to Sellers’ Knowledge, threatened against the Company with the Equal
Employment Opportunity Commission or similar Governmental Body. There is no
lockout by the Company of any employees of the Company, and no such action is
contemplated by Sellers or the Company.

 

4.23 Employee Benefits.  Except as set forth on Schedule 4.23, the Company does
not own or maintain any Employee Benefit Plan pursuant to which any employee or
former employee is entitled to benefits that the Company maintains, to which the
Company contributes, or has any obligation to contribute, or with respect to
which the Company has any Liability or potential Liability.  Except as set forth
on Schedule 4.23, the Company does not maintain, contribute to or have an
obligation to contribute to, or have any Liability or potential Liability with
respect to, any Employee Welfare Benefit Plan (as defined by ERISA) providing
health or life insurance or other welfare-type benefits for current or future
retired or terminated directors, officers or employees (or any spouse or other
dependent thereof) of the Company other than in accordance with COBRA.

 

 -22- 

 

 

4.24 Guaranties.  Except as set forth on Schedule 4.24, the Company is not a
guarantor and is not otherwise liable for any Liability or obligation (including
Indebtedness) of any other Person.

 

4.25 Environmental Matters.

 

(a) Except as disclosed on Schedule 4.25, (i) the Company has not treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled, manufactured, distributed, or released any substance, including without
limitation any Hazardous Material, or owned or operated any property or facility
(and no such property or facility is contaminated by any such substance) so as
to give rise to any current or future Liabilities, including any Liability for
fines, penalties, response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney’s fees, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (“CERCLA”), the Solid Waste Disposal Act, as amended (“SWDA”) or any
other Environmental Laws; (ii) to the Knowledge of the Sellers, the Properties
do not now contain nor have the Properties contained any underground storage
tanks or Hazardous Material; (iii) neither this Agreement nor the consummation
of the Contemplated Transactions will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called “transaction-triggered” or
“responsible property transfer” Environmental Laws; and (iv) the Company has not
assumed, or has otherwise become subject to, any Liability, including without
limitation any obligation for corrective or Remedial Action, of any other Person
relating to Environmental Laws.

 

(b) Except as disclosed on Schedule 4.25, (i) the Company has complied in all
respects, and are presently in compliance in all respects, with all applicable
Environmental Laws pertaining to the ownership and operation of the Assets, the
Properties and the Business, (ii) neither Sellers nor the Company has received
any communication alleging that they are not in compliance with any
Environmental Law, (iii) neither Sellers nor the Company has taken any action
that could reasonably result in any Liability (other than minor Liabilities of
nominal or no financial or other consequence) relating to (1) the environmental
conditions on, under, or about the Properties or any real property that is
presently owned, leased or otherwise used by the Company, or upon which the
Company locates its Tangible Personal Property; or (2) the present use,
management, handling, transport, treatment, generation, storage, disposal or
release of any Hazardous Material.  There are no pending or threatened
Proceedings of any nature resulting from any Environmental, Health and Safety
Liabilities or arising under or pursuant to any Environmental Law with respect
to or affecting the Company, the Business, the Properties or any of the Assets
of the Company. No Property contains wetlands, vegetation, animal species or
significant historic/archaeological sites which are subject to special
regulations or limitations under any Legal Requirement.  To the Knowledge of the
Sellers, no unacceptable material has deposited or buried on or under the
Properties in violation of any Permit, Governmental Authorization or Legal
Requirement; no toxic wastes or Hazardous Materials have been deposited,
disposed of, stored, generated or released on or from the Properties, and there
are no cemeteries, grave sites or other burial sites located on the Properties.

 

4.26 Certain Business Relationships with the Company.  Except as disclosed on
Schedule 4.26, neither Sellers, nor their Related Persons, nor the officers,
directors, managers, members and employees of the Company has been involved in
any business arrangement or relationship with the Company within the past twelve
(12) months, and neither Sellers, nor their Related Persons, nor the officers,
directors, employees, members, managers, directors and officers of the Company
owns any material asset, tangible or intangible, which is used in the Business
of the Company. Neither the Company nor its Related Persons, their respective
officers, employees, members, managers, directors and officers of the Company
nor any Sellers nor any Related Person of any of them owns, or has owned, of
record or as a beneficial owner, an equity interest or any other financial or
profit interest in any Person that has (a) had business dealings or a material
financial interest in any transaction with the Company other than business
dealings or transactions disclosed in Schedule 4.26, each of which has been
conducted in the Ordinary Course of Business with the Company at substantially
prevailing market prices and on substantially prevailing market terms or (b)
engaged in competition with the Company with respect to any line of the products
or services of the Company in any market presently served by the Company. 
Except as set forth in Schedule 4.26, neither the Company nor its Related
Persons, their respective officers, employees, members, managers, directors and
officers of the Company, nor the Sellers nor any Related Person of any of them
is a party to any Contract with, or has any claim or right against, the Company.

 

 -23- 

 

 

4.27 Intellectual Property.  Schedule 4.27 contains a complete and accurate list
and summary of all Intellectual Property owned or possessed by the Company, or
which the Company has the right to use pursuant to a valid and enforceable,
written license, sublicense, agreement, or permission (collectively and together
with the Intangible Personal Property, the “Intellectual Property Assets”). 
Such Intellectual Property Assets constitute all of the Intellectual Property
necessary for the operation of the Business of the Company as presently
conducted.  The Intellectual Property Assets do not infringe on the intellectual
property rights of any Person.  The Company is the owner or licensee of all
right, title and interest in and to each of the Intellectual Property Assets,
free and clear of all Liens.  The Company has the right to use all of the
Intellectual Property Assets without payment to any third party.  The Company
owns or has the right to use pursuant to ownership, license, sublicense,
agreement, permission or free and unrestricted availability to general public
all of the Intellectual Property Assets used by the Company.  The Company has
not interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and neither
Sellers, nor the Company, or their respective members, managers, directors and
officers and employees has ever received any charge, complaint, claim, demand,
or notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that the Company must license or refrain from
using any intellectual property rights of any third party).  To the Knowledge of
Sellers, no third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any proprietary intellectual property rights
of the Company.

 

4.28 Corrupt Practices.  Except in compliance with all Legal Requirements or as
set forth in the contracts listed in Schedule 4.28, neither the Sellers, the
Company, nor any of their Related Persons, or each of their respective officers,
directors, employees or agents, have, directly or indirectly, ever made, offered
or agreed to offer anything of value to (a) any employees, Representatives or
agents of any customers of Sellers or the Company for the purpose of attracting
business to Sellers or the Company or (b) any domestic governmental official,
political party or candidate for government office or any of their employees,
Representatives or agents.

 

4.29 Solvency.  Neither Sellers nor the Company is Insolvent and neither the
Sellers nor the Company has proposed a compromise or arrangement to its
creditors generally, had any petition in bankruptcy filed against it, filed a
petition or undertaken any action proceeding to be declared bankrupt, to
liquidate its assets or to be dissolved.  The Contemplated Transactions will not
cause the Company to become Insolvent or to be unable to satisfy and pay its
debts and obligations generally as they come due.

 

4.30 Operating Agreement.  Attached hereto as Schedule 4.30 is a true and
correct copy of the Operating Agreement (the “Operating Agreement”) for the
Company.  The Operating Agreement is in full force and effect and has not been
rescinded, modified or amended in any way.

 

4.31 States in which doing Business.  The Company operates the Business only
within the State of Georgia.

 

 -24- 

 

 

4.32 Disclosure.

 

(a) No representation or warranty or other statement made by Sellers in this
Agreement, the Schedules, the certificates delivered pursuant to this Agreement
or otherwise in connection with the Contemplated Transactions contains any
untrue statement or omits to state a material fact necessary to make any of
them, in light of the circumstances in which it was made, not misleading.

 

(b)  Sellers have no Knowledge of any fact that has specific application to the
Company (other than general economic or industry conditions) and that may
materially adversely affect the assets, business, prospects, financial condition
or results of operations of the Company that has not been set forth in this
Agreement or the Schedules.

 

4.33  Real Estate Purchase Contract. Schedule 4.33 contains a true, correct and
complete copy of the Real Estate Purchase Contract. The Real Estate Purchase
Contract is in full force and effect and has not been modified or amended other
than as set forth in Schedule 4.33.

 

SECTION 5

COVENANTS

 

5.1 General.  The Parties will cooperate reasonably with each other and with
their respective Representatives in connection with any steps required to be
taken as part of their respective obligations under this Agreement, and will (a)
furnish upon reasonable request to each other such further information, (b)
execute and deliver to each other such other documents, and (c) do such other
acts and things, all as any other Party may reasonably request for the purpose
of carrying out the intent of this Agreement and the Contemplated Transactions. 
In case at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under Section 7 or unless such cost or
expense is the obligation of the non-requesting Party under this Agreement). 
Sellers acknowledge and agree that, from and after the Closing, Buyer will be
entitled to possession of all documents, books, records (including Tax records),
Permits, Governmental Authorizations, certificates of title, agreements, Company
Contracts, Organizational Documents, financial data and all other documents of
any sort relating to the Company (all of the forgoing, the “Company’s
Documents”).

 

5.2 Inspection Period.  Prior to the Closing (the “Inspection Period”), the
Buyer shall have the inspection rights set forth in this Section 5.2.  Buyer
shall have the Inspection Period within which to physically inspect the Assets,
including the Properties, and the Company Documents and to conduct its due
diligence with respect to the Assets, including the Properties, the Business and
the Company.  Buyer and Buyer’s officers, directors, employees, consultants,
agents and attorneys and other authorized representatives, shall have the right
to reasonable access to the Assets, the Properties and Company Documents and to
all records of Sellers and the Company related thereto, including without
limitation title information, property information, surveys, maintenance
records, environmental assessment reports, engineering reports and any other
information of the Company, the Business and the Assets, at reasonable times
during the Inspection Period for the purpose of inspecting the Assets, including
the Properties, and the Business, and  conducting all studies, tests,
inspections and measurements of all kinds as deemed reasonably necessary by
Buyer, reviewing the books and records of Sellers and the Company concerning the
Company, the Business and the Assets, including the Properties, and otherwise
conducting its due diligence review of the Company, the Business, and the
Assets, including the Properties.  Sellers shall cooperate with and assist Buyer
in making such inspections and reviews and in obtaining copies of any
documentation related to the Company, the Business, and the Assets and
Properties, including the review and inspection of any and all Permits,
Approvals, Consents, licenses, Governmental Authorizations and other permits and
approvals necessary or required for the Company to own, operate, construct and
develop the Business and in accordance with such other applicable local, state
and federal Legal Requirements.  Sellers shall make available to Buyer such of
the foregoing as may be in Sellers’ possession, or the Company’s possession, in
order to facilitate Buyer’s due diligence.  Sellers shall give Buyer any
authorizations which may be required by Buyer in order to gain access to records
or other information pertaining to the Company, the Assets, including the
Properties, and the Business, or the use thereof maintained by any third party,
Governmental Body or organizations.  Buyer shall, prior to the expiration of the
Inspection Period, notify Sellers of the Company Contract that Buyer does not
wish for the Company to continue to be a party thereto and be bound thereby
(“Excluded Contracts”).

 

 -25- 

 

 

5.3 Post Closing Contingencies.

 

(a ) Notwithstanding anything to the contrary contained herein, Sellers shall
not be entitled to, and shall forfeit, any and all rights to Tranche II of the
Purchase Price, unless, on or before December 31, 2018 (the “Contingency
Deadline”), (a) the Company has closed on the purchase of that certain real
property (the “Real Property”) described in that certain Real Estate Purchase
Agreement (the “Real Estate Purchase Contract”) entered into by the Kennesaw/75
Venture, L.P., a Georgia limited liability company, “Seller”, and CCMR Limited
Partnership, a Georgia limited partnership, as “Purchaser” , on or about
December 7, 2017 on terms at least as favorable to the Company as contained in
the Real Estate Purchase Contract, and (b) the Company has obtained all Permits
required for the operation of a medical waste disposal facility at the Real
Property (jointly the “Tranche II Post Closing Contingencies”).

 

(b) Notwithstanding anything to the contrary contained herein, Sellers shall not
be entitled to, and shall forfeit, any and all rights to Tranche III, IV, V or
VI of the Purchase Price, unless, on or before the Contingency Deadline, (a) the
Tranche II Post Closing Contingencies shall have been satisfied and (b) the
Company has constructed a fully operational medical waste disposal facility on
the Real Property and has obtained all Permits to operate such facility as a
medical waste disposal facility (jointly the “Remaining Post Closing
Contingencies”).

 

5.4 Transition.

 

(a) Sellers and its Related Persons will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, vendor,
customer, supplier, or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company or Sellers prior to the Closing.  The Parties will
cooperate to provide each other with reasonable information systems support to
permit a smooth transfer of business operations between the Parties.  In such
regard, Sellers will provide Buyer with all information and systems support in
connection with the operation of the Company and the Business.  Such assistance
shall include electronic, computer and other system assistance. Sellers will
refer all customer inquiries relating to the Business of the Company to Buyer
from and after the Closing.

 

(b) From and after the Effective Date and continuing for ninety days after
Closing, the Parties will cooperate to provide each other with reasonable
information systems support to permit a smooth transfer of the operations of the
Business.  In such regard, during such ninety (90) day period, Sellers will
provide Buyer with reasonable billing and other information systems support in
connection with the operation by Buyer of the Business.  Such assistance shall
include electronic, computer and other system assistance.  Sellers also agree to
advise and assist Buyer with respect to any and all local community and
government programs, Proceedings, introductions, and arrangements relating to
the Business.  Sellers will cooperate with and assist Buyer with any submission
of any proposals to any Governmental Bodies and to provide the services
necessary to procure all Permits, Approvals, Governmental Authorizations,
Contracts, orders, Consents, licenses, assignments, and approvals from the State
of Georgia for the Company to have the right to own, operate, construct, and
develop the Business in the Buyer’s sole discretion, including without
limitation, assistance with the completion of all applicable filings,
submissions, registrations and all other requirements relating thereto, and
attendance at all meetings, public hearings and any other Proceedings with
applicable Governmental Bodies, or their Representatives, at Buyer’s reasonable
request. From and after the Effective Date, Sellers will agree to devote the
time and attention necessary to the business and affairs of the Company and
shall give Buyer the benefit of Sellers’ special knowledge, skill and business
expertise to promote the Company’s business interests in the marketplace. All
services to be provided to Buyer, and the Company, as applicable, and all
actions taken by Sellers will be in accordance with all Legal Requirements. The
services to be provided by the Sellers to Buyer and the Company pursuant to this
Agreement shall be exclusive to Buyer and the Company, and Sellers will not
provide, either directly or indirectly, similar services to any other Person.

 

 -26- 

 

 

5.5 Confidentiality.

 

(a) Sellers hereby acknowledge and agree that, through their ownership or
operation of the Company, have occupied positions of trust and confidence with
respect to the Company and the Business up to the date hereof and has had access
to, and have become familiar with, the confidential and non-public information
of the Company and the Business any and all other confidential or proprietary
information concerning the affairs or conduct of the Company and the Business
prior to the date hereof, whether prepared by or on behalf of the Sellers or the
Company (collectively, the “Confidential Information”).

 

(b) Sellers hereby acknowledge and agree that the protection of the Confidential
Information of the Company is necessary to protect and preserve the value of the
Company and the Business and Assets of the Company, and that without such
protection, Buyer would not have entered into this Agreement and consummated the
Contemplated Transactions.  Accordingly, subject to the provisions of Section
5.5(c), Sellers hereby covenant and agree, for themselves, their Representatives
and Related Persons and their successors and permitted assigns, that, without
the prior written consent of Buyer (which consent will be at the Buyer’s
absolute discretion to give or withhold), Sellers will not, nor will Sellers
cause or permit any of their Representatives or Related Persons to, at any time
on or after the Closing Date, directly or indirectly, disclose to any Person or
use for their own account or benefit or for the account or benefit of any other
Person any Confidential Information, except as required under their agreements
with its Independent Contractors, Sales Representatives and Consultants, all of
which have signed confidentiality provisions in their current agreements with
the Company.

 

(c) The provisions of Section 5.5(b) will not apply to any Confidential
Information (i) that the Sellers can demonstrate with documentary evidence is
generally known to, and available for use by, the public other than as a result
of the Breach of this Agreement or any other agreement pursuant to which any
Person (including Sellers or any Representative or Related Person thereof) owes
any duty of confidentiality to the other Party or previously owed any duty of
confidentiality to Buyer; (ii) that is required to be disclosed pursuant to
Legal Requirement or an Order, or (iii) that the Sellers can reasonably
determine is necessary to be disclosed to a Representative of Sellers in order
for Sellers to perform their covenants and obligations, or to enforce its rights
against Buyer, under this Agreement or any related agreement (and then only to
the extent necessary to perform such covenants and obligations or to enforce
such rights).  If Sellers (including any Representative or Related Person
thereof) become compelled by a Legal Requirement or any order to disclose any
Confidential Information, Sellers will provide Buyer with prompt written notice
of such requirement so that Buyer may seek a protective order or other remedy in
respect of such compelled disclosure.  If such a protective order or other
remedy is not obtained by or is not available to Buyer, then Sellers will be
responsible for ensuring that only the minimum portion of such Confidential
Information that is legally required to be disclosed is so disclosed, and
Sellers will use all reasonable efforts to obtain assurances that confidential
treatment will be given to such Confidential Information.  Sellers acknowledge
their responsibility to ensure that their Representatives and agents who are
given, or now have, access to the Confidential Information will comply with the
terms of this Section 5.5.  Sellers shall be liable for any Breach of this
Agreement caused by its Representatives and agents.

 

 -27- 

 

 

5.6 Injunctive Relief.  The Parties acknowledge and agree that (a) each of the
provisions of Sections 5.1, 5.4, 5.5, 5.8, 5.9, 5.10, 5.12 and 5.13 are
reasonable and necessary to protect the legitimate business interests of the
Parties and their Related Persons, (b) any violation of any such covenant
contained in Sections 5.1, 5.4, 5.5, 5.8, 5.9, 5.10, 5.12 and 5.13 would result
in irreparable injury to the Parties and their Related Persons, the exact amount
of which would be difficult, if not impossible, to ascertain or estimate, and
(c) the remedies at law for any such violation would not be reasonable or
adequate compensation to the Parties and their Related Persons for such a
violation.  Accordingly, notwithstanding any other provision of this Agreement,
if either Party, directly or indirectly, violates any of its covenants or
obligations under Sections 5.1, 5.4, 5.5, 5.8, 5.9, 5.10, 5.12 and 5.13 then, in
addition to any other remedy which may be available to the other Party or any
Related Person thereof, at law or in equity, the Parties and their Related
Persons will be entitled to injunctive relief against the other Party, without
posting bond or other security, and without the necessity of proving actual or
threatened injury or damage.

 

5.7 Employees. Buyer shall, in conjunction with the Company, determine those
employees that the Company shall retain after Closing.  Any employment will be
at base salary or wage rates determined by Buyer and the Company.  The provision
of any other compensation or employee benefits, including, without limitation,
bonuses, commissions, health benefits or compensation plans, will be at Buyer’s
and the Company’s discretion, and Buyer shall not assume any Employee Benefit
Plan, any benefit plan obligation, or acquire any benefit plan assets from
Sellers, the Company or any Related Person thereof.

 

5.8 Public Announcements.  The Parties will keep the existence of this
Agreement, the terms and conditions hereof and the Contemplated Transactions
confidential, and the Parties will not, nor will they cause or permit any
Related Person or Representative to, make any public announcement in respect of
this Agreement or the Contemplated Transactions without the prior written
consent of the other Party, which consent will not be unreasonably withheld or
delayed; provided, however that the foregoing confidentiality and non-disclosure
obligations will not apply to:  (1) Buyer if at Closing, if Buyer determines to
issue a press release announcing the fact of the acquisition of the Company or
(2) the Parties to the extent that (a) disclosure of such information is
reasonably necessary to consummate the Contemplated Transactions, (b) disclosure
of such information is required pursuant to Legal Requirement (including the
Securities Exchange Act of 1934, as amended, and the rules of any national stock
exchange or automated dealer quotation system) or an Order, (c) disclosure of
such information is reasonably necessary for the Parties to enforce their rights
under this Agreement, or (d) such information is already in the public domain
other than as a result of a breach of this Section 5.8 or 5.5 or any other
confidentiality or non-disclosure obligation owed to a Party by any Person
(including the other Party).  To the extent that any public announcement of this
Agreement, any of the provisions hereof or the Contemplated Transactions is
required of the Parties by Legal Requirement or Order, the Parties will
cooperate reasonably with respect to reaching agreement on the contents and
timing of such announcement.

 

5.9 Use of Name.  Sellers hereby agree that from and after the Closing Date that
Sellers and their Related Persons shall not, directly or indirectly, use the
names “Red X Medical”, “EnviCare” or any derivation or variation thereof in any
manner unless agreed upon by the Parties.

 

 -28- 

 

 

5.10 Pre-Closing Covenants.  The Parties agree as follows with respect to the
period between the Effective Date and the Closing or earlier termination of this
Agreement:

 

(a) Sellers will not engage, and will not cause or permit the Company, to
engage, in any practice, take any action, or enter into any transaction outside
the Ordinary Course of Business with respect to the Assets, including the
Properties, the Business or the Company without Buyer’s express written consent,
which consent may not be unreasonably withheld or delayed.  Neither Sellers nor
the Company will sell, lease, transfer or assign any of the Membership Interests
or the Assets and Properties and will not impose any Liens upon any of the
Membership Interests or the Assets, including the Properties.  Sellers will not
and will not cause or permit the Company to, without Buyer’s prior consent,
cancel, compromise, waive or release any right or claim under, in or to the
Membership Interests or the Assets, including the Properties.

 

(b) Sellers will not, and will not cause or permit the Company to, without
Buyer’s prior consent, voluntarily incur any obligation or Liability or enter
into any material transaction, contract, capital expenditure or commitment for
which Buyer may have responsibility or Liability after Closing.

 

(c) Sellers will, and will cause the Company to, keep the Assets, including the
Properties, of the Company substantially intact and will maintain all of the
Assets, including the Properties of the Company in a state of condition that
complies with all Legal Requirements and is consistent with the Ordinary Course
of Business of Sellers and the Company.

 

(d) Sellers will, and will cause the Company to, comply with all applicable
Legal Requirements of each Governmental Body having jurisdiction over the
Company, the Properties, the Assets and the Business.

 

(e) Sellers will not, nor will he cause or allow any representative of the
Company to, (a) solicit, initiate, or encourage the submission of any proposal
or offer from any Person relating to the acquisition of the Membership Interests
or any portion of the Assets, including the Properties, of the Company
(including any acquisition structured as a merger, consolidation, or share
exchange) or (b participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any Person to do or seek any of the
foregoing.  Sellers will not vote the equity interests in the Company in favor
of any such acquisition.  Sellers will notify Buyer immediately if any Person
makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing. If Sellers breach the terms of this provision, Sellers, in addition
to other remedies available to Buyer, will reimburse Buyer for all costs and
expenses, including without limitation, attorney and professional fees, incurred
by Buyer and its Representatives in connection with its due diligence
investigation with respect to the Assets, including the Properties, the Business
and the Company.

 

(f) Sellers will not cause or permit, and will not permit the Company to commit,
any waste of the Assets, including the Properties of the Company. 

 

(g) Sellers will not, and will not cause or permit the Company to, without the
prior consent of Buyer, enter into any compromise or settlement of any
litigation, including any Current Litigation, Proceeding or investigation by and
Governmental Body relating to the Company, the Business, or the Company’s
Assets, including the Properties, except that Buyer’s consent will not be
required to any  settlement of any Current Litigation which will not impose any
Liability on  any of the Company or create any third party rights, including
without limitation, lien rights in any of  the Company’s assets.

 

 -29- 

 

 

(h) Sellers will not, and will not cause or permit the Company to, take any
action, or knowingly omit to take any action, that would or would reasonably be
expected to result in (i) any representation or warranty of Sellers set forth in
Section 3 and 4 becoming untrue or (ii) any of the conditions to the obligations
of Sellers set forth in this Agreement not being fully satisfied.  Sellers will
give prompt written notice to Buyer of any material adverse development causing
a Breach of any of the representations and warranties in Section 3 or 4.  No
disclosure pursuant to this Section 5.10(h), however, shall be deemed to amend
or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.

 

(i) Sellers shall not perform, nor shall they authorize or allow any of their or
the Company’s representatives, officers, employees or agents, to perform, any
acts or omissions to manipulate the price of the Parent’s common stock.

 

The Parties will do all other acts that may be reasonably necessary or desirable
in the opinion of Sellers or Buyer to consummate the Contemplated Transactions,
all without further consideration.

 

5.11 Termination of this Agreement.  The Parties may terminate this Agreement as
provided below:

 

(a) permits or approvals contemplated by this Agreement have not been obtained
by the Company, or the Company either does not have full right, title and
interest in and to such Governmental Authorizations, Permits, Consents,
Approvals, licenses, Contracts, Company Contracts, or any other permits or
approvals; or such Governmental Authorizations, Permits, Approvals, Consents,
licenses, Contracts, Company Contracts, or any other permits or approvals cannot
be transferred to or issued directly to and in the name of the Company; and/or
(ii) such Governmental Authorizations, Permits, Approvals, Consents, licenses,
Contracts, Company Contracts, or any other permits or approvals cannot be
issued, conveyed, assigned or transferred to the Company or are not in the form
and substance satisfactory to Buyer in its sole discretion.

 

(b) Buyer may terminate this Agreement by giving written notice to Sellers at
any time prior to the Closing (i) in the event Sellers have Breached any
representation, warranty, or covenant contained in this Agreement in any
respect, Buyer has notified Sellers of the Breach, and the Breach has continued
without cure for a period of ten (10) days after the notice of Breach; and

 

(c) Sellers may terminate this Agreement by giving written notice to Buyer at
any time prior to the Closing (i) in the event Buyer has Breached any
representation, warranty, or covenant contained in this Agreement in any
respect, Sellers have notified Buyer of the Breach, and the Breach has continued
without cure for a period of ten (10) days after the notice of Breach.

 

If any Party terminates this Agreement pursuant to this Section 5.11, all rights
and obligations of the Parties hereunder shall terminate without any Liability
of any Party to any other Party (except for any Liability of any Party then in
Breach).

 

 -30- 

 

 

5.12 Seller Releases.  Sellers, for themselves, and their Related Persons and
each of their respective members, managers, officers, directors, employees,
successors, assigns, agents and Representatives (collectively, the “Seller
Releasing Parties”), hereby finally, unconditionally, irrevocably and absolutely
fully releases, acquits, remises and forever discharges the Company and Buyer
and any of their Related Persons, and their respective officers, directors,
members, managers, employees, parent companies, subsidiaries, predecessors,
successors, assigns, agents and Representatives, from any and all actions,
suits, debts, sums of money, interest owed, accounts, contribution obligations,
reckonings, bonds, bills, covenants, controversies, agreements, guaranties,
promises, undertakings, variances, trespasses, credit memoranda, charges,
damages, judgments, executions, obligations, costs, expenses, fees (including
attorneys’ fees and court costs), counterclaims, claims, demands, causes of
action and Liabilities (the “Seller Claims”) existing as of the Closing Date
accruing to Sellers and the Seller Releasing Parties in any capacity whatsoever,
including but not limited to: (i) all of Sellers’ and Seller Releasing Parties’
capacities with the Company; (ii) arising under or by virtue of the
Organizational Documents or the Company Documents; (iii) relating to or
resulting from the negotiation, preparation, and consummation of this Agreement
and the Contemplated Transactions; (iv) the valuation of the Membership
Interests or determination of the Purchase Price; or (v) all matters set forth
on Schedule 4.10(g) other than the Bank Loans.  Sellers hereby finally,
unconditionally, irrevocably and absolutely waives any and all offsets and
defenses, in each case related to any action, inaction, event, circumstance or
occurrence occurring or alleged to have occurred on or prior to the Closing Date
with respect to such Seller Claims, whether known or unknown, absolute or
contingent, matured or unmatured, foreseeable or unforeseeable, presently
existing or hereafter discovered, at law, in equity or otherwise, whether
arising by statute, common law, in contract, in tort or otherwise, that  Sellers
and the Seller Releasing Parties may now have or that might subsequently accrue
to any of them, including without limitation those against any current or former
officer, director, manager, member, partner, employee, agent or Representative
of the Company or any of its Related Persons or by reason of being an employee,
member, manager, officer and/or director of the Company or its Related Persons.

 

This Section 5.12 shall survive Closing and any termination or expiration of
this Agreement. 

 

5.13 Sellers shall not perform, nor shall they authorize or allow any of their
or the Company’s representatives, officers, employees or agents, to perform, any
acts or omissions to manipulate the price of the Parent’s common stock at any
time after Closing. This Section 5.13 shall survive Closing.

 

5.14 Sellers agree and acknowledge that the Purchase Price Shares may not be
sold or transferred unless (i) such shares are sold pursuant to an effective
registration statement under the Securities Act, or (ii) the Parent or its
transfer agent shall have been furnished with an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the shares to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration or (iii) such shares are sold or transferred pursuant to Rule 144
under the Securities Act (or a successor rule) (“Rule 144”) or (iv) such shares
are transferred to an “affiliate” (as defined in Rule 144) of the Sellers who
agree to sell or otherwise transfer the shares only in accordance with this
Section 5.13 and who is an Accredited Investor (as defined in the Securities
Act). Furthermore, Buyer and Parent agree and acknowledge that Parent shall
remain subject to the reporting requirements of section 13 or 15(d) of the
Securities Act and shall file all required reports under section 13 or 15(d) of
the Securities Act for no less than six years following the Closing. Following
the six-month holding period required by Rule 144, neither Buyer nor Parent
shall unreasonably withhold their consent to remove the restrictive legend
referenced in this Subsection 5.13 of this Agreement, and Buyer and Parent shall
cooperate in good faith to take any reasonable and necessary action to
facilitate removal of the restriction. Until such time as the shares of common
stock of Parent underlying the Purchase Price Shares and Tranche V Shares have
been registered under the Securities Act or otherwise may be sold pursuant to
Rule 144 without any restriction as to the number of securities as of a
particular date that can then be immediately sold, each certificate for shares
of common stock of Parent that has not been so included in an effective
registration statement or that has not been sold pursuant to an effective
registration statement or an exemption that permits removal of the legend, shall
bear a legend substantially in the following form, as appropriate:

 

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT PURSUANT TO
EXEMPTION THEREFROM OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.”

 

This Section 5.14 shall survive Closing.

 

 -31- 

 

 

SECTION 6

CONDITIONS TO OBLIGATION TO CLOSE

 

6.1 Conditions to Obligation of Buyer to Close. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:

 

(a) The representations and warranties of Sellers set forth in Sections 3 and 4
shall be true and correct in all material respects at and as of the Closing
Date, except to the extent that such representations and warranties are
qualified by terms such as “material” and “Material Adverse Effect,” in which
case such representations and warranties shall be true and correct in all
respects at and as of the Closing Date. Each Seller shall have executed and
delivered to Buyer a certificate dated as of the Closing Date that all such
representations and warranties made by them are true and correct in all respects
as of the Closing Date. Without limiting generality of the forgoing, all of the
Assets, including all Tangible Personal Property, shall be in the same
condition, use, operation and repair as of the date of any inspection by Buyer
of such Assets and Tangible Personal Property, normal wear and tear excepted;

 

(b) Sellers shall have performed and complied with all of their covenants
hereunder in all material respects through the Closing;

 

(c) The Company and/or Sellers shall have procured all of the third-party
consents specified in Schedule 3.1(c) and 4.3(b) and 4.16(v);

 

(d) No action, suit, or proceeding shall be pending or threatened before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (iii) affect adversely the right of Buyer to own the
Membership Interests and to control the Company, or (iv) affect adversely the
right of the Company to own its Assets, including the Properties, and to operate
their Business (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);

 

(e) There has not been made or threatened by any Person a claim asserting that
such Person (i) is the holder of record or the beneficial owner of, or has the
right to acquire or to obtain beneficial ownership of, any Membership Interests
or other interest of the Company, or any other voting, equity or ownership
interest, in or to the Company, (ii) is entitled to all or any portion of the
Purchase Price payable for the Membership Interests as contemplated by this
Agreement or (iii) is entitled to acquire any of the Assets, including the
Properties, of the Company;

 

(f) The Company shall have received, acquired and obtained the all nonappealable
and unrestricted Governmental Authorizations, Consents, Permits, Approvals,
licenses, and other permits and approvals, and all pending applications therefor
or renewals thereof, required or necessary for the ownership, construction,
development and operation of Business on the Properties by the Company and
Buyer, and all permits issued by the State of Georgia and Cobb County, Georgia,
for the ownership, operation, development and construction of the Business on
the Properties, such Consents, licenses, Governmental Authorizations, permits
and approvals to be in accordance with all Legal Requirements and satisfactory
to Buyer in its sole discretion, with respect to operating conditions, and any
other restrictions or requirements;

 

(g) Sellers shall have caused the Company to terminate, without Liability to
such Company or Buyer, all Excluded Contracts, or assign all Excluded Contracts
to Sellers or any third party;

 

 -32- 

 

 

(h) On or before the Closing, Sellers shall file for and obtain in the name of
the Company all the necessary Governmental Authorizations from any Governmental
Body (collectively the “Approvals”) having jurisdiction over the Properties, or
the Business, in order for the Permits to be issued to the Company. Sellers
covenant to use good faith and due diligence to actively pursue the Approvals.
Sellers shall execute any additional agent authorization documentation and any
other document, instrument or certificate specifically required by any
Governmental Body to permit the Company to obtain the Permits and Approvals;

 

(i) Sellers shall have delivered to Buyer a certificate to the effect that each
of the conditions specified above in Section 6.1(a)-(h) is satisfied in all
respects;

 

(j) Sellers shall have delivered to Buyer a Closing Statement and accompanying
loan payoff statements showing any and all Retained Liabilities of the Company
which such Retained Liabilities shall be paid and satisfied within 90 days of
Closing in accordance with Section 2.4 (the “Closing Statement”);

 

(k) Buyer shall have received the resignations, effective as of the Closing, of
each officer, director, employee, manager or member of the Company other than
those whom Buyer shall have specified in writing on or prior to Closing, and all
required notices of such resignations shall have been provided, Buyer shall have
received from each such employee, officer, directors, manager or member a
release of the Company and Buyer in the form substantially the same as the
release provided by the Sellers in Section 5.12;

 

(l) Sellers shall have executed and delivered to Buyer a non-competition,
non-solicitation, and confidentiality agreement that, among other things,
prevents Sellers and their Related Persons from competing with the Buyer and the
Company or the Business of the Company and the business of Buyer within a 100
mile radius of each of the Properties for a period of two (2) years following
the Closing Date, substantially in the form attached hereto as Schedule 6.1(l)
(the “Restrictive Covenants Agreement”);

 

(m) If applicable, Sellers shall have delivered to Buyer a non-foreign affidavit
dated as of the Closing Date, sworn under penalty of perjury and in form and
substance required under the Treasury Regulations issued pursuant to Code
Section 1445, stating that each Seller is not a “Foreign Person” as defined in
Code Section 1445 (the “FIRPTA Affidavit”);

 

(n) Sellers shall have delivered to Buyer (i) a copy of the articles of
organization of the Company certified on or soon before the Closing Date by the
Secretary of State (or comparable officer) of the jurisdiction of organization
of the Company, (ii) a certificate of good standing for the Company issued on or
soon before the Closing Date by the Secretary of State (or comparable officer)
of the jurisdiction of organization of the Company and of each jurisdiction in
which the Company is qualified to do business, (iii) the minute books and all
corporate records of the Company and (iv) all other Organizational Documents;

 

(o) Sellers shall have delivered to Buyer a certificate of the secretary or an
assistant secretary of the Company, dated the Closing Date, in form and
substance reasonably satisfactory to Buyer, certifying as to (i) no amendments
to the articles of organization or other Organizational Documents of the Company
since Effective Date; and (ii) any resolutions of the members of the Company
relating to this Agreement and the Contemplated Transactions;

 

(p) Buyer shall have executed employment agreements with Locke and Lewis
substantially in the form of attached hereto as Schedule 6.1(p)(i) and
Employment Agreements with such other key employees the Company of Buyer’s
choosing substantially in the form attached hereto as Schedule 6.1(p)(ii);

 

(q) Richie Stephens shall have executed and delivered to Buyer and the Company a
certificate in the form of Schedule 6.1(q); and,

 

(r) all actions to be taken by Sellers in connection with Contemplated
Transactions and all certificates, opinions, instruments, and other documents
required to effect the Contemplated Transaction shall be reasonably satisfactory
in form and substance to Buyer.

 

Buyer may waive any condition specified in this Section 6.1 if it executes a
writing so stating at or prior to the Closing.

 

 -33- 

 

 

6.2 Conditions to Obligation of Sellers to Close. The obligation of Sellers to
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:

 

(a) the representations and warranties of Buyer and Parent set forth in Section
3.2 shall be true and correct in all material respects at and as of the Closing
Date, except to the extent that such representations and warranties are
qualified by terms such as “material” and “Material Adverse Effect,” in which
case such representations and warranties shall be true and correct in all
respects at and as of the Closing Date;

 

(b) Buyer and Parent shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;

 

(c) no action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);

 

(d) Buyer and Parent shall have delivered to Sellers a certificate to the effect
that each of the conditions specified above in Section 6.2(a)-(c) is satisfied
in all respects;

 

(e) all actions to be taken by Buyer or Parent in connection with consummation
of the Contemplated Transactions and all certificates, opinions, instruments,
and other documents required to effect the Contemplated Transactions will be
reasonably satisfactory in form and substance to Sellers;

 

(f) Buyer and Parent shall have delivered to Sellers (i) a copy of the articles
of incorporation of the Buyer and Parent certified on or soon before the Closing
Date by the Secretary of State (or comparable officer) of the jurisdiction of
organization of the Buyer and Parent, (ii) a certificate of good standing for
the Buyer and Parent issued on or soon before the Closing Date by the Secretary
of State (or comparable officer) of the jurisdiction of organization of the
Buyer and of each jurisdiction in which the Buyer is qualified to do business,
(iii) the minute books and all corporate records of the Buyer and (iv) all other
Organizational Documents of Buyer; and,

 

(g) Buyer and Parent shall have delivered to Sellers a certificate of the
secretary or an assistant secretary of the Buyer and Parent, dated the Closing
Date, in form and substance reasonably satisfactory to Sellers, certifying as to
(i) no amendments to the articles of organization or other Organizational
Documents of the Buyer since Effective Date; and (ii) any resolutions of the
members of the Buyer and Parent relating to this Agreement and the Contemplated
Transactions.

 

Sellers may waive any condition specified in this Section 6.2 if Sellers execute
a writing so stating at or prior to the Closing.

 

SECTION 7

INDEMNIFICATION

 

7.1 Survival. Subject to the provisions of this Section 7, all representations,
warranties, covenants and obligations of the Parties contained in this Agreement
and in the agreements, instruments and other documents delivered pursuant to
this Agreement will survive the Closing and the consummation of the Contemplated
Transactions.

 

 -34- 

 

 

7.2 Indemnification by Buyer and Parent. Buyer and Parent hereby covenant and
agree that, to the fullest extent permitted by Legal Requirement, it will
defend, indemnify and hold harmless Sellers and their Related Persons and
Representatives, and their respective officers, directors, members, managers,
employees, agents, and Representatives, and all successors and assigns of the
foregoing (collectively, the “Seller Indemnified Persons”), for, from and
against any Adverse Consequences, arising from or in connection with:

 

(a) any Breach of any representation or warranty made by Buyer or Parent (i) in
this Agreement, (ii) the Schedules, (iii) the certificates delivered pursuant to
this Agreement, or (iv) any other document, writing or instrument delivered by
Buyer or Parent pursuant to this Agreement;

 

(b) any Breach of any covenant, obligation or agreement of Buyer or Parent in
this Agreement or in any other certificate, document, writing or instrument
delivered by Buyer or Parent pursuant to this Agreement;

 

(c) any claim by any Person for any brokerage or finder’s fee, commission or
similar payment based upon any agreement or understanding made, or alleged to
have been made, by any Person with Buyer or Parent in connection with this
Agreement or any of the Contemplated Transactions; and,

 

(d) any Liability of the Company based on facts, events or circumstances
occurring after the Closing Date, or arising out of or in connection with the
ownership and operation of the Company and the Assets and Business after the
Closing.

 

7.3 Indemnification by Sellers.

 

(a) Each Seller, severally, hereby covenants and agrees that, to the fullest
extent permitted by Legal Requirement, such Seller will defend, indemnify and
hold harmless Buyer, and its Related Persons and Representatives, and their
respective officers, directors, members, managers, employees, agents, and
Representatives, and all successors and assigns of the foregoing (collectively,
the “Buyer Indemnified Persons”), for, from and against any Adverse Consequences
arising from or in connection with:

 

(i) any Breach of any representation or warranty made by such Seller in (A) this
Agreement, (B) the Schedules, (C) the certificates delivered pursuant to this
Agreement, (D) any transfer instrument or (E) any other certificate, document,
writing or instrument delivered by such Seller pursuant to this Agreement;

 

(ii) any Breach of any covenant, obligation or agreement of such Seller in this
Agreement or in any other certificate, document, writing or instrument delivered
by such Seller pursuant to this Agreement;

 

(iii) any Liability of the Company based on facts, events or circumstances
occurring before the Closing Date, or arising out of or in connection with the
ownership and operation of the Company and the Assets and Business prior to the
Closing, or facts and circumstances relating specifically to the Company and the
Business existing at or prior to the Closing, respectively, whether or not such
Liabilities or claims were known or unknown, absolute, accrued or contingent, on
such date;

 

(iv) all Current Seller Liabilities and any Liability or Indebtedness of the
Company not reflected on Schedule 2.4 or the Closing Statement, but excluding
the Bank Loans;

 

(v) all Retained Liabilities;

 

(vi) all Current Litigation Matters:

 

(vii) any Liability of the Company to Sellers or any Related Person of Sellers;

 

(viii) any Liability of the Company resulting from, caused by, or arising in
connection with the termination or assignment of any Excluded Contract; and

 

 -35- 

 

 

(ix) any claim by any Person for any brokerage or finder’s fee, commission or
similar payment based upon any agreement or understanding alleged to have been
made by such Person with any Seller in connection with this Agreement or any of
the Contemplated Transactions.

 

(b) In addition to its indemnification obligations under Section 7.3(a), Sellers
hereby covenant and agree that, to the fullest extent permitted by Legal
Requirement, they will defend, indemnify and hold harmless the Buyer Indemnified
Persons for, from and against any Adverse Consequences (including costs of
cleanup, containment or other Remedial Action) arising out of acts or neglect
occurring or conditions existing at or before Closing from or in connection
with:

 

(i) any Environmental, Health and Safety Liabilities arising out of or relating
to (A) the conduct of any activity by Sellers, the Company, or their Related
Persons, or any employee, contractor, agent or Representative thereof on or
prior to the Closing Date, or relating to the Business and Assets, including the
Properties, of the Company; (B) the ownership or operation by any Person at any
time on or prior to the Closing Date of any of the Assets, including the
Properties, or the Business of the Company, or (C) any Hazardous Materials or
other contaminants that were present on the Properties or Assets at any time on
or prior to the Closing Date; or

 

(ii) any bodily injury (including illness, disability or death, regardless of
when such bodily injury occurred, was incurred or manifested itself), personal
injury, property damage (including trespass, nuisance, wrongful eviction and
deprivation of the use of real property) or other damage of or to any Person or
any Asset, including the Properties, in any way arising from or allegedly
arising from (A) any Hazardous Activity conducted by Sellers, the Company or
their Related Persons or any employee, contractor, agent or Representative
thereof, or any other Person, with respect to the Business or the Assets,
including the Properties at any time on or prior to the Closing Date; or (B)
from any Hazardous Material that was (1) present or suspected to be present on
or before the Closing Date on or at the Properties (or present or suspected to
be present on any other property, if such Hazardous Material emanated or
allegedly emanated from any Property and was present or suspected to be present
on any Property, on or prior to the Closing Date) or (2) Released or allegedly
Released by such Seller, the Company or their Related Persons, or any Person, on
or at any of the Properties or Assets at any time on or prior to the Closing
Date.

 

Buyer, either directly or through the Company, will be entitled to control any
Remedial Action, any Proceeding relating to a claim that any Environmental Law
has been violated and any other Proceeding with respect to which indemnity may
be sought under this Section 7.3(b).

 

7.4 Limitations.

 

(a) For purposes of this Agreement, a Buyer Indemnified Person may only assert a
claim for indemnification under Section 7 during the applicable period of time
(the “Buyer Claims Period”) specified as follows:

 

(i) with respect to any claim arising out of (A) the Breach by such Seller of
any representation, warranty, covenant or agreement contained in this Agreement
or in any other agreement or instrument executed and delivered by any such
Seller pursuant hereto relating to (1) such Seller’s authority or ability to
enter into this Agreement, any related agreement and to consummate the
Contemplated Transactions, (2) Sellers’ title to the Membership Interests of the
Company being sold by him pursuant hereto and its ability to transfer the same
to Buyer free and clear of all Liens, (3) the Company’s title to the Assets and
Properties owned by Company free and clear of all Liens, except for the liens
created by the Bank Loans set forth in Section 2.4, which will continue to be
liabilities of the Company or (4) any Tax-related matter, (B) fraud, willful
misrepresentation or willful misconduct, , (C) any Current Seller Liability or
Retained Liability, (D) any Liability for any Current Litigation Matter or any
Liability that is not included on Schedule 2.4 or the Closing Statement, or (E)
any indemnification clam made under Section 7.3(b) or pursuant to a Breach by
such Seller of the representations and warranties set forth in Section 4.25, the
Buyer Claims Period will commence on the date of this Agreement and continue
until the date that is four (4) years after the Closing Date; and

 

 -36- 

 

 

(ii) with respect to any other indemnification claim made under Section 7.3 the
Buyer Claims Period will commence on the date of this Agreement and continue
until the date that is two (2) years after the Closing Date; provided, however,
that with respect to any such indemnification claim regarding the Breach by
Sellers of any obligation hereunder or under any related agreement that is
intended to survive and continue after the Closing, the Buyer Claims Period will
continue for as long as such obligation is outstanding.

 

(b) For purposes of this Agreement, a Seller Indemnified Person may only assert
a claim for indemnification under Section 7.2 during the applicable period of
time (the “Seller Claims Period”) commencing on the date of this Agreement and
continuing until the date that is six (6) years after the Closing Date;
provided, however, that with respect to any such indemnification claim regarding
the Breach by Buyer of any obligation hereunder or under any related agreement
that is intended to survive and continue after the Closing, the Seller Claims
Period will continue for as long as such obligation is outstanding.

 

Notwithstanding anything to the contrary in this Section 7.4, if before 5:00
p.m. (eastern time) on the last day of the applicable Buyer Claims Period or
Seller Claims Period, any Party against which an indemnification claim has been
made hereunder has been properly notified in writing of such claim for indemnity
hereunder and the basis thereof, including with reasonable supporting details
for such claim (to the extent then known), and such claim has not been finally
resolved or disposed of as of such date, then such claim will continue to
survive and will remain a basis for indemnity hereunder until such claim is
finally resolved or disposed of in accordance with the terms of this Agreement.

 

(c) Sellers shall not have any liability for Adverse Consequences: unless and
until all claims for Adverse Consequences made by the Buyer Indemnified Persons
aggregate at least Five Thousand Dollars ($5,000) (the “Basket”), in which case
the Buyer Indemnified Persons shall be eligible for indemnification for Adverse
Consequences in excess of the Basket. A Seller may satisfy his indemnification
obligations, in his sole discretion, in whole or in part, by surrendering to the
Purchaser one or more Purchase Price Shares, which shall be valued at the per
share value of such shares as of the date same were originally issued to such
Seller (subject to appropriate adjustment for any stock split, stock dividend,
reclassification or combination after the Closing) for purposes of
indemnification.

 

7.5 Payment of Claims. A claim for indemnification may be asserted by written
notice to the Party from whom indemnification is sought and will be paid
promptly after such notice, together with satisfactory proof of Adverse
Consequences or other documents evidencing the basis of the Adverse Consequences
sought, are received.

 

7.6 Third-Party Claims.

 

(a) No later than ten (10) Business Days after receipt by a Person entitled to
indemnity under Section 7.2 or 7.3 or 2.4 (an “Indemnified Person”) of notice of
the assertion of a Third-Party Claim against it, such Indemnified Person shall
give notice to the Person obligated to indemnify under such section (an
“Indemnifying Person”) of the assertion of such Third-Party Claim and a copy of
any writing by which such Third-Party assertion is made. The failure to notify
the Indemnifying Person will relieve the Indemnifying Person of any liability
that it may have to any Indemnified Person to the extent that the Indemnifying
Person demonstrates that the defense of such Third-Party Claim is materially
prejudiced by the Indemnified Person’s failure to give such notice.

 

 -37- 

 

 

(b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to
Section 7.6(a) of the assertion of a Third-Party Claim, the Indemnifying Person
shall be entitled to participate in the defense of such Third-Party Claim and,
to the extent that it wishes (unless (i) the Indemnifying Person is also a
Person against whom the Third-Party Claim is made and the Indemnified Person
determines in good faith that joint representation would be inappropriate or
(ii) the Indemnifying Person fails to provide reasonable assurance to the
Indemnified Person of its financial capacity to defend such Third-Party Claim
and provide indemnification with respect to such Third-Party Claim), to assume
the defense of such Third-Party Claim with counsel reasonably satisfactory to
the Indemnified Person (provided, such counsel has appropriate experience in the
subject matter relating to the claim). After notice from the Indemnifying Person
to the Indemnified Person of its election to assume the defense of such
Third-Party Claim, the Indemnifying Person shall not, so long as it diligently
conducts such defense, be liable to the Indemnified Person under this Section
7.6(b) for any fees of other counsel or any other expenses with respect to the
defense of such Third-Party Claim, in each case subsequently incurred by the
Indemnified Person in connection with the defense of such Third-Party Claim. If
the Indemnifying Person assumes the defense of a Third-Party Claim, (i) such
assumption will conclusively establish for purposes of this Agreement that the
claims made in that Third-Party Claim are within the scope of and subject to
indemnification, and (ii) no compromise or settlement of such Third-Party Claims
may be effected by the Indemnifying Person without the Indemnified Person’s
Consent unless: (A) there is no finding or admission of any violation of Legal
Requirement or any violation of the rights of any Person; (B) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Person;
and (C) the Indemnified Person shall have no liability with respect to any
compromise or settlement of such Third-Party Claims effected without its
Consent. If notice is given to an Indemnifying Person of the assertion of any
Third-Party Claim and the Indemnifying Person does not, within ten (10) days
after the Indemnified Person’s notice is given, give notice to the Indemnified
Person of its election to assume the defense of such Third-Party Claim, the
Indemnifying Person will be bound by any determination made in such Third-Party
Claim or any compromise or settlement effected by the Indemnified Person.

 

(c) Notwithstanding the foregoing, if an Indemnified Person determines in good
faith that there is a reasonable probability that a Third-Party Claim may
adversely affect it or its Related Persons other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the Indemnified Person may, by notice to the Indemnifying Person, assume the
exclusive right to defend, compromise or settle such Third-Party Claim, but the
Indemnifying Person will not be bound by any determination of any Third-Party
Claim so defended for the purposes of this Agreement or any compromise or
settlement effected without its Consent (which may not be unreasonably
withheld).

 

Sellers hereby consent to the nonexclusive jurisdiction of any court in which a
Proceeding in respect of a Third-Party Claim is brought against any Buyer
Indemnified Person for purposes of any claim that a Buyer Indemnified Person may
have under this Agreement with respect to such Proceeding or the matters alleged
therein and agree that process may be served on Sellers with respect to such a
claim anywhere in the world.

 

(e) With respect to any Third-Party Claim subject to indemnification under this
Section 7 and Section 2.4: (i) both the Indemnified Person and the Indemnifying
Person, as the case may be, shall keep the other Person fully informed of the
status of such Third-Party Claim and any related Proceedings at all stages
thereof where such Person is not represented by its own counsel; and (ii) the
parties agree (each at its own expense) to render to each other such assistance
as they may reasonably require of each other and to cooperate in good faith with
each other in order to ensure the proper and adequate defense of any Third-Party
Claim.

 

(f) With respect to any Third-Party Claim subject to indemnification under this
Section 7 and Section 2.4, the parties agree to cooperate in such a manner as to
preserve in full (to the extent possible) the confidentiality of all
Confidential Information and the attorney-client and work-product privileges. In
connection therewith, each party agrees that: (i) it will use its best efforts,
in respect of any Third-Party Claim in which it has assumed or participated in
the defense, to avoid production of Confidential Information (consistent with
applicable law and rules of procedure); and (ii) all communications between any
party hereto and counsel responsible for or participating in the defense of any
Third-Party Claim shall, to the extent possible, be made so as to preserve any
applicable attorney-client or work-product privilege.

 

7.7 Notwithstanding anything to the contrary contained in this Agreement, Buyer
and Parent may deduct from the Purchase Price, on a dollar for dollar basis, the
amount of any Adverse Consequences incurred by any of the Buyer Indemnified
Parties for which the Buyer Indemnified Parties are entitled to indemnification
pursuant to this Section 7;provided, however, the Buyer and Parent shall not be
entitled to make such deduction as long as the Sellers are defending such
Adverse Consequences in accordance with Section 7.6 of this Agreement.

 

 -38- 

 

 

SECTION 8

TAX MATTERS

 

The following provisions shall govern the allocation of responsibility as
between Buyer and Sellers for certain tax matters following the Closing Date:

 

8.1 Tax Indemnification. Sellers shall indemnify the Company, Buyer, and each
Related Person of Buyer and hold them harmless from and against, without
duplication, any loss, claim, liability, expense, or other damage attributable
to (a) all Taxes (or the non-payment thereof) of the Company for all Taxable
periods ending on or before the Closing Date and the portion through the end of
the Closing Date for any Taxable period that includes (but does not end on) the
Closing Date (“Pre-Closing Tax Period”), and (b) any and all Taxes of any Person
(other than the Company) imposed on the Company as a transferee or successor, by
contract or pursuant to any law, rule, or regulation, which Taxes relate to an
event or transaction occurring before the Closing. Sellers shall reimburse Buyer
for any Taxes of the Company which are the responsibility of such Seller or the
Company pursuant to this Section 8.1 within fifteen (15) business days after
payment of such Taxes by Buyer or the Company. Buyer shall indemnify such
Sellers and hold them harmless from and against any loss, claim, liability,
expense or other damage attributable to all Taxes (or the non-payment thereof)
for all Taxable Periods commencing after the Closing Date and Buyer’s failure to
timely file complete and accurate Tax Returns pursuant to Section 8.3.

 

8.2 Straddle Period. In the case of any Taxable period that includes (but does
not end on) the Closing Date (a “Straddle Period”), the amount of any Taxes
based on or measured by income or receipts of the applicable Company for the
Pre-Closing Tax Period shall be determined based on an interim closing of the
books as of the close of business on the Closing Date and the amount of other
Taxes of the applicable Company for a Straddle Period which relate to the
Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the
entire Taxable period multiplied by a fraction the numerator of which is the
number of days in the Taxable period ending on the Closing Date and the
denominator of which is the number of days in such Straddle Period.

 

8.3 Responsibility for Filing Tax Returns. Sellers shall prepare or cause to be
prepared at Sellers’ cost and file or cause to be filed the income Tax Returns
related to the Pre-Closing Period, but shall provide a copy of such return to
Buyer at least ten (10) days prior to the filing deadline and give Buyer an
opportunity to provide comments with respect to such Tax Returns. Buyer shall
prepare or caused to be prepared at Buyer's cost and file or caused to be filed
all other Tax Returns for the Company which are filed after the Closing Date.

 

8.4 Cooperation on Tax Matters.

 

(a) Buyer and its Related Persons and Sellers and their Related Persons shall
cooperate fully, as and to the extent reasonably requested by the other Party,
in connection with the filing of Tax Returns pursuant to Section 8.3 and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other Party’s request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Buyer (and Buyer shall cause the Company), and
Sellers agree (i) to retain all books and records with respect to Tax matters
pertinent to the Company relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and, to the
extent notified by Buyer or Sellers, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered into
with any taxing authority, and (ii) to give the other Party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the other Party so requests, Sellers and Buyer shall cause the
Company to, as the case may be, shall allow the other Party to take possession
of such books and records.

 

(b) Buyer and Sellers further agree, upon request, to use their best efforts to
obtain any certificate or other document from any governmental authority or any
other Person as may be necessary to mitigate, reduce or eliminate any Tax that
could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).

 

(c) Buyer and Sellers further agree, upon request, to provide the other party
with all information that either party may be required to report pursuant to
Code Section 6043 and all Treasury Regulations promulgated thereunder.

 

(d) The parties hereto agree that the issuance of the Purchase Price Shares in
exchange for the Membership Interests in the Company constitutes a tax-free
exchange under Code Section 368 and shall file all tax returns accordingly and
shall not take any contrary position in any Tax return or Tax Proceeding.

 

 -39- 

 

 

8.5 Tax Sharing Agreements. All Tax sharing agreements or similar agreements
with respect to or involving the Company shall be terminated as of the Closing
Date and, after the Closing Date, the Company shall not be bound thereby or have
any liability or right to any benefit thereunder with respect to any period.

 

8.6 Certain Taxes and Fees. Except as otherwise provided in this Agreement, all
transfer, documentary, sales, use, stamp, registration and other such Taxes, and
all conveyance fees, recording charges and other fees and charges (including any
penalties and interest) incurred in connection with consummation of the
transactions contemplated by this Agreement shall be paid shared by the Buyer
and the Sellers and paid when due, and Sellers will, at Sellers own expense file
all necessary Tax Returns and other documentation to be filed by the Sellers
with respect to all such Taxes, fees and charges, and, if required by applicable
law, Buyer will, and will cause its Related Persons to, join in the execution of
any such Tax Returns and other documentation.

 

8.7 Refunds and Tax Benefits. Any Tax refunds that are received by Buyer or the
Company, and any amounts credited against Tax to which the Buyer or the Company
become entitled, that relate to Pre-Closing Tax Periods shall be for the account
of the Sellers, and, so long as no default or deficiency is then due from
Sellers to Buyer under Section 7 and Section 8, Buyer shall pay over to Sellers
any such refund or the amount of any such credit within fifteen (15) days after
receipt or entitlement thereto.

 

8.8 Transaction Related Taxes. All local, state and federal taxes due or
becoming due as a result of the transactions contemplated hereby shall be paid
by Sellers.

 

Section 9
MISCELLANEOUS

 

9.1 Expenses. Each of Buyer and Sellers will bear their own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the Contemplated Transaction, and Sellers shall also bear the costs and
expenses of the Company (including all of their legal fees and expenses) in
connection with this Agreement and the Contemplated Transactions. Sellers shall
also bear the costs and expenses incurred solely in connection with the transfer
of the Membership Interests to Buyer, if any. Sellers shall be responsible for
all federal and state income or similar taxes imposed on Sellers as a result of
the Contemplated Transaction hereby.

 

9.2 Notices. All notices, requests, demands, claims and other communications
permitted or required to be given hereunder must be in writing and will be
deemed duly given and received (i) if personally delivered, when so delivered,
(ii) if mailed, three (3) Business Days after having been sent by registered or
certified mail, return receipt requested, postage prepaid and addressed to the
intended recipient as set forth below, (iii) if sent by electronic facsimile,
once transmitted to the fax number specified below and the appropriate
telephonic confirmation is received, provided that a copy of such notice,
request, demand, claim or other communication is promptly thereafter sent in
accordance with the provisions of clause (ii) or (v) hereof, (iv) by electronic
mail (otherwise known as “e-mail”), or (v) if sent through an overnight delivery
service in circumstances to which such service guarantees next day delivery, the
Business Day following being so sent:

 

(a) To Buyer:

 

Mobile Science Technologies, Inc.

One Glenlake Parkway, NE

Suite 900

Atlanta Georgia 30328

Attn: Jeffrey S. Cosman

Email: jsc@jscosinc.com

Phone: (724) 799-4305

 

with a copy (which will not constitute valid delivery to Buyer) to:

 

Richard J. Dreger, Attorney at Law, P.C.

11660 Alpharetta Highway

Building 700, Suite 730

Roswell, Georgia 30076

Attn: Richard J. Dreger, Esq.

Email: Rick@rdregerlaw.com

Phone: (678) 566-6901

 

 -40- 

 

 

(b) To Parent:

 

Meridian Waste Solutions, Inc.

One Glenlake Parkway, NE

Suite 900

Atlanta Georgia 30328

Attn: Jeffrey S. Cosman

Email: jsc@jscosinc.com

Phone: (724) 799-4305

 

with a copy (which will not constitute valid delivery to (Parent) to:

 

Richard J. Dreger, Attorney at Law, P.C.

11660 Alpharetta Highway

Building 700, Suite 730

Roswell, Georgia 30076

Attn: Richard J. Dreger, Esq.

Email: Rick@rdregerlaw.com

Phone: (678) 566-6901

 

(c) To Sellers:

 

Jefferson Patrick Locke

255 Hardage Drive, S.W.

Marietta, GA 30064

Email: jlocke@redxmedical.com

Phone: (678) 409-4440

 

with a copy (which will not constitute valid delivery to Locke) to:

 

Moore Ingram Johnson & Steele LLP

326 Roswell Street

Marietta, Georgia 30060

Attn: Clayton Owen Carmack, Esq.

Email: coc@mijs.com

Phone: (770) 429-1499

 

Jonathan Moore Lewis

416 Westlake Court

Marietta, GA 30064

Email: jlewis@redxmedical.com

Phone: (404) 771-5802

 

with a copy (which will not constitute valid delivery to Lewis) to:

 

Moore Ingram Johnson & Steele LLP

326 Roswell Street

Marietta, Georgia 30060

Attn: Clayton Owen Carmack, Esq.

Email: coc@mijs.com

Phone: (770) 429-1499

 

Either Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including, without limitation, electronic
mail), but no such notice, request, demand, claim or other communication will be
deemed to have been duly given or received unless and until it actually is
received by the Party for which it is intended and the notifying Party can
provide evidence of such actual receipt. Either Party may change its address for
the receipt of notices, requests, demands, claims and other communications
hereunder by giving the other Party notice of such change in the manner herein
set forth.

 

 -41- 

 

 

9.3 Waiver; Remedies Cumulative. The rights and remedies of the Parties are
cumulative and not alternative. Neither any failure nor any delay by any Party
in exercising any right, power or privilege under this Agreement or any of the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by Legal Requirement: (a) no claim or right arising out of this
Agreement or any of the documents referred to in this Agreement can be
discharged by one Party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by another Party; (b) no waiver that may
be given by a Party will be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on one Party will be deemed to be a
waiver of any obligation of that Party or of the right of the Party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.

 

9.4 Entire Agreement and Modification. This Agreement (including the Schedules
and Exhibits hereto and the other agreements and instruments to be executed and
delivered by the Parties pursuant hereto) constitutes the entire and final
agreement among the Parties with respect to the subject matter hereof, and
supersedes and replaces all prior agreements, understandings, commitments,
communications and representations made among the Parties, whether written or
oral, with respect to the subject matter hereof. This Agreement may not be
amended, supplemented, or otherwise modified except by a written agreement
executed by the Parties.

 

9.5 Assignments; Successors; No Third-Party Rights. No Party may assign any of
its rights or delegate or cause to be assumed any of its obligations under this
Agreement without the prior written consent of each other Party, except that
Buyer may assign any of its rights hereunder to, and cause all of its
obligations hereunder to be assumed by, any Related Person without the consent
of Sellers, provided that Buyer shall remain liable for such obligations.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon and inure to the benefit of the successors and permitted
assigns of the Parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the Parties any legal or equitable
right, remedy or claim under or with respect to this Agreement or any provision
of this Agreement, except such rights as will inure to a successor or permitted
assignee pursuant to this Section 9.5. Notwithstanding anything to the contrary
in this Section 9.5 or otherwise, Buyer shall at all times have all rights and
remedies granted to Buyer pursuant to Section 5.6.

 

9.6 Severability. If any provision of this Agreement, or the application of any
such provision to any Person or circumstance, is held to be unenforceable or
invalid by any Governmental Body or arbitrator or under any Legal Requirement,
the Parties will negotiate an equitable adjustment to the provisions of this
Agreement with the view to effecting, to the greatest extent possible, the
original purpose, intent and commercial effect of such provision and of this
Agreement. In any event, the invalidity of any provision of this Agreement or
portion of a provision will not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.

 

9.7 Dates and Times. Dates and times set forth in this Agreement for the
performance of the Parties’ respective obligations hereunder or for the exercise
of their rights hereunder will be strictly construed, time being of the essence
of this Agreement. All provisions in this Agreement which specify or provide a
method to compute a number of days for the performance, delivery, completion or
observance by any Party of any action, covenant, agreement, obligation or notice
hereunder will mean and refer to calendar days, unless otherwise expressly
provided. Except as expressly provided herein, the time for performance of any
obligation or taking any action under this Agreement will be deemed to expire at
5:00 p.m. (eastern time) on the last day of the applicable time period provided
for herein. If the date specified or computed under this Agreement for the
performance, delivery, completion or observance of a covenant, agreement,
obligation or notice by any Party, or for the occurrence of any event provided
for herein, is a day other than a Business Day, then the date for such
performance, delivery, completion, observance or occurrence will automatically
be extended to the next Business Day following such date.

 

 -42- 

 

 

9.8 Governing Law. This Agreement will be governed by and construed under the
laws of the State of Georgia without regard to conflicts-of-laws principles that
would require the application of any other law.

 

9.9 Dispute Resolution.

 

(a) Any dispute or difference between or among any of the Parties arising out of
or in connection with this Agreement or the Contemplated Transactions, including
without limitation any dispute for indemnification under Section 2.4, Section 7
or 8, which such Parties are unable to resolve themselves shall be submitted to
and resolved by arbitration before a single arbitrator, for amounts in dispute
under Two Hundred Thousand and 00/100 Dollars ($200,000.00) and otherwise before
a panel of three (3) arbitrators, which arbitration shall be governed by and
enforceable under the Federal Arbitration Act, as supplemented or modified by
the provisions of this Section 9.9. The arbitrator(s) will consider the dispute
at issue in Atlanta, Georgia within one hundred twenty (120) days (or such other
period as may be acceptable to the Parties to the dispute) of the designation of
the arbitrator. The arbitrator(s) will deliver a written award, including
written findings of fact and conclusions of law, with respect to the dispute to
each of the arbitrating Parties, who will promptly act in accordance therewith.
In no event will the arbitrator(s) have the power to award damages in connection
with any dispute in excess of actual compensatory damages. In particular, the
arbitrator(s) may not multiply actual damages or award consequential, indirect,
special or punitive damages, including, without limitation, damages for lost
profits or loss of business opportunity. Any award of the arbitrator(s) will be
final, conclusive and binding on the arbitrating Parties; provided, however,
that any such Party may seek the vacating, modification or correction of the
arbitrator(s)’ decision or award as provided under Section 10 and Section 11 of
the Federal Arbitration Act 9 U.S.C. §1-14. Any Party to an arbitration
proceeding may enforce any award rendered pursuant to the arbitration provisions
of this Section 9.9 by bringing suit in any court of competent jurisdiction. All
costs and expenses attributable to the arbitrator(s) will be allocated between
the Parties to the arbitration in such manner as the arbitrator(s) determine to
be appropriate under the circumstances. Any Party may file a copy of this
Section 9.9 with any arbitrator or court as written evidence of the knowing,
voluntary and bargained agreement among the Parties with respect to the subject
matter of this Section 9.9.

 

9.10 Execution of Agreement. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy and all of
which, when taken together, will be deemed to constitute one and the same
agreement. The exchange of copies of this Agreement and of signature pages by
facsimile transmission or electronic mail in PDF format will constitute
effective execution and delivery of this Agreement as to the Parties and may be
used in lieu of the original Agreement for all purposes. Signatures of the
Parties transmitted by facsimile or by electronic mail in PDF format will be
deemed to be their original signatures for all purposes.

 

9.11 Specific Performance. Sellers and Buyer acknowledge and agree that the
other Parties would be damaged irreparably in the event any provision of this
Agreement is not performed in accordance with its specific terms or otherwise is
breached, so that Sellers or Buyer shall be entitled to injunctive relief to
prevent breaches of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in addition to any other remedy to which
Sellers or Buyer may be entitled, at law or in equity. In particular, Sellers
and Buyer acknowledge that the Business of the Company is unique and recognize
and affirm that in the event Sellers or Buyer Breach this Agreement, money
damages would be inadequate and Sellers or Buyer would have no adequate remedy
at law, so that Sellers or Buyer shall have the right, in addition to any other
rights and remedies existing in its favor, to enforce its rights and obligations
hereunder not only by action for damages but also by action for specific
performance, injunctive, and/or other equitable relief.

 

(See following page for execution signatures)

 

 -43- 

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Membership Interest
Purchase Agreement as of the Effective Date, intending to be legally bound.

 

  “BUYER” or “PURCHASER”:       MOBILE SCIENCE TECHNOLOGIES, INC.,   a Georgia
corporation         By: /s/ Jeffrey S. Cosman                            Jeffrey
S. Cosman, Vice President       “PARENT”:       MERIDIAN WASTE SOLUTIONS, INC.,
  a New York corporation         By: /s/ Jeffrey S. Cosman     Jeffrey S.
Cosman, CEO       “SELLERS”:       /s/ Jefferson Patrick Locke   Jefferson
Patrick Locke, individually       /s/ Jonathan Moore Lewis   Jonathan Moore
Lewis, individually

 

 -44- 

 

 

SCHEDULE 1.1

DEFINED TERMS

 

“Accounts Receivable” means (i) all trade and other accounts receivable and
other rights to payment from past or present customers of the Company, and the
full benefit of all security for such accounts or rights to payment, including
all trade and other accounts receivable representing amounts receivable in
respect of services rendered to customers of the Business, and (ii) any claim,
remedy or other right related to any of the foregoing.

 

“Adverse Consequences” means all actions, suits, Proceedings, hearings,
investigations, charges, complaints, claims, demands, diminutions in value,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement or claims, obligations, Taxes, Liens,
losses, interest, expenses (including costs of investigation and defense), any
other Liability and fees, including court costs and reasonable attorneys’ fees
and expenses, whether or not involving a Third-Party Claim.

 

“Affiliated Group” means any affiliated group within the meaning of Code Section
1504(a) or any similar group defined under a similar provision of state, local
or foreign law.

 

“Agreement” has the meaning set forth in the preface.

 

“Approvals” has the meaning set forth in Section 6.1(h).

 

“Assets” has the meaning set forth in Section 4.7.

 

“Basis” means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.

 

“Breach” means any breach of, or any inaccuracy in, any representation or
warranty or any breach of, or failure to perform or comply with, any covenant,
obligation or agreement, in or of this Agreement or any other Contract,
agreement or instrument (whether or not related to this Agreement), or in or of
any corporate, company or partnership organizational document or agreement, any
Governmental Authorization, Order or Legal Requirement, or any other breach of
any written instrument, or any event which with the passing of time or the
giving of notice, or both, would constitute such a breach, inaccuracy or
failure.

 

“Business” has the meaning set forth in the Background Facts.

 

“Business Day” means any day other than a Saturday or Sunday or any other day on
which banks in Georgia are permitted or required by Legal Requirement to be
closed.

 

“Buyer” has the meaning set forth in the preface.

 

“Buyer Claims Period” has the meaning set forth in Section 7.4(a).

 

“Buyer Indemnified Persons” has the meaning set forth in Section 7.3.

 

 -45- 

 

 

“CERCLA” has the meaning set forth in Section 4.25.

 

“Closing” and “Closing Date” has the meaning set forth in Section 2.3.

 

“Closing Statement” has the meaning set forth in Section 6.1(j).

 

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and
Code Section 4980B and of any similar state law.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Combined Entities” means the Company and each third party entity, primarily
engaged in a business competitive with the Business, acquired by the Company
post-Closing for which Parent issued up to 25,000 shares of Parent’s common
stock as part of the purchase price paid to allow the Company to acquire such
entity.

 

“Company” has the meaning set forth in the Background Facts.

 

“Company Contracts” has the meaning set forth in Section 4.18(a).

 

“Company Documents” has the meaning set forth in Section 5.1.

 

“Confidential Information” has the meaning set forth in Section 5.5(a).

 

“Consent” means any approval, consent, ratification, waiver or other
authorization.

 

“Contemplated Transactions” means all of the transactions contemplated by this
Agreement.

 

“Contract” means any agreement, contract, license, lease, consensual obligation,
promise or undertaking (whether written or oral and whether express or implied),
whether or not legally binding.

 

“Current Litigation Matters” has the meaning set forth in Section 4.20.

 

“Current Seller Liabilities” or “Current Seller Liability” has the meaning set
forth in Section 2.4(a).

 

“Disclosure Schedule” has the meaning set forth in the introductory paragraph to
Section 4.

 

“Effective Date” has the meaning set forth in the preface.

 

“Employee Benefit Plan” means all “employee benefit plans” as defined by Section
3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), all
specified fringe benefit plans as defined in Section 6039D of the Code, and all
other bonus, incentive-compensation, deferred-compensation, profit-sharing,
stock-option, stock-appreciation-right, stock-bonus, stock-purchase,
employee-stock-ownership, savings, severance, change-in-control,
supplemental-unemployment, layoff, salary-continuation, retirement, pension,
health, life-insurance, disability, accident, group-insurance, vacation,
holiday, sick-leave, fringe-benefit or welfare plan, and any other employee
compensation or benefit plan, agreement, policy, practice, commitment, contract
or understanding (whether qualified or nonqualified, currently effective or
terminated, written or unwritten) and any trust, escrow or other agreement
related thereto that (i) is maintained or contributed to by the Company or any
other corporation or trade or business controlled by, controlling or under
common control with Sellers (within the meaning of Section 414 of the Code or
Section 4001(a)(14) or 4001(b) of ERISA) (“ERISA Affiliate”) or has been
maintained or contributed to in the last six (6) years by the Company or any
ERISA Affiliate, or with respect to which the Company or any ERISA Affiliate has
or may have any liability, and (ii) provides benefits, or describes policies or
procedures applicable to any current or former director, officer, employee or
service provider of the Company or any ERISA Affiliate, or the dependents of any
thereof, regardless of how (or whether) liabilities for the provision of
benefits are accrued or assets are acquired or dedicated with respect to the
funding thereof.

 

 -46- 

 

 

“Employee Welfare Benefit Plan” has the meaning set forth in ERISA Section 3(1).

 

“Environment” means soil, land surface or subsurface strata, surface waters,
groundwaters, drinking water supply, stream sediments, ambient air (including
indoor air), plant and animal life and any other environmental medium or natural
resource.

 

“Environmental, Health and Safety Liabilities” means any and all costs, damages,
Adverse Consequences, expenses, Liabilities and/or other responsibility arising
from or under any Environmental Law or Occupational Safety and Health Law,
including those consisting of or relating to (i) any environmental, health or
safety matter or condition (including on-site or off-site contamination, and/or
occupational safety and health regulation of any chemical substance or product),
(ii) any fine, penalty, judgment, award, settlement, Proceeding, damages,
Adverse Consequence, loss, claim, demand or response, remedial or inspection
cost or expense arising under any Environmental Law or Occupational Safety and
Health Law, (iii) financial responsibility under any Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any cleanup, removal, containment or other remediation or response
actions (“Cleanup”) required by any Environmental Law or Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource damages,
and/or (iv) any other compliance, corrective or remedial measure required under
any Environmental Law or Occupational Safety and Health Law. For purposes of
this definition, the terms “removal,” “remedial” and “response action” include
the types of activities covered by the United States Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA).

 

“Environmental Law” means any Legal Requirement that requires or relates to
(i) advising appropriate Governmental Bodies, employees or the public of any
intended Release, actual Release or Threat of Release of pollutants or Hazardous
Materials, violations of discharge limits or other prohibitions and the
commencement of activities, such as resource extraction or construction, that
could have significant impact on the Environment, (ii) preventing or reducing to
acceptable levels the Release of pollutants or Hazardous Materials into the
Environment, (iii) reducing the quantities, preventing the Release or minimizing
the hazardous characteristics of wastes that are generated, (iv) assuring that
products are designed, formulated, packaged and used so that they do not present
unreasonable risks to human health or the Environment when used or disposed of,
(v) protecting resources, species or ecological amenities, (vi) reducing to
acceptable levels the risks inherent in the transportation of pollutants,
Hazardous Materials or other potentially harmful substances, (vii) cleaning up
pollutants that have been Released, preventing the Threat of Release or paying
the costs of such clean up or prevention, (viii) making responsible Persons pay
private parties, or groups of them, for damages done to their health or the
Environment or permitting self-appointed representatives of the public interest
to recover for injuries done to public assets; or (ix) governing or regulating
any Hazardous Activities.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means each entity that is treated as a single employer with
the Company for purposes of Code Section 414.

 

“Excluded Contracts” has the meaning set forth in Section 5.2.

 

“Financial Statements” has the meaning set forth in Section 4.11(b).

 

“FIRPTA Affidavit” has the meaning set forth in Section 6.1(m).

 

 -47- 

 

 

“GAAP” means generally accepted accounting principles as in effect in the United
States of America, as determined by the Financial Accounting Standards Board
from time to time, applied on a consistent basis as of the date of any
application thereof.

 

“Governmental Authorization” means any zoning approvals, permits (including the
Permits), franchise rights, rights-of-way, Consent, license, permission,
registration, permit or other right or approval issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement and all pending applications therefor or
renewals thereof.

 

“Governmental Body” means any (i) nation, state, county, city, town, borough,
village, district or other jurisdiction, (ii) federal, state, county, local,
municipal, foreign or other government, (iii) governmental or quasi-governmental
authority of any nature (including any agency, branch, department, board,
commission, court, tribunal or other entity exercising governmental or
quasi-governmental powers), (iv) body exercising, or entitled or purporting to
exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power, (v) Indian tribal authority, (vi)
multinational organization or body, or (vii) official of any of the foregoing.

 

“Hazardous Activity” means, with respect to any Person (including any Party or
the Company or their Related Persons), the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment or use (including any
withdrawal or other use of groundwater) of Hazardous Material in, on, under,
about or from any Property or other facility or real property owned, leased,
operated or otherwise used by such Person or any of its contractors in
connection with the conduct of the business of such Person, or from any other
asset of such Person, into the Environment and any other act, business,
operation or thing that increases the danger, or risk of danger, or poses an
unreasonable risk of harm, to persons or property, whether on or off the
aforementioned Properties, facilities or other real property, beyond what is
authorized by any Environmental Law relating to the business of such Person.

 

“Hazardous Material” means any substance, material or waste which is or will
foreseeably be regulated by any Governmental Body, including any material,
substance or waste which is defined as a “hazardous waste,” “hazardous
material,” “hazardous substance,” “extremely hazardous waste,” “restricted
hazardous waste,” “contaminant,” “pollutant,” “toxic waste” or “toxic substance”
under any provision of Environmental Law, and including petroleum, petroleum
products, asbestos, presumed asbestos-containing material or asbestos-containing
material, urea formaldehyde and polychlorinated biphenyls.

 

“Improvements” means all buildings, structures, fixtures, building systems and
equipment, and all components thereof, including the roof, foundation,
load-bearing walls, and other structural elements thereof, heating, ventilation,
air conditioning, mechanical, electrical, plumbing and other building systems,
environmental control, remediation and abatement systems, sewer, storm, and
waste water systems, irrigation and other water distribution systems, parking
facilities, fire protection, security and surveillance systems, and
telecommunications, computer, wiring, and cable installations, all of which are
included in the Properties.

 

“Indebtedness” means (a) any indebtedness (including all accrued interest) for
borrowed money or issued in substitution for or exchange of indebtedness for
borrowed money, (b) any indebtedness evidenced by any note, bond, debenture or
other debt security, (c) any indebtedness for the deferred purchase price of
property or services with respect to the Company is liable, contingently or
otherwise, as obligor or otherwise, (d) any commitment by which the Company
assures a creditor against loss (including, without limitation, contingent
reimbursement obligations with respect to letters of credit), (e) any
indebtedness guaranteed in any manner by the Company (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(f) any obligations under capitalized leases with respect to which the Company
is liable, contingently or otherwise, as obligor, guarantor or otherwise, or
with respect to which obligations the Company assures a creditor against loss,
(g) any TRAC or synthetic leases; (h) any indebtedness secured by a Lien on the
Assets of the Company, (i) any unsatisfied obligation for “withdrawal liability”
to a “Multiemployer Plan” as such terms are defined under ERISA, (j) the deficit
or negative balance, if any, in the any of the Company’s checking account and
(k) any credit card debt.

 

 -48- 

 

 

“Indemnified Person” has the meaning set forth in Section 7.6.

 

“Indemnifying Person” has the meaning set forth in Section 7.6.

 

“Insolvent” means being unable to pay debts as they mature, or as obligations
become due and payable.

 

“Insolvency Laws” means any bankruptcy, insolvency, reorganization, moratorium
or other similar Legal Requirement affecting the enforcement of creditors rights
generally, and general principles of equity (regardless of whether enforcement
is considered in a proceeding in law or equity).

 

“IRS” means the United States Internal Revenue Services and, to the extent
relevant, the United States Department of the Treasury.

 

“Inspection Period” has the meaning set forth in Section 5.2.

 

“Intangible Personal Property” means all intangible property used or held for
use by the Company, of whatever type or description, including (a) the business
as a going concern (b) goodwill of the Company (c) all files, records and
correspondence (d) telephone numbers, telecopy numbers (e) all rights in
Internet web sites and Internet domain names presently used by Sellers or the
Company, and links; (f) all registered and unregistered copyrights in both
published works and unpublished works, (g) “Red X Medical”, “EnviCare” names,
all assumed fictional business names, trade names, registered and unregistered
trademarks, service marks and applications, and (h) all know-how, trade secrets,
confidential or proprietary information, customer lists, software, technical
information, data, process technology, plans, drawings and blue prints; and (i)
all right, title and interest in and to all Company Documents, Company
Contracts, and all Permits, Governmental Authorizations, Approvals, Consents,
licenses and other permits and approvals of the Company.

 

“Intellectual Property Assets” has the meaning set forth in Section 4.27.

 

“Knowledge” means when used to qualify a representation, warranty or other
statement of a Party to this Agreement, (i) the knowledge that management of the
Party actually has with respect to the particular fact or matter that is the
subject of such representation, warranty or other statement, and (ii) the
knowledge that management of the Party could reasonably be expected to have as
prudent and responsible owners and operators of the assets and the Business of
such Party, or in the case of Seller, the ownership and operation of the
Company, after having conducted a reasonably comprehensive inquiry or
investigation with respect to the fact or matter that is the subject of such
representation, warranty or other statement.

 

A Person (other than an individual) will be deemed to have Knowledge of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, member, manager, executor or
trustee of that Person (or in any similar capacity) has, or at any time had,
Knowledge of that fact or other matter (as set forth in (a) and (b) above), and
any such individual (and any individual party to this Agreement) will be deemed
to have conducted a reasonably comprehensive investigation regarding the
accuracy of the representations and warranties made herein by that Person or
individual.

 

“Legal Requirement” means any federal, state, local, municipal, foreign,
international, multi-national or other constitution, law, ordinance, principle
of common law, code, regulation, statute or treaty.

 

 -49- 

 

 

“Liability” means with respect to any Person (including any Party), any
Indebtedness, liability, penalty, damage, loss, cost or expense, obligation,
claim, deficiency, or guaranty of such Person of any kind, character or
description, whether known or unknown, absolute or contingent, accrued or
unaccrued, disputed or undisputed, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, vested or unvested,
executory, determined, determinable or otherwise, and whether or not the same is
required to be accrued on the financial statements of such Person, including any
liability for Taxes.

 

“Lien” means with respect to any Person, any mortgage, right of way, easement,
encroachment, any restriction on use, servitude, pledge, lien, charge,
hypothecation, security interest, encumbrance, adverse right, interest or claim,
community or other marital property interest, condition, equitable interest,
encumbrance, license, covenant, title defect, option, or right of first refusal
or offer or similar restriction, voting right, transfer, receipt of income or
exercise of any other attribute of ownership, except for any liens for taxes not
yet due or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established and accrued on the
financial statements of such Person in accordance with GAAP.

 

“Material Adverse Effect” or “Material Adverse Change” means any effect or
change that would be materially adverse to the Business, Assets, condition
(financial or otherwise), operating results, operations, or business prospects
of the Company, taken as a whole, including the ability for the Company to own,
construct, operate and develop the Assets and the Business in Buyer’s sole
discretion, the transfer or issuance to the Company, if applicable, of any
Permit, Consent, Governmental Authorization, license or other permit or approval
contemplated by this Agreement, or on the ability of Sellers to consummate
timely the Contemplated Transactions (regardless of whether or not such adverse
effect or change can be or has been cured at any time or whether Buyer has
knowledge of such effect or change on the date hereof), except for any adverse
change or event arising from or relating to (a) general economic conditions or
conditions which generally affect the Business of the Company and the industry
in which the Company competes and (b) public or industry knowledge of the
Contemplated Transactions.

 

“Membership Interests” has the meaning set forth in Section 2.1.

 

“Most Recent Financial Statements” has the meaning set forth in Section 4.11(a).

 

“Most Recent Fiscal Month End” has the meaning set forth in Section 4.11(a).

 

“Most Recent Fiscal Year End” has the meaning set forth in Section 4.11(a).

 

“Multiemployer Plan” has the meaning set forth in ERISA Section 3(37).

 

“Net Large Entity Purchase Price” means the purchase price paid by Buyer for the
acquisition of any Large Acquired Entity, less all amounts deducted therefrom in
payment of such Large Entity’s or the sellers’ prorated items, expenses or debt.

 

“Occupational Safety and Health Law” means any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, including the Occupational Safety and Health Act, and any
program, whether governmental or private (such as those promulgated or sponsored
by industry associations and insurance Company), designed to provide safe and
healthful working conditions.

 

 -50- 

 

 

“Order” means any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.

 

“Ordinary Course of Business” means an action taken by a Person will be deemed
to have been taken in the ordinary course of business only if that action (i) is
consistent in nature, scope and magnitude with the past practices of such Person
and is taken in the ordinary course of the normal, day-to-day operations of such
Person, (ii) does not require authorization by the board of directors, owners,
shareholders, interest holders, members or managers of such Person (or by any
Person or group of Persons exercising similar authority) and does not require
any other separate or special authorization of any nature, and (iii) is similar
in nature, scope and magnitude to actions customarily taken, without any
separate or special authorization, in the ordinary course of the normal,
day-to-day operations of other Persons that are in the same line of business as
such Person).

 

“Organizational Documents” means: (i) with respect to a corporation, the
certificate or articles of incorporation and bylaws; (ii) with respect to any
other Person any charter or similar document adopted or filed in connection with
the creation, formation or organization of a Person; (iii) any operating
agreement, partnership agreement, shareholder agreement or similar agreement and
(iv) any amendment to any of the foregoing.

 

“Party” or “Parties” has the meaning set forth in the preface.

 

“Permits” has the meaning set forth in Section 4.12(a).

 

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock holding company, a trust, a joint
venture, an unincorporated organization, any other business entity, joint
venture or other entity Governmental Body (or any department, agency, or
political subdivision thereof).

 

“Pre-Closing Tax Period” has the meaning set forth in Section 8.1.

 

“Proceeding” means any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body, court, or arbitrator.

 

“Property” or “Properties” means any real property owned or leased by the
Company together with all buildings, structures, Improvements, and fixtures
located thereon, including all electrical, mechanical, plumbing and other
building systems, fire protection, security and surveillance systems,
telecommunications, computer, wiring, and cable installations, utility
installations, water distribution systems, and landscaping, together with all
easements and other rights and interests appurtenant thereto (including air,
oil, gas, mineral, and water rights together with all Permits).

 

“Purchase Price” has the meaning set forth in Section 2.2.

 

“Purchase Price Shares” means, collectively, the Tranche IV Shares, the Tranche
V Shares, and the Tranche VI Shares.

 

“Real Property Lease” means (i) any long-term lease of land in which most of the
rights and benefits comprising ownership of the land and the Improvements
thereon or to be constructed thereon, if any, are transferred to the tenant for
the term thereof or (ii) any lease or rental agreement pertaining to the
occupancy of any improved space on any real property.

 

 -51- 

 

 

“Related Person” means:

 

(i) with respect to a particular individual: (A) each other member of such
individual’s Family; (B) any Person that is directly or indirectly controlled by
any one or more members of such individual’s Family; (C) any Person in which
members of such individual’s Family hold (individually or in the aggregate) a
Material Interest; and (D) any Person with respect to which one or more members
of such individual’s Family serves as a director, officer, partner, executor or
trustee (or in a similar capacity); and

 

(ii) with respect to a specified Person other than an individual: (A) any Person
that directly or indirectly controls, is directly or indirectly controlled by or
is directly or indirectly under common control with such specified Person; (B)
any Person that holds a Material Interest in such specified Person; (C) each
Person that serves as a director, officer, partner, executor or trustee of such
specified Person (or in a similar capacity); (D) any Person in which such
specified Person holds a Material Interest; and (E) any Person with respect to
which such specified Person serves as a general partner or a trustee (or in a
similar capacity).

 

(iii) For purposes of this definition, (a) “control” (including “controlling,”
“controlled by,” and “under common control with”) means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act; (b) the “Family” of an individual includes
(i) the individual, (ii) the individual’s spouse, (iii) any other natural person
who is related to the individual or the individual’s spouse within the second
degree and (iv) any other natural person who resides with such individual; and
(c) “Material Interest” means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act of 1934) of voting securities or
other voting interests representing at least ten percent (10%) of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least ten percent (10%) of the outstanding equity
securities or equity interests in a Person.

 

“Release” means any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching
or migration on or into the Environment or into or out of any property.

 

“Remedial Action” means all actions, including any capital expenditures,
required or voluntarily undertaken (i) to clean up, remove, treat or in any
other way address any Hazardous Material or other substance, (ii) to prevent the
Release or Threat of Release or to minimize the further Release of any Hazardous
Material or other substance so it does not migrate or endanger or threaten to
endanger public health or welfare or the Environment, (iii) to perform
pre-remedial studies and investigations or post-remedial monitoring and care, or
(iv) to bring the Properties and the operations conducted (or to be conducted)
thereon into compliance with Environmental Laws and environmental Governmental
Authorizations.

 

“Representative” means with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that Person.

 

“Restrictive Covenants Agreement” has the meaning set forth in Section 6.1(l).

 

“Retained Liabilities” has the meaning set forth in Section 2.4(b).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Seller” has the meanings set forth in the preface.

 

“Seller Claims” has the meaning set forth in Section 5.12.

 

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“Seller Claims Period” has the meanings set forth in Section 7.4(b).

 

“Seller Indemnified Persons” has the meaning set forth in Section 7.2.

 

“Seller Releasing Parties” has the meaning set forth in Section 5.12.

 

“Straddle Period” has the meaning set forth in Section 8.2.

 

“SWDA” has the meaning set forth in Section 4.25.

 

“Tangible Personal Property” means all tangible personal property used or useful
in the Business, including all machinery, equipment, scales, compactors,
containers, bailers, tools, spare parts, furniture, office equipment, computer
hardware, supplies, materials, vehicles, trade fixtures and other items of
tangible personal property of every kind owned or leased by the Company
(wherever located and whether or not carried on the books of the Company or
Sellers), together with any express or implied warranty by the manufacturers or
lessors of any item or component part thereof and all maintenance records and
other documents relating thereto.

 

“Tax” means any income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental, windfall profit,
customs, vehicle, airplane, boat, vessel or other title or registration, capital
stock, franchise, employees’ income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on minimum and
other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever
and any interest, penalty, addition or additional amount thereon imposed,
assessed or collected by or under the authority of any Governmental Body or
payable under any tax-sharing agreement or any other Contract, whether disputed
or not and including any obligations to indemnify or otherwise assume or succeed
to the Tax liability of any other Person.

 

“Tax Return” means any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.

 

“Third Party Claim” means any claim, issuance of any Order or the commencement
of any Proceeding by any Person who is not a Party to this Agreement, including
a Related Person of a Party, any domestic or foreign court, or Governmental
Body.

 

“Threat of Release” means a reasonable likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.

 

“WARN Act” has the meaning set forth in Section 4.21.

 

 -53-