Document:

EX-10.14

Exhibit 10.14

KENNETH P. MUELLER

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is made as of February 11, 2011 by and between
Metalico, Inc., a Delaware corporation (the “Employer”), and Kenneth P. Mueller (the “Executive”).

W I T N E S S E T H:

WHEREAS, the Employer desires to employ the Executive, and Executive desires to be employed by
Employer, as the Chief Operating Officer of the Employer’s Ferrous and Nonferrous Scrap Metal
Recycling Division or other title as directed, subject to the direction and control of the
Employer, upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises, and of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:

§1. Definitions.

For the purposes of this Agreement, the following terms have the meanings specified or
referred to in this §1:

“Annual Adjustment” for any given year means an amount equal to the product of (x) the
Executive’s Salary for the immediately preceding year times (y) the applicable CPI Multiplier.

“Arbitration Referral Period” has the meaning set forth in §9(o) below.

“Basic Compensation” means Salary and Benefits.

“Benefits” has the meaning set forth in §3(a)(ii) below.

“Board” means the board of directors of the Employer.

“Cause” has the meaning set forth in §6(c) below.

“Change in Control” has the meaning set forth in §6(e)(iii) below.

“Confidential Information” means any and all information concerning the business and affairs
of the Employer that is not generally available to the public, including, without limitations:

(i) trade secrets concerning the business and affairs of the Employer, product
specifications, data, know-how, formulae, compositions, processes, designs, sketches,
photographs, graphs, drawings, samples, inventions and ideas, past, current, and planned
research and development, current and planned manufacturing or distribution methods and
processes, customer lists, current and anticipated customer requirements, price lists,
market studies, business plans, computer software and programs (including object code and
source code), computer software and database technologies, systems, structures, and
architectures (and related formulae, compositions, processes, improvements, devices,
know-how, inventions, discoveries, concepts, ideas, designs, methods and information), and
any other information, however documented, that is a trade secret within the meaning of the
laws of the State of New Jersey; and

(ii) information concerning the business and affairs of the Employer (which includes
historical financial statements, financial projections and budgets, historical and projected
sales, capital spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials), however documented; and

(iii) notes, analysis, compilations, studies, summaries, and other material prepared by
or for the Employer containing or based, in whole or in part, on any information included
in the foregoing.

“CPI Multiplier” means the most recently calculated and published change, expressed as a
percentage, in the Consumer Price Index for urban wage earners and clerical workers, U.S. City
Average, All Items (1982-1984=100) published by the United States Department of Labor, Bureau of
Labor Statistics or the most recent successor of that index (the “CPI”) from the second most recent
third-quarter average to the most recent third-quarter average; provided, however, that if the
change in the CPI for any measuring period is greater than 3.5%, then the CPI Multiplier as
determined from such change shall be 3.5%. For avoidance of confusion, the Employer and the
Executive acknowledge and agree that the change in the CPI contemplated under this definition is
the change announced annually in October by the U.S. Social Security Administration.

“Disability” has the meaning set forth in §6(b) below.

“Effective Date” means February 21, 2011.

“Executive Invention” means any idea, invention, technique, modification, process, or
improvement (whether patentable or not), any industrial design (whether registerable or not), any
mask work, however fixed or encoded, that is suitable to be fixed, embedded or programmed in a
semiconductor product (whether recordable or not), and any work of authorship (whether or not
copyright protection may be obtained for it) created, conceived, or developed by the Executive,
either solely or in conjunction with others, during the Employment Period, or a period that
includes a portion of the Employment Period, that relates in any way to the business then being
conducted or proposed to be conducted by the Employer, and any such item created by the Executive,
either solely or in conjunction with others, following termination of the Executive’s employment
with the Employer, that is based upon or uses Confidential Information.

“Employment Period” means the term of the Executive’s employment under this Agreement as set
forth in §2(b).

“Good Cause” has the meaning set forth in §6(e)(iii) below.

“Non-Competition Territory” means, collectively, (a) a one-hundred-fifty-mile (150) radius
around each and every operating location of the Employer and its affiliates and (b) the Greater New
York metropolitan area.

“person” means any individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust, association,
organization, or governmental body.

“Post-Employment Period” means a period of time, determined as of and commencing on the last
day of the Executive’s employment by the Employer or any affiliate of the Employer, equal to the
lesser of (a) one-half of the duration of such employment of the Executive and (b) three years. By
way of example and for the avoidance of confusion, the Employer and the Executive agree that: (i)
if the Executive is so employed for a period of one year, then “Post-Employment Period” will mean
six months; (ii) if the Executive is so employed for a period of three years, then “Post-Employment
Period” will mean eighteen months; and (iii) if the Executive is so employed for a period of eight
years, then “Post-Employment Period” will mean three years.

“Proprietary Items” has the meaning set forth in §7(b)(i)(D) below.

“Salary” has the meaning set forth in §3(a) below.

“Termination Date” has the meaning set forth in §2(b) below.

§2. Employment Terms and Duties.

(a) Employment. The Employer hereby employs the Executive as Chief Operating Officer
of the Employer’s Ferrous and Nonferrous Scrap Metal Recycling Division, and the Executive hereby
accepts employment by the Employer, upon the terms and conditions set forth in this Agreement. The
Executive will report directly to the President and Chief Executive Officer and the Executive Vice
President of the Employer.

(b) Term. Subject to the provisions of §6, the term of the Executive’s employment
under this Agreement will be three (3) years, beginning on the Effective Date and ending on the day
before the third (3rd) anniversary of the Effective Date (the “Termination Date”).

(c) Duties. The Executive will have such supervisory and management-level duties as
are assigned or delegated to the Executive by the Board or Chief Executive Officer of the Employer.
Without limiting the generality of the foregoing, Executive will have primary managerial
responsibility for Employer’s scrap metal operations, including management of the internal
operations of the Employer’s scrap metal business. The Executive will work closely with the
General Managers of the Employer’s operating scrap subsidiaries on buyers’ scrap practices and
pricing, sales and marketing, including:

(i) Inventory control and sales strategies;

	 	 	 
	(ii)

(iii)

(iv)

	 	Employee/HR matters;

Creation and improvement of operating policies and procedures; and

Coordination and promotion of intercompany buy/sell programs.

The Executive will devote his entire business time, attention, skill, and energy exclusively to the
business of the Employer. In addition, the Executive will use his best efforts to promote the
success of the Employer’s business and will cooperate fully with the Board in the advancement of
the best interests of the Employer. Nothing in this §2(c), however, will prevent the Executive
from engaging in additional activities relating to personal investments and community affairs,
provided that such activities are not inconsistent with the Executive’s duties under the terms
provided in this Agreement.

§3. Compensation.

(a) Salary.

(i) General. The Executive will be paid an annual salary commencing on the Effective
Date of $300,000, subject to adjustment as provided in §3(a)(ii) below (the “Salary”), which
will be payable in equal periodic installments according to the Employer’s customary payroll
practices, but no less frequently than monthly. The Employer agrees that during the term of
this Agreement the Executive’s Salary will not be reduced below its then-current level
unless a salary reduction is imposed by the Employer or Metalico generally on a group-wide
basis as a result of financial difficulty, in which case the Executive will be subject to
the same salary reduction as other employees of the Employer or Metalico within the
identified group.

(ii) Annual Increases. The Executive will be entitled to an annual increase in Salary,
effective as of each anniversary of the Effective Date, equal to the Annual Adjustment.

(b) Bonuses; Annual Review. The Employer will provide the Executive with an annual
review of his and the Employer’s Scrap Metal Recycling Division’s performance on or about each
anniversary of the Effective Date. The Executive will be eligible for an annual performance bonus
for each year in a range of 20% to 60% of the Executive’s Salary for the year or portion thereof
discussed in such annual review, the exact bonus to be based on such performance. Each annual
bonus will be payable in accordance with the customary bonus policy of the Employer or Metalico in
effect at the time such payment is made.

 

(c) Benefits. The Executive will, during the Employment Period, be permitted to
participate in such stock option, pension, profit sharing, 401(k), life insurance, hospitalization,
major medical, dental, disability, and other employee benefit plans of the Employer that may be in
effect from time to time, to the extent the Executive and his dependants are eligible under the
terms of those plans (collectively, the “Benefits”); provided, however, that at a minimum the
Employer will provide the Executive with participation in stock option, pension, medical and all
other benefit plans consistent with such plans offered to manager-level employees of the Employer.
The Employer will provide in the Executive’s name term life insurance in the face amount of not
less than Five Hundred Thousand Dollars ($500,000), payable to the beneficiary or beneficiaries of
the Executive’s choice.

(d) Moving Allowance, Living Expenses, Initial Options and Restricted Stock. As
inducements to the Executive to accept employment hereunder:

(i) The Employer agrees to pay to the Executive a one-time relocation and home search
allowance equal to the actual amount of the Executive’s relocation and home search costs,
payable (in either single or multiple draws) after the commencement of employment within
five days of the Employer’s receipt of evidence of the Executive’s actual relocation and
home search costs justifying such amounts with appropriate back-up, using a direct billing
arrangement to the Employer. The Employer and the Executive agree to use their respective
best efforts to minimize such relocation and home search costs.

(ii) The Employer agrees to reimburse the temporary living expenses of the Executive
and his family in the Ohio Valley, using a direct billing arrangement to the Employer, for a
period to be determined by the parties commencing on the Effective Date.

(iii) The Employer agrees to provide for a grant of 20,000 options for the Employer’s
common stock, vesting monthly over three years with a five-year term commencing on the date
of grant (which shall be no later than the Effective Date) pursuant to an Option Agreement
to be executed by the Employer and the Executive. Such options will bear a per-share
exercise price equal to the lower of (a) $5.50 and (b) the closing price for the Employer’s
stock on the NYSE Amex as of the trading day before the Effective Date. Notwithstanding
anything herein to the contrary, any grant of options and any Option Agreement executed by
the parties will be null and void and of no further force or effect if the Executive fails
to commence employment with the Employer on the Effective Date.

(iv) The Employer agrees to provide twelve (12) equal consecutive grants of four
thousand (4,000) shares of its common stock , such grants to be made quarterly commencing on
the date occurring three months after the Effective Date and on the last day of each
quarterly period occurring three, six, and nine months thereafter until the earlier to occur
of (A) the Employee has received all twelve grants contemplated hereunder for an aggregate
of forty-eight thousand (48,000) shares of common stock, and (B) the termination of the
Executive’s employment by the Employer. All such shares will be fully vested upon grant.
Notwithstanding anything herein to the contrary, no grant of stock will be made hereunder if
the Executive fails to commence employment with the Employer on the Effective Date, and no
additional grants of stock will be made hereunder as of and after any termination of the
Executive’s employment by the Employer.

§4. Facilities and Expenses.

(a) Facilities. The Employer will furnish the Executive with such office space,
equipment, supplies, and such other facilities and personnel as appropriate for the performance of
the Executive’s duties under this Agreement. The Executive will relocate to a suitable location in
the Ohio Valley within a reasonable period of time after the Effective Date.

(b) Vehicle. The Employer will provide to Executive a monthly automobile allowance
of $600 and full automobile insurance coverage.

(c) Expenses. The Employer will reimburse the Executive for all reasonable and
necessary out-of-pocket expenses incurred by the Executive in connection with the performance of
services under this Agreement, subject to any recordkeeping, reporting or similar requirements
imposed pursuant to policies and procedures of the Employer in effect from time to time. The
Employer may, at its option, reimburse the Executive for the costs and expenses of cell phone and
BlackBerry service or provide the Executive with a cell phone and BlackBerry to be billed directly
to the Employer. All rights and obligations under this §4(c) will be consistent with the general
policies of the other affiliates of the Employer.

§5. Vacations and Holidays.

The Executive will be entitled to five (5) weeks paid vacation each calendar year in
accordance with the vacation policies of the Employer in effect for its executive officers from
time to time. Vacation must be taken by the Executive at such time or times as will be determined
to be mutually convenient for both the Executive and the Employer. The Executive will also be
entitled to the paid holidays and other paid leave set forth in the Employer’s policies. Vacation
days and holidays during any year that are not used by the Executive during such year may not be
used in any subsequent year.

§6. Termination.

(a) Termination upon Death. If the Executive dies during the Employment Period, this
Agreement will terminate, except that the representative of the Executive’s estate will be entitled
to receive the compensation herein provided for the month in which death occurs, together with all
amounts accrued and payable under §§3 and 5 hereof, except as otherwise stated herein.

(b) Termination upon Disability. If during the Employment Period, the Executive becomes
physically or mentally disabled, whether totally or partially, so that the Executive is unable
substantially to perform his services hereunder for (i) a period of six consecutive months, or (ii)
for shorter periods aggregating six months during any consecutive twelve month period (the
Executive’s disability for such period “Disability”), the Employer may, at its option, at any time
after the last day of the six consecutive months of Disability or the day on which such shorter
periods of Disability during any consecutive twelve month period equal an aggregate of six months,
by written notice to the Executive, terminate the Employment Period. Nothing in this §6(b) will be
deemed to extend the Employment Period. Upon such termination, the Executive will be entitled to
receive within 30 days the compensation herein provided for the month in which termination of the
Executive as a result of Executive’s Disability occurs, together with amounts accrued and payable
under §§3 and 5 hereof, except as otherwise stated herein.

(c) Termination for Cause. If the Executive (i) neglects his duties hereunder and such
neglect is not discontinued promptly after written notice thereof; or (ii) commits an act of fraud
against, or the misappropriation of property belonging to, the Employer or any affiliate of the
Employer or an act of dishonesty materially affecting the business or affairs of the Employer or
any affiliate of the Employer or which is materially injurious to the Employer or any affiliate of
the Employer; or (iii) appropriates (or attempts to appropriate) a material business opportunity of
the Employer or any affiliate of the Employer, including attempting to secure or securing any
personal profit in connection with any transaction entered into on behalf of the Employer or any
affiliate of the Employer; or (iv) is convicted of or pleads “guilty” or “no contest” to any felony
or act of moral turpitude, other than an automobile-related or support-related action or
proceeding; or (v) fails or refuses to comply with the reasonable written policies of the Employer
or directives of the executive officers of the Employer that are not inconsistent with his position
and such failure is not discontinued promptly after written notice thereto; or (vi) breaches
affirmative or negative covenants or undertakings hereunder and such breach is not remedied
promptly; or (vii) fails or refuses to comply with the written policies of Metalico, including,
without limitation, the Metalico Code of Business Conduct and Ethics and the Metalico Insider
Securities Trading Policy (the terms of clauses (i) through (vii) of this §6(c) referred to
collectively as “Cause”); then the Employer may at any time, by not less than ten (10) days written
notice to the Executive, terminate the Employment Period. Except for accrued and unpaid salary and
vacation (which will be paid within 30 days of termination) together with accrued and vested
options to the date of termination, the Executive will have no right to receive unvested options,
grants or any compensation or benefits from the Employer hereunder.

(d) Termination by the Employer Without Cause. If the Executive’s employment hereunder is
terminated by the Employer without Cause prior to the end of the Employment Period, the Employer
will continue to pay to the Executive, as liquidated damages and not as a penalty, all Salary to
which the Executive would otherwise have been entitled hereunder for the period of twelve (12)
months commencing on the date of termination. It is expressly understood and agreed that the
Executive will not be obligated to mitigate the damages caused by a termination of this employment
for which he could be entitled to such liquidated damages. It is further expressly agreed and
understood that said payments of liquidated damages will be in complete satisfaction of any and all
claims, liabilities and damages of any nature whatsoever against the Employer or its affiliates
relating to or growing out of the Executive’s employment or the Employer’s termination without
Cause of the Executive’s employment, except as otherwise stated herein. Upon any termination by
the Employer without Cause, all unvested options and stock grants granted the Executive will
immediately be 100% fully vested. No options or stock grants will be forfeited as a result of such
termination.

(e) Voluntary Termination.

(i) General. In the event the Executive voluntarily terminates his employment with the
Employer, other than for Good Reason as provided in §6(e)(ii), during or after the
Employment Period, the Executive will have no right to receive any compensation or benefit
from the Employer hereunder, except for accrued and unpaid compensation due on the date of
such termination (which will be paid within 30 days of such termination) and reimbursement
of appropriately documented expenses incurred prior to the date of such termination (which
will be paid in accordance with the Employer’s reimbursement procedures as then in effect),
except as otherwise expressly stated herein.

(ii) Good Reason. In the event the Executive voluntarily resigns from his employment
with the Employer during the Employment Period for Good Reason (as hereinafter defined), the
Executive will be entitled to all compensation and benefits provided under §6(d) as though
such resignation were deemed to be a termination thereunder.

(iii) Definitions.

“Change in Control” means the occurrence of: (A) the acquisition at any time by
a “person” or “group” (as those terms are used in Sections 13(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (excluding, for
this purpose, the Employer or any subsidiary or any employee benefit plan of the
Employer or any subsidiary) of beneficial ownership (as defined in Rule 13d-3 under
the Exchange Act) directly or indirectly, of securities representing 50% or more of
the combined voting power in the election of directors of the then-outstanding
securities of the Employer or Metalico or any successor of the Employer or Metalico;
(B) the termination of service as directors, for any reason other than death or
disability, from the Board of Directors of the Employer, during any period of two
(2) consecutive years or less, of individuals who at the beginning of such period
constituted a majority of the Board, unless the election of or nomination for
election of each new director during such period was approved by a vote of at least
two-thirds of the directors still in office who were directors at the beginning of
the period; (C) approval by the stockholders of the Employer or Metalico of any
merger or consolidation or statutory share exchange as a result of which the common
stock of Employer or Metalico shall be changed, converted or exchanged (other than a
merger or share exchange with a wholly-owned subsidiary of Metalico) or liquidation
of the Employer or Metalico or any sale or disposition of 50% or more of the assets
or earning power of the Employer or Metalico except for a tax free distribution of
any portion of the Employer to its shareholders; or (D) approval by the stockholders
of the Employer or Metalico of any merger or consolidation or statutory share
exchange to which the Employer or Metalico is a party as a result of which the
persons who were stockholders of the Employer or Metalico immediately prior to the
effective date of the merger or consolidation or statutory share exchange shall have
beneficial ownership of less than 50% of the combined voting power in the election
of directors of the surviving corporation following the effective date of such
merger or consolidation or statutory share exchange. “Change in Control” shall not
include any reduction in ownership by the Employer of a subsidiary of the Employer
or any other entity designated by the Board in which the Employer owns at least a
50% interest (including, but not limited to, partnerships and joint ventures.)

“Good Reason” means the occurrence, without the Executive’s prior written
consent, of any of the following events:

(A) a substantial reduction of the Executive’s duties,
responsibilities, or status as a manager (except temporarily during any
period of disability), or the Executive being required to report to any
person or persons other than the Board , the President and Chief Executive
Officer of the Employer, or the Executive Vice President of the Employer,
provided that, if the Executive retains similar title, authority, and status
with the Employer or any entity that acquires the Employer (or any affiliate
or subsidiary of such entity) following a Change in Control, the parties
agree that any change in the title of the Executive shall not constitute a
significant reduction of the Executive’s duties and authorities hereunder;

(B) a breach by the Employer of any material term of this Agreement; or

(C) a significant change in the Employer’s operating approach, methods,
tactics, or philosophy following a Change in Control;

provided that a termination by the Executive with Good Reason will be effective only
if the Executive delivers a notice of termination for Good Reason to the Employer,
and the Employer within sixty (60) days following its receipt of such notification
has failed to cure the circumstances giving rise to Good Reason.

§7. Non-Disclosure Covenant; Executive Inventions.

(a) Acknowledgments by the Executive. The Executive acknowledges that (i) during the
Employment Period and as a part of his employment, the Executive will be afforded access to
Confidential Information; (ii) public disclosure of such Confidential Information could have an
adverse effect on the Employer and its business; (iii) because the Executive possesses substantial
technical expertise and skill with respect to the Employer’s business, the Employer desires to
obtain exclusive ownership of each Executive Invention, and the Employer will be at a substantial
competitive disadvantage if it fails to acquire exclusive ownership of each Executive Invention;
and (iv) the provisions of this §7 are reasonable and necessary to prevent the improper use or
disclosure of Confidential Information and to provide the Employer with exclusive ownership of all
Executive Inventions.

(b) Agreements of the Executive. In consideration of the compensation and benefits to
be paid or provided to the Executive by the Employer under this Agreement, the Executive covenants
as follows:

(i) Confidentiality.

(A) During the Employment Period and the Post-Employment Period, the Executive
will hold in confidence the Confidential Information and will not disclose it to any
person except (I) with the specific prior written consent of the Employer, (II) as
required in connection with the performance of his duties hereunder, (III) as
necessary to comply with any legal process, provided that the Executive will provide
the Employer with prompt notice of such legal process and the documents requested
(unless such disclosure is prohibited by the terms of the applicable process) so
that the Employer may seek an appropriate protective order and/or waive the
Executive’s compliance with the provisions of this Agreement, or (IV) as otherwise
expressly permitted by the terms of this Agreement.

(B) Any trade secrets of the Employer will be entitled to all of the
protections and benefits under any trade secrets law as adopted by the State of New
Jersey and any other applicable law. If any information that the Employer deems to
be a trade secret is found by a court of competent jurisdiction not to be a trade
secret for purposes of this Agreement, such information will, nevertheless, be
considered Confidential Information for purposes of this Agreement. The Executive
hereby waives any requirement that the Employer submit proof of the economic value
of any trade secret or post a bond or other security.

(C) None of the foregoing obligations and restrictions applies to any part of
the Confidential Information that: (I) can be demonstrated to have been in the
public domain prior to the date hereof; (II) subsequently becomes part of the
public domain by publication or otherwise and not due to any unauthorized act or
omission on the Executive’s part; (III) was supplied to the Executive by a third
party who did not obtain it from Employer under any obligation of confidentiality
and who discloses the information or data without restriction as to the confidential
treatment thereof; (IV) can be demonstrated to have been known to the Executive from
a source other than the Employer or its agents or representatives at the time it was
received from the Employer; or (V) is required to be disclosed as part of any legal
process, provided that the Executive will provide the Employer with prompt notice of
such legal process and the documents requested (unless such disclosure is prohibited
by the terms of the applicable process) so that the Employer may seek an appropriate
protective order and/or waive the Executive’s compliance with the provisions of this
Agreement.

(D) The Executive will not remove from the Employer’s premises (except to the
extent such removal is for purposes of the performance of the Executive’s duties at
home or while traveling, or except as otherwise specifically authorized by the
Employer) any document, record, notebook, plan, model, component, device, or
computer software or code, whether embodied in a disk or in any other form
(collectively, the “Proprietary Items”). The Executive recognizes that, as between
the Employer and the Executive, all of the Proprietary Items, whether or not
developed by the Executive, are the exclusive property of the Employer. Upon
termination of this Agreement by either party, or upon the request of the Employer
during the Employment Period, the Executive will return to the Employer all of the
Proprietary Items in the Executive’s possession or subject to the Executive’s
control, and the Executive will not retain any copies, abstracts, sketches, or other
physical embodiment of any of the Proprietary Items.

(ii) Executive Inventions. Each Executive Invention will belong exclusively to
the Employer. The Executive acknowledges that all of the Executive’s writing, works of
authorship, and other Executive Inventions are works made for hire and the property of the
Employer, including any copyrights, patents, or other intellectual property rights
pertaining thereto. If it is determined that any such works are not works made for hire,
the Executive hereby assigns to the Employer all of the Executive’s right, title, and
interest, including all rights of copyright, patent, and other intellectual property rights,
to or in such Executive Inventions. The Executive covenants that he will promptly:

(A) disclose to the Employer in writing any Executive Invention;

(B) assign to the Employer or to a party designated by the Employer, at the
Employer’s request and without additional compensation, all of the Executive’s right
to the Executive Invention for the United States and all foreign jurisdictions;

(C) execute and deliver to the Employer such applications, assignments, and
other documents as the Employer may request in order to apply for and obtain patents
or other registrations with respect to any Executive Invention in the United States
and any foreign jurisdictions;

(D) sign all other papers necessary to carry out the above obligations; and

(E) give testimony and render any other assistance but without expense to the
Executive in support of the Employer’s rights to any Executive Invention.

(c) Disputes or Controversies. The Executive recognizes that should a dispute or
controversy arising from or relating to this Agreement be submitted for adjudication to any court,
arbitration panel, or other third party, the preservation of the secrecy of Confidential
Information may be jeopardized. The Executive and the Employer will use their best efforts to
cause all pleadings, documents, testimony, and records relating to any such adjudication to be
maintained in secrecy and to be available for inspection by the Employer, the Executive, and their
respective attorneys and experts, and the Executive and the Employer will use their best efforts to
cause their respective attorneys and experts to agree, in advance and in writing, to receive and
maintain all such information in secrecy, except as may be limited by such attorneys and experts in
writing.

§8. Non-Competition and Non-Interference.

(a) Acknowledgments by the Executive. The Executive acknowledges that: (i) the
services to be performed by him under this Agreement are of a special, unique, unusual,
extraordinary, and intellectual character; (ii) the Employer competes with other businesses that
are or could be located in any part of the United States; and (iii) the provisions of this §8 are
reasonable and necessary to protect the Employer’s business.

(b) Covenants of the Executive. In consideration of the acknowledgments by the
Executive, and in consideration of the compensation and benefits to be paid or provided to the
Executive by the Employer, the Executive covenants that he will not, directly or indirectly:

(i) during the Employment Period, except in the course of his employment hereunder,
and, except as provided below, during the Post-Employment Period, engage or invest in, own,
manage, operate, finance, control, or participate in the ownership, management, operation,
financing, or control of, be employed by, associated with, or in any manner connected with,
lend the Executive’s name or any similar name to, lend the Executive’s credit to or render
services or advice to, any business whose products or activities compete in whole or in part
with the business of the Employer in the Non-Competition Territory; provided, however, that
the Executive may purchase or otherwise acquire up to (but not more than) one percent of any
class of securities of any enterprise (but without otherwise participating in the activities
of such enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under §12(g) of the Securities Exchange Act of 1934, and
provided further that nothing herein will limit the Executive’s equity ownership in the
Employer or Metalico;

(ii) whether for the Executive’s own account or for the account of any other person, at
any time during the Employment Period or the Post-Employment Period, solicit business of the
same or similar type being carried on by the Employer, from any person known by the
Executive to be a customer of the Employer, whether or not the Executive had personal
contact with such person during and by reason of the Executive’s employment with the
Employer;

(iii) whether for the Executive’s own account or the account of any other person at any
time during the Employment Period and the Post-Employment Period, (A) solicit, employ, or
otherwise engage as an employee, independent contractor, or otherwise, any person who is or
was an employee of the Employer at any time during the Employment Period or in any manner
induce or attempt to induce any employee of the Employer to terminate his employment with
the Employer; or (B) interfere with the Employer’s relationship with any person, including
any person who at any time during the Employment Period was an employee, contractor,
supplier, or customer of the Employer ; or

(iv) at any time during or after the Employment Period, disparage Metalico, the
Employer, or any of their respective shareholders, directors, officers, employees,
affiliates, or agents.

If any covenant in this §8(b) is held to be unreasonable, arbitrary, or against public policy,
such covenant will be considered to be divisible with respect to scope, time, and geographic area,
and such lesser scope, time, or geographic area, or all of them, as a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not against public policy, will be
effective, binding, and enforceable against the Executive.

The period of time applicable to any covenant in this §8(b) will be extended by the duration
of any violation by the Executive of such covenant, provided that such period will not be extended
solely by an allegation of a violation that is not reasonably substantiated or a violation that is
expressly waived by the Employer.

The Executive will, while the covenant under this §8(b) is in effect, give notice to the
Employer, within ten days after accepting any other employment, of the identity of the Executive’s
employer. The Employer or any affiliate of the Employer may notify such employer that the
Executive is bound by this Agreement and, at the Employer’s election, furnish such employer with a
copy of this Agreement or relevant portions thereof.

§9. General Provisions.

(a) Injunctive Relief and Additional Remedy. The Executive acknowledges that the
injury that would be suffered by the Employer as a result of a breach of the provisions of this
Agreement (including any provision of §§7 and 8) would be irreparable and that an award of monetary
damages to the Employer for such a breach would be an inadequate remedy. Consequently, the
Employer will have the right, in addition to any other rights, at law or in equity, it may have, to
obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically
enforce any provision of this Agreement and the Employer will not be obligated to post bond or
other security in seeking such relief.

(b) Covenants of §§7 and 8 Are Essential and Independent Covenants. The covenants by
the Executive in §§7 and 8 are essential elements of this Agreement. The Executive’s covenants in
§§7 and 8 are independent covenants and the existence of any claim by the Executive against the
Employer under this Agreement or otherwise, or against any affiliate of the Employer, will not
excuse the Executive’s breach of any covenant in §§7 or 8. If the Executive’s employment hereunder
expires or is terminated, this Agreement will continue in full force and effect as is necessary or
appropriate to enforce the covenants and agreements of the Executive in §§7 and 8.

(c) Representations and Warranties by the Executive. The Executive represents and
warrants to the Employer that the execution and delivery by the Executive of this Agreement do not,
and the performance by the Executive of the Executive’s obligations hereunder will not, with or
without the giving of notice or the passage of time, or both: (i) violate any judgment, writ,
injunction, or order of any court, arbitrator, or governmental agency applicable to the Executive;
or (ii) conflict with, result in the breach of any provisions of or the termination of, or
constitute a default under, any agreement to which the Executive is a party or by which the
Executive is or may be bound.

(d) Waiver. The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by either party in exercising any right,
power, or privilege under 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 applicable law, (i) no claim or
right arising out of 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 the other party; (ii) no
waiver that may be given by a party will be applicable except in the specific instance for which it
is given; and (iii) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such 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.

(f) Binding Effect; Delegation of Duties Prohibited. This Agreement will inure to the
benefit of, and will be binding upon, the parties hereto and their respective successors, assigns,
heirs, and legal representatives, including any entity with which the Employer may merge or
consolidate or to which all or substantially all of its assets may be transferred, provided that
any such successor-in-interest or transferee agrees to comply with and be bound by all of the terms
and conditions of this Agreement. The duties and covenants of the Executive under this Agreement,
being personal, may not be delegated.

(g) Employer Policies. The Executive understands and agrees that, as an employee of
the Employer, the Executive is and will be subject to the policies and procedures of the Employer,
expressly including without limitation the Metalico, Inc. Code of Business Conduct and Ethics and
the Metalico, Inc. Insider Securities Trading Policy.

(h) Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder will be in writing and will be deemed given
only if delivered as hereinafter provided, as follows:

	 	 	 
	If to the Employer, to:	 	METALICO, INC.
	 	 	186 North Avenue East

Cranford, New Jersey 07016

Attention:President

Telephone:(908) 497-9610

Fax: (908) 497-1097

Email:

	If to the Executive, to:
	 	KENNETH P. MUELLER

	 	 	 	 	 
	
 
	 	 	,	 
	 

	 	 	 	 
	Telephone:

Fax:

Email:

	 	(      )     

(      )     

or to such other address as the addressee may have specified in a notice duly given to the sender
as provided herein. Each such notice, request or other communication will be given (i) by hand
delivery, (ii) by U.S. mail, (iii) by nationally recognized courier service, or (iv) by facsimile,
receipt confirmed. Each such notice, request or communication will be effective (i) if delivered
by hand or by nationally recognized courier service, when delivered at the address specified in
this §9(h) (or in accordance with the last unrevoked written direction from such party), (ii) if
sent by mail, three (3) days after deposit therein, and (iii) if given by facsimile when such
facsimile is transmitted to the facsimile number specified in this Section (or in accordance with
the latest unrevoked written direction from such party), and the appropriate confirmation is
received. All notices, requests, demands, claims, and other communications hereunder will be in
writing.

(i) Entire Agreement; Amendments. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all prior agreements
and understandings, oral or written, between the parties hereto with respect to the subject matter
hereof. This Agreement may not be amended orally, but only by an agreement in writing signed by
the parties hereto.

(j) Governing Law. This Agreement will be governed by the laws of the State of New
Jersey without regard to conflicts of laws principles.

(k) Section Headings, Construction. The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or interpretation. All
references to “Section” or “Sections” refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this Agreement will be construed to be of
such gender or number as the circumstances require. Unless otherwise expressly provided, the word
“including” does not limit the preceding words or terms.

(l) Severability. If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement will remain in full
force and effect. Any provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or unenforceable.

(m) Counterparts. This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

(n) IRS §409A Compliance. Any payments made pursuant to this Agreement will be
subject to any tax or similar withholding requirements under applicable federal, state or local
employment or income tax laws or similar statutes or other provisions of law then in effect. This
Agreement is intended to comply with the requirements of Section 409A of the U.S. Internal Revenue
Code, as amended (the “Code”) and the regulations thereunder (“Section 409A”). To the extent that
any provision in this Agreement is ambiguous as to its compliance with Section 409A, the provision
will be interpreted in a manner so that no payment due to the Executive hereunder will be deemed
subject to an “additional tax” within the meaning of Section 409A(a)(1)(B) of the Code. For
purposes of Section 409A, each payment made under this Agreement will be treated as a separate
payment. Notwithstanding anything contained herein to the contrary, the Executive will not be
considered to have terminated employment with the Employer for purposes of this Agreement unless
the Executive has incurred a “termination of employment” from the Employer within the meaning of
Treasury Regulation §1.409A-1(h)(1)(ii) promulgated under Section 409A. Notwithstanding the
foregoing, if applicable and necessary to comply with the restriction in Section 409A(a)(2)(B) of
the Code concerning payments to “specified employees,” any payment made to the Executive pursuant
to this Agreement on account of the Executive’s separation from service that would otherwise be due
hereunder within six months after such separation from service will nonetheless be delayed until
the first business day of the seventh month following the Executive’s separation from service. In
no event may the Executive, directly or indirectly, designate the calendar year of any payment.
All reimbursements provided under this Agreement will be made or provided in accordance with the
requirements of Section 409A, including, where applicable, the requirement that (i) any
reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period
of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during
a calendar year may not affect the expenses eligible for reimbursement in any other calendar year,
(iii) the reimbursement of an eligible expense will be made on or before the last day of the
calendar year following the year in which the expense is incurred, and (iv) the right to
reimbursement is not subject to liquidation or exchange for another benefit. The Executive further
acknowledges that, while this Agreement is intended to comply with Section 409A, any tax liability
incurred by the Executive under Section 409A is solely the responsibility of the Executive.

(o) Arbitration. Either party hereto will have the option of referring any claim or
dispute to arbitration by written notice to the other party within sixty (60) calendar days (or
such longer period of time as may be agreed to by the parties) following the giving of any written
notice of the claim or dispute hereunder, or the initiation of litigation by either party against
any other party (the “Arbitration Referral Period”). If the matter is referred to arbitration,
each party will select an arbitrator and the two so selected will agree on a third arbitrator. The
arbitration will be pursuant to the Rules of the American Arbitration Association and will be
conducted in Buffalo, New York or such other location in New York as the parties may agree upon.
Judgment upon any resulting arbitration award may be entered in any court of competent
jurisdiction. As part of such award, the arbitrators will establish their fees and expenses in
connection therewith and allocate equally such fees and expenses between the parties, who will
promptly pay their equal shares. Any award will be a conclusive determination of the matter and
either party may reduce such award to a judgment. If neither party properly refers the matter to
arbitration prior to the expiration of the Arbitration Referral Period, then the parties will be
free to pursue such remedies as may be available at law or in equity.

IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement as of
the date first written above.

	 	 	 
	Employer:

	 	Executive:
	METALICO, INC.

	 	

	By: /s/ Carlos E. Agüero

	 	/s/ Kenneth P. Mueller
	 

	 	 
	Carlos E. Agüero

	 	KENNETH P. MUELLER
	Presidentexhibit10-32.htm

Exhibit 10.32

 

AGREEMENT FOR THE PURCHASE OF ALL

 

 OF THE CAPITAL STOCK OF

 

MOODY CONSTRUCTION & SONS, INC.

 

THIS AGREEMENT FOR THE PURCHASE OF ALL OF THE CAPITAL STOCK OF MOODY CONSTRUCTION, INC. (the “Agreement") is made this 3rd day of February 2011 (the "Effective Date"), by and between Douglas W. Moody ("Seller") both as sole proprietor of, and doing business as, Moody Construction & Sons, and as sole shareholder of Moody Construction & Sons, Inc. a Colorado corporation ("Moody Construction & Sons, Inc." or the "Company") and GeoBio Energy. Inc., a publicly traded Colorado corporation ("GeoBio" or the “Purchaser"). The parties acknowledge that previously Seller was a sole proprietorship hut as of January 1, 2011 all assets of the business of Moody Construction & Sons, a sole proprietorship, were contributed to Moody Construction & Sons, Inc. and Seller will sell all (100%) of the issued and outstanding Capital Stock (defined below) of Moody Construction & Sons, Inc. to Purchaser. Hereinafter, GeoBio and Seller may be referred to individually as the "Party" or collectively as the "Parties".

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and reprcsel1t~ltions contained herein, the Parties agree as follows:

 

ARTICLE I

 

SALE OF SHARES OF CAPITAL STOCK AND PURCHASE PRICE

 

1.01                 Sale and Purchase of Capital Stock and Earnest Money.

 

1.01.1                      Sale and Purchase of Capital Stock. Subject to the terms and conditions of this Agreement, Seller agrees to sell to GeoBio, and GeoBio agrees to purchase from Seller, one hundred percent (100%) of the total issued and outstanding capital stock of Moody Construction, Inc., as well as all securities convertible into capital stock and all capital stock equivalents of Moody Construction & Sons, Inc. as of the Effective Date, which are held by Seller in such amounts as set forth in Schedule 1.01 (herein collectively referred to as the "Capital Stock"), and which total amount of Capital Stock shall not change between the Effective Date and tile Closing Date (defined below). Purchaser hereby agrees that this transaction is a purchase and sale of Capital Stock and Purchaser will not elect to treat this transaction as an asset sale under Internal Revenue Code Section 338(h)(IQ). Purchaser hereby indemnifies Seller from all adverse tax consequences from Purchaser's breach of this covenant, whether intentional or inadvertent.

 

  

  

  

1.01.2 Earnest Money Payment. Within thirty (30) business days following the Effective Date hereof, Purchaser will pay to Escrow Agent, defined and described in Section 1.04 herein, the sum of fifty thousand U.S. Dollars ($50,000.00) as an earnest money deposit (the "Earnest Money Deposit") and part payment of the Closing Date Purchase Price for the Capital Stock, The Earnest Money Deposit shall be deposited by the Escrow Agent into an interest-bearing account. All interest earned on the Earnest Money Deposit shall be held and applied by the Escrow Agent in accordance with the terms of this Agreement.

 

l.01.3 Due Diligence. The obligations of Purchaser hereunder are conditional upon Purchaser determining 011 or before expiration of the Due Diligence Period (defined below} that Purchaser is satisfied with all aspects of the Company that it is acquiring by purchase of the Capital Stock and with all aspects of the Capital Stock itself.

 

1.01.4 Due Diligence Contingency and Due Diligence Period. The foregoing contingency is referred to herein as the "Due Diligence Contingency" and the term "Due Diligence Period" as used in this Agreement means the period of time commencing with the Effective Date of this Agreement and expiring at 5:00 P,M, in Meeker, Colorado, sixty (60) days after the Effective Date.

 

l.01.5 Satisfaction or Waiver of Due Diligence Contingency, If Purchaser is satisfied with the results of its inspection of the Company and it, review of Seller's Information (as described in Section 1.01.7), then Purchaser will give written notice (the "Approval Notice") of such approval to Seller and the Escrow Agent of such fact on or before the expiration of the Due Diligence Period. Upon the giving of the Approval Notice, the Due Diligence Contingency will be considered satisfied or waived, the Earnest Money Deposit will be non refundable except upon default of Seller at Closing, and the Parties will proceed 10 Closing in accordance with the terms of this Agreement.

 

1.01.6 Termination Based on Due Diligence Inspection of Property and Satisfaction of Due diligence Contingency. If, for any reason, in its sole discretion, Purchaser does not approve of its inspection of the Company and its review of Seller's Information, then, at any time prior to the expiration of the Due Diligence Period, Purchaser may give written notice (the "Termination Notice") of such disapproval to Seller and the Escrow Agent and of its intent to terminate this Agreement. Upon such timely delivery of the Termination Notice, this Agreement shall terminate and upon such • timely termination of this Agreement, the Earnest Money Deposit will be returned by the Escrow Agent to Purchaser, und, upon return of the Earnest Money Deposit, this Agreement will be of no further force or effect. If Purchaser fails to give the Termination Notice before the end of the Due Diligence Period, then this Agreement will not terminate but will be in full force and effect, the Earnest Money Deposit will be non-refundable except upon Seller's default at Closing, the Due Diligence Contingency will be considered satisfied or waived, and the Parties will proceed to Closing in accordance with the terms of this Agreement.

 

1.01.7                      Inspection of the Company. During the Due Diligence Period (and thereafter if this Agreement is not terminated as provided above), Purchaser will have the right to examine all books, records and files of Seller relating to the Company and Moody Construction & Sons, a sole proprietorship, which are in the possession or control of Seller ("Seller's Information") and the right to make such inspections, investigations and tests as Purchaser may elect to make or obtain, which shall include all equipment, all master service agreements with customer and work orders as well as all accounts receivable and employee records. Purchaser may make such inquiries as Purchaser deems appropriate of Seller’s consultants or contractors with due regard for not alarming customers or suppliers. Purchaser may not contact any customer of the Company except through the office of Seller. Seller agrees to make all such books, records and files available to Purchaser, Purchaser's attorneys, and other representatives at any time during business hours upon reasonable notice from Purchaser and to cause its consultants and contractors to furnish Purchaser and its agents with any information and copies of documents reasonably requested by Purchaser. Purchaser will indemnify, defend, protect and hold Seller and the Company harmless from any claims, liabilities, damages or expenses (including reasonable attorneys' fees and costs) arising out of or incurred in connection with the investigation of the Company by Purchaser or its agents, designees, or representatives hereunder or arising from Or ill connection with any and all damage to property or persons arising out of the due diligence activities by Purchaser or its agents, designees or representatives.

 

1.01.8                      Guaranties. Seller currently has executed personal guaranties or is otherwise personally liable for certain debts and loans of the Company and a condition to Closing shall be that Purchaser shall provide, at Closing, either a substitute guarantor for all debts that Seller has guaranteed, Or evidence of alternative arrangements, as more fully set forth in Section 2.05(c),

 

	
  

	
1.02 Closing Date Payment and Adjustments.

 

	
  

	
At the Closing, GeoBio shall pay to Seller, as the Closing Date payment, an amount equal to the product of (i) the earnings of the Company for the trailing (previous) 12­months prior to the Closing Date ("Earnings" means net income as presented in the statement of operations under generally accepted accounting principles (“GAAP") before interest, taxes, depreciation and amortization for the same period (the "TTM EBITDA") multiplied by (ii) a factor equal to 3.5 ("Cap Rate"). The product of the TTM EBITDA and the Cap Rate described above shall be referred to as the "Closing Date Purchase Price", which shall be subject to the adjustments set forth herein, including the Earn-Out Provisions set forth in Section 1.03 below. Subject to compliance with and satisfaction of the above, the Closing Date Purchase Price shall be payable as follows:

 

 

	
  

	
1.02.1. An amount in cash (the "Closing Date Cash Payment") equal to (i) sixty-six and sixty-seven hundredths percent (66.67%) of the Closing Date Purchase Price, plus. (ii) the amount, if any, by which the Estimated Net Working Capital (defined in Section 1.02.7, below) is greater than the Target Net Working Capital (defined in Section 1.02.6, below), minus (iii) the amount, if any, by which the Target Net Working Capital is greater than the Estimated Net Working Capital plus (iv) any reimbursements provided for in this Agreement such as the, Audit Expense Reimbursement, minus (v) the Earnest Money Deposit. Payment of the Closing Date Cash Payment shall be made by GeoBio to Seller in cash or by wire transfer of immediately available funds to the account designated in advance by Seller.

 

 

	
1.02.2.

	
At Closing, GeoBio shall issue to Seller shares of common stock of GeoBio in an amount equal in value to thirty-throe and thirty-throe hundredths percent (33.33%) of the Closing Date Purchase Price (the "Equity Consideration"). The number of shares to be issued to Seller shall be the lesser of either (I) the quotient resulting from the division of the value of the Equity Consideration by the public, volume weighted average dosing-trading price per share of GeoBio's common stock for the ten (10) trading days immediately prior to the Effective Date and the ten trading days immediately after the Effective Date or (ii) $0.55 per share (the “Average Stock Price"). By way of example, if the value of the equity consideration is $2,000,000.00 USD and the Average Stock Price for the 10 trading days prior to, and after, the Effective Date is ten ($0.10) cents per share, then Seller would be entitled to 20,000,000 shares of GeoBio common stock If, however, the Average Stock Price for the 10 trading days prior 1o, and after, the Effective Date is $0.75 per share, then the Average Stock Price shall be the maximum of $0,55 per share and Seller shall be entitled to 3,636,363 shares of GeoBio common stock, GeoBio shall be responsible for insuring that these shares are authorized and available for issue within 15 days of the Closing Date.

 

 

	
  

	
1.02.3. None of the Closing Date Purchase Price will be paid by Seller financing.

 

 

	
1.02.4.

	
Because the TTM EBITDA will be estimated and calculated as of the Closing Date, the parties anticipate that till adjustment period of approximately thirty (30) days or less (the “Adjustment Period") may be necessary to finalize the accounting related to calculating the actual 'ITM EBITDA through the date of Closing (the "Final TTM EBITDA") and therefore the calculation of the final TTM EBITDA through the date of Closing may result in a different Purchase Price than calculated at Closing. The parties shall cooperate at arriving at a Final TTM EBITDA and calculate a final purchase price ("Adjusted Purchase Price") based upon the Final TTM EBITDA according to the following:

 

 

	
  

	
(i) In the event that the Final TTM EBITDA is greater than the TTM EBITDA, an adjustment will be made such that the number of shares received by Seller under Section 1.02.2 will be increased by thirty-three and thirty-three hundredths percent (33.33%) of the difference between the Adjusted Purchase Price minus the Closing Purchase Price and Purchaser shall transfer the required number of shares. and Purchaser shall pay to Seller an amount in cash equal to sixty-six and sixty-seven hundredths percent (66.67%) of the difference between the Adjusted Purchase Price and the Closing Purchase Price.

 

	
  

	
(ii) In the event that the Final TTM EBITDA is less than the TTM EBITDA, adjustments will be made proportionately, such that the number of shares received by Seller under Section 1.02.2 will be reduced by thirty-three and thit1y-three hundredths percent (33.33%) of the difference between the Closing Purchase Price less the Adjusted Purchase Price and Seller shall transfer back the required member of shares, and Seller shall pay to GeoBio an amount in cash equal to sixty-six and sixty-seven hundredths percent (66.67%) of the difference between the Closing Purchase Price less the Adjusted Purchase Price.

 

 

	
  

	
1.02.5. Schedule 1.02.5(A) reflects all of the existing debts of the Company as of the date of execution hereof and Schedule 1.02.5(B) reflects the long term debts of the Company as of the date of execution hereof, which longer term debts, are secured by equipment. At the Closing, Seller shall estimate the liabilities listed 011 Schedule 1.02.S(A) and Schedule 1.02.5(B) ill accordance with Section 1.02.7 below and the difference between Schedule 1.02.5 (A) and Schedule 1.02.S(B) at Closing shall be referred to as the "Closing Date Current Liabilities.

 

 

	
  

	
1.02.6. "Working Capital" shall be defined as the sum of the Accounts Receivable, plus cash minus Closing Date Current Liabilities less any current portion of long term liabilities plus amounts of cash expended or loans drawn upon to prepare the Company for operations in Wyoming and Montana. "Target Working Capital" shall be defined as $800,000.00 USD. At Closing, the Working Capita1 of the Company shall not be less than the Target Working Capital All work in progress performed through the day prior to Closing, whether billed or not, shall be included in Accounts Receivable and shall be allocated a dollar value, which shall be mutually agreed upon, prior to Closing. Purchaser hereby acknowledges that the Company has plans to open its operations in Wyoming and in Montana to support contracts in place with customers for those areas. Purchaser acknowledges that it will take approximately $200,000.00 in Wyoming and $200,000.00 in Montana to prepare for operations under the said contracts. With respect to the amount of cash Or loans expended to develop Wyoming and Montana prior to Closing, Seller agrees that, prior to Closing, Seller shall supply Buyer with all expenditures made to develop Wyoming and Montana up to $400,000.00 and all amounts in excess of $400,000.00 shall be sent to Buyer for approval.

 

1.02.7. At least five (5) Business Days prior to the Closing Date, Seller shall cause the Company to prepare and deliver to GeoBio, an officer's certificate (the "Estimated Closing Statement") setting forth a good faith estimate of (1) Cash of the Company as of the Closing Date ("Estimated Closing Cash"), (ii) the aggregate amount of Closing Date Current Liabilities of the Company as of the Closing, and (iii) the Working Capital (defined in Section 1.02.6 above) as of the Closing Date ("Estimated Net Working Capital"), in each case with respect to the foregoing clauses (i) through (iii), together with the components and calculations thereof, Purchaser and its representatives shall have an opportunity to review and comment upon, and an opportunity to disagree with, the Estimated Closing Statement. In the event that Purchaser disagrees with the Estimated Closing Statement and its values, the Parties shall proceed to Closing and then follow the procedure set forth, below, with regard to disagreement upon the Closing Statement. As promptly as practicable, but no later than sixty (60) days, after the Closing Date, Purchaser will cause to be prepared and delivered to Seller officer’s certificate (the "Closing Statement") setting forth (i) Cash of the Company as of the Closing Date (the "Actual Closing Cash"), and (ii) the Net Working Capital as of the Closing Date (the Actual Net Working Capital"), in each case, together with the components and calculations thereof. The Closing Statement shall also set forth the amount, if any, by which the Actual Net Working Capital (A) exceeds the Estimated Net Working Capital or (B) is less than the Estimated Net Working Capital. After receipt of the Closing Statement, Seller shall have thirty (30) days to review the Closing Statement and the work papers used in its preparation. The Closing Statement shall become final and binding upon the Parties on the thirtieth (3D''') day following receipt of the Closing Statement by Seller unless Seller gives written notice of their disagreement (a "Notice of Disagreement") to GeoBio prior to such date. Any Notice of Disagreement shall specify those items or amounts as to which Seller disagrees and Seller's proposed computation of the Actual Closing Cash and/or the Actual Net Working Capital. If a Notice of Disagreement is delivered pursuant to this Section, Purchased and Seller shall, during the fifteen (15) days following such delivery, negotiate reasonably and in good faith to reach agreement on the items or amounts disputed by Seller in the Notice of Disagreement. If, during such 15 day period, Purchaser and Seller are unable to reach an agreement, they shall promptly thereafter cause a firm of independent accoulll8nts of nationally recognized standing reasonably satisfactory to Purchaser and Seller (who shall not have any material relationship with Purchaser or Seller) to review (his Agreement and the disputed items or amounts for the purpose of calculating Actual Closing Cash and/or Actual Net Working Capital. [n making such calculation, such independent accountants shall consider only those items or amounts in the Closing Statement as to which the Requisite Seller has disagreed, Such independent accountants shall deliver to Purchaser and Seller, as promptly as practicable, a report setting forth the calculation of Actual Closing Cash and/or Actual Net Working Capital, as applicable. Such report shall be final and binding upon Purchaser and Seller, absent manifest error.  The cost of such independent accountants' review and report shall be horne half by Purchaser and half by Seller. Purchaser will make the work papers and back­up materials used in preparing the Closing Statement, and the books, records, and financial staff of the Company, available to Seller and his accountants and other representatives at reasonable times and upon reasonable notice during the review by Seller of the Closing Statement. Within ten (10) days after the Final Closing Cash has been detell11ined, either by the failure of Seiler to deliver a Notice of Disagreement or following resolution of such Notice of Disagreement in accordance with this Section 1.02.7, Purchaser shall pay to Seller, in accordance with their Allocable Portion, the amount of Final Closing Cash by wire transfer to the account(s) designated in advance in writing by Seller, and such payment shall be deemed an adjustment to the Purchase Price. Within ten (I10) days after the Final Net Working Capital has been detem1ined, either by the failure of Seller to deliver a Notice of Disagreement or following resolution of such Notice of Disagreement in accordance herewith, the Company Or Seller, as the case may be shall make the following payments. If the Final Net Working Capital is greater than the Estimated Net Working Capital, then the Company shall pay to Seller, in accordance with their Allocable Portion, the amount of such difference; or if the' Estimated Net Working Capital is greater than the Final Net Working Capital, then Seller shall pay to the Company the amount of such difference.

 

1.02.8. Exclusions from Sale. Excluded from this sale shall be the following property to which Seller shall retain title and shall assume any debts encumbering such assets. Seller shall indemnify Buyer from all liability for any debts encumbering the assets listed below:

 

a. 972 Loader and associated debt

 

b. 2004 Lowboy Semi Trailer

 

c. 2004 T -800 truck

1.03 Addition to the Closing Date Purchase Price -Additional Purchase Price. In addition to the Adjusted Purchase Price, Seller shall have the opportunity to be paid additional consideration, (the "Additional Purchase Price") for the Capital Stock. At Closing, Seller and the Company shall execute a mutually agreeable employment agreement whereby Seller shall become the President and Chief Executive Officer of the Company, a draft of which is attached hereto. Seller’s right to the Additional Purchase Price shall be based upon the Company's achievement of specified earnings and revenue targets during the twelve (12) month period immediately following the Closing (the "First Year") and the twelve (12) month period immediately following the end of the First Yea" ("Second Year") .

 

a. Calculation of the First Year Earn Out. Within 30 days following the end of the First Year, Purchaser and Seller, as president of the Company, shall cause the Company accountants to calculate the EBITDA for the First Year. To the extent that the Company generated a Firs! Year EBITDA which exceeds the Final TIM EBITDA (the difference between the EBITDA for the First Year and the Final TTM EBITDA shall be referred to as the "First Year Earn Out EBITDA"), Seller shall be entitled to Additional Purchase Price consideration equal to 28% of the product of the Cap Rate (defined above) multiplied by the First Year Earn Out EBIDTA (2&% x (Cap Rate x First Year Earn Out EBIDTA)}. By way of example, if the Final TTM EBITDA is $2,000.000 and the First Year EBITDA is $3,000,000, then the Additional Purchase Price would be $980,000.00 calculated as 28% x (3.5 x ($3,000,000-$2,000,000)).

 

b. Payment of Additional Purchase Price, Within ninety (90) days following the close of the First Year, GeoBio shall deliver the Additional Purchase Price to Seller, The Additional Purchase Price shall he paid 50% in cash and 50% in stock and in the same manner as set forth in Section 1,02.1 (additional cash consideration to be delivered in cash or via wire transfer) and Section 1.02.2 above (additional shares to be authorized, available and delivered within 15 days of determination of the dollar amount of the Additional Purchase Price). The value of the common stock shall be established in accordance with Section 1.02.2 above.

 

c. Calculation of the Second Year Earn Out. Within 30 days of the end of the Second Year, Purchaser and Seller, as President of the Company, shall cause the Company accountants to calculate the EBITDA for the Second Year. To the extent that the Company generated a Second Year EBITDA which exceeds the First Year EBIDTA (the difference between the EBIDTA for the Second Year and the EBITDA for the First Year shall be referred to as the "Second Year Earn Out EBITDA"), Seller shall be entitled to an Additional Purchase Price equal to 5% of the product of the Cap Rate (defined above) multiplied by the Second Year Earn Out EBITDA (5% x (Cap Rate x (Second Year EBITDA·· First Year BBITDA))). By way of example, if the Second Year EBITDA is $6,000,000 and the First Year EBITDA is $5,000,000, then the Additional Purchase Price would be $175.000.00 calculated as 5% x (3,5 x ($6,000,000·$5,000,000)). Seller shall take 100% of such Second Year Additional Purchase Price in GeoBio common stock valued in accordance with Section 1.02.2 above.

 

d. Calculation of the Affiliate EBITDA. To the extent that GeoBio or any business which is owned in whole or in part by GeoBio (a "GeoBio Subsidiary") realizes revenue during the First Y car or Second Year which is the direct or indirect result of the business generated by the Company ("Subsidiary Revenue"), such Subsidiary Revenue shall be added to the First Year EBIIDA and the Second Y car EBITDA as if the Subsidiary Revenue was earned by the Company for its own benefit.

 

1.04 Escrow Agent and Brokers .

 

1.04.1 Escrow Agent. S                                        eller and GeoBio shall appoint, at their mutual approval, an escrow agent (the "Escrow Agent") to coordinate the receipt and distribution of money and documents required by this Agreement.

 

 

1.04.2 Brokers and Agents. Seller and Company have not engaged any broker on their behalf and do not intend to do so, Each party shall bear any and all commissions payable to any broker such party engages on its own behalf and will indemnify the other parties against all liabilities for brokers' fees and commissions, All other transaction fees, including any reasonable fees Charged by the Escrow Agent, shall be borne by Purchaser, except as otherwise specifically provided in this Agreement

 

1.05 Exchange. It is agreed that the Closing Purchase Price and all other documents and money required by Section 5.02 shall be delivered to the Escrow Agent prior to or at Closing and the Escrow Agent shall be responsible for the Closing and delivery of items in accordance with this Agreement

 

1.06 Opening of Escrow. Upon the receipt by the Escrow Agent of Earnest Money Deposit, the escrow shall be opened and in effect.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

The Company and Seller hereby represent and warrant to GeoBio, the following:

 

2.01 Organization. The Company is a corporation duly organized ill the State of Colorado and has all necessary corporate powers to conduct business. All actions taken by the incorporators, directors and/or shareholders of the Company have been valid and in accordance with the laws of the State of Colorado.

 

2.02 Capital. The authorized capital stock of the Company currently consists of one thousand (1,000) shares of common stock, with no par value, of which a total of thousand (l,000) shares have been issued to Seller and are outstanding ("Common Stock"), At the Closing, one hundred percent (100%) of all of the outstanding Capital Stock shall be transferred to GeoBio, Additionally, upon Closing, there will be no outstanding subscriptions, options, rights, warrants, cOtwel1ibie securities, or other agreements or commitments obligating the Company to issue or to transfer from treasury any additional shares of its Capital Stock, Furthermore, Seller represents that they have title to, or the authority to direct, all outstanding shares of the Capital Stock as fully paid and non­assessable and in accordance with the State of Colorado's corporate law and the applicable securities laws of the United States.

 

2.03 Financial Settlements As soon as possible following the Effective Date, but in no event later than thirty (30) days prior to Closing, the Company shall prepare, or undertake to have prepared, at its own expense (the "Audit Expense"), and provide to GeoBio consolidated, audited financial statements prepared in compliance with Generally Accepted Accounting Principles ("GAAP") and audited by a PCAOB registered auditor, whom shall be acceptable to GeoBio, consisting of (i) balance sheets, (ii) the related statements of income and retained earnings, and (iii) statements of cash flow for the Company's fiscal years ending 2008, 2009, and 2010, the four quarters subsequent to the 1110st recent fiscal year end and for the interim period subsequent to the last fiscal quarter, including historic line item detail, on both an accrual basis and a cash flow basis, in compliance with GAAP (the "Financial Statements"). Upon Closing, and as a condition thereof, GeoBio shall reimburse Seller for the final amount of the Audit Expense, which shall not be considered to be part of the Closing Purchase Price or Adjusted Purchase Price (the "Audit Expense Reimbursement"). The Financial Statements shall be attached hereto as Schedule 2.03, and shall be delivered as soon as possible (but not less than sixty (60) days following the Effective Date of this Agreement), with the understanding that the Closing may be delayed 01' cancelled in the event that the Financial Statements are not delivered to GeoBio in a timely fashion.

 

2.04 Absence of Changes. The Company warrants and represents that since the end of its most recent fiscal year. there have been no changes in the financial condition or operations of the Company except for changes in the ordinary course of business or as a result of customary seasonal variations.

 

a. Closing Financial Statements. Any changes to the financial condition of the Company as it is represented in the audited Financial Statements delivered to GeoBio pursuant to Section 2.03 of this Agreement, or absence thereof, shall be evidenced by a set of Closing financial Statements to be submitted to GeoBio at the Closing (the "Closing Financial Statement."), and attached hereto as Schedule 2.04(;\), which Seller shall represent as valid and verifiable by audit at the Closing. A list referred to as "Schedule 2.04(8)". which references the existing and ongoing liabilities to be taken over by GeoBio upon Closing, shall be provided prior to Closing. Schedule 2.04(B) will be deemed accepted by GeoBio, upon GeoBio’s review and signature of Schedule 2.04(B} prior to or at Closing. The Closing Financial Statements shall accurately depict the financial condition of the Company as of the date of the Closing and; subsequent thereto. the Company shall not, except in the ordinary course of business, purchase, or enter into any contracts to purchase, any assets, nor dispose, assign, transfer, or encumber any assets shown on the Closing Financial Statements without the written consent of GeoBio.

 

2.05 Liabilities. The total liabilities of the Company are set forth in Schedule l.02.5(A) and the long term liabilities are set forth on Schedule 1.02.5(B). Seller is selling the Capital Stock of a working company and Purchaser acknowledges that it 1s receiving $800,000.00 in Working Capital and is taking the Company subject to the current and long tel111 liabilities. Additionally, Seller represents;

 

a. The Company is not aware of any pending, threatened or asserted claims lawsuits or contingencies involving Seller or the Company. There is no other dispute of any kind between the Company or Seller and any third party and no such dispute will exist at Closing; and

 

b. The Company shall have good and marketable title thereto to said Assets subject to the liabilities set forth in Schedule 2.04(A).

 

c. During the Due Diligence Period, the Parties shall each use their "best efforts" to remove Seller as a personal guarantor in connection with my obligation of the Company. If a creditor is unable or unwilling to release Seller from personal liability on behalf of the Company, then Purchaser shall (1) substitute Purchaser as guarantor or (2) substitute an alternative personal guarantor or

(3) close that account by paying such liability. Seller and Company shall have no obligation to preserve any credit facility which has Seller as a guarantor and Purchaser shall be responsible for replacing any credit line that Seller must terminate in order to insure that Seller is not personally liable on any Company debts after Closing. Seller and Purchaser any, at Closing, reach an agreement for Seller to remain as guarantor fm' a period of time but with a mutually agreeable fee arrangement and an indemnity from Purchaser.

 

2.06 Tax Returns. The Company represents that it has paid, or will pay by the Closing, all taxes, assessments. and penalties due and payable. No federal tax returns of the Company have been audited by the Internal Revenue Service. There are no present disputes as to the taxes of any nature payable by the Company and as of the Closing there shall be no taxes of any kind due or owing except the following: federal excise taxes and segment fees taxes which will be prorated as of the Closing, and employee payroll taxes subsequent to the last required quarterly payment. A list referred to as "Schedule 2.06(A)" which references the federal excise taxes, segment fees taxes and employee payroll taxes payable by GeoBio upon Closing shall be provided prior to Closing. Schedule 2.06(A) will be deemed accepted by GeoBio upon GeoBio's review and signature of Schedule 2.06(A) at or prior to Closing. Furthermore, as soon as possible following the execution of this Agreement, but in no event later than twenty (20) days prior to Closing, the Company shall provide to GeoBio true and complete copies of the Company’s federal and state income tax returns for its 2007, 2008. and 2009 tax years (the "Tax Returns"). The Tax Returns shall be delivered as soon as possible following the Effective Date of this Agreement, with the understanding that the Closing may be delayed in the event that the Tax Returns are not delivered to GeoBio in a timely fashion.

 

2.07 Ability to Carry Out Obligations. Seller has in his right, power, and authority to enter into, and perform his obligations under this Agreement. The execution and delivery of this Agreement by Seller and the performance by Seller of his obligations hereunder will not cause, constitute, conl1ict with or result in (a) any breach or violation of' any of the provisions of, or constitute a default under, any license, indenture, mortgage, charter, instrument, articles of incorporation, bylaw, or other agreement or instrument to which the Company, its officers, directors or Seller are a party, or by which they may be bound, nor will any consents or authorizations of any party other than those hereto be required, or (b) an event that would result in the creation or imposition of any lien, charge, or encumbrance on any asset of the Company or upon the shares of Capital Stock.

 

2.08 Full Disclosure. To the best of Seller's knowledge, information and belief, none of the representations and warranties made by, or included in, any certificate or memorandum furnished or to be furnished by Seller, the Company, or 011 their behalf, contain or will contain any untrue statement of a material fact, or omit any material fact the omission of which would be misleading.

 

2.09 Contracts and Leases. The Company is not a party to any contract, agreement or lease except as shown and identified on Schedule 2.09, copies of which shall be supplied to GeoBio prior to Closing. No person holds a power of attorney from the Company or Seller, Purchaser is purchasing the Capital Stock in the Company which will be subject to the existing contracts, agreements and leases, including, but not limited to the lease of the yard in Rifle Colorado.

 

2.10 QQ!I1pliance with Laws, To the best of Seller's knowledge, information and belief, the Company has complied with, and is not in violation of, any federal, state, or local statute, law, and/or regulation pertaining to the Company. To the best of Seller's knowledge, information and belief the Company has complied with all federal and state securities laws in connection with the offer, sale, and distribution of its securities.

 

2.11 Litigation. Except as otherwise disclosed herein, the Company is not a party to any existing or pending suit, action, arbitration, or legal, administrative, or other proceeding, or prior, existing, or pending governmental investigation. Furthermore, the Company is not subject to or in default with respect to any order, writ, injunction, or decree of any federal, slate, local, or foreign court, department, agency, or instrumentality.

 

2.12 Conduct of Business. Prior to Closing, the Company shall conduct its business in the normal course and shall not, without the approval of GeoBio, (i) sell, pledge, assign or dispose of any assets, except in the ordinary course of business or as contemplated herein, (ii) amend its Certificate of Incorporation or Bylaws, (iii) redeem or sell stock or other securities (which in no event shall be deemed in the normal course of business), (iv) incr any liabilities, except in the normal course of operations of the business, which term "normal course of operations or business" shall include operations to establish operations in Wyoming and Montana" (v) commit to or issue any options, warrants or shares of Capital Stock or convertible into Capital Stock of the Company, or any Capital Stock equivalents; (vi) enter into any debt, loan, debenture or encumbrance arrangement with respect to the Company or the principal shareholders, officers and directors of the Company except in the ordinary course of business, (vii) acquire any assets or enter into any contract, guarantee obligations of any third party, except in the ordinary course of business, or (viii) enter into any other transaction not in the normal course of business,

 

2,13 Corporate Documents. Copies of each of the following documents, which are true, complete and correct in all material respects, will be submitted by or on behalf of the Company and Seller at or before Closing:

 

(i) All of the Company's Master Service Agreements (and/or similar agreements) between the Company and the Company's customers and clients;

 

(Ii) All of the Company's material contracts;

 

(iii) the Company's Articles of Incorporation;

 

(iv) the Company's Bylaws;

 

(v) Consent of the Board of Directors of the Company to this Agreement, also attached hereto as Schedule 2.l3(v);

 

(vi) List of current Officers and Directors and the resignation(s) of Ofi1c.ers and Directors effective on the Closing Date;

(vii) Balance Sheet together with other Financial Statements described in Section 2.03;

 

(viii) Colorado Corporation Commission Filing Receipt or other documentation to demonstrate good standing with the Stale of Colorado;

 

(ix) Copies of all federal and state income tax returns fur 2007, 2008, and 2009 as required by Section 2.06 of this Agreement;

 

(x) Stock register and stock certificate records of the Company;

 

(xi) Corporate minute book of the Company with all updated entries and filings,

2.14 Corporate Pilings. All minutes, consents, resolutions, licenses, registrations or other documents filed with any federal, state, or local governmental body or agency shall at the Closing be delivered to GeoBio and be valid and in accordance with the laws of the Stale of Colorado.

 

2.15 Title. Seller has good title to the shares of Capital Stock being sold to GeoBio pursuant to this Agreement the shares will be, at the Closing, free and clear of all liens, security interests, pledges, charges, claims, encumbrances and restrictions of any kind. Except as provided in this Agreement, Seller and the Company are not parties to any agreement which offers or grants to any person the right to purchase or acquire any of the shares of the Capital Stock. Seller and the Company are not aware of any applicable local, state or federal law, rule, regulation, 01' decree that would, as a result of the purchasing the shores of Capital Stock by GeoBio, impair, restrict or delay voting rights with respect to the shares of Capital Stock delivered by Seller. Seller shall act in good faith at all times and act expediently to complete the transaction contemplated herein,

 

2.16 Representations. All representations set forth in this Article II shall be true as of the Closing and all such representations shall survive the Closing for a period of two (2) years.

 

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

GeoBio hereby represents and warrants to the Company and Seller, the following;

 

3.01 Authorization and immediately Available Funds. Purchaser represents and warrants to Seller that Purchaser has full power and· authority to enter into this Agreement and that this Agreement constitutes the valid and legally binding obligation of Purchaser. Purchaser represents that it has or will have at Closing immediately available funds either in its possession or available by a credit facility to purchase the Capital Stock from Seller.

 

3.02 Purchase Entirely for Own Account. Purchaser represents and warrants to Seller that Purchaser is acquiring the Capital Stock for investment for Purchaser's own account and not with a view to the resale or distribution thereof, and that Purchaser has no present intention of selling or otherwise effecting a distribution of the same.

 

3.03 Reliance upon Purchaser's Representations. Purchaser understands that the Capital Stock has not been registered under the Securities Act of 1944 (the "Securities Act"), by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof and Regulation D promulgated under the Securities Act, and that Seller's reliance on such exemption is predicated on Purchaser's representations contained in this Agreement.

 

3.04 Investment Experience. Purchaser represents that Purchaser is experienced in evaluating energy related companies such as the Company, is able to fend for itself in transactions such as the one contemplated by this Agreement, has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its prospective investment in Seller, and has the ability to bear the economic risks of the investment.

 

3.05 Receipt of Information. Prior to Closing, Purchaser shall deliver to Seller a signed certification representing that Purchaser has reviewed the financial and corporate documents of the Company and has had an opportunity to ask questions of and to receive answers from Seller and/or the Company regarding those documents as well as all of the Company's activities, prospects and financial condition, which certification shall be attached hereto as Schedule 3.05. The certification shall further represent that Purchaser has had the opportunity to obtain additional information (10 the extent Seller and/or the Company possesses such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of the information furnished to Purchaser or to which Purchaser had access.

 

  

  

  

3.06 Legends. Each certificate representing shares of Capital Stock transferred or issued pursuant to this Agreement shall be endorsed with a legend in substantially the following form, and Purchaser covenants that, except to the extent such restrictions are waived by Seiler, such Purchaser shall not transfer the Capital Stock without complying with the restrictions on transfer described in the legend:

 

"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACT (COLLECTIVELY, THE "SECURITIES LAWS"). THESE SECURITIES HAVE BEEN ACOUIRED FOR INVESTMENT AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS THEY (I) ARE REGISTERED UNDER THE SECURITIES LAWS OR (II) ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES LAWS AND THE CORPORATION IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REOUIRED"

 

3.07 Domicile, Purchaser represents that it has its principal place of business in the State of Georgia.

 

3.08 Capitalization, Upon Closing, the issued and outstanding capital stock of GeoBio shall consist solely of common stock, Any and all preferred stock which may be issued and outstanding as of the Effective Date shall be converted to common stock prior to Closing.

 

3.09 Purchaser's Legal Opinion, Purchaser has received an opinion from its legal counsel that the sale and purchase of the Capital Stock pursuant to this Agreement qualifies for an exemption from registration under Section 5 of the Securities Act of 1933 as a transaction by an issuer not involving any public offering,

 

 

ARTICLE IV

 

INVESTMENT INTENT

 

4.01 Transfer Restrictions, Seller and GeoBio agree that the Capital Stock being acquired pursuant to this Agreement may not be sold, pledged, assigned, hypothecated or otherwise transferred, unless such shares are registered under or in compliance with Rule 144 of the 'Securities Act of 1933 (the "Act") or other exemption from registration under the Act.

 

 

 

ARTICLE V

 

CLOSING

 

5.01 Closing. The Closing of the transaction will occur on or before the date that is ninety (90) days from the Effective Date. at such time and location us mutually agreed to by the Parties.

 

5.02 Documents to be delivered at Closing. As part of the Closing, those documents listed in Section 2.13 of this Agreement, as well as the following, in Conn reasonably acceptable to counsel to the Parties, shall be delivered to the Escrow Agent:

 

a. By Seller:

	
  

	
(i)

	
Stock Certificate #1 representing 1000 shares of common stock no par value which is all of the authorized and all of the issued and outstanding stock of the Company. Stock Certificate #1 represents One hundred percent (100"/0) of the issued and outstanding Capital Stock of Seller, which stock certificate shall be assigned to Purchaser at Closing

 

	
  

	
(ii)

	
Copies of all of the business and corporate records of the Company that are in the possession of Seller or the Company; and

	
  

	
(iii)

	
Such other documents of the Company that arc executed in the normal course of business.

(iv) Fully executed Employment Agreement.

 

(v) Termination of all credit facilities that will not accept termination of Seller's personal guaranty or Purchaser's replacement guarantor and for which the Parties have not made mutually agreeable alternative arrangements.

b. By GeoBio:

(i) The Cash Consideration to be deposited by wire transfer to the Escrow Agent on the day before the Closing;

 

 

(ii) The Equity Consideration, in the form of one stock certificate made out 10 Seller; and

 

 

(iii) The Audit 'Expense Reimbursement, payable in cash.

 

 

(iv) Employment Agreement for Seller which shall be a condition precedent to Closing.

 

(v) Creditors' agreement to accept Purchaser's replacement guarantor or an agreement with Seller for Seller's continuing guaranty.

5.03 Change Directors. Seller shall remain a director of the Company as long as he is employed by the Company under all employment agreement. The Board shall consist of a minimum of three (3) members, one of whom shall be Seller. Seller shall have the authority 10 select senior management and local advisors and consultants.

 

5.04 Employment Agreement. Prior to Closing, the Parties shall negotiate a mutually acceptable employment agreement (the "Employment Agreement") by which Douglas W. Moody, the current President and CEO of the Company, shall remain employed by the Company on a full-time basis, at a salary 0[$200,000.00 per year and with benefits to be mutually agreed upon by the Parties, for a period not less than thirty-six t36) months from the Closing Date and which may be extended thereafter upon terms mutually agreed upon by the Parties. The Parties understand and acknowledge that Seller's right to be paid the Earn-Out Consideration as discussed in Section 1.03, above, shall be conditioned upon Seller's continued employment with the Company and his fulfillment of his obligations under the Employment Agreement. As protection for Seller, however, the Employment Agreement shall provide specific provisions defining "Termination without Cause", and the Parties understand and acknowledge that Seller's Termination without Cause shall have no effect on Seller's right to the Earn-Out Consideration.

ARTICLE VI

 

COVENANTS SUBSEQUENT TO CLOSING

 

6.01 Indispensible Clients.

 

6.01.1 Reduction in Business of an Indispensible Client. To the extent that revenue obtained from any current customer or client represents more than thirty three percent (33%) of the Company's total annual revenue (an "Indispensible Client"), then if such Indispensible Client's business drops more than 25% in the first year and the gross revenue of the Company declines by 25% or more than the gross revenue for the year 2010, then the amount of stock delivered to Seller under Section 1.02.2 shall be adjusted by reducing the Final TIM EBITDA (using the reduced gross revenue figure) and re-calculating the amount of stock due under Section 1.02.2 and by Seller conveying back the appropriate amount of shares.

 

6.01.2 Loss of an Indispensible Client. In the event that there is a loss of an Indispensible Client during the twelve (12) month period following the Closing that is not caused by the failure or inaction of GeoBio to service properly that Indispensible Client, as expressly stated in writing by such Indispensible Client, then Seller shall have 12 months to replace the loss of the indispensible Client and if such Indispensible Client's business cannot be replaced and the gross revenues of the Company have declined due to the loss of the Indispensible Client, then the amount of stock delivered to Seller under Section 1.02.2 shall be adjusted by reducing the Final TTM EBITDA (using the reduced gross revenue figure) and re-calculating the amount of stock due under Section 1.02.2 and by Seller conveying back the appropriate amount of shares.

 

6.02 Non-Compete. Seller, agrees that he shall not compete with the business of the Company, as acquired by Purchaser, nor compete within the Company's industry, defined as performing construction and providing related field services to the oil and gas industry (a "Competing Business"), anywhere in the following states for a period of five (5) years following the Closing:

(i) Colorado

 

(ii) New Mexico

 

(iii) Utah

 

(iv) Arizona

 

(v) Wyoming

 

(vi) Idaho

 

(vii) Montana; and

 

(viii) North Dakota

 

	
6.03

	
Government Approvals. Post-Closing, and in conjunction with the Employment Agreement referenced in Section 5.04 of this Agreement, Seller will cooperate with GeoBio in filing certificates formalizing the business combination contemplated herein with the Stat" of Colorado.

 

ARTICLE VII

 

 

DEFAULT AND REMEDIES

 

 

 

 

7.01 Time Is of the Essence, Time is of the essence of the obligations of the Parties. Neither Party will be considered to be in default of its obligations here under until ten (10) days after notice is given by one Party specifying the obligations the other Part)' has failed to perform; provided however, no notice will be required regarding the obligations to be performed by the Parties at Closing,

 

7.02 GeoBio's Default. If GeoBio defaults in performing its obligations hereunder, Seller will be entitled to terminate this Agreement and have the Earnest Money Deposit paid to Seller as liquidated damages as Seller’s sole and exclusive remedy. Seller will have )10 right \0 an action for specific performance or for money damages or to any other remedy except the payment of such liquidated damage amount. The Parties acknowledge that Seller's damages because of GecBio's default hereunder are difficult to ascertain and agree that the amount of the Earnest Money Deposit represents a reasonable estimate of Seller’s damages,

 

7.03 Seller’s Default If Seller defaults in performing its obligations hereunder, (a) GeoBio may elect to terminate this Agreement, have the Earnest Money Deposit returned to GeoBio and seek specific performance of this Agreement from Seller because of such default. Seller shall have no right to a claim for damages.

 

7.04 Rights of Parties following Termination of Agreement. Upon termination of this Agreement under this Section 7 or any other provision of this Agreement, no Putty thereafter will have any further obligations to the other hereunder except as provided above and except for the payment of any sums or damages upon termination as provided herein,

 

7.05 Arbitration. Any controversy or claim rising out of, or relating to, this Agreement, or the making, performance, or interpretation thereof, shall be settled by arbitration in the State of Colorado, City of Denver, in accordance with the Rules of the American Arbitration Association then existing, and judgment on the arbitration award may be entered ill any court having jurisdiction over the subject matter of the controversy,

 

7.06 Termination, In addition to other remedies on or before the Closing Date, GeoDio and/or Seller may terminate this Agreement only if any of the warranties detailed herein have been breached.

 

7.07 Indemnification. The Parties, jointly and severally, agree to indemnify the other Party against all actual tosses, damages and expenses caused by (i) any material breach of this Agreement or warranty by them or any material misrepresentation contained herein, or (ii) any misstatement of a material fact or omission to state a material fact required to be slated herein or otherwise necessary to make the statements herein not misleading.

 

7.08 Indemnification Non-Exclusive. The foregoing indemnification provision is in addition to, and not in derogation of, any statutory, equitable or common law remedy that may be available to any Party for breach of representation, warranty, covenant or agreement.

 

ARTICLE VIII

 

CONFIDENTIALITY

 

8.01 Confidential Information. Each Party hereto shall treat all non-public confidential and trade secret information received from another Party as confidential, and such Party shall not disclose or use such information in a manner contrary to the purposes of this Agreement or for any purpose other than in connection with the raising of the Financing or otherwise evaluating the transaction contemplated by this Agreement. Moreover, all such information shat! be returned to the other Party in the event this Agreement is terminated. This section shall survive the Closing or any termination of this Agreement.

 

ARTICLE IX

 

MISCELLANEOUS

 

9.01 Captions and Headings. The article and section headings throughout this Agreement are for convenience and reference only, and shall in no way be deemed to define, limit, or add to the meaning of any provision of this Agreement.

 

9.02 No Oral Change, This Agreement and any provision hereof, may not be waived, changed, modified, or discharged orally, but only by an agreement in writing signed by the Party against whom enforcement of any waiver, change, modification or discharge is sought.

 

9.03 Non Waiver. Except as otherwise expressly provided herein, no waiver or: any covenant, condition, or provision of this Agreement shall be deemed to have been made unless expressed in writing and signed by the Party against whom such waiver is charged; and (i) the failure of any Party to insist in anyone or more cases upon the performance of any of the provisions, covenants, or conditions of this Agreement, or to exercise any option herein contained, shall not be construed as a waiver or relinquishment for the future of any such provisions, covenants, Or conditions; (ii) the acceptance of performance of anything required by this Agreement to he performed with the knowledge of the breach or failure of a covenant, condition, or provision hereof shall not be deemed a waiver of such breach or failure; and (iii) no waiver by any Party of one breach by another Paty shall be construed as a waiver with respect to any other or subsequent breach.

 

9.04 Time of Essence. Time is of tile essence of this Agreement and of each and every provision hereof.

 

9.05 Entire Agreement. This Agreement, including any and all attachments hereto, if any, contains the entire Agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings.

 

9.06 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. facsimile signatures will be acceptable to all Parties.

 

9.07 Notices, All notices, requests, demands, and other communications under this Agreement shall be ill writing and shall be deemed to have been duly given on the date of service if served personally on the Party to whom notice is to be given, or all the third day after mailing if mailed to the Party to whom notice is (0 be given, by first class mail, registered or certified, postage prepaid, or Oil the second day if faxed, and properly addressed Or faxed as follows:

 

If to GeoBio:

 

GeoBio Energy, Inc.

802 Windy Ridge Lane SE

Atlanta, GA 30339

Attn: John L. Sams

 

With a Copy to:

 

The Otto Law Group, PLLC

601 Union Street, Suite 4500

Seattle, W A 98103

Attn: David M. Otto, Esq.

 

If to the Company or Seller:

 

Moody Construction & Sons, Inc.

2202 County Road 7

Meeker, CO 81641

Attn: Douglas W. Moody

 

With a copy to:

 

Charles A. Bewley

Berenbaum Weinshienk, P.C.

370 17th St. #4800

                Denver, CO 80202

 

9.08 Binding Effect. This Agreement shall inure to and be binding upon the heirs, executors, personal representatives, successors and assigns of each of the Parties to this Agreement.

 

9.09 Effect of Closing. All representations, warranties, covenants, and agreements of the Parties contained in this Agreement, or in any instrument, certificate, opinion., or other writing provided for in it, shall be true and correct as of the Closing and shall survive the Closing of this Agreement for two (2) years post-Closing.

 

9.10 Mutual .Cooperation, The Parties hereto shall cooperate with each other to achieve the purposes of this Agreement, and shall execute such other and further documents and take such other and further actions as may be necessary or convenient to effect the transactions described herein.

 

IN WITNESS OF WHEREOF, this Agreement has been duly executed by the Parties hereto as of the Effective Date first written above.

 

SELLER

 

 

_________________________________________

 

Doug Moody individually and as sole proprietor of

 

MOODY CONSTRUCTION & SONS, a sole proprietorship

 

 

 

Moody Construction & Songs, Inc.

 

A Colorado Corporation

 

 

By: __________________________

 

Doug Moody, President and CEO

 

BUYER:

GEOBIO ENERGY, INC.

_____________________________

Name: John L. Sams

Title: President and Chief Executive Officer

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