UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary information statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive information statement
-------------------
THERMACELL TECHNOLOGIES, INC.
(K/N/A ABSOLUTE WASTE SERVICES, INC.)
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-------------------
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid: -0-
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
THERMACELL TECHNOLOGIES, INC.
(K/N/A ABSOLUTE WASTE SERVICES, INC.)
901 Chestnut St.
Clearwater, FL 33756
INFORMATION STATEMENT NOTICE
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
Dear Stockholders:
Notice is hereby given that on July 31, 2003, we received the written
consent, in lieu of a meeting of stockholders, from the holders of approximately
77% of our outstanding voting stock, approving amendments to our certificate of
incorporation that changes our name from 'ThermaCell Technologies, Inc.' to
'Absolute Waste Services, Inc.' and approving an amendment to our certificate of
incorporation that increases the number of authorized shares of common stock
from 20,000,000 to 150,000,000 and increases the number of authorized preferred
shares from 20,000,000.to 50,000,000. These actions were taken in connection
with an Agreement and Plan of Merger by and between Absolute Industries, Inc.,
LLC, a Texas limited liability company ("Absolute") and the Company.
You are encouraged to read the attached Information Statement, including the
exhibits, for further information regarding these actions. In accordance with
Rule 14c-2, the actions described herein will be deemed ratified and effective
at a date that is at least 20 days after the date this Information Statement has
been mailed to the Stockholders. The Company anticipates this date to occur on
or about October __, 2003.
THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS'
MEETING WILL BE HELD TO CONSIDER THE MATTERS DESCRIBED HEREIN. This Information
Statement is being furnished to you solely for the purpose of informing
stockholders of the matters described herein in compliance with Regulation 14C
of the Securities Exchange Act of 1934, as amended, and Section 607.0704,
Florida Statutes.
By Order of the Board of Directors
/s/ Tom Duszynski
Tom Duszynski
----------------------
Clearwater Florida
October __, 2003
THERMACELL TECHNOLOGIES, INC.
(K/N/A ABSOLUTE WASTE SERVICES, INC.)
901 Chestnut St.
Clearwater, FL 33756
INFORMATION STATEMENT
The purpose of this Information Statement is to notify the holders of our
common stock as of the close of business on August 24, 2003 (the 'Record Date'),
that on July 31, 2003 we received the written consent, in lieu of a meeting of
stockholders, from the holders of 7,721,487 shares of our common stock,
representing approximately 77% of our outstanding voting stock, approving an
amendment to our certificate of incorporation that changes our name from
'ThermaCell Technologies, Inc.' to 'Absolute Waste Services, Inc.' and approving
an amendment that will increase the number of authorized shares of common stock
from 20,000,000 to 150,000,000 and number of authorized shares of preferred
stock from 5,000,000 to 50,000,000.
This Information Statement is first being mailed or furnished to
stockholders on or about October __, 2003. We will pay all costs associated with
the preparation and distribution of this Information Statement, including all
mailing and printing expenses. We will also, upon request, reimburse brokers,
banks and similar organizations for reasonable out-of-pocket expenses incurred
in forwarding this Information Statement to their clients.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
SECURITY OWNERSHIP
As of the Record Date, there were 10,000,000 shares of common stock issued
and outstanding and entitled to vote. Each share of common stock entitles its
holder to one vote.
The following table sets forth certain information concerning the ownership
of our common stock, as of August 24, 2003, by (i) all persons known by us to
beneficially own five percent (5%) or more of the outstanding shares of common
stock, (ii) each director and executive officer required to be named hereunder
and (iii) all of our directors and executive officers as a group. Unless
otherwise noted, each stockholder named has sole voting and investment power
with respect to such shares, subject to community property laws where
applicable.
- ------------------------------------- ----------------------------------- -----------------------
Name Number of shares of common stock Percentage of shares of common
beneficially owned stock beneficially owned (1)
- ------------------------------------- ----------------------------------- -----------------------
Tom Duszynski and Don Huggins through the following entities:
PAC Funding, LLC (2) 5,000,000 50%
Augustine Fund, LP (3) 2,507,188 25%
Private Capital Group, Inc. (4) 217,293 2.2%
TA Holdings, Inc. 135,000 1.3%
--------- -----
TOTALS 7,859,487 78.5%
========= =====
All officers and directors as a 7,181,585 78.5%
group [3 persons]
(1) Applicable percentage of ownership as of August 24, 2003 is based on
10,000,000 shares of common stock outstanding.
(2) Don Huggins and Tom Duszynsiki are the Co Managers of PAC Funding, LLC and
were directors of the Company as of August 24, 2003.
(3) Tom Duszynsiki is a principal of Augustine Fund, LP.
(4) Private Capital Group, Inc. and TA Holdings, Inc. are owned by Margie
Huggins, the wife of Don Huggins. Mr. Huggins disclaims beneficial ownership
interest of his wife's ownership of Private Capital Group, Inc. and TA Holdings,
Inc.
STOCKHOLDER ACTIONS
INTRODUCTION
On July 31, 2003, our Board of Directors unanimously approved an amendment and
restatement of our Certificate of Incorporation that changes our name from
'ThermaCell Technologies, Inc.' to 'Absolute Waste Services, Inc.' (the 'Name
Change Amendment') and submitted such matter for stockholder approval. On July
31, 2003, stockholders holding approximately 77% of our outstanding voting
stock, acting by majority written consent, approved and ratified the Name Change
Amendment, a copy of which is attached to this Information Statement as Exhibit
A.
On July 31, 2003, our Board of Directors unanimously approved an amendment and
restatement of our Certificate of Incorporation that will increase the number of
authorized shares of common stock from 20,000,000 to 150,000,000 and increased
the number of authorized shares of preferred stock from 5,000,000 to 50,000,000
("Share Increase Amendment") and submitted such matter for stockholder approval.
On July 31, 2003, stockholders holding approximately 77% of our outstanding
voting stock, acting by majority written consent, approved and ratified the
Share Increase Amendment, a copy of which is attached to this Information
Statement as Exhibit "A." A copy of the Amendment to the Articles of
Incorporation reflecting the Name Change Amendment and Share Increase Amendment
is attached as Exhibit "B."
PURPOSE OF THE NAME CHANGE AND SHARE INCREASE AMENDMENT
On August 23, 2003, we finalized on an Agreement and Plan of
Merger ("Merger Agreement") with ABSOLUTE INDUSTRIES, LLC, a Texas limited
liability company ("Absolute"). Absolute is engaged in pickup, disposal,
remediation and transportation of waste for residential and commercial
companies, primarily in South Texas. In addition, Absolute rents containers for
waste storage and disposal. Absolute had audited gross revenues of approximately
$4.4 million for fiscal year ended December 31, 2002. The merger with Absolute
is our initial step to effect a consolidation of small to medium size businesses
in the solid waste disposal industry. Copies of the audited financial statement
of Absolute for years ended December 31, 2002 and 2001 are attached as Exhibit
"C."
Pursuant to the terms of the Merger Agreement, Absolute merged
into a newly formed Texas corporate subsidiary of our subsidiary being the
surviving entity. As such, the prior business and operations of Absolute are now
contained in the issuer's wholly owned Texas subsidiary.
In accordance with the terms of the Merger Agreement, 100% of
the equity interests of Absolute is exchangeable into 27,000,000 shares of the
Company's Class A Convertible Preferred Stock. Each share of preferred stock is
convertible into one (1) share of common stock and entitled to three (3) votes.
Prior to the Merger, the Company had 10,000,000 new common
shares outstanding which were approved for issuance under the issuer's Plan of
Reorganization, which was confirmed in August, 2002. All of such shares have
been issued to the existing shareholders, creditors and debtor in possession
funding source. As part of the Merger with Absolute, an additional 10,000,000
new restricted common shares were issued. 4,000,000 of such new restricted
common shares were issued to Private Capital Group, Inc. - one of the managers
of Pac Funding, LLC, the debtor in possession funding source. 1,000,000 new
restricted common shares were issued to Thomas F. Duszynski, who is an affiliate
of Augustine Fund, LP, the other co-manager of Pac Funding, LLC. 3,000,000 new
restricted common shares were issued to The Harrelson Group, which acted as a
finder and facilitator for this Merger. 2,000,000 new restricted common shares
were issued as consideration for additional capital.
Accordingly, after the Merger we have 20,000,000 common shares
outstanding
and are obligated to issue 27,000,000 preferred shares, each of which is
converted into one (1) common share and each of which is entitled to three (3)
votes per share.
As part of the Merger, current vacancies on the board were
filled until the next meeting of shareholders and officers were reconstituted to
consist of James D. Wright, William M. Davis, Lawrence A. Woods and Thomas F.
Duszynski. See Exhibit "D" for background information regarding these
individuals. Mr. Huggins resigned as a director and officer. The Company also
agreed not enter into any reverse stock splits until the issuer's stock is
closed at or above $3.00 per share for 90 consecutive trading days, or until
August 24, 2004, whichever occurs first.
In connection with the Merger Agreement, Thomas F. Duszynski
and Don Huggins entered into an Inducement/Indemnity Agreement, which requires
Pac Funding, LLC to indemnify the Company for any liabilities, debts and
obligations of the issuer that existed prior to the closing date or were not
otherwise discharged as part of the bankruptcy proceeding. The estimated amount
of assumed liabilities by Pac Funding, LLC is approximately $340,000. In
addition, Pac Funding, LLC is obligated to pay the professional fees and other
expenses in connection with the issuer's Form 15c2-11 application with the NASD
and EDGAR filing costs through September 30, 2004. The indemnity obligations are
not personal obligations or guaranties of Mr. Duszynski and Mr. Huggins, rather
obligations of Pac Funding, LLC. Mr. Duszynski, Mr. Huggins and Absolute make
certain other representations and warranties as is more fully set forth in the
Inducement/Indemnity Agreement.
The Agreement and Plan of Merger, Certificate of Designation
of Rights, Preferences, and Obligations of the Convertible Series A Preferred
Stock and Inducement/ Indemnity Agreement are included as Exhibits "E," "F" and
"G" respectively to this Information Statement. The information contained in the
body of this Information Statement is only a summary of the terms and conditions
of these documents and agreements, which are incorporated herein by reference,
the terms of which shall control.
In light of the Absolute merger, management of the Company is
currently evaluating the alternatives that may be available relating to the
future of ThermaCell Industries, Inc., a wholly owned subsidiary of the issuer.
ThermaCell Industries, Inc. is currently the owner of the Company's evacuated
microsphere technologies. These assets are carried at a nominal value on the
issuer's financial statements. The physical plant and assets for microsphere
evacuation is in a warehouse located in Deland, Florida. The issuer is currently
negotiating with other parties to potentially divest itself of such assets in
order to obtain additional capital.
The new CUSIP number for the Company's common shares is 00387L
10 6. On September 3, 2003 the NASD released the Company's new call symbol
"ABWS", which replaces
the prior call symbol "VCLL". The Company has submitted a Form 15(c)2-11 to the
NASD for trading privileges of our common stock on the pink sheets. After
trading commences on the pink sheets the Company intends to request trading
privileges on the OTC:BB with the NASD for its common shares.
EFFECTS OF THE NAME CHANGE
Changing our name will not have any effect on our corporate status, the
rights of stockholders or the transferability of outstanding stock certificates.
Outstanding stock certificates bearing the name 'ThermaCell Technologies, Inc.'
will continue to be valid and represent shares of Absolute Waste Services, Inc.
VOTE REQUIRED
The affirmative vote of the holders of a majority of our outstanding common
stock is required to change our name from 'ThermaCell Technologies, Inc.' to
'Absolute Waste Services, Inc.,' which vote was obtained by a majority written
consent dated July 31, 2003 from holders of approximately 77% of our outstanding
common stock.
PURPOSE OF INCREASING NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Company is contractually obligated to issue additional authorized shares
of common stock in connection with the Absolute merger. In accordance with the
terms of the Merger Agreement with Absolute all of the Company's authorized
common shares are issuable. The Company requires additional authorized common
shares underlying the one for one conversion feature of the 27,000,000 newly
created and issued shares of Series A Preferred Stock issued to the Absolute
members. In addition to the reasons set forth above, the Company's Board of
Directors believes that it is desirable to have additional authorized shares of
common stock available for other possible future financings, possible future
acquisition transactions and other general corporate purposes. The Company's
Board of Directors believes that having such additional authorized shares of
common stock available for issuance in the future should give the Company
greater flexibility and may allow such shares to be issued without the expense
and delay of a special shareholders' meeting. Although such issuance of
additional shares with respect to future financings and acquisitions would
dilute existing shareholders, management believes that such transactions would
increase the value of the Company to its shareholders.
The amendment to the Company's Articles of Incorporation provides for the
authorization of 150,000,000 shares of the Company's common stock. There are
certain advantages and disadvantages of voting for an increase in the Company's
authorized common stock. The advantages include:
o The ability to raise capital by issuing capital stock under the transaction
described above, or other financing transactions.
o The ability to fulfill our Company's obligations by having capital stock
available upon the conversion of preferred stock.
o To have shares of common stock available to pursue business expansion
opportunities, if any.
The disadvantages include:
o Dilution to the existing shareholders, including a decrease in our net
income per share in future periods. This could cause the market price of
our stock to decline.
The issuance of authorized but unissued stock could be used to deter a
potential takeover of the Company that may otherwise be beneficial to
shareholders by diluting the shares held by a potential suitor or issuing shares
to a shareholder that will vote in accordance with the Company's Board of
Directors' desires. A takeover may be beneficial to independent shareholders
because, among other reasons, a potential suitor may offer such shareholders a
premium for their shares of stock compared to the then-existing market price.
The Company does not have any plans or proposals to adopt provisions or enter
into agreements that may have material anti-takeover consequences.
Stockholders do not have any preemptive or similar rights to subscribe for or
purchase any additional shares of Common Stock that may be issued in the future,
and therefore, future issuances of Common Stock may, depending on the
circumstances, have a dilutive effect on the earnings per share, voting power
and other interests of the existing stockholders.
CREATION OF BLANK CHECK PREFERRED STOCK/SERIES A PREFERRED STOCK
The amendment to the Certificate of Incorporation will create
50,000,000 authorized shares of "blank check" preferred stock. The proposed
Amendment to the Certificate of Incorporation attached as Exhibit "B" to this
information statement contains provisions related to the "blank check" preferred
stock. The following summary does not purport to be complete and is qualified in
its entirety by reference to the proposed Amendment to the Certificate of
Incorporation as set forth in Exhibit "B."
Of the 50,000,000 authorized preferred shares, 27,000,000 are
designated as Series A Preferred Stock and are issuable in connection with the
Absolute merger. Each share of Series A Preferred Stock has three (3) votes per
share and is convertible into one (1) common share. Accordingly, the former
Absolute members are in a position to control the affairs of the Company,
including the election of directors, approval of future acquisitions or the
terms of a sale or merger of the Company. A copy of the Rights, Requirements and
Preferences of the Series A Preferred Stock is attached as Exhibit "D" to this
Information Statement.
The remaining 23,000,000 shares of preferred stock are referred to as
"blank-check" preferred stock. The term "blank check" refers to preferred stock,
the creation and issuance of which is authorized in advance by the stockholders
and the terms, rights and features of which are determined by the board of
directors of the Company upon issuance. The authorization of such blank check
preferred stock would permit the board of directors to authorize and issue
preferred stock from time to time in one or more series.
Subject to the provisions of the Company's Amended Articles of
Incorporation and the limitations prescribed by law, the board of directors
would be expressly authorized, at its discretion, to adopt resolutions to issue
shares, to fix the number of shares and to change the number of shares
constituting any series and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend
rights (including whether the dividends are cumulative), dividend rates, terms
of redemption (including sinking fund provisions), redemption prices, conversion
rights and liquidation preferences of the shares constituting any series of the
preferred stock, in each case without any further action or vote by the
stockholders. The board of directors would be required to make any determination
to issue shares of preferred stock based on its judgment as to the best
interests of the Company and its stockholders.
The Amendment provides the Company with increased financial flexibility
in meeting future capital requirements by providing another type of security in
addition to its Common Stock, as it will allow preferred stock to be available
for issuance from time to time and with such features as determined by the board
of directors for any proper corporate purpose. It is anticipated that such
purposes may include exchanging preferred stock for Common Stock and, without
limitation, may include the issuance for cash as a means of obtaining capital
for use by the Company, or issuance as part or all of the consideration required
to be paid by the Company for acquisitions of other businesses or assets. Any
issuance of preferred stock with voting rights could, under certain
circumstances, have the effect of delaying or preventing a change in control of
the Company by increasing the number of outstanding shares entitled to vote and
by increasing the number of votes required to approve a change in control of the
Company. Shares of voting or convertible preferred stock could be issued, or
rights to purchase such shares could be issued, to render more difficult or
discourage an attempt to obtain control of the Company by means of a tender
offer, proxy contest, merger or otherwise. The ability of the board of directors
to issue such additional shares of preferred stock, with the rights and
preferences it deems advisable, could discourage an attempt by a party to
acquire control of the Company by tender offer or other means. Such issuances
could therefore deprive stockholders of benefits that could result from such an
attempt, such as the realization of a premium over the market price that such an
attempt could cause. Moreover, the issuance of such additional shares of
preferred stock to persons friendly to the board of directors could make it more
difficult to remove incumbent managers and directors from office even if such
change were to be favorable to stockholders generally.
While the amendment may have anti-takeover ramifications, the board
of directors believes that the financial flexibility offered by the amendment
outweighs any disadvantages. To the extent that the amendment may have
anti-takeover effects, the amendment may encourage persons seeking to acquire
the Company to negotiate directly with the board of directors enabling the board
of directors to consider the proposed transaction in a manner that best serves
the stockholders' interests.
VOTE REQUIRED
The affirmative vote of the holders of a majority of our outstanding common
stock is required to increase the authorized shares of common stock from
20,000,000 to 150,000,000 and to increase our authorized preferred stock from
5,000,000 to 50,000,000, which vote was obtained by a written consent dated July
31, 2003 from the holders of approximately 77% of our outstanding voting common
shares.
DISSENTERS' RIGHTS OF APPRAISAL
The Florida General Corporation Law does not provide for appraisal or
dissenter rights in connection with our name change, increase in authorized
common shares and preferred shares or the Absolute Merger.
ADDITIONAL INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith file reports, proxy
statements and other information including annual and quarterly reports on Form
10-KSB and 10-QSB with the Securities and Exchange Commission. Reports and other
information filed by us can be inspected and copied at the public reference
facilities maintained at the Securities and Exchange Commission at Room 1024,
450 Fifth Street, N.W., Washington, DC 20549. Copies of such material can be
obtained upon written request addressed to the Securities and Exchange
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Securities and Exchange Commission also
maintains a web site on the Internet (http://www.sec.gov) where reports, proxy
and information statements and other information regarding issuers that file
electronically with the Securities and Exchange Commission through the
Electronic Data Gathering, Analysis and Retrieval System may be obtained free of
charge.
10/2/2003 2:07 PM
44589.107408
#302050 v1 - Absolute Waste Services, Inc. - Schedule 14C
EXHIBITS TO INFORMATION STATEMENT
- ------------------------ ---------------------------------------------------------------------------------------------
Exhibit Letter Description
- ------------------------ ---------------------------------------------------------------------------------------------
- ------------------------ ---------------------------------------------------------------------------------------------
A Form of Written Consent of Shareholders Approving Nam Change Amendment and Share Increases
Amendment
- ------------------------ ---------------------------------------------------------------------------------------------
B Form of Amendment to Articles of Incorporation
- ------------------------ ---------------------------------------------------------------------------------------------
C Audited Financial Statement of Absolute Industries, LLC for Years Ended December 31, 2002
and 2001
- ------------------------ ---------------------------------------------------------------------------------------------
D Background Information of Directors Replacing Vacancies
- ------------------------ ---------------------------------------------------------------------------------------------
E Agreement and Plan of Merger by and between Absolute
Industries, LLC and ThermaCell Technologies, Inc.
- ------------------------ ---------------------------------------------------------------------------------------------
F Certificate of Rights, Designations and Preferences of Series A Preferred Stock
- ------------------------ ---------------------------------------------------------------------------------------------
G Inducement/Indemnity Agreement of Tom Duszynski and Don Huggins and PAC Funding, LLC
- ------------------------ ---------------------------------------------------------------------------------------------
EXHIBIT A
ACTION BY WRITTEN CONSENT
OF SHAREHOLDERS OF
THERMACELL TECHNOLOGIES, INC.
We, the undersigned being the holders of a majority of the voting
rights for the shares of the outstanding Common Stock of THERMACELL
TECHNOLOGIES, INC. (the "Corporation"), having not less than the minimum number
of votes necessary to take the actions set forth herein, and acting pursuant to
the authority conferred in Section 607.0704 and 607.0722, Florida Statutes, do
hereby take and adopt the following actions, in writing without a meeting:
RESOLVED, that the Shareholders hereby adopt and approve an Amendment
to the Articles of Incorporation of the Corporation, a copy of which is attached
hereto as Exhibit "A," which deletes Article IV of the existing Articles of
Incorporation of the Corporation and substitutes a new Article IV in lieu
thereof which (i) increases the number of authorized shares of common stock to
150,000,000 shares, (ii) authorizes 50,000,000 shares of preferred stock to be
issued with such rights, designations, and preferences as established from time
to time by the board of directors as more fully set forth therein, and (iii)
authorizes the issuance of 10,000,000 new shares of common stock to replace old
shares of outstanding common stock pursuant to an Order confirming the Plan of
Reorganization in the U.S. Bankruptcy Court, Middle District of Florida, Case
No. 01-20854-861.
RESOLVED, that the Shareholders also approve a change in the name of
the Corporation to Absolute Waste Services, Inc.
FURTHER RESOLVED, that prompt notice of the action shall be given to
those shareholders entitled to vote who have not signed this Consent, as
provided in Section 607.0704, Florida Statutes.
FURTHER RESOLVED, that this action by written consent 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.
FURTHER RESOLVED, that no proxies were solicited or use of the mails or
means of interstate commerce in executing this consent it being expressly
represented the consents were executed in person at the officers of the Company
located at 901 Chestnut Street, Clearwater, Florida.
The actions contained herein were approved on the ___ day of July,
2003, and shall be effective as of that date the attached Articles of Amendment
to Certificate of Incorporation are filed.
IN WITNESS WHEREOF, the undersigned have executed the foregoing
Corporate Actions for purposed giving their consent thereto.
SHAREHOLDERS:
AUGUSTINE FUND, L.P.
By:
-----------------------------------------------------------
Print Name:
---------------------------------------------------
Title:
--------------------------------------------------------
PRIVATE CAPITAL GROUP, INC.
By:
-----------------------------------------------------------
Print Name:
---------------------------------------------------
Title:
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PAC FUNDING, LLC
By:
-----------------------------------------------------------
Print Name:
---------------------------------------------------
Title:
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#302050 v1 - Absolute Waste Services, Inc. - Schedule 14C
EXHIBIT B
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION
OF
THERMACELL TECHNOLOGIES, INC.
The undersigned, being the President of THERMACELL TECHNOLOGIES, INC.,
a Florida corporation (the "Corporation"), does hereby certify that the
Amendment provided for herein to change the name of the Corporation and to
increase the number of authorized shares of the Common Stock of the Corporation
was adopted unanimously by Special Corporate Actions by Written Consent of the
Board of Directors of the Corporation on July 31, 2003, and written consent of
shareholders owning a majority of the outstanding shares entitled to vote of the
Corporation, in accordance with the provisions of Chapter 607 of the General
Corporation Law of the State of Florida, and the number of votes cast in favor
of the Amendments was sufficient to carry the motion.
1. Article I of the Articles of Incorporation of the Corporation is
hereby amended to read as follows:
I. The name of the Corporation is:
Absolute Waste Services, Inc.
2. Article IV of the Articles of Incorporation, as it pertains to the
authorized shares of the Capital Stock of the Corporation is hereby amended as
follows:
ARTICLE IV - Capital Stock
--------------------------
This Corporation shall be authorized to issue a total of 200,000,000 shares
of two classes of capital stock to be designated respectively preferred
stock ("Preferred Stock") and Common Stock ("Common Stock"). The total
number of shares of Preferred Stock the corporation shall have authority to
issue is 50,000,000, $.001 par value per share and the total number of
shares of Common Stock the corporation shall have authority to issue is
150,000,000, $.0001 par value per share, which shall have one (1) vote per
share. The Preferred Stock authorized by this Certificate of Incorporation
shall be issued in series. The Board of Directors is authorized to
establish series of Preferred Stock and to fix, in the manner and to the
full extent provided and permitted by law, the rights, preferences and
limitations of each series of the Preferred Stock and the relative rights,
preferences and limitations between or among such series including:
(1) the designation of each series and the number of shares that shall
constitute the series;
(2) the rate of dividends, if any, payable on the shares of each series,
the time and manner of payment and whether or not such dividends shall
be cumulative;
(3) whether shares of each series may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
(4) sinking fund provisions, if any, for the redemption or purchase of
shares of each series which is redeemable;
(5) the amount, if any, payable upon shares of each series in the event of
the voluntary or involuntary liquidation, dissolution or winding up of
the corporation, and the manner and preference of such payment;
(6) voting rights, if any, on the shares of each series and any conditions
upon the exercisability of such rights.
The holders of Common Stock shall be entitled to one vote for
each share held at all meetings or other actions of the Stockholders of the
Corporation.
3. Pursuant to an order issued by the United States Bankruptcy Court
for the Middle District of Florida, Tampa Division, case No. 01-20854-8G1,
previously issued shares of the Corporation's common stock are canceled and
replaced by new shares authorized from the Plan of Reorganization (the "Plan").
A total of 10,000,000 new common shares were authorized for issuance under the
Plan as follows:
(i) The Plan provides that 1,000,000 new common shares will be issued to
the existing common shareholders of the Corporation. As of August 30,
2002, according to the records of the Corporation maintained by
transfer agent, there were 13,0346,228 issued and outstanding shares
of the Corporation's old common stock. Thus, pursuant to the Plan and
the actions taken by the Corporation's board of directors and
shareholders, existing ThermaCell stockholders are entitled to receive
one (1) new ThermaCell common share for every 13.034 old ThermaCell
common shares previously held, subject to adjustment in the event the
actual number of shares outstanding are reconciled or adjusted between
the transfer agent and the Corporation's records. No fractional
shares, scripts or cash in lieu of fractional shares shall be issued.
Shares shall be rounded to the nearest whole number. The record date
shall be August 30, 2002.
(ii) The Plan authorizes 4,000,000 new common shares be issued to the
unsecured creditors on a pro rata based upon each creditor's relative
percentage of total claims under the Plan in full and complete
satisfaction of such unsecured creditors claims against the
Corporation.
(iii)The Plan authorizes 5,000,000 new common shares be issued to Pac
Funding, LLC to satisfy debtor-in-possession funding amounts provided
under the Plan.
4. The capital of the Corporation will not be reduced under or by
reason of said Amendment.
IN WITNESS WHEREOF, the undersigned, being the President of the
Corporation, has executed this Amendment to Articles of Incorporation of
ThermaCell Technologies, Inc., a Florida corporation, the 31st day of July,
2003, for the purpose of amending the Articles of Incorporation under Section
607.1006, Florida Statutes, and hereby certify that the facts herein stated are
true and correct, and were approved by the votes of Shareholders owning a
majority of the shares entitled to vote and the vote was sufficient to carry
motion.
THERMACELL TECHNOLOGIES, INC.,
a Florida corporation
By:/s/ Donald Huggins
-----------------------------------------
Donald Huggins, President
STATE OF FLORIDA )
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me this 31st day of
July, 2003, by DONALD HUGGINS, as President of THERMACELL TECHNOLOGIES, INC., a
Florida corporation, on behalf of said corporation, who is personally known to
me.
/s/ Tawny L. Best
-------------------------------------------
Notary Public
Print Name: Tawny L. Best
-------------------------------------------
Commission #DD187314
My Commission Expires: February 24, 2007
Bonded thru
Atlantic Bonding Co., Inc.
#302050 v1 - Absolute Waste Services, Inc. - Schedule 14C
EXHIBIT C
LUBY & BIRDWELL, LLP
CERTIFIED PUBLIC ACCOUNTANTS
101 North Shoreline, Suite 580, Corpus Christi, Texas 78401 Ph (361) 883-0292
email - bbirdwell@sbcglobal.net Fax (361) 883-0151
Independent Auditors' Report
To the Members of
Absolute Industries, LLC
We have audited the balance sheet of Absolute Industries, LLC ("Company") as of
December 31, 2002, and the related statement of income, members' equity, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Absolute Industries, LLC as of
December 31, 2002, and the results of its operations and cash flows for the year
then ended, in conformity with accounting principles generally accepted in the
United States of America.
April 18, 2003
ABSOLUTE INDUSTRIES, LLC
BALANCE SHEET
DECEMBER 31, 2002
Assets
Current Assets
Cash and Cash Equivalents $ 6,226
Receivables:
Trade 939,387
Related Party 84,303
Employees 4,416
Notes Receivable - Related Party 282,327
Accrued Interest Receivable 33,357
Prepaid Expenses 4,044
----------------
Total Current Assets 1,354,060
Property and Equipment
Land 35,000
Buildings and Improvements 10,000
Machinery and Equipment 2,952,965
Office Furniture and Fixtures 10,937
Accumulated Depreciation (644,554)
-----------------
Net Property and Equipment 2,364,348
-----------------
Total Assets $ 3,718,408
=================
2
Liabilities and Members' Equity
Current Liabilities
Accounts Payable $ 488,054
Deferred Revenue 60,411
Deferred Income Taxes 141,726
Accrued Expenses 100,861
Current Portion of Long-Term Debt 380,865
------------------
Total Current Liabilities 1,171,917
Long-Term Debt, less current portion 1,597,462
Members' Equity 949,029
------------------
Total Liabilities and Members' Equity $ 3,718,408
==================
See accompanying notes and accountant's report.
3
ABSOLUTE INDUSTRIES, LLC
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2002
Revenues
Box Rental $ 359,600
Garbage Collection 1,674,089
Remediation 514,571
Transportation 2,058,430
----------------
Gross Revenues 4,606,690
Operating Expenses 4,447,991
----------------
Income from Operations 158,699
Other Income (Expense)
Interest Expense (168,921)
Interest Income 16,940
Loss on Sale of Equipment (1,975)
Miscellaneous Expense (13,842)
----------------
Loss Before Income Taxes (9,099)
Income Tax (Expense) Benefit
Current -
Deferred 11,933
--------
11,933
--------
Net Income $ 2,834
================
See accompanying notes and accountant's report.
4
ABSOLUTE INDUSTRIES, LLC
STATEMENT OF MEMBERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2002
Members'
Equity
-----------
Balance at January 1, 2002 $ 946,195
Net Income 2,834
-----------
Balance December 31, 2002 $ 949,029
===========
See accompanying notes and accountant's report.
5
ABSOLUTE INDUSTRIES, LLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2002
Cash Flows from Operating Activities
Net Income $ 2,834
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Loss on Sale of Fixed Assets 1,975
Depreciation and Amortization 336,391
Increase in Accounts Receivables (9,976)
Increase in Related Party Receivable (3,073)
Increase in Employee Receivable (1,158)
Decrease in Notes Receivable - Related Party 8,723
Increase in Accrued Interest Receivable (16,940)
Increase in Prepaid Expenses (4,044)
Decrease in Other Assets 13,792
Increase in Accounts Payable 194,559
Increase in Deferred Revenue 60,411
Decrease in Deferred Income Taxes (11,933)
Increase in Accrued Expenses 59,159
------------------
Net Cash Provided by Operating Activities 630,720
Cash Flows from Investing Activities
Proceeds from Sale of Property and Equipment 15,000
Purchase of Property and Equipment (1,115,791)
-----------------
Net Cash Used by Investing Activities (1,100,791)
Cash Flows from Financing Activities
Principal Payments of Long-Term Debt (334,119)
Proceeds from Long -Term Debt 809,041
----------------
Net Cash Provided by Financing Activities 474,922
Net Increase in Cash and Cash Equivalents 4,851
Cash and Cash Equivalents at Beginning of Year 1,375
----------------
Cash and Cash Equivalents at End of Year $ 6,226
================
6
(Continued)
ABSOLUTE INDUSTRIES, LLC
STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2002
Supplemental Disclosures:
Cash Paid for Interest $ 168,921
See accompanying notes and accountant's report.
7
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
1. Summary of Significant Accounting Policies
Organization and Business Activity
Absolute Industries, LLC (the "Company") a Texas limited liability corporation
was created in 1997, under the laws of the state of Texas. They began operations
during March 1997. The Company is engaged in pickup, disposal, remediation and
transportation of waste for residential and commercial companies primarily in
south Texas. In addition, the Company rents containers for waste storage and
disposal.
Effective January 1, 2003, the Company's operations noted above were divided
into separate entities. The Company is now strictly involved with residential
and commercial waste pickup and disposals. Environmental Evolutions Holding,
Ltd. (a limited partnership), was created to operate the Company's remediation,
transportation and box rental activities. J.W. Venture, LLC (a limited liability
company) was created to manage all of the above mentioned related party
entities.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the year. Actual results could differ from these estimates.
Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis of
accounting.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and all highly
liquid investments with a maturity of three months or less.
8
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
1. Summary of Significant Accounting Policies (Continued)
Property and Equipment
Property and equipment are recorded at cost and depreciated on the straight-line
method over the estimated useful lives of the buildings and equipment.
Advertising
The Company expenses advertising costs as they are incurred. Advertising expense
for the year was $10,566.
Income Taxes
The Company is a limited liability company that has elected to be taxed as a
corporation pursuant to the Company filing Form 8832, Entity Classification
Election. The election was effective on January 1, 2001.
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to the difference between the basis of property and equipment
and investments for financial reporting and income tax reporting. The deferred
taxes represent the future tax return consequences of those differences, which
will either be taxable or deductible when the assets and liabilities are
recovered or settled. Deferred taxes are also recognized for operating losses
that are available to offset future federal income taxes.
The net deferred tax liability in the accompanying balance sheet includes the
following amounts of deferred tax assets and liabilities:
Deferred Tax Liability 277,929
Deferred Tax Asset (136,203)
----------------
Net Deferred Tax Liability $ 141,726
==========
9
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
2. Long-Term Debt
Notes Payable and Long-Term Debt consists of the following at December 31, 2002.
Note payable to bank, monthly principal
and interest payments of $1,873, interest
rate 9.02%, maturing 2006, secured
by equipment $ 73,847
Note payable to finance company, monthly principal and interest payments of
$5,023, interest rate 10.0%, maturing 2006, secured
by equipment 131,639
Note payable to finance company, monthly principal and interest payments of
$1,726, interest rate 10.0%, maturing 2006, secured
by equipment $ 70,636
Note payable to finance company, monthly principal and interest payments of
$1,644, interest rate 10.0%, maturing 2006, secured
by equipment 60,411
Note payable to finance company, monthly principal and interest payments of
$1,583, interest rate 10.0%, maturing 2004, secured
by equipment 30,342
Note payable to finance company, monthly principal and interest payments of
$672, interest rate 10.15%, maturing 2006, secured
by equipment 21,613
Note payable to finance company, monthly principal and interest payments of
$703, interest rate 9.6%, maturing 2004, secured
by equipment 18,123
10
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
2. Long-Term Debt (continued)
Note payable to bank under a $500,000 line of credit , interest payable
monthly, principal payable on demand, interest rate 6.25%, secured by
accounts receivable,
unused portion $1,902 498,098
Note payable to bank, monthly principal and interest payments of $5,199,
interest rate 8.5%, maturing 2004, secured
by equipment $ 63,507
Note payable to bank, monthly principal and interest payments of $6,221,
interest rate 7.49%, maturing 2004, secured
by equipment 142,022
Note payable to finance company, monthly principal and interest payments of
$777, interest rate 10.32%, maturing 2005, secured
by equipment 26,420
Note payable to finance company, monthly principal and interest payments of
$1,188, interest rate 9.85%, maturing 2004, secured
by equipment 31,412
Note payable to finance company, monthly principal and interest payments of
$703, interest rate 16.86%, maturing 2004, secured
by equipment 16,619
Note payable to finance company, monthly principal and interest payments of
$6,040, interest rate 9.9%, maturing 2007, secured
by equipment 273,802
11
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
2. Long-Term Debt (continued)
Note payable to finance company, monthly principal and interest payments of
$5,943, interest rate 10.75%, maturing 2005, secured
by equipment 169,136
Note payable to finance company, monthly principal and interest payments of
$3,108, interest rate 8.15%, maturing 2005, secured
by equipment 81,564
Note payable to finance company, monthly principal and interest payments of
$7,057, interest rate 7.5%, maturing 2005, secured
by equipment 209,846
Other notes payable 59,290
----------------
Total Notes Payable and Long-Term Debt 1,978,327
Less Current Portion of Long-Term Debt 380,865
----------------
Long-Term Debt $ 1,597,462
================
Principal payments on long-term debt at December 31, 2002 are as follows:
2003 $ 380,865
2004 425,963
2005 460,336
2006 497,482
2007 213,681
Long-Term Debt was consolidated into one note agreement on February 21, 2003.
The terms of the new debt agreement require monthly principal and interest
payments of $43,708 based on an interest rate of 7.785% maturing in 2008. The
debt is secured by accounts receivable and equipment.
12
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002
3. Leases
The Company leases real property and equipment under both non-cancelable and
month to month operating leases. Rentals paid under these leases were
approximately $280,000 during the year ended December 31, 2002.
Future minimum rental payments under the non-cancelable operating leases at
December 31, 2992 are as follows:
2003 $ 123,504
2004 37,104
2005 34,768
4. Related Party Transactions
The Company entered into a note receivable agreement with a related party on
December 31, 2000. The written terms of the note receivable are as follows:
Accrued interest is due and payable annually on January 1st of each year. The
unpaid principal balance and all accrued interest are due and payable in one
lump sum on January 1, 2005. Other related party transactions included advances
approximately equaling $84,000.
13
LUBY & BIRDWELL, LLP
CERTIFIED PUBLIC ACCOUNTANTS
101 North Shoreline, Suite 580, Corpus Christi, Texas 78401 Ph (361) 883-0292
email - bbirdwell@sbcglobal.net Fax (361) 883-0151
Independent Auditors' Report
To the Members of
Absolute Industries, LLC
We have audited the balance sheet of Absolute Industries, LLC ("Company") as of
December 31, 2001, and the related statement of income, members' equity, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Absolute Industries, LLC as of
December 31, 2001, and the results of its operations and cash flows for the year
then ended, in conformity with accounting principles generally accepted in the
United States of America.
July 17, 2003
14
ABSOLUTE INDUSTRIES, LLC
BALANCE SHEET
DECEMBER 31, 2001
Assets
Current Assets
Cash and Cash Equivalents $ 1,376
Receivables:
Trade 1,050,323
Related Party 81,229
Employees 3,258
Notes Receivable - Related Party 273,620
Accrued Interest Receivable 16,417
Prepaid Expenses 13,814
----------------
Total Current Assets 1,440,037
Property and Equipment
Buildings and Improvements 36,116
Machinery and Equipment 1,891,804
Office Furniture and Fixtures 1,040
Accumulated Depreciation (327,169)
----------------
Net Property and Equipment 1,601,791
Intangible Assets, net of accumulated amortization 110
----------------
Total Assets $ 3,041,938
================
15
Liabilities and Members' Equity
Current Liabilities
Accounts Payable $ 339,586
Accrued Expenses 82,768
Deferred Income Taxes 153,659
Current Portion of Long-Term Debt 502,555
------------------
Total Current Liabilities 1,078,568
Long-Term Debt, less current portion 1,017,175
Members' Equity 946,195
------------------
Total Liabilities and Members' Equity $ 3,041,938
===================
See accompanying notes and accountant's report.
16
ABSOLUTE INDUSTRIES, LLC
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2001
Revenues
Box Rental $ 106,361
Garbage Collection 768,383
Remediation 823,387
Transportation 2,304,904
----------------
Gross Revenues 4,003,035
Operating Expenses 3,630,948
----------------
Income from Operations 372,087
Other Income (Expense)
Interest Expense (147,284)
Interest Income 16,417
Gain on Sale of Equipment 18,000
Miscellaneous Income 13,501
Miscellaneous Expense (35,718)
----------------
Income Before Income Taxes 237,003
Income Tax (Expense) Benefit
Current -
Deferred (153,659)
-----------
(153,659)
Net Income $ 83,344
================
See accompanying notes and accountant's report.
17
ABSOLUTE INDUSTRIES, LLC
STATEMENT OF MEMBERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2001
Members'
Equity
----------------
Balance at January 1, 2001 $ 862,851
Net Income 83,344
----------------
Balance December 31, 2001 $ 946,195
================
See accompanying notes and accountant's report.
18
ABSOLUTE INDUSTRIES, LLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2001
Cash Flows from Operating Activities
Net Income $ 83,344
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Gain on Sale of Assets (18,000)
Depreciation and Amortization 188,335
Increase in Accounts Receivables (644,163)
Increase in Employee Receivable (2,074)
Increase in Accrued Interest Receivable (16,417)
Decrease in Other Assets 264
Increase in Accounts Payable 278,968
Increase in Deferred Income Taxes 153,659
Increase in Accrued Expenses 79,993
------------------
Net Cash Provided by Operating Activities 103,909
Cash Flows from Investing Activities
Proceeds from Sale of Property and Equipment 18,000
Purchase of Property and Equipment (1,197,715)
-----------------
Net Cash Used by Investing Activities (1,179,715)
Cash Flows from Financing Activities
Principal Payments of Long-Term Debt (223,652)
Proceeds from Long -Term Debt 1,284,943
----------------
Net Cash Provided by Financing Activities 1,061,291
Net Decrease in Cash and Cash Equivalents (14,515)
Cash and Cash Equivalents at Beginning of Year 15,891
----------------
Cash and Cash Equivalents at End of Year $ 1,376
================
(Continued)
19
ABSOLUTE INDUSTRIES, LLC
STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2001
Supplemental Disclosures:
Cash Paid for Interest $ 147,283
See accompanying notes and accountant's report.
20
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
1. Summary of Significant Accounting Policies
Organization and Business Activity
Absolute Industries, LLC (the "Company") a Texas limited liability corporation
was created in 1997, under the laws of the state of Texas. They began operations
during March 1997. The Company is engaged in pickup, disposal, remediation and
transportation of waste for residential and commercial companies primarily in
south Texas. In addition, the Company rents containers for waste storage and
disposal.
Effective January 1, 2003, the Company's operations noted above were divided
into separate entities. The Company is now strictly involved with residential
and commercial waste pickup and disposals. Environmental Evolutions Holding,
Ltd. (a limited partnership), was created to operate the Company's remediation,
transportation and box rental activities. J.W. Venture, LLC (a limited liability
company) was created to manage all of the above mentioned related party
entities.
Effective April 1, 2003, the Company entered into an agreement and plan of
reorganization with Sixteen Services, Inc., a Texas corporation. Sixteen
Services, Inc. under the agreement and plan of reorganization is a wholly owned
subsidiary of the Company that is engaged in commercial garbage collection in
south Texas. In addition, effective April 1, 2003, the Company purchased 100% of
all assets of STRD, Inc, which was engaged in commercial and residential garbage
collection.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the year. Actual results could differ from these estimates.
Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis of
accounting.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and all highly
liquid investments with a maturity of three months or less.
21
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
1. Summary of Significant Accounting Policies (Continued)
Property and Equipment
Property and equipment are recorded at cost and depreciated on the straight-line
method over the estimated useful lives of the buildings and equipment.
Advertising
The Company expenses advertising costs as they are incurred. Advertising expense
for the year was $17,863.
Income Taxes
The Company is a limited liability company that has elected to be taxed as a
corporation pursuant to the Company filing Form 8832, Entity Classification
Election. The election was effective on January 1, 2001.
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to the difference between the basis of property and equipment
and investments for financial reporting and income tax reporting. The deferred
taxes represent the future tax return consequences of those differences, which
will either be taxable or deductible when the assets and liabilities are
recovered or settled. Deferred taxes are also recognized for operating losses
that are available to offset future federal income taxes.
The net deferred tax liability in the accompanying balance sheet includes the
following amounts of deferred tax assets and liabilities:
Deferred Tax Liability 241,549
Deferred Tax Asset (87,890)
----------------
Net Deferred Tax Liability $ 153,659
================
22
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
2. Long-Term Debt
Notes Payable and Long-Term Debt consists of the following at December 31, 2001:
Note payable to bank, monthly principal
and interest payments of $1,873, interest
rate 8.9%, maturing 2006, secured
by equipment $ 90,191
Note payable to bank, monthly principal and interest payments of $488,
interest rate 9.0%, maturing 2004, secured
by building 11,531
Note payable to bank, monthly principal and interest payments of $1,190,
interest rate 10.0%, maturing 2003, secured
by equipment 24,804
Note payable to finance company, monthly principal and interest payments of
$5,023, interest rate 9.0%, maturing 2005, secured
by equipment 176,478
Note payable to finance company, monthly principal and interest payments of
$1,726, interest rate 10.0%, maturing 2006, secured
by equipment 83,464
Note payable to finance company, monthly principal and interest payments of
$1,644, interest rate 10.0%, maturing 2006, secured
by equipment 73,427
Note payable to finance company, monthly principal and interest payments of
$3,166, interest rate 10.0%, maturing 2004, secured
by equipment 45,424
23
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
3. Long-Term Debt (continued)
Note payable to finance company, monthly principal and interest payments of
$672, interest rate 10.15%, maturing 2006, secured
by equipment $ 27,176
Note payable to finance company, monthly principal and interest payments of
$343, interest rate 14.3%, maturing 2005, secured
by equipment 12,869
Note payable to finance company, monthly principal and interest payments of
$378, interest rate 14.0%, maturing 2006, secured
by equipment 15,081
Note payable to finance company, monthly principal and interest payments of
$703, interest rate 11.95%, maturing 2005, secured
by equipment 24,480
Note payable to finance company, monthly principal and interest payments of
$808, interest rate 12.56%, maturing 2003, secured
by equipment 9,781
Note payable to finance company, monthly principal and interest payments of
$808, interest rate 12.56%, maturing 2003, secured
by equipment $ 9,781
24
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
2. Long-Term Debt (continued)
Note payable to bank under a $500,000 line of credit, interest payable
monthly, principal payable on demand, interest rate 6.5%, secured by
accounts receivable,
unused portion $44,728 455,272
Note payable to bank, monthly principal and interest payments of $5,199,
interest rate 8.5%, maturing 2004, secured
by equipment 131,283
Note payable to bank under a $200,000 line of credit, interest payable
monthly, principal payable on demand, interest rate 7.5%, secured by
equipment, unused
portion $50,791 149,209
Note payable to finance company, monthly principal and interest payments of
$4,421, interest rate 10.0%, maturing 2002, secured
by equipment 50,282
Note payable to finance company, monthly principal and interest payments of
$703, interest rate 16.85%, maturing 2005, secured
by equipment 20,600
Other notes payable 108,597
----------------
Total Notes Payable and Long-Term Debt 1,519,730
Less Current Portion of Long-Term Debt 502,555
----------------
Long-Term Debt $ 1,017,175
================
25
ABSOLUTE INDUSTRIES, LLC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001
2. Long-Term Debt (continued)
Principal payments on long-term debt at December 31, 2001 are as follows:
2002 $ 502,555
2003 680,173
2004 176,571
2005 102,997
2006 57,434
Long-Term Debt was consolidated into one note agreement on February 21, 2003.
The terms of the new debt agreement require monthly principal and interest
payments of $43,708 based on an interest rate of 7.785% maturing in 2008. The
debt is secured by accounts receivable and equipment.
3. Leases
The Company leases real property and equipment under both non-cancelable and
month to month operating leases. Rentals paid under these leases were
approximately $454,000 during the year ended December 31, 2001.
Future minimum rental payments under the non-cancelable operating leases at
December 31, 2001 are as follows:
2002 $ 280,000
2003 123,504
2004 37,104
2005 34,768
4. Related Party Transactions
The Company entered into a note receivable agreement with a related party on
December 31, 2000. The written terms of the note receivable are as follows:
Accrued interest is due and payable annually on January 1st of each year. The
unpaid principal balance and all accrued interest are due and payable in one
lump sum on January 1, 2005. Other related party transactions included advances
approximately equaling $81,000.
26
EXHIBIT D
BACKGROUND OF CURRENT DIRECTORS
James D. Wright, Chairman of the Board, CEO, Director, Age 41. Mr. Wright was
founder and President of Absolute Industries, LLC, the predecessor organization.
Mr. Wright has 20 years experience in the waste industry in all aspects of
founding, managing and developing waste services. He will be involved in all
acquisitions and all financial, operational and business functions of the
company as well as at the board of directors level setting and reviewing
corporate policy.
William M. Davis, President, Director, Age 46. Mr. Davis directs the garbage
division of Absolute. Prior to joining the company, Mr. Davis spent 15 years in
the industry in the financial, operational and M&A functions of large
publicly-traded waste operators. His role has included interaction with
municipalities in the preparation and securing of municipal bids, acquisitions,
management of hauling, landfill, transfer station and recycling operations.
Thomas F. Duszynski, Director, Age 48. Mr. Duszynski is a graduate of the
University of Illinois (1973) with a degree in accounting. He is a CPA and
worked in public accounting until 1997. He is an officer and affiliate of
Augustine Fund, L.P., which is one of the co-managers of Pac Funding, LLC.
Lawrence A. Woods, Director, Age 46. Mr. Woods began his own company in 1996
before being acquired by Absolute Industries, LLC in April 2003. Mr. Woods
brings the understanding of building a company from the ground floor. His
background in truck repairs and container manufacturing should make major
contributions in the area of capital spending.
MTC/ej/300876
EXHIBIT E
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is executed as of
the 2nd day of July, 2003, by and among THERMACELL TECHNOLOGIES, INC., a Florida
corporation ("THERMACELL"), ABSOLUTE WASTE SERVICES, INC., a newly formed Texas
corporation and wholly-owned subsidiary of THERMACELL ("Merger Sub"), ABSOLUTE
INDUSTRIES, LLC, a Texas limited liability company ("ABSOLUTE"), and each person
owning any interest in ABSOLUTE, as named on the signature pages of this
Agreement (hereinafter individually "ABSOLUTE Member" and collectively "ABSOLUTE
Members").
R E C I T A L S:
A. The board of directors of THERMACELL and the ABSOLUTE Members have
determined that a business combination between THERMACELL and ABSOLUTE is in the
best interests of their respective companies and the respective shareholders and
members of each of them, and presents an opportunity for their respective
companies to enhance the products and services provided to customers and achieve
long-term strategic and financial benefits, and, accordingly, have agreed to
effect the merger provided for herein upon the terms and subject to the
conditions set forth herein.
B. For federal income tax purposes, it is intended that the merger
provided for herein shall qualify as a tax-free reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
C. THERMACELL, Merger Sub, ABSOLUTE and James D. Wright desire to make
certain representations, warranties and agreements in connection with the
merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
"Employee Benefit Plan" means any "employee benefit plan" (as such term
is defined in ERISA ss.3(3)) and any other employee benefit plan, program or
arrangement of any kind.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Sec. 3(2).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
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treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as
now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Knowledge" means actual knowledge.
"Liability" or "liability" means any liability whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, and whether due or to become due.
"Ordinary course of business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
I. THE MERGER
1.1. Merger, Surviving Company. Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined in Section 1.5), ABSOLUTE
shall be merged with and into Merger Sub in accordance with this Agreement and
the separate existence of ABSOLUTE shall thereupon cease (the "Merger"). Merger
Sub shall be the surviving entity in the Merger (sometimes hereinafter referred
to as the "Surviving Company") and shall remain a wholly-owned subsidiary of
THERMACELL. The Merger shall have the effects specified in the applicable
sections of the Texas Business Corporation Act, as amended ("TBCA") and the
Texas Limited Liability Company Act, as amended ("TLLCA").
1.2. Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of Merger Sub in effect immediately prior to the Effective Time
shall be the Articles of Incorporation of the Surviving Company until altered,
amended or repealed as provided therein or by law.
1.3. Bylaws. At the Effective Time, the Bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Company until altered, amended or repealed as provided therein or by law.
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1.4. Directors and Officers of Surviving Company. The directors and
officers of Merger Sub immediately prior to the Effective Time shall be the
directors and officers of the Surviving Company as of the Effective time until
changed according to the Bylaws of Merger Sub or according to applicable law.
1.5. Effective Time. If all of the conditions to the Merger set forth
in Article VII shall have been fulfilled or waived in accordance therewith and
this Agreement shall not have been terminated as provided in Article VIII, the
parties hereto shall cause articles or a certificate of merger meeting the
requirements of the TBCA and the TLLCA to be properly executed and filed with
the Texas Secretary of State in accordance with such statutes on the Closing
Date (as defined in Section 1.8). The Merger shall become effective at the time
of filing of the articles or certificate of merger with, and as accepted by, the
Texas Secretary of State or at such later time which the parties hereto shall
have agreed upon and designated in such filing as the effective time of the
Merger (the "Effective Time").
1.6. Stock of Merger Sub. At the Effective Time, all of the issued and
outstanding stock of Merger Sub shall continue to be held by THERMACELL and the
Surviving Company will be a wholly-owned subsidiary of THERMACELL.
1.7 Exchange of THERMACELL Shares for Interests in ABSOLUTE.
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a. Exchange of Stock. THERMACELL shall tender at Closing (as
defined in Section 1.8) 27,000,000 shares of its Class A convertible preferred
stock ("Merger Stock") to the ABSOLUTE Members and all of the pre-Effective Time
membership interests of ABSOLUTE, including any rights to acquire pre-Effective
Time membership interests of ABSOLUTE ("Outstanding ABSOLUTE Interests") shall
be cancelled. Each share of Merger Stock shall have three (3) votes as described
in a Certificate of Designation, Preference and Rights for such stock to be
filed with the Florida Secretary of State, a true and correct copy of which is
attached hereto as Exhibit ___. Each ABSOLUTE Member shall receive the number of
shares of Merger Stock that is determined by multiplying 27,000,000 times the
total percentage of Outstanding ABSOLUTE Interests owned by such ABSOLUTE Member
immediately prior to the Effective Time.
b. Certificates. At the Effective Time, a certificate
representing the number of shares of Merger Stock for which each ABSOLUTE
Member's Outstanding ABSOLUTE Interests shall be exchanged as provided in
Section 1.7.a above shall be delivered to such member.
c. Outstanding Options or Warrants. Immediately prior to the
Closing, all outstanding options or warrants to purchase membership interests in
ABSOLUTE will be exercised to the extent exercisable and canceled to the extent
not exercisable.
1.8. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on or before the date specified in
Section 8.1(e). The date Closing occurs shall be the "Closing Date". The Closing
shall take place at the offices of Pearson & Price, PLLC, 800 North Shoreline
Boulevard, Suite 1700 South, Corpus Christi, Texas.
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II. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THERMACELL
THERMACELL represents, warrants and covenants as follows:
2.1. Corporate Status. THERMACELL is a corporation organized, existing
and in good standing under the laws of the State of Florida and has full
corporate authority and power to own its properties and conduct its business as
now conducted, and is qualified as a foreign corporation in all jurisdictions
where required by law because it conducts business, owns assets or maintains a
presence therein. At Closing, Merger Sub will be a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
Merger Sub will have full corporate power and authority to own and lease its
properties and to carry on its business as now conducted. Merger Sub will be
qualified as a foreign corporation in all jurisdictions where required by law
because it conducts business, owns assets or maintains a presence therein.
2.2 Bankruptcy Status. In November, 2001, THERMACELL filed a voluntary
petition for reorganization under Chapter 11 of the United States Bankruptcy
Code. Pursuant to that action, the United States Bankruptcy Court for the Middle
District of Florida confirmed THERMACELL's Plan of Reorganization on August 30,
2002 ("Plan of Reorganization"). The previously existing assets and business of
THERMACELL have been transferred to a newly-formed subsidiary free and clear of
any and all debts, claims, liens, demands and interest of creditors, equity
security holders and parties and interests, except as described on Schedule 2.2
attached hereto. All debts, claims and demands that arose before the date of
confirmation of the Plan of Reorganization have been discharged, except for the
priority tax claims and administrative claims described on Schedule 2.2 attached
hereto. A copy of the Plan of Reorganization is attached hereto as Exhibit2.2.
2.3 Capital Stock. The currently authorized capital stock of THERMACELL
consists of 20,000,000 shares of common stock, $.0001 par value, of which
1,000,000 shares were outstanding as of June 1, 2003, and 5,000,000 shares of
Series A and Series B preferred stock, $.0001 par value, of which (0) shares
were outstanding as of June 1, 2003. All outstanding shares of THERMACELL
capital stock are duly authorized, validly issued, fully paid and nonassessable.
The Plan of Reorganization provides for the issuance, or reservation for future
issuance, of 10,000,000 new shares of THERMACELL common stock in the aggregate.
Previously issued shares of THERMACELL common stock will be cancelled and
replaced by the new shares authorized under the Plan of Reorganization. Pac
Funding, LLC, a Florida limited liability company, whose members are Augustine
Capital Funding, L.P. and Private Capital Group, Inc., is entitled to 5,000,000
new THERMACELL common shares pursuant to the Plan of Reorganization. General
unsecured creditors and unsecured claims are entitled to 4,000,000 new
THERMACELL common shares pursuant to the Plan of Reorganization. The existing
shareholders of THERMACELL are entitled to 1,000,000 new THERMACELL common
shares. No later than the earlier of seven days prior to the Closing Date or
July 24, 2003, the distribution of shares of new THERMACELL common stock will be
completed.
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2.4 Merger Stock. The Merger Stock will, when issued, be duly
authorized, validly issued, fully paid and nonassessable. The Merger Stock shall
be convertible at any time to shares of common stock, ___ par value, and
following conversion, the holder of the shares of common stock received in
connection with the conversion shall be entitled to sell, transfer, exchange,
pledge or otherwise dispose of, or in any other way reduce the holder's risk
relative to, or make any offer or agreement relating to any of the foregoing
with respect to, any or all of such shares of common stock subject only to the
requirements of Rule 144 with the period such holder held the Merger Stock being
given full credit for purposes of meeting the holding period requirement of such
rule.
2.5 THERMACELL SEC Reports. THERMACELL has filed all required reports,
schedules, forms, statements, and other documents with the Securities and
Exchange Commission (the "SEC"). In particular, but without limitation of the
generality of the foregoing, THERMACELL has filed with the SEC, and has
heretofore made available to ABSOLUTE and the ABSOLUTE Members, true and
complete copies of THERMACELL's most recent annual report on Form 10-KSB, most
recent quarterly report on Form 10-QSB, and most recent Form 8-K. These reports,
at the time filed, (a) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, and (b) complied in all material respects with
the applicable requirements of the Securities Act of 1933 and the Securities
Exchange Act of 1934, as applicable, and the applicable rules and regulations of
the SEC thereunder. No consent, approval or authorization of any governmental or
regulatory authority or any other party or person is required to be obtained by
either THERMACELL or Merger Sub in connection with its execution, delivery and
performance of this Agreement and the articles of merger or the transactions
contemplated hereby or thereby, except such as shall have been obtained by the
Closing Date.
2.6. Subsidiaries. Schedule 2.6 sets forth the name, principal place of
business and jurisdiction of organization of each corporation, partnership,
association, joint venture, or other entity or business enterprise in which
THERMACELL, directly or indirectly, owns any shares of the capital stock or has
any other equity interest (each such corporation, partnership, association,
joint venture, or other entity or business enterprise is referred to herein
individually as a "Subsidiary" and, collectively, as the "Subsidiaries"), and
sets forth the jurisdiction in which each Subsidiary is qualified to do
business. Other than as set forth in Schedule 2.6, (i) THERMACELL does not own,
directly or indirectly, any shares of capital stock or have any other equity
interest in any corporation, partnership, association, joint venture, or other
entity or business enterprise, (ii) THERMACELL does not control, beneficially or
otherwise, any other corporation, partnership, association, joint venture, or
other entity or business organization and (iii) THERMACELL does not have any
commitment to contribute capital of, make loans or advances to, or share the
losses of any enterprise.
2.7. Power and Authority. Execution and delivery of this Agreement and
other instruments, agreements and documents referred to herein by THERMACELL and
Merger Sub, and the performance of the transactions contemplated hereby have
been (or by Closing will be) duly and validly authorized by the Board of
Directors of THERMACELL and Merger Sub, and this Agreement and the other
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agreements, instruments and documents referred to herein will be, when executed,
binding upon and enforceable against THERMACELL and Merger Sub in accordance
with their terms. All corporate and other proceedings required to be taken by or
on behalf of THERMACELL and Merger Sub in order to authorize THERMACELL and
Merger Sub to enter into and carry out this Agreement and for the transfer and
delivery of the Merger Stock to be transferred by it hereunder have been duly
and properly taken and THERMACELL and Merger Sub will be bound by all such
actions.
2.8. No Conflicts. The execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement and compliance
with the terms of this Agreement by THERMACELL will not:
a. conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under the Articles of Incorporation or
the Bylaws of, THERMACELL and its Subsidiaries or of any indenture, mortgage,
loan agreement or other instrument or agreement to which THERMACELL or any of
its Subsidiaries is a party or by which it or its property is bound, or of any
applicable law, rule, regulation, judgment, order or decree of any government,
governmental authority or instrumentality, or court, domestic or foreign, having
jurisdiction over THERMACELL or any of its Subsidiaries or any of its assets or
properties, or of any agreement among shareholders of THERMACELL and any of its
Subsidiaries or between THERMACELL and any of its Subsidiaries and its
shareholders; or
b. result in the creation of any lien, charge or encumbrance
upon the stock or upon any of the assets or properties of THERMACELL or its
Subsidiaries.
2.9. Litigation. Except as disclosed in Schedule 2.9 and except for the
bankruptcy proceeding described in Section 2.2 above, neither THERMACELL nor its
Subsidiaries:
a. is a party to any litigation, proceeding or administrative
investigation, and, none is pending or to the best of its knowledge threatened
against them, their respective properties, any property used in the business of
THERMACELL and its Subsidiaries or the transactions contemplated by this
Agreement;
b. knows of any outstanding order, writ, injunction or decree
of any court, government, governmental authority or arbitration against or
affecting it, its properties or business;
c. knows of any basis for any such litigation, proceeding or
investigation to have a materially adverse effect, financial or otherwise, on
the business, property, operations or prospects of THERMACELL and its
Subsidiaries; and
d. knows of any material infringement of any copyright,
trademark, trade name, patent or other proprietary right owned or licensed by
it.
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There is no action, suit or proceeding pending against
THERMACELL or its Subsidiaries before or by any court, administrative agency or
other governmental authority which brings into question the validity of, or
might in any way impair, the execution, the delivery or the performance by
THERMACELL of this Agreement or of any of the other instruments, agreements and
documents described herein or constitute a default with respect to any other
instrument, agreement or document to which THERMACELL is subject or bound.
2.10. Compliance With Applicable Laws. The conduct of the business of
THERMACELL does not violate or infringe upon any federal, state, local or
foreign law, statute, ordinance, license or regulation presently in effect.
THERMACELL has maintained and currently maintains all licenses and permits
required by all local, state and federal authorities and regulatory bodies, and
THERMACELL will continue to conduct its business in compliance therewith.
2.11. Approvals and Consents. No consent, approval or authorization of
any governmental authority, person or entity not a party to this Agreement is
required to be obtained by THERMACELL in connection with the execution, delivery
or performance of this Agreement or of any other document, instrument or
agreement referred to herein by THERMACELL or the consummation by it of the
transactions contemplated hereby except for the filing of articles or a
certificate of merger with the Secretary of State of Florida and of Texas.
2.12. Enforceability. This Agreement and all instruments, agreements
and documents contemplated herein constitutes, or when executed and delivered
will constitute, the valid and binding obligations of THERMACELL enforceable in
accordance with their respective terms, subject only to laws of general
application affecting creditor's rights.
2.13. Schedules. The Schedules to this Agreement set forth true,
complete and accurate information describing the matters set forth therein.
2.14. No Brokers. Except for the Harrelson group, all negotiations
relating to this Agreement and the transactions contemplated hereby have been
carried on without the intervention of any person acting on behalf of THERMACELL
or any stockholder of THERMACELL in such manner as to give rise to any valid
claim against THERMACELL, any stockholder of THERMACELL, or ABSOLUTE for any
broker's or finder's fee or similar compensation.
2.15 Tax-Free Reorganization Matters.
(a) No inter-corporate indebtedness exists between THERMACELL and the
Merger Sub that was issued at a discount, acquired at a discount or will be
settled at a discount.
(b) THERMACELL has no present plan or intention to sell or dispose of
any of the assets of ABSOLUTE after the Closing, except for (i) sales,
transfers or other distributions made in the ordinary course of business
and (ii) transfers or successive transfers to one or more corporations
controlled within the meaning of Section 368(c) of the Code in each case by
the transferor corporations.
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(c) Following the Closing, THERMACELL intends to continue the historic
businesses of ABSOLUTE that are presently conducted or use a significant
portion of ABSOLUTE's historic assets in operating a business.
(d) The Merger Stock is voting stock.
(e) Following the Closing, the Surviving Company will hold at least
ninety percent (90%) of the fair market value of ABSOLUTE's net assets and
at least seventy percent (70%) of the fair market value of ABSOLUTE's gross
assets and at least ninety percent (90%) of the fair market value of Merger
Sub's net assets and at least seventy percent (70%) of the fair market
value of Merger Sub's gross assets held immediately prior to Closing.
Reorganization expenses, and all redemptions and distributions (except for
regular, normal dividends) made by ABSOLUTE or the Merger Sub will be
included as assets of ABSOLUTE or the Merger Sub, respectively, immediately
prior to Closing.
(f) Immediately prior to Closing, THERMACELL will be in control of
Merger Sub within the meaning of Section 368(c) of the Code. THERMACELL has
no plan or intention to cause ABSOLUTE to issue additional membership
interests that would result in THERMACELL losing control of ABSOLUTE within
the meaning of Section 368(c) of the Code.
(g) Merger Sub will have no liabilities assumed by ABSOLUTE, and will
not transfer to ABSOLUTE any assets subject to liabilities as part of the
transactions contemplated by this Agreement.
(h) Neither THERMACELL nor Merger Sub is an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
2.16 Rule 145 Representations. THERMACELL, as described in Rule
144(c)(i) of the Act, has filed all reports required to be filed by Sections 13
or 15(d) of the Exchange Act during the past twelve (12) months, and has been
subject to such filing requirements for the past ninety (90) days. THERMACELL
Stock is registered pursuant to Section 12 of the Exchange Act.
2.17 Investment Representations. THERMACELL and its representatives
have been provided ample opportunity to ask questions of ABSOLUTE's management,
and have received answers satisfactory to such representatives regarding the
financial condition, business and affairs of ABSOLUTE and such other information
as it desired in order to evaluate the purchase of membership interests in
ABSOLUTE. THERMACELL is purchasing for its own account for the purpose of
investment and not with a view for sale in connection with any distribution
thereof. THERMACELL has been advised prior to investing that the Absolute
interests may not be resold without an exemption from registration. THERMACELL's
representatives have the knowledge and experience to evaluate the merits and
risks of the purchase of the ABSOLUTE membership interests. THERMACELL
acknowledges that Thomas F. Duszynski and Don Huggins are the representatives of
THERMACELL. Neither of the THERMACELL representatives has any material
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relationship to Absolute. Thermacell has the financial ability to bear the
economic risk of holding the ABSOLUTE membership interests for an indefinite
period of time and to suffer the complete loss of its investment in the ABSOLUTE
membership interests. Thermacell sought out Absolute, solicited the acquisition
of the ABSOLUTE membership interests and proposed the merger transaction to the
holders of Absolute membership interests.
2.18. Disclosure. Neither this Agreement nor any of the Schedules
attached hereto contains any untrue statements of a material fact or omit to
sate a material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. THERMACELL knows of no fact or condition which materially adversely
affects, or in the future may materially adversely affect, the condition,
properties, assets, liabilities, business, operations or prospects of THERMACELL
taken as a whole which has not been set forth herein or in the attached
Schedules.
III. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ABSOLUTE
ABSOLUTE and James D. Wright hereby jointly and severally represent,
warrant and covenant as follows:
3.1. Company Status. ABSOLUTE is a limited liability company duly
organized and existing in good standing under the laws of the State of Texas and
has full authority and power to own its properties and conduct its business as
now conducted, and is qualified as a foreign limited liability company in all
jurisdictions where required by law because it conducts business, owns assets or
maintains a presence therein.
3.2. Subsidiaries. Schedule 3.2 sets forth the name, principle place of
business and jurisdiction of organization of each corporation, partnership,
association, joint venture, or other entity or business enterprise in which
ABSOLUTE, directly or indirectly, owns any shares of the capital stock or has
any other equity interest (each such corporation, partnership, association,
joint venture, or other entity or business enterprise is referred to herein
individually as a "Subsidiary" and, collectively, as the "Subsidiaries"), and
sets forth the jurisdiction in which each Subsidiary is qualified to do
business. In addition, Schedule 3.2 accurately and completely sets forth (a) the
number of shares of capital stock or other securities or ownership interests of
each Subsidiary that are owned by ABSOLUTE, and the percentage of the total
outstanding number of such shares or other securities or ownership interests
that are owned, and (b) the names and addresses of the owners of any shares or
other securities or ownership interests in any Subsidiary that are not owned by
ABSOLUTE. Other than as set forth in Schedule 3.2, (i) ABSOLUTE does not own,
directly or indirectly, any shares of capital stock or have any other equity
interest in any corporation, partnership, association, joint venture, or other
entity or business enterprise, (ii) ABSOLUTE does not control, beneficially or
otherwise, any other corporation, partnership, association, joint venture, or
other entity or business organization and (iii) ABSOLUTE does not have any
commitment to contribute capital of, make loans or advances to, or share the
losses of any enterprise.
3.3. Power and Authority. Execution and delivery of this Agreement and
the other instruments, agreements and documents referred to herein by ABSOLUTE,
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and the performance of the transactions contemplated hereby have been duly and
validly authorized by the ABSOLUTE Members, and this Agreement and the other
agreements, instruments and documents referred to herein will be, when executed,
binding upon and enforceable against ABSOLUTE in accordance with their terms.
All company and other proceedings required to be taken by or on behalf of
ABSOLUTE in order to authorize ABSOLUTE to enter into and carry out this
Agreement and for the transfer and delivery of the membership interests in
ABSOLUTE to be transferred hereunder have all been duly and properly taken, and
ABSOLUTE will be bound by all such actions.
3.4. No Conflicts. The execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement and compliance
with the terms of this Agreement by ABSOLUTE will not, to the best of the
Knowledge of James D. Wright:
a. conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under the articles of organization or the
Regulations of ABSOLUTE or of any indenture, mortgage, loan agreement or other
instrument or agreement to which ABSOLUTE is a party or by which it or its
property is bound, or of any applicable law, rule, regulation, judgment, order
or decree of any government, governmental authority or instrumentality, or
court, domestic or foreign, having jurisdiction over ABSOLUTE or any of its
assets or properties, or of any agreement among the ABSOLUTE Members or between
ABSOLUTE and the ABSOLUTE Members; or
b. result in the creation of any lien, charge or encumbrance
upon the membership interests or upon any of the assets or properties of
ABSOLUTE.
3.5. Financial Statements. Except as disclosed on Schedule 3.5, the
financial statements of ABSOLUTE dated as of December 31, 2001, December 31,
2002, and March 31, 2003 (the "Financial Statements"):
a. are in accordance with the books and records of ABSOLUTE;
b. fairly set forth the financial condition and results of the
operations of ABSOLUTE as of the relevant dates thereof and for the periods
covered thereby;
c. contain and reflect all necessary and material adjustments
for a fair representation of the results of operations and financial condition
for the periods covered by the statements; and
d. will be provided to THERMACELL in audited form no later
than 45 days following Closing.
3.6. Absence of Undisclosed Liabilities. Except as disclosed in the
Financial Statements or in Schedule 3.6, to the best of the Knowledge of James
D. Wright, ABSOLUTE is not obligated for, nor are any of the assets or
properties of ABSOLUTE subject to, any liabilities of any kind, including
without limitation trade liabilities incurred in the ordinary course of
business.
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3.7. Absence of Certain Changes or Events. Except as disclosed in
Schedule 3.7, since the beginning of its current fiscal year, to the best of the
Knowledge of James D. Wright, ABSOLUTE has not:
a. experienced any change in its financial condition, assets,
liabilities, results of operations or business, any of which has been materially
adverse;
b. suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting its properties or
business;
c. mortgaged, pledged or subjected to lien, charge, security
interest or any other encumbrance (other than the lien of taxes not yet due and
payable) any of its assets or properties;
d. transferred or leased any of its assets or properties;
e. cancelled or compromised any debt or claim (except for
adjustments made with respect to contracts for the purchase of supplies or for
the sale of products which in the aggregate are not material);
f. waived or released any right of material value;
g. suffered any operating loss or other material loss;
h. issued or sold any membership interests or any other
securities or granted any options for the purchase thereof;
i. made any amendment to or terminated any contract, license
or other agreement to which it is a party;
j. received any payment or transfer in violation of Section
547 or Section 548 of the Federal Bankruptcy Code (11 U.S.C. 547, 548) or in
violation of similar state law;
k. failed to make payment on any of its debts or other
obligations as they have become due and payable in the ordinary course of
business;
l. conducted its business other than in the ordinary course;
or
m. experienced any other event or condition of any character
which has materially and adversely affected ABSOLUTE's business.
3.8. Tax Matters. ABSOLUTE has prepared and filed or will file in a
timely manner all federal, state and local tax returns and reports as are and
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have been required to be filed, which returns were prepared on a basis
consistent with the financial statements of ABSOLUTE, and all taxes shown
thereon to be due have been paid in full. ABSOLUTE has not executed or filed
with the Internal Revenue Service or any other taxing authority any agreement
extending the period for assessment or collection of any income or other taxes;
and, as of the date hereof, ABSOLUTE is not a party to any pending action or
proceeding by any governmental authority for assessment or collection of taxes,
and no claim for assessment or collection of taxes has been asserted against
ABSOLUTE. No formal claims have been made or asserted against ABSOLUTE or its
properties in which ABSOLUTE has an interest, and no formal claims have been
made or asserted against ABSOLUTE or its properties by the United States
Government or by any state or foreign country or local government for income,
sales or any other taxes, except such as have been paid or are disclosed herein.
3.9. Litigation. Except as disclosed in Schedule 3.9, ABSOLUTE:
a. is not a party to any litigation, proceeding or
administrative investigation and none is pending or, to the best of James D.
Wright's Knowledge, threatened against it, its properties, any property used in
the business of ABSOLUTE, or the transactions contemplated by this Agreement;
b. to the best of the Knowledge of James D. Wright, is not
subject to any outstanding order, writ, injunction or decree of any court,
government, governmental authority or arbitration against or affecting it, its
properties or business;
c. knows of no basis currently for any litigation, proceeding
or investigation which might have a materially adverse effect, financial or
otherwise, on the business, property, operations or prospects of ABSOLUTE; and
d. knows of no material infringement of any material
copyright, trademark, trade name, patent or other proprietary right owned or
licensed by it.
There is no action, suit or proceeding pending against
ABSOLUTE before or by any court, administrative agency or other governmental
authority which brings into question the validity of, or might in any way
impair, the execution, the delivery or the performance by ABSOLUTE of this
Agreement.
3.10. Title to Assets and Condition of Properties.
a. Except as disclosed on Schedule 3.10, ABSOLUTE has good and
marketable title to all of the assets both real and personal, tangible and
intangible, shown on its Financial Statements. Such assets are subject to no
liens and encumbrances, including without limitation, mortgage, guaranty,
judgment, execution, pledge, lien, conditional sales agreement, security
agreement, encumbrance or charge, except as disclosed in the Financial
Statements (with respect to which no default or basis therefor exists), except
for liens for taxes not delinquent, and except for minor imperfections of title
and encumbrances, if any, which are not substantial in amount, do not materially
detract from the value of the properties subject thereto or materially impair
its operations and have arisen only in the ordinary course of business. ABSOLUTE
expressly disclaims any warranty as to the condition of such assets, such assets
being sold AS IS and WHERE IS.
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b. The following paragraphs describe the business of ABSOLUTE:
(i) All vendor and customer contracts, professional service agreements,
subcontracting agreements, confidentiality agreements, purchase and sales
orders, powers of attorney, undertakings, commitments and other agreements to
which ABSOLUTE is a party and which relate in any manner to the business and/or
relationship between ABSOLUTE and its customers, whether written or oral, shall
be referred to herein collectively as the "Business Agreements." Attached as
Schedule 3.10(b)(i-1) is a list of all written Business Agreements which have
been entered into between ABSOLUTE and its customers. Attached as Schedule
3.10(b)(i-2) is a detailed summary of all written non-customer Business
Agreements between ABSOLUTE and others, including, without limitation, vendors
or service providers, or which relate to any strategic partnerships,
subcontracting or revenue sharing agreements, reselling arrangements or joint
ventures between ABSOLUTE and others. Listed on Schedule 3.10(b)(i-3) is a
description of each and every real estate, equipment and personal property lease
(collectively, the "Leases") to which ABSOLUTE is a party. To the best of the
Knowledge of James D. Wright, ABSOLUTE is not in default under any agreement and
no other party to any agreement has made any claim or given ABSOLUTE notice of
any dispute under any agreement, except as set forth on Schedule 3.9. Each
agreement is in full force and effect.
(ii) All of the tangible assets of ABSOLUTE, including without limitation,
all motor vehicles, trucks, machinery, office and other equipment, furniture,
computers and related equipment, business machines, telephones and telephone
systems, parts and accessories, telephone numbers, facsimile numbers, e-mail
addresses, IP addresses and Internet domain addresses presently utilized by
ABSOLUTE shall be referred to herein collectively as the "Tangible Assets."
Attached hereto as Schedule 3.10(b)(ii) is a true and correct list or
description of the material Tangible Assets. ABSOLUTE expressly disclaims any
warranty as to the condition of the Tangible Assets, such Tangible Assets being
sold AS IS and WHERE IS.
(iii)All trademarks, trade names, service marks, service names, logos,
designs, and other trade rights and all registrations and applications therefor,
all know-how, trade secrets, technology or processes, all web sites and all
computer programs, data files and data bases, software code and documentation
owned or used by ABSOLUTE, other than off-the-shelf software licensed by
ABSOLUTE, shall be referred to herein collectively as the "Intellectual
Property." Attached hereto as Schedule 3.10(b)(iii) is a list of all of the
Intellectual Property. To the Knowledge of James D. Wright, ABSOLUTE is not
infringing on the rights of any third parties to Intellectual Property used, but
not owned by, ABSOLUTE. ABSOLUTE has not sent or otherwise communicated to any
other person any notice, charge, claim or assertion of, nor has any knowledge
of, any present, impending or threatened infringement by such other person of
any Intellectual Property. To the best of the Knowledge of James D. Wright,
ABSOLUTE's rights in the Intellectual Property are valid and enforceable.
ABSOLUTE has received no written demand, claim, notice or inquiry from any
person in respect of the Intellectual Property which challenges, threatens to
challenge or inquires as to whether there is any basis to challenge, the
validity of, or the rights of ABSOLUTE in, the Intellectual Property. To James
D. Wright's Knowledge, ABSOLUTE is not in violation or infringement of, and has
not violated or infringed, any intellectual property rights of any other person.
To the Knowledge of James D. Wright, no third party is infringing on the rights
of ABSOLUTE in and to the Intellectual Property. ABSOLUTE has not granted a
license with respect to the Intellectual Property to any person.
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3.11. Accounts Receivable. All of the accounts receivable of ABSOLUTE
are disclosed on Schedule 3.11 and at the Closing will be bona fide trade
accounts receivable, except as specified in Schedule 3.11; provided, however,
that no representation or warranty is made as to the collectibility of the
accounts receivable.
3.12. Insurance Coverage. ABSOLUTE maintains the policies listed on
Schedule 3.12 for fire, casualty, liability, use and occupancy and other
insurance covering its properties and assets. Such policies or like policies
are, as of the date of this Agreement, and will be on the Closing Date,
outstanding and duly in force. True and complete copies of all such policies
shall be made available to THERMACELL for inspection.
3.13. No Interest in Competitors and Others. Except as previously
disclosed to THERMACELL or as set forth on Schedule 3.13, neither ABSOLUTE nor
any officer or member of ABSOLUTE, owns, directly or indirectly, any interest in
(except for the ownership of marketable securities of publicly owned
corporations representing in no case more than five percent of the outstanding
shares of such class of securities) or controls or is an employee, officer,
director or partner of, participant in or consultant to any corporation,
association, partnership, limited partnership, joint venture or other business
organization, which is a competitor, supplier, customer, landlord or tenant of
ABSOLUTE.
3.14. Compliance With Applicable Laws. To the best of the Knowledge of
James D, Wright, the conduct of the business of ABSOLUTE does not violate or
infringe upon any federal, state, local or foreign law, statute, ordinance,
license or regulation presently in effect, or any right or concession,
copyright, trademark, trade name, patent, know-how or other proprietary right of
others, the enforcement of which would materially adversely affect either the
business of ABSOLUTE or the value of the assets being conveyed hereunder. To the
best of the Knowledge of James D. Wright, ABSOLUTE has maintained and currently
maintains all licenses and permits required by all local, state and federal
authorities and regulatory bodies, and ABSOLUTE will continue to conduct its
business in compliance therewith.
3.15. Approvals and Consents. To the best of the Knowledge of James D.
Wright, no consent, approval or authorization of any governmental authority,
person or entity not a party to this Agreement is required to be obtained by
ABSOLUTE in connection with the execution, delivery or performance of this
Agreement or of any other document, instrument or agreement referred to herein,
or the consummation by it of the transactions contemplated hereby, except for
the filing of articles or a certificate of merger with the Secretary of State of
Florida and of Texas.
3.16. No Discontinuance of Customers. Except as disclosed on Schedule
3.16, no customers of ABSOLUTE have notified ABSOLUTE that they intend to
discontinue their relationship with ABSOLUTE.
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3.17. Enforceability. This Agreement and all instruments, agreements
and documents contemplated herein constitute, or when executed and delivered
will constitute, the valid and binding obligations of ABSOLUTE enforceable in
accordance with their respective terms, subject only to laws of general
application affecting creditor's rights.
3.18. Schedules. To the best of the knowledge of James D. Wright, the
Schedules to this Agreement set forth true, complete and accurate information
describing the matters set forth therein.
3.19. Membership Interests. Schedule 3.19 lists all of the ABSOLUTE
Members and their respective membership interests in ABSOLUTE. Except as
disclosed in Schedule 3.19, there are no outstanding offers, subscriptions,
options, warrants, rights or other agreements or commitments obligating ABSOLUTE
or any ABSOLUTE Member to issue or sell, or cause to be issued or sold, any
interests of ABSOLUTE or obligating ABSOLUTE or any ABSOLUTE Member to enter
into any such agreement or commitment.
3.20. Other Material Contracts. ABSOLUTE has furnished to THERMACELL
copies, where such is in writing, of all agreements, contracts and commitments
of the following types, written or oral, to which ABSOLUTE is a party or by
which it or any of its properties is bound as of the date hereof: (a) mortgages,
indentures, notes, letters of credit, security agreements and other agreements
and instruments relating to the borrowing of money by or extension of credit to
ABSOLUTE; (b) employment and consulting agreements; (c) employee benefit,
profit-sharing and retirement plans; (d) collective bargaining agreements; (e)
material agreements under which gross revenues will or are expected to exceed
$100,000 during ABSOLUTE's fiscal year ending 2003; (f) all joint venture or
partnership agreements to which ABSOLUTE is a party; (g) licenses of software
and any material patent, trademark and other industrial property rights; (h)
agreements or commitments for capital expenditures in excess of $50,000; (i)
brokerage or finder's agreements; and (j) agreements, contracts, leases and
commitments of a type other than those described in the foregoing clauses (a)
through (i) which, in any case, involve aggregate payments or receipts of more
than $50,000 per annum. ABSOLUTE has made available to THERMACELL complete and
correct copies of all written agreements, contracts and commitments, together
with all amendments thereto, and accurate descriptions of all oral agreements.
All such agreements, contracts and commitments are in full force and effect and,
to the best of James D. Wright's Knowledge, all parties thereto have performed
all material obligations required to be performed by them to date, are not in
default in any material respect thereunder, and have not violated any
representation or warranty, explicit or implied, contained therein.
3.21. Employees. To the Knowledge of James D. Wright, no
executive, key employee, or group of employees has any plans to terminate
employment with ABSOLUTE. ABSOLUTE is not a party to or bound by any collective
bargaining agreement, nor has ABSOLUTE experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining disputes.
ABSOLUTE has not committed any unfair labor practice that has not been resolved.
James D. Wright has no Knowledge of any organizational effort presently being
made or threatened by or on behalf of any labor union with respect to employees
of ABSOLUTE.
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3.22. Employee Benefits.
(i) Schedule 3.22 lists each Employee Benefit Plan that ABSOLUTE
maintains or to which ABSOLUTE contributes.
(ii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to each
such Employee Benefit Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date which are not
yet due have been paid to each such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of ABSOLUTE.
(iii) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code Sec. 401(a)
and has received, within the last two years, a favorable determination letter
from the Internal Revenue Service.
(iv) The market value of assets under each such Employee Benefit Plan
which is an Employee Pension Benefit Plan equals or exceeds the present value of
all vested and nonvested liabilities thereunder determined in accordance with
methods, factors, and assumptions applicable to an Employee Pension Benefit
Plan.
3.23. Environment, Health, and Safety. To the best of the Knowledge of
James D. Wright:
(i) ABSOLUTE and its predecessors has complied and is in compliance
with all Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, ABSOLUTE has
obtained and complied with, and is in compliance with, all permits, licenses and
other authorizations that are required pursuant to Environmental, Health, and
Safety Requirements for the occupation of its facilities and the operation of
its business.
(iii) Neither ABSOLUTE nor its predecessors has received any written or
oral notice, report or other information regarding any actual or alleged
violation of Environmental, Health, and Safety Requirements, or any liabilities
or potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective obligations,
relating to any of them or its facilities arising under Environmental, Health,
and Safety Requirements.
(iv) None of the following exists at ABSOLUTE's owned or leased
facilities: (1) underground storage tanks, (2) asbestos-containing material in
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any form or condition, (3) materials or equipment containing polychlorinated
biphenyls, or (4) landfills, surface impoundments, or disposal areas.
(v) Neither this Agreement nor the consummation of the transaction that
is the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties.
(vi) Neither ABSOLUTE nor any of its predecessors has, either expressly
or by operation of law, assumed or undertaken any liability, including without
limitation any obligation for corrective or remedial action, of any other Person
relating to Environmental, Health, and Safety Requirements.
(vii) No facts, events or conditions relating to the past or present
facilities, properties or operations of ABSOLUTE or any of its predecessors will
prevent, hinder or limit continued compliance with Environmental, Health, and
Safety Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental, Health, and Safety Requirements, or give
rise to any other liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or offsite
releases or threatened releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources damage.
3.24. No Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any person acting on behalf of ABSOLUTE or any ABSOLUTE Member in such manner
as to give rise to any valid claim against ABSOLUTE or any ABSOLUTE Member for
any broker's or finder's fee or similar compensation.
3.25. Disclosure. To the best of the Knowledge of James D. Wright,
neither this Agreement nor any of the Schedules attached hereto contain any
untrue statements of a material fact or omit to state a material fact necessary
to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. There is no fact or
condition within the Knowledge of James D. Wright which materially adversely
affects, or in the future may materially adversely affect, the condition,
properties, assets, liabilities, business, operations or prospects of ABSOLUTE
taken as a whole which has not been set forth herein or in the attached
Schedules.
IV. CONDUCT OF THERMACELL'S BUSINESS PENDING CLOSING DATE
From and after the date of this Agreement and until the Closing Date,
THERMACELL shall operate its business only in the usual, regular and ordinary
manner and, to the extent consistent with such operation, keep the business
organization intact, keep available the services of its present officers and
employees and preserve the present business relationships with customers,
suppliers and others having business dealings with THERMACELL.
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V. CONDUCT OF ABSOLUTE'S BUSINESS PENDING CLOSING DATE
From and after the date of this Agreement and until the Closing Date,
except as disclosed on Schedule V, ABSOLUTE shall operate its business only in
the usual, regular and ordinary manner and, to the extent consistent with such
operation, keep the business organization intact, keep available the services of
its present officers and employees and preserve the present business
relationships with Customers, suppliers and others having business dealings with
ABSOLUTE.
VI. ADDITIONAL AGREEMENTS
6.1. Cooperation to Effectuate Transaction. Each of ABSOLUTE, the
ABSOLUTE Members, THERMACELL and Merger Sub shall use their respective good
faith efforts to:
a. take all such action as may be required under federal
securities laws and state securities laws in connection with the transactions
contemplated by this Agreement;
b. cooperate with one another in order to remove any other
impediment to the consummation of the transactions contemplated herein; and
c. furnish to one another and to one another's counsel all
such information as may be required in order to effect the foregoing actions.
6.2. Compliance with Conditions Precedent; Further Assurances.
THERMACELL, Merger Sub, ABSOLUTE, and the ABSOLUTE Members will each use its or
his or her reasonable good faith efforts to cause the conditions precedent to
the Merger set forth in Article VII hereof to be fulfilled and, subject to the
terms and conditions herein provided, to take, or cause to be taken, all action,
and to do or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Merger. In case at any time
after the Effective Time any further actions are necessary or desirable to carry
out the purposes of this Agreement, the ABSOLUTE Members and the proper officers
and/or directors of ABSOLUTE, THERMACELL or Merger Sub, as the case may be,
shall take all such necessary actions.
6.3. Certification Notifications. At all times from the date hereof
until the Effective Time, each party shall promptly notify the others in writing
of the occurrence of any event which will or may result in the failure to
satisfy any of the conditions specified in Article VII.
6.4. Adoption by Merger Sub. THERMACELL, as the sole shareholder of
Merger Sub, by execution of this Agreement, consents to the adoption of this
Agreement by Merger Sub and agrees that such consent shall be treated for all
purposes as a vote duly adopted at a meeting of the shareholders of Merger Sub
held for this purpose.
6.5. Expenses. All costs and expenses incurred by THERMACELL and Merger
Sub in connection with this Agreement and the transactions contemplated hereby
shall be borne or paid by THERMACELL and Merger Sub. All costs and expenses
incurred by ABSOLUTE and the ABSOLUTE Members in connection with this Agreement
and the transactions contemplated hereby shall be borne or paid by ABSOLUTE or
the ABSOLUTE Members.
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6.6 THERMACELL Capital Structure. At the Effective Time, the
capital ownership of THERMACELL will be as follows:
Pac Funding, LLC 5,000,000 shares of common stock
Unsecured creditors/claims 4,000,000 shares of common stock (allocated)
Pre-petition THERMACELL shareholders 1,000,000 shares of common stock (allocated)
Harrelson group 3,000,000 shares of common stock
Glenn Bagwell, as escrow agent 2,000,000 shares of common stock
Tom Duszynski 1,000,000 shares of common stock
Private Capital Group, Inc. 2,000,000 shares of common stock
Private Capital Group, Inc. (new issue) 2,000,000 shares of common stock
ABSOLUTE Members 27,000,000 shares of Class A convertible preferred stock.
6.7 THERMACELL Board of Directors. At the Closing Date , THERMACELL's
Board of Directors shall consist of Jim Wright, Bill Davis, a designee of
ABSOLUTE, Tom Duszynski, and Bob Cordrick with Messrs. Wright, Davis and
Duszynski elected to 2-year terms and Messrs. Cordrick and the ABSOLUTE designee
elected to 1-year terms.
6.8 Dilution - Reverse Splits. After Closing, there will be no dilution
of THERMACELL common stock or reverse splits thereof until such stock has closed
at or above $3.00 per share for ninety (90) consecutive trading days, or until
the end of one (1) year following the Closing Date, whichever occurs first;
provided, however, that the foregoing shall not be construed to limit, or delay
the exercise of, the right of the ABSOLUTE Members to convert any or all of the
Merger Stock into shares of common stock.
VII. CONDITIONS FOR CLOSING
7.1. Conditions Precedent to the Obligations of All Parties.
Notwithstanding any other provision of this Agreement, the obligations of both
THERMACELL and Merger Sub, and of ABSOLUTE and the ABSOLUTE Members, to effect
the Merger shall be subject to the fulfillment, prior to or at the Effective
Time, of each of the following conditions:
a. all permits, approvals and consents of any governmental
body or agency necessary or appropriate for consummation of the Merger shall
have been obtained;
b. no preliminary or permanent injunction or other order of a
court or governmental agency or authority in the United States shall have been
issued and be in effect, and no United States federal or state statute, rule or
regulation shall have been enacted or promulgated after the date hereof and be
in effect, that (i) prohibits the consummation of the Merger or (ii) imposes
material limitations on the ability of the Surviving Company to exercise full
rights of ownership of ABSOLUTE's assets or business;
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c. there shall not be any action or proceeding commenced by or
before any court or governmental agency or authority in the United States, that
challenges the consummation of the Merger or seeks to impose material
limitations on the ability of the Surviving Company to exercise full rights
regarding the assets or business of ABSOLUTE;
d. the transaction shall have been duly and validly authorized
by the respective Boards of Directors of THERMACELL and Merger Sub;
e. the transaction shall have been duly and validly authorized
by the ABSOLUTE Members, and no ABSOLUTE Member shall have exercised any rights
to dissent from the Merger under applicable provisions of the TLLCA; and
f. the parties acknowledge that no Schedules will be delivered
prior to execution of this Agreement; therefore, prior to the Effective Time,
all Schedules shall have been attached hereto, and the party under this
Agreement being furnished the Schedules shall be satisfied with the information
set forth therein in its sole and absolute discretion.
7.2. Additional Conditions Precedent to the Obligations of THERMACELL
and Merger Sub. In addition to the conditions contained in Section 7.1, the
obligations of THERMACELL and Merger Sub to effect the Merger shall also be
subject to the fulfillment as of the Effective Time of each of the following
conditions:
a. the representations and warranties of ABSOLUTE contained in
Article III shall be true in all material respects at and as of the date hereof
and as of the Effective Time as if made at and as of such time; ABSOLUTE and the
ABSOLUTE Members shall have duly performed and complied in all material respects
with all agreements, covenants and conditions required by this Agreement to be
performed or complied with by it or them prior to or at the Effective Time; and
ABSOLUTE shall have delivered to THERMACELL and Merger Sub a certificate dated
the Effective Time and signed on behalf of ABSOLUTE by its President to the
effect set forth in this paragraph (a);
b. THERMACELL and Merger Sub shall have received from Pearson
& Price, PLLC, counsel for ABSOLUTE and the ABSOLUTE Members, an opinion, dated
the Closing Date, in form and substance satisfactory to THERMACELL, to the
effect that (i) ABSOLUTE is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Texas, has the
power to enter into this Agreement, consummate the Merger and to carry out the
other transactions contemplated hereby; (ii) this Agreement has been duly
authorized, executed and delivered by ABSOLUTE; (iii) this Agreement has been
duly executed and delivered and constitutes valid and binding obligations of
ABSOLUTE and the ABSOLUTE Members; and (iv) the execution, delivery and
performance of this Agreement by ABSOLUTE will not constitute a breach or
violation of, or default under, the articles of organization or the Regulations
of ABSOLUTE. In rendering the foregoing opinion, Pearson & Price, PLLC may limit
its opinions to the laws of the United States and the State of Texas and the
rules and regulations of governmental agencies of such jurisdictions. Counsel
may also take the customary exception to its opinion that the Agreement is a
valid and binding obligation to allow for the effect of applicable bankruptcy,
insolvency, reorganization and other laws affecting creditors' rights and
equitable principles, and counsel may rely upon certificates of officers and
other persons as to questions of fact material to such opinion;
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c. all approvals or consents of any third party (other than
governmental agencies) required for the execution, delivery or performance of
this Agreement by ABSOLUTE or the ABSOLUTE Members shall have been delivered to
THERMACELL;
d. none of the ABSOLUTE Members shall have exercised
dissenters' rights under the TLLCA in connection with the Merger; and
e. ABSOLUTE shall have completed a certified audit in
accordance with applicable SEC regulations.
7.3. Additional Conditions Precedent to the Obligations of ABSOLUTE. In
addition to the conditions contained in Section 7.1, the obligations of ABSOLUTE
and the ABSOLUTE Members to effect the Merger shall also be subject to the
fulfillment as of the Closing Date of each of the following conditions:
a. the representations and warranties of THERMACELL and Merger
Sub contained in Article II shall be true in all material respects at and as of
the date hereof and as of the Effective Time as if made at and as of the
Effective Time; THERMACELL and Merger Sub shall have duly performed and complied
in all material respects with all agreements, covenants and conditions required
by this Agreement to be performed or complied with by each of them prior to or
at the Effective Time; and THERMACELL and Merger Sub shall have delivered to
ABSOLUTE certificates dated the Effective Time and signed on their behalf by
their respective chairmen or presidents to the effect set forth in this
paragraph (a);
b. ABSOLUTE shall have received from Donald P. Reed, Esq.
counsel for THERMACELL and Merger Sub, an opinion, dated the Closing Date, to
the effect that (i) THERMACELL is a corporation validly existing and in good
standing under the laws of the State of Florida and has corporate power to enter
into this Agreement and to carry out the transactions contemplated hereby; (ii)
this Agreement has been duly authorized, executed and delivered by THERMACELL
and constitutes its valid and binding obligation; (iii) the shares of Merger
Stock issuable pursuant to the Merger have been duly and validly authorized and
upon issuance at the Effective Time will be validly issued, fully paid and
non-assessable; (iv) the execution, delivery and performance of this Agreement
by THERMACELL will not constitute a breach or violation of, or default under,
the Articles of Incorporation or Bylaws of THERMACELL, (v) if the Merger
constitutes, or is deemed to include, an offering or sale of the membership
interests of ABSOLUTE under any applicable federal and/or state securities laws
or regulations, the appropriate steps have been taken to qualify and report such
offering or sale as an exempt or exempted transaction under applicable federal
and/or state securities laws and regulations, and (vi) at the Effective Time,
the capital ownership of THERMACELL will be as follows:
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Pac Funding, LLC 5,000,000 shares of common stock
Unsecured creditors/claims 4,000,000 shares of common stock (allocated)
Pre-petition THERMACELL shareholders 1,000,000 shares of common stock (allocated)
Harrelson group 3,000,000 shares of common stock
Glenn Bagwell, as escrow agent 2,000,000 shares of common stock
Tom Duszynski 1,000,000 shares of common stock
Private Capital Group, Inc. 2,000,000 shares of common stock
Private Capital Group, Inc. (new issue) 2,000,000 shares of common stock
ABSOLUTE Members 27,000,000 shares of Class A convertible preferred stock.
In rendering the foregoing opinion, Donald P. Reed, Esq. may limit his opinions
to the laws of the United States and the State of Florida. Counsel may also take
the customary exception to his opinion that the Agreement is a valid and binding
obligation to allow for the effect of applicable bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights and equitable
principles and counsel may rely upon certificates of officers and other persons
as to questions of fact material to such opinion;
c. Merger Sub shall have been duly and validly formed under
the laws of the State of Texas;
d. ABSOLUTE shall have received from Johnson, Pope, Bokor,
Ruppell & Burns, P.A., securities and bankruptcy counsel for THERMACELL, or from
other counsel acceptable to ABSOLUTE, an opinion, dated the Closing Date, to the
effect that:
1. The confirmation of the plan in Case No. 01-20854-8G1,In
re: Thermacell Technologies, Inc. discharged the debtor from all debts that
arose before the date of confirmation.
2. The Plan of Reorganization approved by the Court on or
about August 30, 2002, in Case No. 01-20854-8G1,In re: Thermacell Technologies,
Inc. did not provide for the liquidation of all or substantially all of the
property of the estate as provided in Section 1141(d)(3)(A) of the Bankruptcy
Code.
3. Following the consummation of the Plan of Reorganization
approved by the Court on or about August 30, 2002, in Case No. 01-20854-8G1,In
re: Thermacell Technologies, Inc., the debtor did engage in business as provided
in Section 1141(d)(3)(B).
4. All allowed administrative claims in Class A of the Plan of
Reorganization approved by the Court on or about August 30, 2002, in Case No.
01-20854-8G1,In re: Thermacell Technologies, Inc. and all administrative claims
due on the Effective Date of said Plan have been paid in full and no remaining
balances are due.
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5. All allowed priority Claims in Class B of the Plan of
Reorganization approved by the Court on or about August 30, 2002, in Case No.
01-20854-8G1,In re: Thermacell Technologies, Inc. have been paid in full and no
remaining balances are due.
6. The Allowed Priority Tax Claims in Class C in the Plan of
Reorganization approved by the Court on or about August 30, 2002, in Case No.
01-20854-8G1,In re: Thermacell Technologies, Inc. have been paid in full and no
remaining balances are due.
7. PAC Funding, LLC the secured creditor in Class D-1 in the
Plan of Reorganization approved by the Court on or about August 30, 2002, in
Case No. 01-20854-8G1,In re: Thermacell Technologies, Inc. has elected to have
its claim for secured debt converted to equity in the Reorganized Debtor in an
amount equal to fifty percent (50%) of the newly issued common stock as provided
in the Order Confirming Plan.
8. All Class E-1 Allowed Unsecured Claims in the Plan of
Reorganization approved by the Court on or about August 30, 2002, in Case No.
01-20854-8G1,In re: Thermacell Technologies, Inc. have been paid in full and no
remaining balances are due.
9. All Class E-2 Allowed Unsecured Claims in the Plan of
Reorganization approved by the Court on or about August 30, 2002, in Case No.
01-20854-8G1,In re: Thermacell Technologies, Inc. have received their pro rata
share of newly issued common stock as provided in such Plan.
10. All Class F-1 equity interest holders in the Plan of
Reorganization approved by the Court on or about August 30, 2002, in Case No.
01-20854-8G1,In re: Thermacell Technologies, Inc. have received their pro rata
share of newly issued common stock as provided in the Plan.
11. THERMACELL is in compliance with the Plan of
Reorganization.
12. Neither THERMACELL nor its subsidiary is subject to any
executory contracts.
13. There is no litigation pending against THERMACELL or its
subsidiary.
14. Neither THERMACELL nor its subsidiary maintain any
Employee Benefit Plans.
15. THERMACELL, as described in Rule 144(c)(i) of the Act, has
filed all reports required to be filed by Sections 13 or 15(d) of the Exchange
Act during the past twelve (12) months, and has been subject to such filing
requirements for the past ninety (90) days; and the Merger Stock is convertible
into shares of THERMACELL common stock that may be sold in accord with Rule
144(f) of the Act, subject only to the holding period requirement of Rule 145(d)
and the limitation on the amount of securities sold under Rule 144(e).
23
e. THERMACELL shall have taken the appropriate corporate
actions and made the necessary filings to authorize sufficient shares of its
Class A convertible preferred stock to consummate the Merger and issue the
Merger Stock to the ABSOLUTE Members;
f. THERMACELL shall have taken the appropriate actions to
cause its common stock to be fully tradable on the OTC:BB and its
representatives, Thomas F. Duszynski and Don Huggins, shall have executed and
delivered a certificate that all such appropriate actions have been taken;
g. THERMACELL shall have taken the appropriate actions to duly
authorize a total of 50,000,000 shares of preferred stock and 150,000,000 shares
of common stock and amend its Articles of Incorporation to reflect such
authorizations;
h. THERMACELL shall have taken the appropriate actions to
adopt, and file with the Secretary of State of the State of Florida, the
Certificate of Designation, Preference and Rights for all classes of its
preferred stock; and
i. THERMACELL shall have taken the appropriate actions to
amend its Bylaws, if necessary, to read in accord with Exhibit 7.3 attached
hereto and to elect Jim Wright, Bill Davis and a designee of ABSOLUTE to its
Board of Directors.
VIII. TERMINATION, AMENDMENT AND WAIVER
8.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time:
a. by the written consent of ABSOLUTE and THERMACELL; or
b. by THERMACELL and Merger Sub, upon notice to ABSOLUTE, if
any material default under, or material breach of, any agreement or covenant of
ABSOLUTE or the ABSOLUTE Members contained in this Agreement has occurred or if
any representation or warranty contained herein on the part of ABSOLUTE or the
ABSOLUTE Members shall not have been true and correct in any material respect at
and as of the date made; or
c. by ABSOLUTE, upon notice to THERMACELL and Merger Sub, if
any material default under, or material breach of, any agreement or covenant of
THERMACELL or Merger Sub contained in this Agreement has occurred or if any
representation or warranty contained herein on the part of THERMACELL or Merger
Sub shall not have been true and correct in any material respect at and as of
the date made; or
d. by either party if the information set forth in Schedules
and Exhibits to be attached to this Agreement after the date of execution and
delivered prior to Closing are not satisfactory to the party to whom such
Schedules and Exhibits are being furnished in its sole and absolute discretion;
or
24
e. by THERMACELL and Merger Sub, on the one hand, or ABSOLUTE,
on the other, upon notice to the other, if the Merger shall not have become
effective on or before July 31, 2003, unless such date is extended by mutual
consent of ABSOLUTE and THERMACELL.
IX. REPRESENTATIONS AND WARRANTIES OF ABSOLUTE MEMBERS
Each ABSOLUTE Member hereby represents and warrants, with respect to
only such ABSOLUTE Member, to THERMACELL and Merger Sub as follows:
9.1. Authority. Each ABSOLUTE Member (other than a natural person) has
full corporate, partnership or trust (as the case may be) authority to execute,
deliver and perform this Agreement and each other agreement, document or
instrument required to be delivered by it hereby or in connection herewith
(collectively, the "ABSOLUTE Member Documents"). Each ABSOLUTE Member (including
a trustee of a trust that is an ABSOLUTE Member) that is a natural person has
the right, capacity and all requisite authority to execute, deliver and perform
the ABSOLUTE Member Documents. The execution, delivery and performance by each
ABSOLUTE Member (other than a natural person or a trust) of the ABSOLUTE Member
Documents has been duly authorized by all necessary corporate or partnership (as
the case may be) action of such ABSOLUTE Member. This Agreement has been, and
each other ABSOLUTE Member Documents when executed and delivered in accordance
with this Agreement will be, duly executed and delivered by each ABSOLUTE
Member. This Agreement constitutes, and each of the other ABSOLUTE Member
Documents when executed and delivered in accordance with this Agreement will
constitute, a valid and binding obligation of each ABSOLUTE Member, enforceable
against such ABSOLUTE Member in accordance with its terms.
9.2. Absence of Conflict. The execution, delivery or performance of the
ABSOLUTE Member Documents will not (a) violate any provision of the certificate
or articles of incorporation, bylaws, certificate of partnership, partnership
agreement, declaration of trust or other organizational document of each
ABSOLUTE Member (other than a natural person) or (b) violate any statute or law
or any judgment, decree, order, regulation or rule of any court or other
governmental body applicable to each ABSOLUTE Member.
9.3. Investment Representations.
a. The Merger Stock to be received by each ABSOLUTE Member
pursuant to this Agreement will be held by such ABSOLUTE Member for its/his/her
own account for the purpose of investment and not with a present view for sale
in connection with any distribution thereof.
b. Each ABSOLUTE Member's financial position is such that
it/he/she can afford to bear the economic risk of holding the Merger Stock
it/he/she receives pursuant to this Agreement for an indefinite period of time,
and each ABSOLUTE Member can afford to suffer the complete loss of its/his/her
investment in such Merger Stock.
25
c. Each ABSOLUTE Member has been provided an opportunity to
ask questions of, and has received answers satisfactory to such ABSOLUTE Member
from, THERMACELL and its representatives regarding the business and affairs of
THERMACELL and such other information as it/he/she desired in order to evaluate
an investment in the Merger Stock.
d. Each ABSOLUTE Member understands that the Merger Stock
comprising the merger consideration to be received by it/him/her pursuant to
this Agreement has not been registered under the Securities Act or applicable
state securities laws in reliance upon specific exemptions from registration
thereunder. Each ABSOLUTE Member agrees that the Merger Stock to be received by
it/him/her pursuant to this Agreement may not be sold, offered for sale,
exchanged, transferred, pledged or otherwise disposed of except pursuant to a
registration statement under the Securities Act of 1933 or pursuant to an
exemption from the registration requirements of the Securities Act of 1933 and
in compliance with state securities laws, and the certificates for the Merger
Stock will bear a legend to such effect. Upon registration, if any, there can be
no assurance that a public market for the Merger Stock shares will exist. If
shares of the Merger Stock are converted into shares of THERMACELL common stock,
there likewise can be no assurance that a public market for such common shares
will exist or that trading of such common shares can commence, or if commenced
can be maintained, on the OTC:BB. As a result, a holder of THERMACELL tradable
securities may find it difficult to dispose of, or to obtain accurate quotations
as to the price of, the shares. In addition, THERMACELL securities may be
subject to "penny stock" rules that impose sales practice and market making
requirements on broker-dealers who sell and/or make a market in such securities.
This could affect the ability or willingness of broker-dealers to sell and/or
make a market in THERMACELL securities and the ability of holders of THERMACELL
securities to sell their stock in the secondary market.
9.4 Tax Matters. No ABSOLUTE Member is a foreign person subject
to withholding under Section 1445 of the Code and the regulations promulgated
thereunder.
X. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The warranties, representations, covenants and agreements set forth
herein shall be continuous and shall survive the termination of this Agreement
or any part hereof for a period of one year.
XI. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto with respect to the transactions contemplated hereby, and this Agreement
supersedes in all respects all written or oral understandings and agreements
heretofore existing between the parties hereto.
26
XII. AMENDMENT AND WAIVER
This Agreement may not be modified or amended except by an instrument
in writing duly executed by the parties hereto. No waiver of compliance with any
provision or condition hereof and no consent provided for herein shall be
effective unless evidenced by an instrument in writing duly executed by the
party hereto sought to be charged with such waiver or consent.
XIII. NOTICES
Notices required or permitted hereunder shall be deemed to be delivered
hereunder if mailed with U.S. postage prepaid, or delivered via express delivery
service, to (copies may be sent via facsimile):
If to THERMACELL or Merger Sub:
648 Snug Island
Clearwater, FL 33767
With a copy to:
Donald P. Reed, Esq.
100 Second Avenue South
Suite 200-S
St. Petersburg, FL 33701
Fax: 727-823-3465
If to ABSOLUTE and any ABSOLUTE Member:
2932 County Road 44
Robstown, TX 78380
With a copy to:
Paul O. Price, Esq.
Pearson & Price, PLLC
800 North Shoreline Blvd.
Suite 1700, South Tower
Corpus Christi, TX 78401
Fax: 361-885-0288
XIV. COUNTERPARTS
This Agreement may be executed in one or more counterparts, and all
such counterparts shall constitute one and the same instrument.
27
XV. CAPTIONS
Captions used herein are for convenience only and are not a part of
this Agreement and shall not be used in construing it.
XVI. EXECUTION OF DOCUMENTS
At any time and from time to time, the parties hereto shall execute
such documents as are necessary to effect this Agreement.
XVII. MISCELLANEOUS
17.1. Assignability. This Agreement shall not be assignable by any of
the parties to this Agreement without the prior written consent of all other
parties to this Agreement.
17.2. Venue; Process. The parties to this Agreement agree that
jurisdiction and venue shall properly lie in the courts of the State of Texas in
Nueces County, Texas, or in the United States District Court for the Southern
District of Texas (Corpus Christi Division), with respect to any legal
proceedings arising from this Agreement.
17.3. Governing Law. This Agreement has been negotiated and prepared
and shall be performed in the State of Texas , and the validity, construction
and enforcement of, and the remedies under, this Agreement shall be governed in
accordance with the laws of the State of Texas (except that if any choice of law
provision under Texas law would result in the application of the law of a state
or jurisdiction other than the State of Texas, such provision shall not apply).
17.4. Severability of Provisions. The invalidity or unenforceability of
any particular provision hereof shall not affect the remaining provisions of
this Agreement, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.
17.5. Successors and Assigns. The rights and obligations of the parties
hereunder shall inure to the benefit of, and shall be binding and enforceable
upon, the respective heirs (if personal), successors, assigns and transferees of
either party.
17.6. Reliance. All representations and warranties contained herein, or
any certificate or other instrument delivered in connection herewith, shall be
deemed to have been relied upon by the parties hereto, notwithstanding any
independent investigation made by or on behalf of such parties.
17.7. Attorney's Fees. The parties hereby agree that in the event any
of the terms and conditions contained in this Agreement, including the
indemnification provisions contained herein, must be enforced by reason of any
past, existing or future delinquency of payment or failure of observance or of
performance by any of the parties hereto, in each such instance, the defaulting
party shall be liable for reasonable collection and/or legal fees, trial and
appellate levels, any expenses and legal fees incurred, including time spent in
supervision of paralegal work and paralegal time, and any other expenses and
costs incurred in connection with the enforcement of any available remedy.
28
17.8. Schedules. The Schedules to this Agreement, and the other
materials and documents referenced herein, are incorporated by reference herein
and are made a part hereof as if they were fully set forth herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THERMACELL TECHNOLOGIES, INC.,
a Florida corporation
Attest: By:
----------------------------------- --------------------
Print Name: Its:
--------------------------------- --------------------
ABSOLUTE WASTE SERVICES, INC.,
a Texas corporation
Attest: By:
------------------------------------- -----------------------
Print Name: Its:
--------------------------------- -----------------------
ABSOLUTE INDUSTRIES, LLC,
a Texas limited liability
company
Attest: By:
------------------------------------- ------------------------
Print Name: Its:
--------------------------------- ------------------------
ABSOLUTE MEMBERS:
- --------------------------------------------
James D. Wright
- --------------------------------------------
William Davis
- --------------------------------------------
Larry Woods
PRICE & PEARSON,
a Texas general partnership
By: __________________________________
29
EXHIBIT F
Articles of Amendment
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A PREFERRED STOCK OF
ABSOLUTE WASTE SERVICES, INC.
The undersigned, being the Secretary of ABSOLUTE WASTE SERVICES, INC.,
a Florida corporation ("Corporation"), DOES HEREBY CERTIFY as follows:
FIRST: That pursuant to the Articles of Incorporation duly filed with
the Secretary of State of the State of Florida, the total number of shares which
the Corporation may issue, as stated in Article IV thereof, consists of One
Hundred Fifty Million (150,000,000) shares of common voting stock having a par
value of $.0001 per share, and Fifty Million (50,000,000) shares of preferred
stock, par value $.001, which preferred stock shall have such voting power,
preferences, rights, terms and conditions as established by the Board of
Directors from time to time.
SECOND: That pursuant to authority conferred upon the Board of
Directors by Article IV of the Articles of Incorporation and Section 607.0602 of
the Florida Business Corporation Act, the Board of Directors of the Corporation,
acting by unanimous written consent, duly adopted the following resolution
providing for the issuance of a series of preferred stock:
RESOLVED that, pursuant to authority vested in the Board of Directors
by Article IV of the Articles of Incorporation of this Corporation, a
series of Preferred Stock is hereby established, the distinctive
designation of which shall be "Series A Preferred Stock", and the
preferences and relative, participating, optional or other special
rights of Series A Preferred Stock, and the qualifications, limitations
or restrictions thereof, shall be as follows:
1. Designation. The designation of the series of preferred stock
described in Article IV shall be Series A Preferred Stock, $.001 par value
(hereinafter "Series A Preferred Stock"), and the number of shares constituting
such series shall be 27,500,000.
2. Voting Rights. The holders of Series A Preferred Stock shall be
entitled to three (3) votes for each share of such stock held on all matters on
which the holders of Common Stock are entitled to vote and shall vote together
with the holders of Common Stock and not as a separate class, unless otherwise
required by Florida law.
3. Dividend Rights. Shares of Series A Preferred Stock shall be
entitled to the same dividends and dividend rights as shares of Common Stock.
All dividends payable with respect to shares of Series A Preferred Stock on any
dividend payment date shall be paid prior to the payment of dividends on Common
Stock.
4. Redemption Rights. Shares of Series A Preferred Stock shall have no
redemption rights.
5. Liquidation. Shares of Series A Preferred Stock shall have the same
liquidation rights as shares of Common Stock. Shares of Series A Preferred Stock
shall have no liquidation preferences.
6. Conversion Rights. Shares of Series A Preferred Stock shall have the
following conversion rights:
a. Conversion Formula. Any holder of shares of Series A
Preferred Stock may convert each such share of Series A
Preferred Stock into one (1) share of Common Stock of the
Corporation at any time at the option of the holder.
b. Mechanics of Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into
shares of Common Stock, he shall surrender the certificate or
certificates therefor, duly endorsed, at the principal office
of the Corporation or of any transfer agent for the Series A
Preferred Stock, and shall give written notice to the
Corporation at such office that he elects to convert the same
and shall state therein the name or names in which he wishes
the certificate or certificates for shares of Common Stock to
be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of
Series A Preferred Stock, or to his nominee or nominees, a
certificate or certificates for the number of shares of Common
Stock to which he shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of
shares of Series A Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders or such shares of
Common Stock on such date (the "Conversion Date").
c. Stock Splits, etc. If the number of shares of Common Stock
issued and outstanding at any time after the effective date of
this Resolution is increased by a stock dividend payable in
shares of Common Stock or by a subdivision or split-up of
shares of Common Stock, then immediately after the record date
fixed for the determination of holders of Common Stock
entitled to receive such stock dividend or the effective date
of such subdivision or split-up, as the case may be, the
number of shares of Common Stock issuable upon conversion of
the Series A Preferred Stock shall be appropriately adjusted
by the Board of Directors of the Corporation so that the
holder of any Series A Preferred Stock thereafter converted
shall be entitled to receive the number of shares of Common
Stock that he would have owned immediately following such
stock dividend or split action had such Series A Preferred
Stock been converted immediately prior thereto.
d. Reverse Stock Splits, etc. If the number of shares of
Common Stock issued and outstanding at any time after the
effective date of this Resolution is decreased by a reverse
stock split, the number of shares of Common Stock issuable
upon conversion of the Series A Preferred Stock shall be
appropriately adjusted so that the holder of any Series A
Preferred Stock thereafter converted shall be entitled to
receive the number of shares of Common Stock that he would
have owned immediately following such reverse stock split
action had such Series A Preferred Stock been converted
immediately prior thereto.
e. Notice of Adjustments. Whenever the number of shares of
Common Stock issuable upon conversion of the Series A
Preferred Stock shall be adjusted as provided herein, the
Corporation shall forthwith file, at the office of any
conversion agent for the Series A Preferred Stock and at the
principal office of the Corporation, a statement showing in
detail the facts requiring such adjustment and the number of
shares of Common Stock issuable upon conversion of the Series
A Preferred Stock after such adjustment, and the Corporation
shall also cause a copy of such statement to be sent by mail,
first class postage prepaid, to each holder of Series A
Preferred Stock at its address appearing on the Corporation's
records.
f. Taxes. The Corporation shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the
issuance or delivery of shares of Common Stock upon conversion
of any Series A Preferred Stock.
g. Reserve Shares. The Corporation shall reserve at all times
so long as any Series A Preferred Stock remains outstanding,
free from preemptive rights, out of either or both of its
treasury stock or its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of
the Series A Preferred Stock, sufficient shares of Common
Stock to provide for the conversion of all outstanding Series
A Preferred Stock.
h. Governmental Approvals. If any shares of Common Stock to be
reserved for the purpose of conversion of Series A Preferred
Stock require registration with or approval of any
governmental authority under any federal or state law before
such shares may be validly issued or delivered upon
conversion, then the Corporation will in good faith and as
expeditiously as possible endeavor to secure such registration
or approval, as the case may be. If, and so long as, any
Common Stock into which the Series A Preferred Stock is then
convertible is listed on any national securities exchange, the
Corporation will, if permitted by the rules of such exchange,
list and keep listed on such exchange, upon official notice of
issuance, all shares of such Common Stock issuable upon
conversion.
i. Valid Issue. All shares of Common Stock which may be issued
upon conversion of the Series A Preferred Stock will, upon
issuance by the Corporation, be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof and the
Corporation shall take no action which will cause a contrary
result.
7. Reacquired Shares. Shares of Series A Preferred Stock converted or
otherwise acquired by the Corporation shall be restored to the status of
authorized but unissued shares of preferred stock without designation as to
series.
8. No Sinking Fund. Shares of Series A Preferred Stock are not subject
to the operation of a sinking fund.
9. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereto.
10. Severability of Provisions. If any right, preference or limitation
of the Series A Preferred Stock set forth in this resolution (as such resolution
may be amended from time to time) is invalid, unlawful or incapable of being
enforced by reason of any rule of law or public policy, all other rights,
preferences and limitations set forth in this resolution (as so amended) which
can be given effect without the invalid, unlawful or unenforceable right,
preference or limitation shall, nevertheless, remain in full force and effect,
and no right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so
expressed herein.
11. Remedies. The holders of the Series A Preferred Stock shall be
granted the rights of specific performance, injunctive relief and any other
remedies that may be otherwise available at law or in equity to enforce the
provisions of this Certificate of Designation. The provisions of this
Certificate of Designation are to be literally construed in interpreting the
preferences granted to the Series A Preferred Stock hereunder.
12. No Other Rights. The shares of Series A Preferred Stock shall not
have any relative powers, preferences and rights, nor any qualifications,
limitations or restrictions thereof, other than as set forth herein or in the
Articles of Incorporation of the Corporation.
13. Other Articles. All other articles and provisions of the Articles
of Incorporation of the Corporation shall remain the same.
IN WITNESS WHEREOF, the undersigned, being the Secretary of the
Corporation, has hereunto set his hand as of the ____ day of _________________,
2003, and he hereby affirms that the foregoing Certificate is my act and deed
and the act and deed of the Corporation and that the facts stated herein are
true.
------------------------------
Donald G. Huggins, Jr., Secretary
STATE OF FLORIDA )
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me this ____ day of
___________________, 2003 by Donald G. Huggins, Jr., as Secretary of Absolute
Waste Services, Inc., a Florida corporation on behalf of the corporation, who is
known to me and did take an oath.
___________________________
Notary Public
My commission expires:----------------------
MTC/ej/298002
EXHIBIT G
INDUCEMENT/INDEMNITY AGREEMENT
WHEREAS, Thomas F. Duszynski and Don Huggins sought out the members and
owners of Absolute Industries, LLC ("ABSOLUTE"), solicited the acquisition of
the ABSOLUTE membership interests and proposed a merger transaction to the
holders of Absolute membership interests by and between ABSOLUTE and ThermaCell
Technologies, Inc. ("THERMACELL") (now known as Absolute Waste Services, Inc.).
WHEREAS, Pac Funding, LLC, as the debtor in possession funding source,
is willing to indemnify ABSOLUTE and THERMACELL for liabilities, debts and
obligations of THERMACELL that exist or relate to events or circumstances prior
to the Effective Time of the Agreement and Plan of Merger.
NOW, THEREFORE, in order to induce the members and owners of ABSOLUTE
to close the Agreement and Plan of Merger with THERMACELL without obtaining
certain opinions from THERMACELL's counsel and without THERMACELL having taken
the appropriate actions to cause its common stock to be fully tradable on the
OTC:BB as required under such Agreement, Thomas F. Duszynski and Don Huggins
hereby represent and warrant to the best of each of their respective knowledge
to the members of ABSOLUTE that the following are true and correct as of the
Closing:
1. Bankruptcy Status. In November, 2001, THERMACELL filed a voluntary petition
("Bankruptcy Proceeding") for reorganization under Chapter 11 of the United
States Bankruptcy Code. Pursuant to that action, the United States
Bankruptcy Court for the Middle District of Florida confirmed THERMACELL's
Plan of Reorganization on August 30, 2002 ("Plan of Reorganization"). A
true and correct copy of the Plan of Reorganization is attached hereto as
Exhibit 1. The previously existing assets and business of THERMACELL have
been transferred to a newly-formed subsidiary free and clear of any and all
debts, claims, liens, demands and interest of creditors, equity security
holders and parties and interests, except as described on Schedule 1
attached hereto. The Plan of Reorganization does not provide for the
liquidation of all or substantially all of the property of the bankruptcy
estate of THERMACELL. THERMACELL, the reorganized debtor, did engage in its
pre-petition business following consummation of the Plan of Reorganization.
Schedule 1 attached hereto sets forth all debts, claims and demands that
arose before the date of confirmation but that were not discharged upon the
entry on March 21, 2003 of the Final Decree in the Bankruptcy Proceeding.
2. Pac Funding, LLC Indemnity. Provided that THERMACELL and ABSOLUTE WASTE
ACQUISITIONS, INC. furnishes at their expense the required audited
financial statements and other financial information Pac Funding, LLC ("PAC
FUNDING") hereby agrees to pay the professional fees and other expenses
incurred to file on behalf of THERMACELL and ABSOLUTE WASTE ACQUISITIONS,
INC. for (i) the Form 15(c)(2)(11) with NASD, (ii) the EDGAR filing costs
and expenses for Couture & Co. with the SEC the Form 10-KSB annual reports
for the years ending September 30, 2003 and September 30, 2004, (iii) the
Form 10-Q's and Form 8-K's required for all periods through September 30,
2004, the Form D required in connection with the consummation of the
Agreement and Plan of Merger, and (iv) any other EDGAR costs and expenses
of Couture & Co. for SEC filings required for all periods through September
30, 2004 (i.e. Forms 3, 4 and Schedule 13D). PAC FUNDING hereby agrees to
indemnify and hold harmless THERMACELL, ABSOLUTE, ABSOLUTE WASTE
ACQUISITIONS, INC. and their respective successors ("INDEMNITEES") from (i)
all debts, claims, liabilities and demands of THERMACELL that arose before
the date of confirmation of the Plan of Reorganization but were not
discharged upon the entry on March 21, 2003 of the Final Decree in the
Bankruptcy Proceeding, (ii) all liabilities, debts and obligations of
THERMACELL or ABSOLUTE WASTE ACQUISITIONS, INC. that arose after the Final
Decree in the Bankruptcy Proceeding from events or circumstances that
occurred prior to the Effective Time of the Agreement and Plan of Merger,
including without limitation professional fees and other expenses incurred
by either THERMACELL or ABSOLUTE WASTE ACQUISITIONS, INC. in connection
with the negotiation, documentation and consummation of the Agreement and
Plan of Merger, (iii) liability for the professional fees and other
expenses that PAC FUNDING, Thomas F. Duszynski, Don Huggins have agreed to
pay in connection with the filings set forth above, and (iv) reasonable
attorney's fees and expenses incurred by INDEMNITEES in enforcing this
indemnification obligation. Schedule 2, attached hereto, sets forth all
such debts, claims, demands and liabilities ("Assumed Liabilities"). PAC
FUNDING shall deliver via wire transfer to THERMACELL cash in the total
amount of the Assumed Liabilities on or before the Effective Time of the
Merger. Thomas F. Duszynski and Don Huggins represent to ABSOLUTE and
THERMACELL that PAC FUNDING is authorized to enter into this Agreement and
undertake the indemnification obligations described herein. The Indemnity
obligations set forth in this Section 2 are not personal obligations or
guaranties of Thomas F. Duszynski and Don Huggins.
3. Litigation. Except as disclosed in Schedule 3 and except for the bankruptcy
proceeding described in Section 1 above, neither THERMACELL nor its
Subsidiaries:
a. is a party to any litigation, proceeding or
administrative investigation, and, none is pending or
to the best of its knowledge threatened against them,
their respective properties, any property used in the
business of THERMACELL and its Subsidiaries or the
transactions contemplated by this Agreement;
b. knows of any outstanding order, writ, injunction or
decree of any court, government, governmental
authority or arbitration against or affecting it, its
properties or business;
c. knows of any basis for any such litigation,
proceeding or investigation to have a materially
adverse effect, financial or otherwise, on the
business, property, operations or prospects of
THERMACELL and its Subsidiaries; and
d. knows of any material infringement of any copyright,
trademark, trade name, patent or other proprietary
right owned or licensed by it.
There is no action, suit or proceeding pending against
THERMACELL or its Subsidiaries before or by any court,
administrative agency or other governmental authority which
brings into question the validity of, or might in any way
impair, the execution, the delivery or the performance by
THERMACELL of this Agreement or of any of the other
instruments, agreements and documents described herein or
constitute a default with respect to any other instrument,
agreement or document to which THERMACELL is subject or bound.
4. Investment Representations. THERMACELL and its representatives have been
provided ample opportunity to ask questions of ABSOLUTE's management, and
have received answers satisfactory to such representatives regarding the
financial condition, business and affairs of ABSOLUTE and such other
information as it desired in order to evaluate the purchase of membership
interests in ABSOLUTE. THERMACELL is purchasing membership interests in
ABSOLUTE for its own account for the purpose of investment and not with a
view for sale in connection with any distribution thereof. THERMACELL has
been advised prior to investing that the Absolute interests may not be
resold without an exemption from registration. THERMACELL's representatives
have the knowledge and experience to evaluate the merits and risks of the
purchase of the ABSOLUTE membership interests. THERMACELL acknowledges that
Thomas F. Duszynski and Don Huggins are the representatives of THERMACELL.
Neither of the THERMACELL representatives has any material relationship to
Absolute. Thermacell has the financial ability to bear the economic risk of
holding the ABSOLUTE membership interests for an indefinite period of time
and to suffer the complete loss of its investment in the ABSOLUTE
membership interests. Thermacell sought out Absolute, solicited the
acquisition of the ABSOLUTE membership interests and proposed the merger
transaction to the holders of Absolute membership interests.
5. Financial Statements. Except as disclosed on Schedule 5 attached hereto,
the annual financial statements of THERMACELL dated as of September 30,
2002 and the 9 month quarter financial statements as of June 30, 2003 (the
"Financial Statements"):
a. are in accordance with the books and records of THERMACELL;
b. fairly set forth the financial condition and results of the
operations of THERMACELL as of the relevant dates thereof
and for the periods covered thereby;
c. contain and reflect all necessary and material adjustments
for a fair representation of the results of operations and
financial condition for the periods covered by the
statements.
6. Absence of Undisclosed Liabilities. Except as disclosed in the Financial
Statements or in Schedules 2 or 6 attached hereto, THERMACELL is not
obligated for, nor are any of the assets or properties of THERMACELL
subject to, any liabilities of any kind, including without limitation trade
liabilities incurred in the ordinary course of business and professional
fees incurred in connection with the negotiation, documentation and
consummation of the Agreement and Plan of Merger.
7. Tax Matters. THERMACELL and its subsidiaries have prepared and filed or
will file in a timely manner all federal, state and local tax returns and
reports as are and have been required to be filed, which returns were
prepared on a basis consistent with the financial statements of THERMACELL
and its subsidiaries, and all taxes shown thereon to be due have been paid
in full. Neither THERMACELL nor any of its subsidiaries have executed or
filed with the Internal Revenue Service or any other taxing authority any
agreement extending the period for assessment or collection of any income
or other taxes; and, as of the date hereof other than as disclosed on
Schedule 1, neither THERMACELL nor any of its subsidiaries is a party to
any pending action or proceeding by any governmental authority for
assessment or collection of taxes, and no claim for assessment or
collection of taxes has been asserted against THERMACELL or any of its
subsidiaries. No formal claims have been made or asserted against
THERMACELL or any of its subsidiaries or any property in which THERMACELL
or any of its subsidiaries has an interest, and no formal claims have been
made or asserted against THERMACELL, its subsidiaries or its properties by
the United States Government or by any state or foreign country or local
government for income, sales or any other taxes, except such as have been
paid or are disclosed herein.
8. Material Contracts. THERMACELL has furnished to ABSOLUTE copies, where such
is in writing, of all agreements, contracts and commitments of the
following types, written or oral, to which THERMACELL or its subsidiary is
a party or by which it or any of its properties is bound as of the date
hereof: (a) mortgages, indentures, notes, letters of credit, security
agreements and other agreements and instruments relating to the borrowing
of money by or extension of credit to THERMACELL or any of its
subsidiaries; (b) employment and consulting agreements; (c) employee
benefit, profit-sharing and retirement plans; (d) collective bargaining
agreements; (e) all joint venture or partnership agreements to which
THERMACELL or any of its subsidiaries is a party; (f) licenses of software
and any material patent, trademark and other industrial property rights;
(g) agreements or commitments for capital expenditures in excess of $5,000;
(i) brokerage or finder's agreements; and (h) agreements, contracts, leases
and commitments of a type other than those described in the foregoing
clauses (a) through (h) which, in any case, involve aggregate payments or
receipts of more than $2,000 per annum. THERMACELL has made available to
ABSOLUTE complete and correct copies of all written agreements, contracts
and commitments, together with all amendments thereto, and accurate
descriptions of all oral agreements. All such agreements, contracts and
commitments are in full force and effect and, to the best of THERMACELL's
Knowledge, all parties thereto have performed all material obligations
required to be performed by them to date, are not in default in any
material respect thereunder, and have not violated any representation or
warranty, explicit or implied, contained therein.
9. PAC Funding, LLC the secured creditor in Class D-1 in the Plan of
Reorganization approved by the Court on or about August 30, 2002, in Case
No. 01-20854-8G1, In re: Thermacell Technologies, Inc. has elected to have
its claim for secured debt converted to equity in the Reorganized Debtor in
an amount equal to fifty percent (50%) of the newly issued common stock as
provided in the Order Confirming Plan.
10. All Class E-1 Allowed Unsecured Claims in the Plan of Reorganization
approved by the Court on or about August 30, 2002, in Case No.
01-20854-8G1, In re: Thermacell Technologies, Inc. have been paid in full
and no remaining balances are due.
11. THERMACELL has instructed its transfer agent to issue and the transfer
agent is in the process of issuing to all Class E-2 Allowed Unsecured
Claims in the Plan of Reorganization approved by the Court on or about
August 30, 2002, in Case No. 01-20854-8G1, In re: Thermacell Technologies,
Inc. their pro rata share of newly issued common stock as provided in such
Plan.
12. THERMACELL has instructed its transfer agent to issue and the transfer
agent is in the process of issuing to all Class F-1 equity interest holders
in the Plan of Reorganization approved by the Court on or about August 30,
2002, in Case No. 01-20854-8G1, In re: Thermacell Technologies, Inc. their
pro rata share of newly issued common stock as provided in the Plan.
13. Assignability. This Agreement shall not be assignable by any of the parties
to this Agreement without the prior written consent of all other parties to
this Agreement.
14. Venue; Process. The parties to this Agreement agree that jurisdiction and
venue shall properly lie in the courts of the State of Texas in Nueces
County, Texas, or in the United States District Court for the Southern
District of Texas (Corpus Christi Division), with respect to any legal
proceedings arising from this Agreement.
15. Governing Law. This Agreement has been negotiated and prepared and shall be
performed in the State of Texas, and the validity, construction and
enforcement of, and the remedies under, this Agreement shall be governed in
accordance with the laws of the State of Texas (except that if any choice
of law provision under Texas law would result in the application of the law
of a state or jurisdiction other than the State of Texas, such provision
shall not apply).
16. Successors and Assigns. The rights and obligations of the parties hereunder
shall inure to the benefit of, and shall be binding and enforceable upon,
the respective heirs (if personal), successors, assigns and transferees of
either party.
17. Reliance. All representations and warranties contained herein, or any
certificate or other instrument delivered in connection herewith, shall be
deemed to have been relied upon by the parties hereto, notwithstanding any
independent investigation made by or on behalf of such parties.
18. Attorney's Fees. The parties hereby agree that in the event any of the
terms and conditions contained in this Agreement must be enforced the
defaulting party shall be liable for reasonable collection and/or legal
fees, trial and appellate levels, any expenses and legal fees incurred,
including time spent in supervision of paralegal work and paralegal time,
and any other expenses and costs incurred in connection with the
enforcement of any available remedy.
19. Schedules. The Schedules and Exhibits to this Agreement, and the other
materials and documents referenced herein, are incorporated by reference
herein and are made a part hereof as if they were fully set forth herein.
IN WITNESS WHEREOF, the parties have executed this Inducement Agreement
as of the ____ day of ___________, 2003.
------------------------------
Thomas F. Duszynski
------------------------------
Don Huggins
PAC FUNDING, LLC
By:
---------------------------
Don Huggins
Co-Manager
By:
---------------------------
Thomas F. Duszynski
Co-Manager
MTC/ej/299303