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EXHIBIT 10.50
PURCHASE AGREEMENT
Dated as of December 11, 1998, by and among
Waste Connections, Inc.
▇▇▇▇▇▇ County Landfill, Inc.
▇▇▇▇▇ Construction, Inc.
▇▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "AGREEMENT"), dated as of December 11, 1998,
is entered into by and among Waste Connections, Inc., a Delaware corporation
("WCI"), ▇▇▇▇▇▇ County Landfill, Inc., a Nebraska corporation (the
"CORPORATION"), ▇▇▇▇▇ Construction, Inc., a Nebraska corporation ("KCI"), ▇▇▇
▇▇▇▇▇ ("▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ shall collectively be
referred to as the "SHAREHOLDERS").
WHEREAS, the Corporation owns and operates the ▇▇▇▇▇▇ County Landfill in
▇▇▇▇▇▇ County, Nebraska and engages in other related activities;
WHEREAS, the Corporation owns all of the real estate used in connection
with the business and operations of the Corporation, including without
limitation the real property set forth on Schedule A, attached hereto;
WHEREAS, KCI is engaged in the handling and transportation of solid waste
and other related activities throughout the State of Nebraska (collectively, the
"KCI BUSINESS");
WHEREAS, the Shareholders own all of the issued and outstanding capital
stock of the Corporation (the "CORPORATION'S STOCK");
WHEREAS, WCI wishes to acquire from the Shareholders all of the
Corporation's Stock; and
WHEREAS, WCI wishes to acquire, or to cause one of its wholly owned
subsidiaries to acquire, from KCI substantially all of the assets, properties,
rights, privileges and interests owned, leased, held or used by KCI in
connection with the KCI Business, except certain non-business related assets;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto, each intending to be bound hereby, agree as
follows:
1. PURCHASE OF CORPORATION'S STOCK AND KCI'S ASSETS
1.1 Shares to be Purchased. At the Closing (as defined in Section 2), the
Shareholders shall sell and deliver to WCI all of the issued and outstanding
shares of the Corporation's Stock, being the number of shares of the Corporation
set forth on Schedule 3.2 opposite each Shareholder's name. At the Closing, WCI
shall purchase the Corporation's Stock and in exchange therefor shall deliver to
the Shareholders at the Closing or thereafter as provided by this Agreement the
purchase price as described in Section 1.5 (the "PURCHASE PRICE").
1.2 Sale and Transfer of Assets. At the Closing, KCI shall convey,
transfer, deliver and assign to WCI or, at WCI's election, one of its wholly
owned subsidiaries, and in exchange therefor, WCI shall deliver to KCI at the
Closing or thereafter as provided by this Agreement the Purchase Price and
accept from KCI, the following assets (collectively, the "ASSETS"):
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(a) the trucks, containers, operating machinery and equipment,
processing equipment, shop tools, parts, supplies, accessories, inventory,
physical assets and other tangible personal property used primarily in
connection with the ownership, operation and management of the KCI Business,
including without limitation the items listed in Schedule 1.2(a) (the "FIXED
ASSETS");
(b) all of KCI's right, title and interest in and to the contracts,
leases, agreements, customer accounts, commitments and arrangements specifically
identified in Schedule 1.2(b) (the "ASSUMED CONTRACTS");
(c) all permits, licenses, titles (including motor vehicle titles
and current registrations), fuel permits, zoning and land use approvals or
zoning variances, occupancy permits, and any other similar documents from any
and all governmental authorities constituting a material authorization or
entitlement or otherwise material to the operation or management of the KCI
Business owned by, issued to, or held by KCI as are transferable by their
respective terms to WCI;
(d) all customer lists relating to the KCI Business;
(e) KCI's right, title and interest in and to the logos, trade
names, fictitious business names and service marks of KCI, including, without
limitation, any right KCI may have to use the name "KCI Trucking";
(f) the goodwill of the KCI Business;
(g) [Omitted];
(h) all guaranties, warranties, indemnities and similar rights in
favor of KCI with respect to any of the Assets and all books and records
primarily used in connection with the operation of the KCI Business;
(i) all operating and financial records relating to the KCI
Business, including, without limitation, all ledgers, copies (but not originals)
of books of account, depreciation schedules, inventory information, records
relating to payables and receivables, equipment records, maintenance records,
disposal records and information concerning customers; and
(j) all Effective Date Current Assets of KCI. WCI and KCI
acknowledge that KCI will have been paid before the Effective Date for certain
services to be rendered by WCI after the Effective Date with respect to KCI's
prepaid customer accounts, and KCI will have rendered services to certain
customers prior to the Effective Date who will be billed by WCI after the
Effective Date with respect to certain other of KCI's customer accounts that are
paid in arrears. Accordingly, within 30 days after the Closing Date, WCI and KCI
shall prorate these prepaid and postpaid accounts as of the Closing Date and
shall reconcile the net amount due, whereupon the party owing the other will
immediately pay the net amount due.
Notwithstanding the foregoing, WCI shall not acquire any of the
assets listed on Schedule 3.3 (the "EXCLUDED ASSETS").
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1.3 Assumption by WCI of Certain Debt and Certain Contracts. WCI hereby
assumes and agrees to pay, perform and discharge, after the Closing, all of the
obligations, liabilities and commitments of KCI accruing from and after the
Closing under or with respect to each Assumed Contract, but not including any
obligation or liability for any breach thereof occurring prior to the Closing,
and all of the debt of KCI included in the Closing Date Debt and all of the
current liabilities of KCI included in the Effective Date Current Liabilities.
1.4 Excluded Liabilities. Except as expressly set forth herein, WCI shall
not assume or be bound by any other duties, responsibilities, obligations,
indebtedness or other liabilities of KCI or to which KCI or any of the Assets or
the KCI Business may be bound or affected, of whatever kind or nature, whether
known, unknown, contingent or otherwise, arising before, on or after the Closing
Date (including without limitation taxes arising from the operation of the KCI
Business prior to the Closing) except those obligations, liabilities and
commitments expressly assumed by WCI pursuant to Section 1.3 (the "EXCLUDED
LIABILITIES").
1.5 Purchase Price. The Purchase Price is:
(a) eight million one hundred thousand dollars ($8,100,000), (i)
minus the Closing Date Debt (as defined in Section 3.23(a)), (ii) plus or minus,
as the case may be, the amount by which the Effective Date Current Assets (as
defined in Section 3.23(b)) are greater or less than the Effective Date Current
Liabilities (as defined in Section 3.23(b)), (iii) plus or minus, as the case
may be, the amount of the Net Profit or Net Loss (as hereinafter defined) of the
Corporation and the KCI Business for the period from the Effective Date through
the Closing Date, and (iv) minus the Post Closure Liability (as hereafter
defined). The Closing Date Debt shall be based on pay-off letters obtained from
the Corporation's and KCI's lenders. The Effective Date Current Assets,
Effective Date Current Liabilities, the Net Profit, the Net Loss and the Post
Closure Liability shall be based on estimates of such amounts delivered to WCI
by the Corporation and KCI at Closing. As used herein, the term "NET PROFIT" or
"NET LOSS" shall mean the net profit or net loss of the Corporation and the KCI
Business calculated in materially the same manner that net profit and net loss
were calculated for the Corporation and the KCI Business for the periods prior
to the Effective Date, and which profits or losses shall be incurred in
compliance with Section 5 herein. The term "POST CLOSURE LIABILITY" shall mean
the amount by which the Corporation's estimated closure and post closure
liabilities with respect to the landfill set forth on Schedule A (based on
engineering estimates taking into account the airspace depleted prior to the
Effective Date) exceeds the reserves established therefor (the "RESERVES"), all
as more specifically set forth on Schedule 1.5(a)(iv).
At Closing, the following portion of the Purchase Price shall be
paid to the Shareholders and KCI in immediately available funds by wire
transfer: eight million one hundred thousand dollars ($8,100,000) (v) minus the
Closing Date Debt, (w) plus or minus, as the case may be, any estimated Net Loss
or Net Profit (x) minus the Post Closure Liability, and (y) plus or minus, as
the case may be, the amount by which the estimated Effective Date Current Assets
are greater or less than the estimated Effective Date Current Liabilities.
Within ninety (90) days after the Closing, WCI and the Shareholders shall
determine the actual Closing Date Debt, Effective Date Current Assets, Effective
Date Current Liabilities, Net Profit or Net Loss, and Post Closure Liability. If
the difference between the actual amounts of such items and the estimated
amounts provided at Closing results in an increase in the amount that should
have been paid at the Closing over the amount that was so paid, WCI shall
promptly pay such amount to the
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Shareholders or KCI, as the case may be; if the result is a decrease in the
amount that should have been paid at the Closing from the amount that was so
paid, the Shareholders or KCI, as the case may be, shall promptly pay such
amount to WCI (the "POST CLOSING ADJUSTMENT.").
(b) A non-interest bearing promissory note (the "▇▇▇ ▇▇▇▇▇ NOTE")
from WCI to ▇▇▇ ▇▇▇▇▇ in the principal amount of one hundred thirty-five
thousand dollars ($135,000), which Note shall be subordinate to WCI's senior
debt and paid to ▇▇▇ ▇▇▇▇▇ in twelve (12) equal quarterly installments of eleven
thousand two hundred fifty dollars ($11,250) and shall be in form and substance
reasonably satisfactory to the parties. A non-interest bearing promissory note
(the "▇▇▇▇▇▇ ▇▇▇▇▇ NOTE") from WCI to ▇▇▇▇▇▇ ▇▇▇▇▇ in the principal amount of
forty-four thousand dollars ($44,000), which Note shall be subordinate to WCI's
senior debt and paid to ▇▇▇▇▇▇ ▇▇▇▇▇ in twelve (12) equal quarterly installments
of three thousand six hundred sixty-six dollars and 66/100 ($3,666.66) and shall
be in form and substance reasonably satisfactory to the parties.
1.6 Allocation of the Purchase Price. The Shareholders acknowledge that
WCI is purchasing the entire business of the Corporation and KCI, other than the
Excluded Assets, for the aggregate Purchase Price provided herein, and agree
that they shall allocate the Purchase Price among themselves as they shall
agree. WCI shall pay the Purchase Price as allocated among the Shareholders as
set forth on Schedule 1.6 which Schedule shall set forth the allocation of the
Purchase Price among the Assets and among the assets of the Corporation for
purposes of the election described in Section 9.8 (the "ALLOCATION") provided
that twenty thousand dollars ($20,000) of the Purchase Price shall be allocated
to the covenants not to compete as described in Section 11.1(a) hereof. The
parties hereto agree that the Allocation will be used by them for tax reporting
purposes. Each party hereto agrees that it will report the transaction completed
pursuant to this Agreement in accordance with the Allocation, including any
report made under Section 1060 of the Internal Revenue Code, as amended (the
"CODE"), and that no such party will take a position inconsistent with the
Allocation except with prior written consent of the other parties hereto. In the
event that there is a Post Closing Adjustment, the parties hereto shall agree to
an adjustment to the Allocation and such new Allocation shall then be used for
all purposes in place of the original Allocation, provided that any Net Profit
or Net Loss shall be allocated to landfill cells.
1.7 Excluded Assets. The assets of the Corporation and KCI listed on
Schedule 3.3 (the "EXCLUDED ASSETS") shall be distributed to the Shareholders
prior to the Closing, and WCI shall acquire no interest in or claim to any of
the Excluded Assets.
2. CLOSING TIME AND PLACE
2.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated herein (the "CLOSING") shall take place
January 8, 1999 or on such later date as WCI and the Shareholders shall agree
(the "CLOSING DATE"). For financial reporting purposes, the effective date of
the Closing shall be November 1, 1998 (the "EFFECTIVE DATE"). The Closing shall
take place at the Law Offices of Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as WCI
and the Shareholders shall agree. At the Closing, WCI, the Corporation, KCI and
the Shareholders shall deliver to each other the documents, instruments and
other items described in Section 8 of this Agreement. At the election of WCI and
the Shareholders, the Closing of this transaction
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may take place through an exchange of documents using overnight courier service
or facsimile and wire transfer of funds.
2.2 Termination. Notwithstanding anything in this Agreement to the
contrary, this Agreement and the obligations of the parties hereunder may be
terminated prior to Closing as follows:
(a) By the Corporation, KCI or the Shareholders (i) in the event the
transactions contemplated by this Agreement have been prohibited or
enjoined by reason of any judgment, decree or order entered or issued by a
court of competent jurisdiction in litigation or proceedings involving any
of the parties hereto; or (ii) in the event WCI breaches or violates any
material provision of this Agreement or fails to perform any material
covenant or agreement to be performed on or prior to the Closing Date by
WCI under the terms of this Agreement, and Shareholders have provided
written notice thereof to WCI giving reasonable specificity and WCI has
not cured same within a reasonable period of time and such breach is not
waived by Shareholders in writing.
(b) By WCI (i) in the event the transactions contemplated by this
Agreement have been prohibited or enjoined by reason of any judgment,
decree or order entered or issued by a court of competent jurisdiction in
litigation or proceedings involving any of the parties hereto; (ii) in the
event that the covenants set forth in Sections 5.4, 5.6 and 5.7 have not
been complied with to the reasonable satisfaction of WCI; or (iii) in the
event that the Corporation, KCI or the Shareholders breach or violate any
applicable material provision of this Agreement or fail to perform any
material covenant or agreement to be performed on or prior to the Closing
Date by the Corporation, KCI or the Shareholders under the terms of this
Agreement and WCI has provided written notice thereof to the applicable
parties giving reasonable specificity, and such parties have not cured
same within a reasonable period of time and such breach is not waived by
WCI in writing.
(c) By WCI or Shareholders if the Closing hereunder shall not have
taken place by January 31 1999, or, by such later date as shall be agreed
upon by an appropriate amendment to this Agreement, if the parties agree
in writing to an extension, provided that a party shall not have the right
to terminate under this Section 2.2(c) if the conditions precedent to such
party's obligation to close, as set forth in Sections 6 and 7 hereof, have
been fully satisfied and such party has failed or refused to close after
being requested in writing to close by the other party.
2.3 Notice and Effect of Termination. On termination of this Agreement,
the transactions contemplated herein shall forthwith be abandoned and all
continuing obligations and liabilities of the parties under or in connection
with this Agreement shall be terminated and of no further force or effect;
provided, however, that nothing herein shall relieve any party from liability
for any misrepresentation, breach of warranty or breach of covenant contained in
this Agreement prior to such termination unless WCI terminates this Agreement
pursuant to Section 2.2(b)(ii), in which case the Corporation, Shareholders and
KCI shall have no continuing liability related to any matters disclosed in the
Schedules or information provided to WCI as contemplated in Section 5.4 which
caused WCI to so terminate. Notwithstanding the foregoing, Sections 2.4, 3.36,
4.5, 9.5 and 12.8 and the confidentiality obligations set forth in Sections 5.4
and 9.4 shall survive the termination of this Agreement for any reason.
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2.4 Break-Up Fee. If WCI elects to terminate this Agreement pursuant to
Section 2.2 herein for reasons other than those set forth in (w) Section
2.2(b)(i), (x) Section 2.2(c), (y) the failure to fulfill the conditions set
forth in Sections 6.1 through 6.5 and 6.7, or (z) the failure of the
Shareholders and KCI to make the deliveries described in Section 8.2(a), (b),
(c), (e), (f) and (i) (the foregoing subsections w, x, y and z shall
collectively be referred to as the "EXCEPTIONS"), WCI shall promptly pay to the
Shareholders a sum equal to one hundred thousand dollars ($100,000) (the
"BREAK-UP FEE"), and upon such payment, WCI shall have, except as otherwise set
forth in Section 2.3, no further liability or obligation to the Corporation, KCI
or the Shareholders under this Agreement. Notwithstanding the above or anything
in this Agreement seemingly to the contrary, the parties hereto intend that WCI
shall be obligated to pay to Shareholders the Break Up Fee if WCI terminates
this Agreement pursuant to Section 2.2, due to one of the Exceptions or
otherwise, and the root cause for such termination is WCI's dissatisfaction with
any matter disclosed in the Schedules to this Agreement from and after the date
of this Agreement (other than Schedules 1.5(a)(iv), 1.6 and 3.3, which have been
agreed to by the parties), or any due diligence information provided to WCI from
and after the date of this Agreement.
2.5 Exclusive Negotiations. Following execution of this Agreement until
January 31, 1999, the Corporation, KCI and the Shareholders shall not, and the
Shareholders shall not permit the Corporation's or KCI's officers, directors,
employees or agents to, initiate, negotiate or discuss with any other person or
entity the possible sale of all or substantially all of the assets, business or
stock of the Corporation or KCI, or to effect the merger of the Corporation or
KCI with any party other than WCI or one of its Affiliates. The Shareholders
hereby confirm that no person or entity presently has or may acquire any rights
to purchase or otherwise acquire the assets or the stock of either the
Corporation or KCI.
2.6 Corrections to Due Diligence and Schedules. Pursuant to Sections 5.4
and 5.6 of this Agreement, Shareholders, the Corporation and KCI have agreed to
deliver to WCI or its agents the Schedules to this Agreement in final form, and
all reasonably requested due diligence material, by no later than December 22,
1998. If, prior to the Closing Date, the Shareholders, the Corporation or KCI
determine that any Schedule, document or other information provided to WCI or
its agents by the Shareholders, the Corporation or KCI is incomplete, inaccurate
or misleading, the Shareholders, the Corporation or KCI shall promptly give WCI
written notice and correct such Schedule, document or information. In addition,
the Corporation and KCI shall provide WCI with such additional information in
their control concerning such correction as WCI shall reasonably request. If
such correction does not represent a material adverse change in the information
previously provided to WCI, WCI shall not have the right to terminate this
Agreement based upon such correction. If such correction does represent a
material adverse change in the information previously provided to WCI or its
agents and WCI reasonably determines that such correction is unacceptable, such
correction shall be deemed to be a failure of the conditions set forth in
Sections 5.4 and 5.6, as applicable, and WCI shall have the right to terminate
this Agreement after receipt of the corrected information; provided that the
Corporation and KCI shall first have an opportunity to cure such matter to the
reasonable satisfaction of WCI prior to the Closing Date, and provided that on
WCI's election to terminate WCI shall be obligated to pay the break-up fee as
provided in Section 2.4.
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3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION, KCI AND THE
SHAREHOLDERS.
The Corporation, KCI and the Shareholders, jointly and severally,
represent and warrant to WCI, which representations and warranties are true and
correct, as follows:
3.1 Organization, Standing and Qualification. Each of the Corporation and
KCI is duly organized, validly existing and in good standing under the laws of
the State of Nebraska. Each of the Corporation and KCI has full corporate power
and authority to own and lease its properties and to carry on its business as
now conducted. The Corporation is not required to be qualified or licensed to
conduct business as a foreign corporation in any other jurisdiction.
3.2 Capitalization. Schedule 3.2 sets forth the authorized and outstanding
capital of the Corporation, the names and addresses of the record and beneficial
owners thereof, the number of shares so owned, the allocation of the Purchase
Price among the Shareholders and KCI as agreed to among themselves, and wire
transfer instructions for each Shareholder and KCI relating to the bank account
to which the cash portion of the Purchase Price should be sent. All of the
issued and outstanding shares of the capital stock of the Corporation are owned
of record and beneficially by the Shareholders, as set forth in Schedule 3.2,
and are and will be free and clear of all liens, security interests,
encumbrances, restrictions, pledges and claims of every kind except as set forth
in Schedule 3.2. Each share of the capital stock of the Corporation is duly and
validly authorized and issued, fully paid and nonassessable, and was not issued
in violation of any preemptive rights of any past or present shareholder of the
Corporation. No option, warrant, call, conversion right or commitment of any
kind (including any of the foregoing created in connection with any indebtedness
of the Corporation) exists which obligates the Corporation to issue any of its
authorized but unissued capital stock or other equity interest or which
obligates the Shareholders to transfer any Corporation's Stock to any person. To
the knowledge of Shareholders, the Corporation's Stock has been issued in
accordance with all applicable federal and state securities laws.
3.3 All Stock and Assets Being Acquired. The Corporation's Stock being
acquired by WCI hereunder constitutes all of the outstanding capital stock of
the Corporation. The assets of the Corporation listed on Schedule 3.3 shall be
distributed to the Shareholders prior to the Closing, and WCI shall acquire no
interest in or claim to any of such assets. The Assets being acquired by WCI
hereunder constitute substantially all of the assets of the KCI Business used in
and necessary to conduct and operate the KCI Business as presently conducted and
operated (other than certain Excluded Assets set forth on Schedule 3.3).
3.4 Authority for Agreement. The Corporation, KCI and the Shareholders
have full right, power and authority to enter into this Agreement and all
documents and agreements necessary to give effect to the provisions of this
Agreement, and to perform its, his or her obligations hereunder. The execution
and delivery of this Agreement by the Corporation and KCI and the consummation
of the transactions contemplated hereby by the Corporation and KCI has been duly
authorized by the Board of Directors of the Corporation or KCI, as the case may
be. This Agreement and all other agreements and documents executed in connection
herewith have been and will be, as the case may be, duly and validly executed
and delivered by the Corporation and KCI and the Shareholders and, subject to
the due authorization, execution and delivery by WCI, constitute the legal,
valid and binding obligations of the Corporation, KCI and
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the Shareholders enforceable against the Corporation, KCI and the Shareholders
in accordance with their respective terms.
3.5 No Breach or Default. Except as disclosed on Schedule 3.5, the
execution and delivery by the Corporation, KCI and the Shareholders of this
Agreement, and the consummation by the Corporation, KCI and the Shareholders of
the transactions contemplated hereby, will not, after the giving of notice, or
the lapse of time or otherwise:
(a) result in the breach of any of the terms or conditions of, or
constitute a default under, or allow for the acceleration or termination
of, or in any manner release any party from any obligation under, any
mortgage, lease, note, bond, indenture, or contract, agreement, license or
other instrument or obligation of any kind or nature to which the
Corporation, KCI or any of the Shareholders is a party, or by which the
Corporation, KCI or any of the Shareholders, or any of the Corporation's
assets or the Assets, is or may be bound or affected; or
(b) violate any law, rule or regulation, or any order, writ,
injunction or decree of any court, administrative agency or governmental
authority, or require the approval, consent or permission of any
governmental or regulatory authority; or
(c) violate the Articles of Incorporation or Bylaws of the
Corporation or KCI.
3.6 Subsidiaries. Schedule 3.6 lists any and all subsidiaries of the
Corporation and any securities of any other corporation or any securities or
other interest in any other business entity owned by the Corporation or any of
the Corporation's subsidiaries.
3.7 Financial Statements. The Corporation and KCI have delivered to WCI,
as Schedule 3.7, copies of the compiled financial statements ("FINANCIAL
STATEMENTS") for the Corporation's and KCI's three most recent fiscal years and
interim financial statements for the Corporation and KCI for the period ended
October 31, 1998 (the "BALANCE SHEET DATE"). The Financial Statements are true
and correct and fairly present (i) the financial position of the Corporation and
the KCI Business as of the respective dates of the balance sheets included in
said statements, and (ii) the results of operations for the respective periods
indicated. The Financial Statements have been prepared consistently with prior
periods. Except to the extent reflected or reserved against in the Corporation's
or KCI's balance sheet as of the Balance Sheet Date, or as disclosed on Schedule
3.7 or Schedule 3.8, neither the Corporation nor KCI had as of the Balance Sheet
Date, nor will the Corporation or KCI have as of the Closing Date, any material
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities due.
3.8 Liabilities. Parts I, II, III and IV of Schedule 3.8 are accurate
lists and descriptions of all liabilities of (i) the Corporation and (ii) KCI
relating to the KCI Business, required to be described below in the format set
forth below.
(a) Part I of Schedule 3.8 lists, as of the date hereof other than
with respect to trade payables, and as of the Effective Date with respect
to trade payables, all indebtedness for money borrowed and all other fixed
and uncontested liabilities of any kind, character and description
(excluding all real and personal property leasehold interests included in
Part IV of Schedule 3.8), whether reflected or not reflected on the
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Financial Statements and whether accrued or absolute, and states as to
each such liability the amount of such liability and to whom payable. From
the end of the Effective Date, trade payables have been incurred only in
the ordinary course of business consistent with comparable prior periods.
(b) Part II of Schedule 3.8 lists all claims, suits and proceedings
which are pending against the Corporation or against KCI relating to the
KCI Business and, to the knowledge of the Corporation, KCI and the
Shareholders, all contingent liabilities and all claims, suits and
proceedings threatened or anticipated against the Corporation or against
KCI relating to the KCI Business. Part II of Schedule 3.8 includes a
summary description of each such liability, including, without limitation,
(A) the name of each court, agency, bureau, board or body before which any
such claim, suit or proceeding is pending, (B) the date such claim, suit
or proceeding was instituted, (C) the parties to such claim, suit or
proceeding, (D) a brief description of the factual basis alleged to
underlie such claim, suit or proceeding, including the date or dates of
all material occurrences, and (E) the amount claimed and other relief
sought.
(c) Part III of Schedule 3.8 lists, to the extent not otherwise
included in Part I of Schedule 3.8, all liens, claims and encumbrances
secured by or otherwise affecting any asset of the Corporation (including
any Corporate Property, as hereafter defined) or secured by any of the
Assets, including a description of the nature of such lien, claim or
encumbrance, the amount secured if it secures a liability, the nature of
the obligation secured, and the party holding such lien, claim or
encumbrance.
(d) Part IV of Schedule 3.8 lists, to the extent not otherwise
included in Part I or Part III of Schedule 3.8, all real and personal
property leasehold interests to which the Corporation or KCI is a party as
lessor or lessee or, to the knowledge of the Corporation, KCI or a
Shareholder, affecting or relating to any Corporate Property or KCI
Property.
Except as described on the applicable part of Schedule 3.8, none of
the Corporation, KCI or any of the Shareholders has made any payment or
committed to make any payment since the Balance Sheet Date on or with respect to
any of the liabilities or obligations listed on Schedule 3.8 except, in the case
of liabilities and obligations listed on Parts I, III and IV of Schedule 3.8,
periodic payments required to be made under the terms of the agreements or
instruments governing such obligations or liabilities or made in the ordinary
course of business.
3.9 Accurate and Complete Records. The corporate minute books, stock
ledgers, books, ledgers, financial records and other records of the Corporation:
(a) have been made available to WCI and its agents at the
Corporation's offices or at the offices of WCI's attorneys or the
Corporation's attorneys;
(b) have been, in all material respects, maintained in accordance
with all applicable laws, rules and regulations; and
(c) are accurate and complete in all material respects, reflect all
material corporate transactions required to be authorized by the Board of
Directors and/or shareholders of that Corporation and do not contain or
reflect any material discrepancies.
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3.10 Permits and Licenses.
(a) Schedule 3.10(a) is a full and complete list, and includes
copies, of all material permits, licenses, franchises, and service
agreements pursuant to which the Corporation or KCI is authorized to
collect and haul industrial, commercial and residential solid waste (the
"COLLECTION FRANCHISES"), and of all other material permits, licenses,
titles (including motor vehicle titles and current registrations), fuel
permits, zoning and land use approvals and authorizations, including,
without limitation, any conditional or special use approvals or zoning
variances, occupancy permits, and any other similar documents constituting
a material authorization or entitlement or otherwise material to the
operation of the business of the Corporation or the KCI Business
(collectively the "GOVERNMENTAL PERMITS") owned by, issued to or held by
the Corporation, KCI or the Shareholders. Schedule 3.10(a) also sets forth
the name of any governmental agency or other third party from whom the
Shareholders, the Corporation, KCI or WCI must obtain consent (the
"REQUIRED GOVERNMENTAL CONSENTS") in order to effect a direct or indirect
transfer of the Collection Franchises or other Governmental Permits
required as a result of the consummation of the transactions contemplated
by this Agreement. Except as set forth on Schedule 3.10(a), all of the
Collection Franchises and other Governmental Permits enumerated and listed
on Schedule 3.10(a) are adequate for the operation of the business of the
Corporation and the KCI Business and of each Corporate Property and KCI
Property as presently operated and are valid and in full force and effect.
All of said Collection Franchises and other Governmental Permits and
agreements have been duly obtained and are in full force and effect, and
there are no proceedings pending or, to the knowledge of the Corporation,
KCI or the Shareholders, threatened which may result in the revocation,
cancellation, suspension or material adverse modification of any of the
same. Neither the Corporation nor KCI nor any of the Shareholders has any
knowledge of any reason why all such Governmental Permits and agreements
will not remain in effect for the period or term stated therein, subject
to WCI's full compliance therewith, after consummation of the transactions
contemplated hereby.
(b) Prior to Closing, the Corporation, KCI and the Shareholders
shall have made available to WCI: (i) all material records, notifications,
reports, permit and license applications, engineering and geologic
studies, and environmental impact reports, tests or assessments
(collectively, "RECORDS, NOTIFICATIONS AND REPORTS") that (A) are material
to the operation of the business of the Corporation or the KCI Business,
or (B) relate to the discharge or release of materials into the
environment and/or the handling or transportation of waste materials or
hazardous or toxic substances or otherwise relate to the protection of the
public health or the environment, or (C) were filed with or submitted to
appropriate governmental agencies during the past twenty-four (24) months
by the Corporation, KCI or the Shareholders or their agents with respect
to the business of the Corporation or the KCI Business, and (ii) all
material notifications from such governmental agencies to the Corporation,
KCI, the Shareholders or their agents in response to or relating to any of
such Records, Notifications and Reports.
(c) Schedule 3.10(c) lists each facility owned, leased, operated or
otherwise used by the Corporation or by KCI for the KCI Business, or owned
by any of the Shareholders or an Affiliate of any Shareholder and leased
to the Corporation or KCI, the
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ownership, lease, operation or use of which is being transferred to,
assumed by or otherwise acquired directly or indirectly by WCI pursuant to
this Agreement (each, a "FACILITY" and collectively, the "FACILITIES").
Except as otherwise disclosed on Schedule 3.10(c):
(i) Each Facility is fully licensed, permitted and authorized
to carry on its current business under all applicable federal, state
and local statutes, orders, approvals, zoning or land use
requirements, rules and regulations, and, none of such Facilities or
the current use thereof constitutes a non-conforming use or is
otherwise subject to any restrictions regarding the operation,
renovation or reconstruction thereof. To the knowledge of the
Corporation, KCI and the Shareholders, no Facility that is leased by
the Corporation or KCI from a non-Affiliate or the current use
thereof constitutes a material non-conforming use or is otherwise
subject to any material restrictions regarding the operation,
renovation or reconstruction thereof.
(ii) There are no circumstances, conditions or reasons which
are reasonably likely to be the basis for revocation or suspension
of any Facility's site assessments, permits, licenses, consents,
authorizations, zoning or land use permits, variances or approvals
relating to any Facility owned by the Corporation or KCI or owned by
any of the Shareholders or an Affiliate (as hereinafter defined) of
any of the Shareholders and leased to the Corporation or KCI, and to
the knowledge of the Corporation, KCI and the Shareholders there are
no circumstances, conditions or reasons which are reasonably likely
to be the basis for revocation or suspension of any site assessment,
permits, licenses, consents, authorizations, zoning or land use
permits, variances or approvals relating to any Facility leased by
the Corporation or KCI from a third party who is not an Affiliate
(as hereinafter defined) of the Shareholders.
3.11 Certain Receivables. Schedule 3.11 is an accurate list of the
accounts and notes receivable of the Corporation or KCI from and advances to
employees, former employees, officers, directors, the Shareholders and
Affiliates of the foregoing which have not been fully repaid. For purposes of
this Agreement, the term "AFFILIATE" means, with respect to any person, any
person that directly or indirectly through one or more intermediaries controls
or has an ownership interest in, or is controlled or owned in whole or in part
by, or is under common control or ownership in whole or in part with such
person, and in the case of the Corporation or KCI includes directors and
officers, in the case of individuals includes the individual's spouse, father,
mother, grandfather, grandmother, brothers, sisters, children and grandchildren
and in the case of a trust includes the grantors, trustees and beneficiaries of
the trust.
3.12 Fixed Assets and Real Property.
(a) Schedule 3.12(a) lists all of the material Fixed Assets (other
than real estate) of the Corporation or of KCI used in the KCI Business,
including, without limitation, identification of each vehicle by
description and serial number, identification of machinery, equipment and
general descriptions of parts, supplies and inventory. Except as described
on Schedule 3.12(a), all of the Corporation's and KCI's containers,
vehicles, machinery and equipment necessary for the operation of the
Corporation's
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businesses or the operation of the KCI Business are in operable condition,
ordinary wear and tear excepted, and all of the motor vehicles and other
rolling stock of the Corporation and of KCI used in the KCI Business are
in material compliance with all applicable laws, rules and regulations.
Except as otherwise specifically set forth in this Agreement, the Fixed
Assets and the assets owned or held for use by the Corporation are being
sold to WCI on an "AS-IS, WHERE-IS" basis without warranty. Except as set
forth in this Agreement, the Corporation and KCI hereby disclaim all other
warranties, express or implied, including the implied warranties of
merchantability and fitness for a particular purpose. All leases of fixed
assets are in full force and effect and binding upon the parties thereto;
neither the Corporation nor KCI nor, to the knowledge of the Corporation
or KCI or the Shareholders, any other party to such leases is in breach of
any of the material provisions thereof.
(b) Each parcel of real property leased or owned by the Corporation
(the "CORPORATE PROPERTY") and each parcel of real property leased or
owned by KCI and used in the KCI Business (the "KCI PROPERTY"), including
the street address and, in the case of Corporate Property or KCI Property
owned, the legal description thereof, is listed on Schedule 3.12(b). Each
parcel of real property being purchased by the Corporation is listed and
described on Schedule 3.12(b). Attached to said Schedule 3.12(b), are
copies of all leases, deeds, outstanding mortgages, other encumbrances and
any existing title insurance policies or lawyer's title opinions relating
to each Corporate Property, each KCI Property and the real property being
purchased by the Corporation. Except as set forth on Schedule 3.12(b), the
Corporation and KCI represent that there are no agreements (written or
oral), nor are there current negotiations or discussions with third
parties, to purchase real property for the Corporation or KCI. All leases
listed on Schedule 3.12(b) are in full force and effect and binding on the
parties thereto; neither the Corporation nor KCI nor, to the knowledge of
the Corporation, KCI or Shareholders, any other party to any such lease is
in breach of any of the materiaL provisions thereof; to the knowledge of
the Corporation, KCI and the Shareholders, the landlord's interest in each
such lease has not been assigned to any third party nor has any such
interest been mortgaged, pledged or hypothecated; and neither the
Corporation nor KCI has assigned any such lease or sublet all or any part
of the Corporate Property or the KCI Property that is the subject of any
such lease.
(c) Each of the Corporation and KCI possesses good, valid and
marketable title to all properties and assets, real, personal, and mixed,
tangible and intangible, actually used or necessary for the conduct of its
business, free of any encumbrance or charge of any kind except: (i) liens
for current taxes not yet due; (ii) minor imperfections of title and
encumbrances, if any, that are not substantial in amount, do not
materially reduce the value or impair the use of the property subject
thereto, do not materially impair the value of the Corporation or KCI, and
have arisen only in the ordinary course of business and consistent with
past practice; and (iii) the liens identified on Parts I and III of
Schedule 3.8 (collectively, the "PERMITTED LIENS"). Except as described on
Schedule 3.12(b), neither the Corporation, KCI nor the Shareholders is a
party to any leases, occupancy agreements, options, rights of first
refusal or any other agreements or arrangements, either oral or written,
that create or confer in any person or entity the right to acquire, occupy
or possess, now or in the future, any Facility, any Corporate Property,
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any KCI Property, or any portion thereof, or create in or confer on any
person or entity any right, title or interest therein or in any portion
thereof.
3.13 Related Party Transactions. None of the Shareholders or their
respective Affiliates has entered into any transaction with or is a party to any
agreement, lease or other instrument, or is indebted to or is owed money by the
Corporation or KCI not disclosed in the Financial Statements. Except as
disclosed in the Financial Statements, none of the Shareholders or their
Affiliates owns any direct or indirect interest of any kind in, or controls or
is a director, officer, employee, shareholder or partner of, or consultant or
lender to or borrower from or has the right to participate in the profits of,
any Person which is a competitor, supplier, customer, landlord, tenant, creditor
or debtor of the Corporation or KCI.
3.14 Acquisition/Disposition of Assets. Except as indicated on Schedule
3.14, since the Balance Sheet Date, neither the Corporation nor KCI has acquired
or sold or otherwise disposed of any properties or assets that, singly or in the
aggregate, have a value in excess of $10,000, or which are material to the
operation of the Corporation's business or the KCI Business as presently
conducted, without the prior written consent of WCI.
3.15 Contracts and Agreements; Adverse Restrictions.
(a) Schedule 3.15(a) lists and includes copies of, all material
contracts and agreements, and written summaries of key terms of all oral
contracts, to which the Corporation or KCI is a party or by which it or
any of its property is bound (other than leases and documents included
with Schedule 3.12(b)) including, but not limited to, joint venture or
partnership agreements, contracts with any labor organizations, promissory
notes, loan agreements, bonds, mortgages, deeds of trust, liens, pledges,
conditional sales contracts or other security agreements. Schedule 1.2(b)
lists all of the Assumed Contracts. Except as disclosed on Schedule
3.15(a), all contracts and agreements included in Schedule 3.15(a) and
Schedule 1.2(b) are in full force and effect and binding upon the parties
thereto. Except as described or cross referenced on Schedule 3.15(a),
neither the Corporation nor KCI nor, to the Corporation's or KCI's or any
Shareholder's knowledge, any other parties to such contracts and
agreements is in breach thereof, and none of the parties has threatened to
breach any of the material provisions thereof or notified the Corporation,
KCI or any of the Shareholders of a default thereunder, or exercised any
options thereunder.
(b) Except as set forth on Schedule 3.15(b), there is no outstanding
judgment, order, writ, injunction or decree against the Corporation or
KCI, the result of which could materially adversely affect the Corporation
or its business, or the KCI Business or any of the Assets, or any of the
Corporate Properties or KCI Properties, nor has the Corporation or KCI
been notified that any such judgment, order, writ, injunction or decree
has been requested.
3.16 Insurance. Schedule 3.16 is a complete list and includes copies of
all insurance policies currently in effect or, with respect to "OCCURRENCE"
policies that were in effect, in respect of the Corporate Properties or any
other property used by the Corporation specifying, for each policy, the name of
the insurer, the type of risks insured, the deductible and limits of coverage,
and the annual premium therefor. During the last five years, there has been no
lapse in
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any material insurance coverage of the Corporation. For each insurer providing
coverage for any of the contingent or other liabilities listed on Schedule 3.8,
except to the extent otherwise set forth in Part II of Schedule 3.8, each such
insurer, if required, has been properly and timely notified of such liability,
no reservation of rights letters have been received by the Corporation and the
insurer has assumed defense of each suit or legal proceeding. All such
proceedings are fully covered by insurance, subject to normal deductibles.
3.17 Personnel. Schedule 3.17 is a complete list of all officers,
directors and employees (by type or classification) of the Corporation and KCI
and their respective rates of compensation, including (i) the portions thereof
attributable to bonuses, (ii) any other salary, bonus, stock option, equity
participation, or other compensation arrangement made with or promised to any of
them, and (iii) copies of all employment agreements with non-union officers,
directors and employees. Schedule 3.17 also lists the driver's license number
for each driver of the Corporation's motor vehicles and each motor vehicle used
in the KCI Business.
3.18 Benefit Plans and Union Contracts.
(a) Schedule 3.18(a) is a complete list, and includes complete
copies (or, in the case of oral arrangements, descriptions), of all
employee benefit plans and agreements (written or oral) currently
maintained or contributed to by the Corporation or KCI, including
employment agreements and any other agreements containing "golden
parachute" provisions, retirement plans, welfare benefit plans and
deferred compensation agreements, together with copies of such plans,
agreements and any trusts related thereto, and classifications of
employees covered thereby. Except for the employee benefit plans described
on Schedule 3.18(a), neither the Corporation nor KCI has any other
pension, retirement, welfare, profit sharing, deferred compensation, stock
option, employee stock purchase or other employee benefit plans or
arrangements with any party. Except as disclosed on Schedule 3.18(a), all
employee benefit plans listed on Schedule 3.18(a) are fully funded and in
substantial compliance with all applicable federal, state and local
statutes, ordinances and regulations. All such plans that are intended to
qualify under Section 401(a) of the Internal Revenue Code have been
determined by the Internal Revenue Service to be so qualified, and copies
of such determination letters are included as part of Schedule 3.18(a).
Except as disclosed on Schedule 3.18(a), all reports and other documents
required to be filed with any governmental agency or distributed to plan
participants or beneficiaries (including, but not limited to, actuarial
reports, audits or tax returns) have been timely filed or distributed, and
copies thereof are included as part of Schedule 3.18(a). All employee
benefit plans listed on such Schedule have been operated in accordance
with the terms and provisions of the plan documents and all related
documents and policies. Neither the Corporation nor KCI has incurred any
liability for excise tax or penalty due to the Internal Revenue Service or
U.S. Department of Labor nor any liability to the Pension Benefit Guaranty
Corporation for any employee benefit plan, and neither the Corporation nor
KCI, nor a party-in-interest or disqualified person, has engaged in any
transaction or other activity which would give rise to such liability.
Neither the Corporation nor KCI has participated in or made contributions
to any "multi-employer plan" as defined in the Employee Retirement Income
Security Act of 1974 ("ERISA"), nor would the Corporation, KCI or any
Affiliate be subject to any withdrawal liability with respect to such
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a plan if any such employer withdrew from such a plan immediately prior to
the Closing Date. No employee pension benefit plan is under-funded on a
termination basis as of the date of this Agreement.
(b) There are now no union contracts or agreements between the
Corporation or KCI and any collective bargaining group, nor have there
ever been any such contracts in effect. The Corporation and, in the
operation of the KCI Business, KCI, are in compliance in all material
respects with all applicable federal and state laws respecting employment
and employment practices, terms and conditions of employment, wages and
hours, and nondiscrimination in employment, and is not engaged in any
unfair labor practice. There is no charge pending or, to the Corporation's
or KCI's or any Shareholder's knowledge, threatened, against the
Corporation or KCI before any court or agency and alleging unlawful
discrimination in employment practices and there is no charge of or
proceeding with regard to any unfair labor practice against it pending
before the National Labor Relations Board. There is no labor strike,
dispute, slow down or stoppage, existing or threatened against the
Corporation or KCI; no union organizational activity exists respecting
employees of the Corporation or KCI, and Schedule 3.18(b) contains a list
of all arbitration or grievance proceedings that have occurred since the
Balance Sheet Date. No one has petitioned within the last five years, and
no one is now petitioning, for union representation of any employees of
the Corporation or KCI. Neither the Corporation nor KCI has experienced
any labor strike, slow-down, work stoppage, labor difficulty or other job
action during the last five years.
3.19 Taxes.
(a) Each of the Corporation and KCI has timely filed or will timely
file all requisite federal, state, local and other tax and information
returns due for all fiscal periods ended on or before the Closing Date.
All such returns are accurate and complete in all material respects.
Except as set forth on Schedule 3.19, there are no open years (other than
those within the statute of limitations), examinations in progress,
extensions of any statute of limitations or claims against the Corporation
or KCI relating to federal, state, local or other taxes (including
penalties and interest) for any period or periods prior to and including
the Closing Date and no notice of any claim for taxes has been received.
Copies of (i) any tax examinations, (ii) extensions of statutory
limitations and (iii) the federal income, and state franchise, income and
sales tax returns of the Corporation and KCI for their last three fiscal
years are attached as part of Schedule 3.19. Copies of all other federal,
state, local and other tax and information returns for all prior years of
the Corporation's and KCI's existence have been made available to WCI and
are among the records of the Corporation and KCI that will accrue to WCI
at the Closing. Neither the Corporation nor KCI has been contacted by any
federal, state or local taxing authority regarding a prospective
examination.
(b) Except as set forth on Schedule 3.19 (which schedule also
includes the amount due with respect to the Corporation and KCI) the
Corporation and KCI have duly paid all taxes and other related charges
required to be paid prior to the date of this Agreement. The reserves for
taxes contained in the Financial Statements of the Corporation and KCI are
adequate to cover the Corporation's and KCI's respective tax liabilities
as of the Closing Date.
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(c) The Corporation and KCI have withheld all required amounts from
its employees for all pay periods in full and complete compliance with the
withholding provisions of applicable federal, state and local laws. All
required federal, state and local and other returns with respect to income
tax withholding, social security, and unemployment taxes have been duly
filed by the Corporation or KCI for all periods for which returns are due,
and the amounts shown on all such returns to be due and payable have been
paid in full.
3.20 Copies Complete; Required Consents. Except as disclosed on Schedule
3.20, the certified copies of the Articles of Incorporation and Bylaws of the
Corporation and KCI, as amended, and the copies of all leases, instruments,
agreements, licenses, permits, certificates, site assessments or other documents
included in the Schedules to this Agreement are complete and accurate and are
true and correct copies of the originals thereof. Except as specifically
disclosed on Schedule 3.20, any rights and benefits the Corporation or KCI may
have under any of the foregoing documents will not be materially adversely
affected by the transactions contemplated hereby, and the execution of this
Agreement and the performance of the obligations hereunder will not materially
violate or result in a material breach or constitute a material default under
any of the terms or provisions thereof. Except for any consents and approvals
listed on Schedule 3.20 and except for Required Governmental Consents (all of
which have been given or obtained prior to the Closing), none of the documents
mentioned in this Section 3.20 requires notice to, or consent or approval of,
any governmental agency or other third party to any of the transactions
contemplated hereby.
3.21 Customers, ▇▇▇▇▇▇▇▇, Current Receipts and Receivables. Schedule 3.21
is a current, accurate and complete list of, and includes:
(a) the customers that each of the Corporation and KCI serves on an
ongoing basis, including name, location and current billing rate;
(b) an accurate and complete aging of all accounts and notes
receivable from customers of the Corporation and the KCI Business as of
the Effective Date, showing amounts due in 30-day aging categories. Except
to the extent of the allowance for bad debts reflected on the Financial
Statements or otherwise disclosed on Schedules 3.12 or 3.21, the
Corporation's and KCI's accounts and notes receivable are fully
collectible in the amounts shown on Schedules 3.12 and 3.21; and
(c) the average monthly revenues of each of the Corporation and KCI
derived from ▇▇▇▇▇▇▇▇ to its customers for each of the twelve months
preceding the date hereof.
3.22 No Change With Respect to the Corporation or the Business. Except as
set forth on Schedule 3.22, since the Balance Sheet Date, the Corporation's
business and the KCI Business have been conducted only in the ordinary course
and there has been no change in the condition (financial or otherwise) of the
assets, liabilities or operations of the Corporation or the KCI Business, other
than changes in the ordinary course of business, which either singly or in the
aggregate has been materially adverse. Specifically, and without limiting the
generality of the foregoing, except as set forth on Schedule 3.22, with respect
to each of the Corporation and the KCI Business, since the Balance Sheet Date,
there has not been:
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(a) any material change in its financial condition, assets,
liabilities (contingent or otherwise), income, operations or business
which would have a material adverse effect on the financial condition,
assets, liabilities (contingent or otherwise), income, operations or
business of the Corporation or the KCI Business, taken as a whole;
(b) any material damage, destruction or loss (whether or not covered
by insurance) adversely affecting any material portion of its properties
or business;
(c) any change in or agreement to change (i) its shareholders, (ii)
ownership of its authorized capital or outstanding securities, or (iii)
its securities;
(d) any declaration or payment of, or any agreement to declare or
pay, any dividend or distribution in respect of its capital stock or any
direct or indirect redemption, purchase or other acquisition of any of its
capital stock;
(e) any increase or bonus or promised increase or bonus in the
compensation payable or to become payable by it, in excess of usual and
customary practices, to any of its directors, officers, employees or
agents, or any accrual or arrangement for or payment of any bonus or other
special compensation to any employee or any severance or termination pay
paid to any of its present or former officers or other key employees;
(f) any labor dispute or any other event or condition of any
character with respect to the Corporation's or KCI's employees, materially
adversely affecting its business or future prospects;
(g) any sale or transfer, or any agreement to sell or transfer, any
of its material assets, property or rights to any other person, including,
without limitation, the Shareholders and their Affiliates, other than in
the ordinary course of business;
(h) any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to it, including, without
limitation, any indebtedness or obligation of any of the Shareholders or
any Affiliate thereof;
(i) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets, property
or rights or requiring consent of any party to the transfer and assignment
of any such assets, property or rights;
(j) any purchase or acquisition of, or any agreement, plan or
arrangement to purchase or acquire, any of its property, rights or assets
outside the ordinary course of its business;
(k) any waiver of any of its material rights or claims;
(l) any new or any amendment or termination of any existing material
contract, agreement, license, permit or other right to which it is a
party, other than in the ordinary course of business.
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3.23 Closing Date Debt; Effective Date Current Assets and Effective Date
Current Liabilities.
(a) When delivered at the Closing, Schedule 3.23(a) shall list (i)
the amount of the aggregate debt (excluding trade payables) of the
Corporation and of KCI outstanding on the Closing Date required to be
repaid by WCI or the Corporation at or immediately after the Closing Date
and all prepayment penalties incurred or to be incurred by WCI or the
Corporation in connection with the repayment of any such debt; provided,
however, that the parties hereto agree that such debt of KCI and
associated prepayment penalties to be paid by WCI shall not exceed
$350,000 in the aggregate, and provided further that those certain
short-term renewable rental arrangements marked as such on Schedule
3.23(a) shall not be included in the definition of Closing Date Debt, (ii)
the amount of the aggregate debt (excluding trade payables) of the
Corporation outstanding on the Closing Date which will remain outstanding
obligations of the Corporation after the Closing Date, and all prepayment
penalties applicable to such debt if repaid prior to maturity, including
in each case all interest accrued through and including the Closing Date,
(iii) the aggregate amount of the present value as of the Closing Date,
discounted at the lease rate factor, if known, inherent in the lease or,
if the lease rate factor is not known, at the rate charged to the
Corporation or KCI by a third party lender in connection with its most
recent borrowing to finance equipment, of all lease obligations of the
Corporation that are not capitalized lease obligations and all lease
obligations of KCI that are not capitalized lease obligations and that are
included in the Assumed contracts or encumbering the Assets, and (iv) the
aggregate amount of the present value as of the Closing Date of all
capitalized lease obligations (determined in accordance with generally
accepted accounting principles) of the Corporation and all capitalized
lease obligations of KCI that are included in the Assumed Contracts or
encumbering the Assets (the "CLOSING DATE DEBT"). Schedule 3.23(a)
includes wire transfer instructions for creditors who hold Closing Date
Debt. Pay-off letters or instructions from such creditors in the form
provided by WCI's bank or acceptable to WCI shall be attached to Schedule
3.23(a).
(b) When delivered at the Closing, Schedule 3.23(b) shall be an
estimate as of the Effective Date of the amount of the aggregate current
liabilities (including any reserve for unpaid taxes and excluding the
current portion of long-term debt to the extent such current portion is
included in Closing Date Debt) and trade payables of the Corporation or
KCI as of the Effective Date (the "EFFECTIVE DATE CURRENT LIABILITIES")
and the amount of the aggregate cash and other current assets of the
Corporation and KCI as of the Effective Date, including prepaid expenses
the benefit of which survives the Effective Date and the accounts
receivable of the Corporation and KCI earned prior to the Effective Date,
and collectible on or after the Effective Date (the "EFFECTIVE DATE
CURRENT ASSETS"). Notwithstanding the foregoing, Effective Date Current
Assets shall not include the Reserves.
3.24 Bank Accounts.
(a) Schedule 3.24(a) is a complete and accurate list of:
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(i) the name of each bank in which the Corporation or KCI has
accounts or safe deposit boxes;
(ii) the name(s) in which the accounts or boxes are held;
(iii) the type of account; and
(iv) the name of each person authorized to draw thereon or
have access thereto.
(b) Schedule 3.24(b) is a complete and accurate list of:
(i) each credit card or other charge account issued to the
Corporation or KCI; and
(ii) the name of each person to whom such credit cards or
other charge accounts have been issued.
3.25 Compliance With Laws. Except as disclosed on Schedule 3.25, the
Corporation and KCI have complied with, and the Corporation and KCI are
presently in compliance with all material federal, state and local laws,
ordinances, codes, rules, regulations, Governmental Permits, orders, judgments,
awards, decrees, consent judgments, consent orders and requirements applicable
to it (collectively "LAWS"), including, but not limited to, the Americans with
Disabilities Act, the Federal Occupational Safety and Health Act, and Laws
relating to the public health, safety or protection of the environment
(collectively, "ENVIRONMENTAL LAWS"). Except as disclosed on Schedule 3.25,
there has been no assertion by any party that the Corporation or KCI is in
violation of any Laws. Specifically and without limiting the generality of the
foregoing, except as disclosed on Schedule 3.25:
(a) Except as permitted under applicable laws and regulations and in
compliance therewith, including, without limitation, the federal Resource
Conservation Recovery Act, 42 USC Section 6901 et seq. ("RCRA"), neither
the Corporation nor KCI nor the KCI Business has accepted, processed,
handled, transferred, generated, treated, stored or disposed of any
Hazardous Material (as defined in Section 3.25(e) below) nor has the
Corporation or KCI or the KCI Business accepted, processed, handled,
transferred, generated, treated, stored or disposed of asbestos, medical
waste, radioactive waste or municipal waste, except in compliance with
Environmental Laws.
(b) During the Corporation's ownership or leasing of the Corporate
Property owned or leased by it and KCI's ownership or leasing of the KCI
Property owned or leased by it, to the knowledge of the Corporation, KCI
and the Shareholders, prior to the Corporation's or KCI's ownership or
leasing of such Corporate Property or KCI Property, no Hazardous Material,
other than that allowed under Environmental Laws, including, without
limitation, RCRA, has been disposed of, or otherwise released on any
Corporate Property or KCI Property.
(c) During the Corporation's ownership or leasing of the Corporate
Property owned or leased by it and KCI's ownership or leasing of the KCI
Property owned or leased by it and, to the knowledge of the Corporation,
KCI and the Shareholders, prior to
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the Corporation's ownership or leasing of such Corporate Property and
prior to KCI's ownership or leasing of the KCI Property, no Corporate
Property or KCI Property has ever been subject to or received any notice
of any private, administrative or judicial action, or notice of any
intended private, administrative or judicial action relating to the
presence or alleged presence of Hazardous Material in, under, upon or
emanating from any Corporate Property or KCI Property or any real property
now or previously owned or leased by a Corporation or KCI. There are no
pending and, to the Corporation's, KCI's and Shareholders' knowledge, no
threatened actions or proceedings from any governmental agency or any
other entity involving remediation of any condition of the Corporate
Property or the KCI Property, including, without limitation, petroleum
contamination, pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, neither the
Corporation nor KCI has knowingly sent, transported or arranged for the
transportation or disposal of any Hazardous Material to any site, location
or facility.
(e) As used in this Agreement, "HAZARDOUS MATERIAL" means the
substances (i) defined as "HAZARDOUS WASTE" in 40 CFR 261, and substances
defined in any comparable Nebraska statute or regulation; (ii) any
substance the presence of which requires remediation pursuant to any
Environmental Laws; and (iii) any substance required to be disposed of in
a manner expressly prescribed by Environmental Laws; provided however,
that the term Hazardous Waste shall not include any substances disposed of
in compliance with any material Governmental Permits.
3.26 Powers of Attorney. The Corporation has not granted any power of
attorney (except routine powers of attorney relating to representation before
governmental agencies) or entered into any agency or similar agreement whereby a
third party may bind or commit the Corporation in any manner.
3.27 Underground Storage Tanks. No underground storage tanks containing
petroleum products or wastes or other hazardous substances regulated by 40 CFR
280 or Environmental Laws are currently or, to the knowledge of the Corporation,
KCI or Shareholders, have been located on any Corporate Property or KCI
Property. The Corporation has not to its knowledge owned or leased any real
property not included in the Corporate Property having any underground storage
tanks containing petroleum products or wastes or other hazardous substances
regulated by 40 CFR 280.
3.28 Patents, Trademarks, Trade Names, etc. Schedule 3.28 lists all
patents, tradenames, fictitious business names, trademarks, service marks, and
copyrights owned by the Corporation or KCI or which it is licensed to use (other
than licenses to use software for personal computer operating systems that were
provided when the computer was purchased and licenses to use software for
personal computers that are granted to retail purchasers of such software). To
the knowledge of the Corporation, KCI and the Shareholders, no patents, trade
secrets, knowledge intellectual property, trademarks, trade names, assumed
names, copyrights, or designations used by the Corporation or KCI in its
business infringe on any patents, trademarks, or copyrights, or any other rights
of any person. Neither the Corporation nor KCI nor any of the Shareholders knows
or has any reason to believe that there are any claims of third parties to the
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use of any such names or any similar name, or knows of or has any reason to
believe that there exists any basis for any such claim or claims.
3.29 Assets, etc., Necessary to Business. Each of the Corporation and KCI
owns or leases all material properties and assets, real, personal, and mixed,
tangible and intangible, necessary to permit it to carry on its business and
operations as presently conducted, and, except as disclosed on Schedules 3.5,
3.10(a), 3.10(c), 3.15(a) or 3.20, is a party to all Collection Franchises and
Governmental Permits and other agreements necessary to permit it to carry on its
business as presently conducted. All of said Collection Franchises and
Governmental Permits and agreements have been duly obtained and, except as
disclosed on Schedules 3.5, 3.8-Part II, 3.10(a), 3.10(c) 3.15(a) or 3.20, are
in full force and effect and there are no proceedings pending or, to the
knowledge of the Corporation, KCI and the Shareholders, threatened which may
result in the revocation, cancellation, suspension or adverse modification of
any of the same. Neither the Corporation nor KCI nor any of the Shareholders has
any knowledge of any reason why all such Collection Franchises and Governmental
Permits and agreements will not remain in effect after consummation of the
transactions contemplated hereby.
3.30 Condemnation. No Corporate Property owned or leased by the
Corporation, and no KCI Property owned or leased by KCI is the subject of, or
would be affected by, any pending condemnation or eminent domain proceedings,
and, to the knowledge of the Corporation, KCI and the Shareholders, no such
proceedings are threatened.
3.31 Suppliers and Customers. To the knowledge of the Corporation, KCI and
the Shareholders, the relations between the Corporation and KCI and each of
their respective customers are good. Neither the Corporation, KCI nor any of the
Shareholders has knowledge of any fact (other than general economic and industry
conditions) which indicates that any of the suppliers supplying products,
components, materials or providing use of, or access to, landfills or disposal
sites to the Corporation or KCI intends to cease providing such items to the
Corporation or KCI, nor does the Corporation, KCI or any of the Shareholders
have knowledge of any fact (other than general economic and industry conditions)
which indicates that any of the customers of the Corporation or KCI intends to
terminate, limit or reduce its business relations with the Corporation or KCI.
3.32 Absence of Certain Business Practices. Neither the Corporation, KCI
nor any of the Shareholders has directly or indirectly within the past five
years given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person who is or may be in a position
to help or hinder the business of the Corporation or KCI in connection with any
actual or proposed transaction which (a) may reasonably subject the Corporation
or KCI to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (b) if not given in the past, might have had a
material adverse effect on the financial condition, business or results of
operations of the Corporation or the KCI Business, or (c) if not continued in
the future, might materially adversely affect the financial condition, business
or operations of the Corporation or the KCI Business or which might subject the
Corporation or WCI to suit or penalty in any private or governmental litigation
or proceeding.
3.33 Disclosure Schedules. Any matter disclosed on any Schedule to this
Agreement shall be deemed to have been disclosed on every other Schedule that
refers to such Schedule by
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cross reference so long as the nature of the matter disclosed is reasonably
apparent from a fair reading of the Schedule on which the matter is disclosed.
3.34 No Misleading Statements. The representations and warranties of the
Corporation, KCI and the Shareholders contained in this Agreement, the Exhibits
and Schedules hereto are complete and accurate in all material respects and do
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made not misleading.
3.35 Knowledge. Wherever reference is made in this Agreement to the
"KNOWLEDGE" of the Shareholders, such term means the actual knowledge of the
Shareholders. In the case of a Shareholder that is a trust, the term "KNOWLEDGE"
means the actual knowledge of the trustee or trustees of the trust or any
knowledge which should have been obtained by the trustee or trustees upon
reasonable inquiry by a reasonable business person. Wherever reference is made
in this Agreement to the "KNOWLEDGE" of the Corporation or KCI, such term means
the actual knowledge of ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
3.36 Brokers; Finders. No person has acted directly or indirectly as a
broker, finder or financial advisor for the Corporation, KCI or a Shareholder in
connection with the transactions contemplated by this Agreement and no person is
entitled to any broker's, finder's, financial advisory or similar fee or payment
in respect thereof based in any way on any agreement, arrangement or
understanding made by or on behalf of a Corporation, KCI or a Shareholder.
3.37 S Corporation. The Corporation has elected to be treated as an S
Corporation within the meaning of the Code for the years listed on Schedule
3.37.
4. REPRESENTATIONS AND WARRANTIES OF WCI
WCI represents and warrants to the Shareholders and KCI, which
representations and warranties are true and correct, as follows:
4.1 Existence and Good Standing. WCI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
WCI has full corporate power and authority to own and lease its properties and
to carry on its business as now conducted. WCI is not required to be qualified
or licensed to conduct business as a foreign corporation in any jurisdiction
where the failure to be so qualified would have a material adverse effect on its
financial condition. Any wholly owned subsidiary of WCI which acquires the
Assets of KCI shall be, as of Closing, qualified to do business in Nebraska.
4.2 No Contractual Restrictions. No provisions exist in any article,
document or instrument to which WCI is a party or by which it is bound which
would be violated by consummation of the transactions contemplated by this
Agreement.
4.3 Authorization of Agreement. This Agreement has been duly authorized,
executed and delivered by WCI and, subject to the due authorization, execution
and delivery by the Corporation, KCI and the Shareholders, constitutes a legal,
valid and binding obligation of WCI enforceable against WCI in accordance with
its terms. WCI has full corporate power, legal right and corporate authority to
enter into and perform its obligations under this Agreement and to carry on its
business as presently conducted. The execution and delivery of this Agreement
and
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the consummation of the transactions contemplated hereby and the fulfillment of
and compliance with the terms and conditions hereof do not and will not, after
the giving of notice, or the lapse of time or otherwise: (a) violate any
provisions of any judicial or administrative order, award, judgment or decree
applicable to WCI; (b) conflict with any of the provisions of the Amended and
Restated Certificate of Incorporation or Amended and Restated Bylaws of WCI; or
(c) conflict with, result in a breach of or constitute a default under any
material agreement or instrument to which WCI is a party or by which it is
bound.
4.4 No Misleading Statements. The representations and warranties of WCI
contained in this Agreement, the Exhibits and Schedules hereto and all other
documents and information furnished to the Shareholders pursuant hereto are
accurate and complete in all material respects, and do not include any untrue
statement of a materiaL fact or omit to state any material fact necessary to
make the statements made not misleading.
4.5 Brokers; Finders. No person has acted directly or indirectly as a
broker, finder or financial advisor for WCI in connection with the transactions
contemplated by this Agreement and no person is entitled to any broker's,
finder's, financial advisory or similar fee or payment in respect thereof based
in any way on any agreement, arrangement or understanding made by or on behalf
of WCI.
4.6 Disclosure Schedules. Any matter disclosed by WCI on any Schedule to
this Agreement shall be deemed to have been disclosed on every other Schedule
that refers to such Schedule by cross reference so long as the nature disclosed
is obvious from a fair reading of the Schedule on which the matter is disclosed.
5. COVENANTS FROM SIGNING TO CLOSING DATE
5.1 Operations. Between the date hereof (the "SIGNING DATE") and the
Closing Date, the Corporation and KCI will, and the Shareholders will cause the
Corporation and KCI to:
(a) carry on each respective business in substantially the same
manner as heretofore and not introduce any material new method, or
discontinue any existing material method, of operation or accounting;
(b) maintain the properties and facilities of the Corporation and
KCI, including those held under leases, in as good working order and
condition as at present, ordinary wear and tear excepted;
(c) perform all material obligations under agreements relating to or
affecting the assets, properties, business operations and rights of the
Corporation and KCI;
(d) keep in full force and effect present insurance policies or
other comparable insurance coverage, provided that WCI shall reimburse the
Shareholders for that portion of the premiums which relate to periods
following the Closing Date with respect to policies issued or renewed and
paid for on or after the Effective Date and prior to the Closing Date;
(e) use reasonable efforts to maintain and preserve the business
organization of the Corporation and KCI intact, retain present employees
and maintain relationships
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with suppliers, customers and others having business relations with the
Corporation and KCI on a basis consistent with past practice;
(f) file on a timely basis all notices, reports or other filings
required to be filed with or reported to any federal, state, municipal or
other governmental department, commission, board, bureau, agency or any
instrumentality of any of the foregoing wherever located with respect to
the continuing operations of the Corporation;
(g) maintain compliance with all Collection Franchises and
Governmental Permits and all laws, rules, regulations and consent orders
consistent with past practice;
(h) file on a timely basis all complete and correct applications or
other documents necessary to maintain, renew or extend any permit,
license, variance or any other approval required by any governmental
authority necessary and/or required for the continuing operation of the
Corporation's and KCI's business operations, whether or not such approval
would expire before or after the Closing; and
(i) advise WCI promptly in writing of any material change in any
document, Schedule, Exhibit, or other information delivered pursuant to
this Agreement.
5.2 No Change. Between the Signing Date and the Closing Date, the
Corporation and KCI will not, and the Shareholders will not permit the
Corporation to, take any action described below without the prior written
consent of WCI:
(a) make any change in the Articles of Incorporation or Bylaws of
the Corporation and KCI;
(b) authorize, issue, transfer, pledge, distribute or sell any of
the Corporation's Stock or any other securities of the Corporation or KCI;
(c) except as set forth on Schedule 3.3 with respect to Excluded
Assets, declare or pay any dividend or make any distribution in respect of
the capital stock of the Corporation or KCI whether now or hereafter
outstanding, or purchase, redeem or otherwise acquire or retire for value
any shares of the capital stock or the Corporation or KCI;
(d) enter into any contract or commitment or incur or agree to incur
any liability other than in the ordinary course of business other than the
transactions contemplated by this Agreement or make any single capital
expenditure in excess of $10,000 or in excess of $25,000 in the aggregate
during any consecutive thirty (30) day period without regard to whether
such capital expenditure is in the ordinary course of business;
(e) except as set forth on Schedules 3.17 and 3.22, change or
promise to change the compensation payable or to become payable to any
director, officer, employee or agent, or make or promise to make any bonus
payment to any such person;
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(f) create, assume or otherwise permit the imposition of any
mortgage, pledge or other lien or encumbrance upon or grant any option or
right of first refusal with respect to any assets or properties whether
now owned or hereafter acquired;
(g) except as set forth on Schedule 3.3 with respect to Excluded
Assets, sell, assign, lease or otherwise transfer or dispose of any
property or equipment other than in the ordinary course of business;
(h) merge or consolidate or agree to merge or consolidate with or
into any firm, corporation or other entity;
(i) waive any material rights or claims;
(j) amend, terminate or enter into any material agreement or any
site assessment, permit, license or other right, without the prior written
consent of WCI other than in the ordinary course of business;
(k) enter into any other transaction outside the ordinary course of
the Corporation's or KCI's business or prohibited hereunder; or
(l) take any action or suffer or permit any event to occur that
would cause any representation or warranty of the Corporation, KCI or the
Shareholders to become untrue as of the Closing Date.
5.3 Obtain Consents. Promptly after the Signing Date, the Corporation and
KCI will, and the Shareholders shall cause the Corporation and KCI to, make all
filings and take all steps reasonably necessary to obtain all consents and
approvals, if any, of each other party whose consent or approval is necessary to
permit the consummation of the transactions contemplated in this Agreement
pursuant to, or required to prevent the breach of or permit the assignment of,
any material Collection Franchises, Governmental Permits, or Governmental
Consents (the "NECESSARY CONSENTS"), and shall take all steps necessary to
obtain all other non-material approvals and non-material consents required to be
obtained by the Corporation, KCI or the Shareholders to consummate the
transactions contemplated by this Agreement.
5.4 Access; Confidential Information. Between the Signing Date and the
Closing Date, the Shareholders, the Corporation and KCI will, and the
Shareholders will cause the Corporation and KCI to, afford to the officers and
authorized representatives of WCI, including, without limitation, its engineers,
counsel, independent auditors and investment bankers, reasonable access to the
Facilities, plants, Corporate Property, KCI Property and other properties, books
and records of the Corporation and KCI, and will furnish WCI with such
additional financial and operating data and other information as to the business
and properties of the Corporation and KCI as WCI may from time to time
reasonably request. The Shareholders will and will cause the Corporation and KCI
to cooperate with WCI, its representatives and counsel in the preparation of any
documents or other material which may be required by any governmental agency.
The Shareholders, the Corporation and KCI shall provide to WCI such information
and materials regarding the Corporation or the KCI business, as WCI may
reasonably request on or before December 22, 1998. WCI will cause all
information obtained from the Shareholders, the Corporation or KCI, in
connection with WCI's due diligence review
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and the negotiation and performance of this Agreement to be treated as
confidential (except such information which is in the public domain or which WCI
may be required to disclose to any governmental agency, or pursuant to any court
or regulatory agency order) and will not use, and will not knowingly permit
others to use, any such confidential information in a manner detrimental to the
Corporation, the Shareholders or KCI. Each party hereto shall not disclose to
any third person other than their accountants, bankers or legal counsel any of
the terms or provisions of this Agreement prior to or after the Closing Date
without prior written consent of WCI (in the case of disclosures by the
Corporation (prior to Closing), or the Shareholders or ▇▇▇), or of the
Shareholders or ▇▇▇ (in the case of disclosures by the Corporation (after the
Closing) or WCI).
5.5 Notice of Material Adverse Change. The Corporation, KCI and the
Shareholders shall promptly notify WCI of any material adverse change in the
business or financial condition of the Corporation or KCI, including any
lawsuit, claim, audit, investigation, or other proceeding, between the date of
this Agreement and the Closing Date.
5.6 Completion of Schedules. The Corporation, Shareholders and KCI, as
applicable, shall prepare and submit to WCI the Schedules to this Agreement in a
form reasonably acceptable to WCI no later than December 22, 1999.
5.7 Title Commitment. On or before December 22, 1998, Shareholders and the
Corporation shall deliver to WCI, at WCI's expense, a current ALTA preliminary
title commitment issued by a nationally recognized title company, which title
commitment shall be acceptable to WCI.
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI TO CLOSE
The obligations of WCI under this Agreement are subject to the
satisfaction, at or before Closing, of all of the following conditions
precedent, unless waived in writing by WCI:
6.1 Representations and Warranties. All representations and warranties of
the Corporation, KCI and the Shareholders contained in this Agreement or in any
Exhibit, Schedule, certificate or document delivered by the Corporation, KCI or
the Shareholders under this Agreement shall be true, correct and complete on and
as of the date when made in all material respects, and (except to the extent
that such representations and warranties speak of an earlier date) shall be
deemed to be made again on the Closing Date, and shall then be true, correct and
complete in all material respects as of the Closing Date.
6.2 Conditions. The Corporation, KCI and the Shareholders shall have
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by them
on or before the Closing Date.
6.3 No Material Adverse Change. Since the Signing Date, there shall not
have been any material adverse change in the condition (financial or otherwise)
of the business, properties or assets of the Corporation or KCI.
6.4 Certificates. The President of the Corporation and KCI shall have
delivered to WCI a certificate, dated as of the Closing Date, in form and
substance satisfactory to WCI and the Shareholders, certifying to the
fulfillment of the conditions set forth in Sections 6.1, 6.2 and
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6.3, and the Shareholders shall have delivered to WCI a certificate dated as of
the Closing Date, in form and substance satisfactory to WCI and the
Shareholders, certifying to the fulfillment of the conditions set forth in
Section 6.1, 6.2 and 6.3 applicable to the Shareholders.
6.5 No Litigation. None of the transactions contemplated hereby shall have
been enjoined by any court or by any federal or state governmental branch,
agency, commission or regulatory authority and no suit or other proceeding
challenging the transactions contemplated hereby shall have been threatened or
instituted and no investigative or other demand shall have been made by any
federal or state governmental branch, agency, commission or regulatory
authority.
6.6 Other Deliveries. The Shareholders shall have delivered the items
which they are required to deliver under Section 8 of this Agreement.
6.7 Necessary Consents. All Necessary Consents shall have been obtained.
6.8 Due Diligence. WCI and its representatives have and shall continue to
have reasonable rights of inspection of the Corporation's and KCI's businesses
and assets in connection with WCI's due diligence review, and the results of
WCI's due diligence review shall be reasonably acceptable to it. WCI shall have
reviewed all of the schedules to this Agreement and all documents related to any
of the Corporation's benefits plans, and all such schedules and documents shall
be reasonably satisfactory to WCI or any problems reflected in, or indicated by,
such schedules or documents shall have been resolved to the reasonable
satisfaction of WCI.
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDERS THE CORPORATION AND
KCI TO CLOSE
The obligations of the Corporation, KCI and Shareholders under this
Agreement are subject to the satisfaction, at or before Closing, of all of the
following conditions precedent, unless waived in writing by the Shareholders:
7.1 Representations and Warranties. All representations and warranties of
WCI contained in this Agreement or in any statement, Exhibit, Schedule,
certificate or document delivered by WCI under this Agreement shall be true,
correct and complete on and as of the date when made in all material respects,
and (except to the extent that such representations and warranties speak of an
earlier date) shall be deemed to be made again on the Closing Date, and shall
then be true, correct and complete in all material respects as of the Closing
Date.
7.2 Conditions. WCI shall have performed, satisfied and complied with all
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by it on or before the Closing Date.
7.3 Certificate. WCI shall have delivered to the Shareholders a
certificate, dated as of the Closing Date, in form and substance satisfactory to
the Shareholders, certifying to the fulfillment of the conditions set forth in
Sections 7.1 and 7.2.
7.4 No Litigation. None of the transactions contemplated hereby shall have
been enjoined by any court or by any federal or state governmental branch,
agency, commission or regulatory authority and no suit or other proceeding
challenging the transactions contemplated
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hereby shall have been threatened or instituted and no investigative or other
demand shall have been made by any federal or state governmental branch, agency,
commission or regulatory authority.
7.5 Other Deliveries. WCI shall have delivered the items which it is
required to deliver under Section 8 of this Agreement.
7.6 NECESSARY CONSENTS. All Necessary Consents shall have been obtained.
8. CLOSING DELIVERIES
At the Closing, the respective parties shall make the deliveries
indicated:
8.1 WCI Deliveries.
(a) WCI shall deliver to the Shareholders and KCI the Purchase Price
required to be delivered on the Closing Date pursuant to Section 1.5.
(b) WCI shall execute and deliver a Consulting Agreement with ▇▇▇
▇▇▇▇▇ in form and substance reasonably satisfactory to the parties.
(c) WCI shall execute and deliver a Consulting Agreement with ▇▇▇▇▇▇
▇▇▇▇▇ in form and substance reasonably satisfactory to the parties.
(d) WCI shall execute and deliver an Employment Agreement with ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ in form and substance reasonably satisfactory to the parties.
(e) WCI shall execute and deliver the License Agreement and the
Declaration of Access, Ingress, and Egress Agreement, each in form and
substance reasonably satisfactory to the parties.
(f) WCI shall execute and deliver a Stock Option Agreement for ▇▇▇▇▇
▇▇▇▇▇▇▇ in form and substance reasonably satisfactory to the parties.
(g) WCI shall execute and deliver to KCI an Assignment and
Assumption Agreement in form and substance reasonably satisfactory to the
parties.
(h) WCI shall deliver to the Shareholders an opinion of counsel for
WCI dated as of Closing in form and substance reasonably satisfactory to
the parties.
(i) WCI shall execute and deliver to the Shareholders and KCI the
certificate set forth in Section 7.3.
(j) WCI shall deliver to Shareholders certified copies of the
Amended and Restated Certificate of Incorporation and Amended and Restated
By-laws of WCI, and a certified copy of the resolutions of the Executive
Committee of the Board of Directors of WCI authorizing the execution,
delivery and consummation of this Agreement and the transactions
contemplated hereby.
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(k) WCI shall deliver such other documents and instruments as are
reasonably requested by the Shareholders, the Corporation and KCI to
consummate the transactions contemplated by this Agreement.
8.2 Shareholders' and KCI's Deliveries.
(a) The Shareholders shall deliver to WCI the certificates
representing the outstanding Corporation's Stock free and clear of all
liens, security interests, encumbrances, restrictions, pledges and claims,
accompanied by a stock power duly executed in blank.
(b) Each of the Shareholders, as a group, and KCI shall deliver to
WCI an opinion of counsel for the Shareholders and an opinion of counsel
for KCI, respectively, dated as of the Closing Date, in form and substance
reasonably satisfactory to the parties.
(c) All Necessary Consents shall have been obtained.
(d) The Shareholders shall cause each officer and director of the
Corporation to deliver a resignation as an officer and/or director of the
Corporation.
(e) KCI shall deliver to WCI an executed ▇▇▇▇ of sale and other
instruments of transfer and conveyance for the full and complete transfer,
conveyance, assignment and delivery to WCI on the Closing Date of all of
KCI's right, title and interest in and to all of the Assets in form and
substance reasonably satisfactory to the parties.
(f) Shareholders and KCI shall execute and deliver to WCI an
Assignment and Assumption Agreement in form and substance reasonably
satisfactory to the parties.
(g) KCI shall deliver to WCI all motor vehicle registrations and
ownership documents for the motor vehicles being acquired from KCI by WCI.
(h) The Shareholders, the Corporation and KCI shall deliver such
other documents and instruments as are reasonably requested by WCI to
consummate the transactions contemplated by this Agreement.
(i) The Corporation, KCI and the Shareholders shall execute and
deliver to WCI the certificates set forth in Section 6.4.
(j) [OMITTED]
(k) Shareholders, the Corporation and KCI shall deliver to WCI
certified copies of the Articles of Incorporation and Bylaws of the
Corporation and KCI, and a certified copy of the resolutions of the Board
of Directors of each of the Corporation and KCI authorizing the execution,
delivery and consummation of this Agreement and the transactions
contemplated hereby.
(l) Shareholders shall deliver to WCI a ▇▇▇▇ of sale executed by
▇▇▇▇▇ (as defined below) or other instruments of transfer and conveyance
for the full and complete transfer, conveyance, assignment and delivery to
WCI on the Closing Date of ▇▇▇▇▇'
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right, title and interest to that certain bulldozer set forth in Exhibit
8.2(l) in form and substance reasonably satisfactory to the parties.
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATION, KCI AND THE SHAREHOLDERS
9.1 No Delay. The Corporation, KCI, the Shareholders and WCI covenant and
agree from and after the date hereof not to hinder in any way or unreasonably
delay the Closing Date and to use their respective reasonable efforts to obtain
required Governmental Consents and otherwise to cause the Closing Date to occur
as soon as reasonably practicable after the date of this Agreement, provided,
however, that in using its reasonable efforts WCI shall not be required to take
any action or to agree to any condition, including without limitation any
condition imposed by any government authority with respect to the transfer of
any Governmental Permit, that, in WCI's reasonable judgment, imposes a
materially adverse financial burden or operating condition on WCI.
9.2 Release of Guaranties. WCI shall use reasonable efforts to obtain the
termination and release promptly after the Closing Date of the personal
guaranties of the Shareholders listed on Schedule 9.2. If WCI is unsuccessful in
its efforts to obtain such termination and release, WCI shall indemnify the
Shareholders and hold them harmless from and against all losses, expenses or
claims by third parties to enforce or collect indebtedness owed by the
Corporation or KCI (to the extent assumed by WCI pursuant to this Agreement) as
of the Closing Date which is personally guaranteed by the Shareholders pursuant
to such guaranties. The Shareholders may notify the obligees under such
guaranties that they have terminated their obligations under such guaranties.
The Shareholders shall cooperate with WCI in obtaining such releases.
9.3 Release of Security Interests. Between the Signing Date and the
Closing Date, the Shareholders and their respective Affiliates shall cause those
security interests in the assets of the Corporation that have been created in
favor of financial institutions or other lenders to secure indebtedness (other
than indebtedness of the Corporation) of the Shareholders or their respective
Affiliates to be released in a manner reasonably satisfactory to WCI, and shall
cause all guaranties by the Corporation relating to the indebtedness (other than
the indebtedness of the Corporation) of the Shareholders to be released to the
reasonable satisfaction of WCI. On or after the Closing Date, KCI, the
Shareholders and their respective Affiliates shall cause those security
interests in the Assets that have been created in favor of financial
institutions or other lenders to secure indebtedness (other than indebtedness of
KCI), the Shareholders or their respective Affiliates to be released in a manner
reasonably satisfactory to WCI.
9.4 Confidentiality. No party hereto shall disclose or make any public
announcements of the transactions contemplated by this Agreement without the
prior written consent of the others; provided, however, any party may make such
disclosure or announcement required by law, including any applicable securities
laws or disclosures required thereunder, in which event the party making the
disclosure or announcement shall notify the others at least twenty-four (24)
hours before such disclosure or announcement is expected to be made.
9.5 Broker's and Finder's Fees. Each party shall pay and be responsible
for any broker's, finder's or financial advisory fee incurred by such party in
connection with the transactions contemplated by this Agreement.
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9.6 Taxes. WCI shall reasonably cooperate with the Shareholders, at the
Shareholders expense, with respect to any matters involving the Shareholders
arising out of the Shareholders' ownership of the Corporation prior to the
Closing, including matters relating to tax returns and any tax audits, appeals,
claims or litigation with respect to such tax returns or the preparation of such
tax returns. In connection therewith, WCI shall make available to the
Shareholders such files, documents, books and records of the Corporation for
inspection and copying as may be reasonably requested by the Shareholders and
shall cooperate with the Shareholders with respect to retaining information and
documents which relate to such matters.
9.7 Short Year Tax Returns. After the Closing Date, the Shareholders shall
prepare at their sole cost and expense all short year federal, state, county,
local and foreign tax returns for the Corporation required by law for the period
beginning with the first day of the Corporation's fiscal year in which the
Closing occurs and ending with the Closing Date. Each such return shall be
prepared in a financially responsible and conservative manner and shall be
delivered to WCI, together with all necessary supporting schedules within 120
days following the Closing Date or at least sixty (60) days prior to the
required filing date, whichever is earlier, for WCI's approval (such approval,
however, shall not relieve the Shareholders of their responsibility for the
taxes assessed under these returns). The Shareholders shall be responsible for
the payment of all taxes shown to be due or that may come to be due on such
returns or otherwise relating to the period prior to the Closing Date in excess
of the amount of any reserve for taxes included in Effective Date Current
Liabilities and shall be responsible for any taxes incurred on the Net Profits.
The Shareholders shall also be responsible for all taxes arising from the
conversion of the Corporation from a cash to an accrual basis of reporting
whether or not due on such returns or on the first return filed by that
Corporation for the period commencing after the Closing Date. At the time of the
delivery of the returns, the Shareholders shall contemporaneously deliver to WCI
checks payable to the respective taxing authorities in amounts equal to the
amount due. WCI shall sign tax returns and cause such returns to be timely filed
with the appropriate authorities. The Shareholders shall be entitled to receive
all refunds shown on said returns and any such refunds received by the
Corporation or WCI shall be remitted to the Shareholders.
9.8 Certain Tax Matters. The Shareholders acknowledge that WCI has
indicated its intention to make an election under Section 338(h)(10) of the
Code. The Shareholders agree that WCI, in its discretion, may make such
election; provided, however, that such election shall be made no later than the
due date for such election. If such election is made by WCI:
(a) WCI shall be authorized to complete Form 8023-A;
(b) The Shareholders shall sign such completed Form 8023-A at the
Closing; and
WCI and the Shareholders shall agree upon the allocation of the portion of the
Purchase Price allocated to WCI's purchase of the Corporation's Stock among the
assets (including intangible assets) of the Corporation as set forth on Schedule
1.6.
9.9 Continued Employment. WCI shall offer all employees of the Corporation
continued employment after the Closing on substantially the same terms and
conditions as they were employed by the Corporation immediately prior to the
Closing; provided, however, that WCI shall offer such employees the same
benefits (including, but not limited to, medical and
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disability insurance, vacation and sick leave, and retirement benefits) that WCI
offers to its other employees with similar responsibilities.
9.10 Covenants of WCI.
(a) WCI hereby agrees to cause the Corporation to offer to ▇▇▇▇▇ Earth
Moving, Inc. ("▇▇▇▇▇") on the same terms and conditions as any third party, an
opportunity to bid and to match the lowest bid on any contracts, on the same
terms and conditions as any third party, involving any earth moving operations
at the ▇▇▇▇▇▇ County Landfill that ▇▇▇▇▇ is able to perform within its
traditional business capabilities.
(b) If within two (2) years immediately following the Closing Date, WCI or
any of its Affiliates, sells any or all of the Corporation's stock or the assets
of the Corporation to any party other than a party to this agreement or any
Affiliate of WCI, WCI agrees to pay to ▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, jointly, a sum
equal to twenty percent (20%) of (a) the purchase price received for such stock
or assets minus (b) the following: (i) the consideration received by the
Shareholders under this Agreement so allocated to such stock, (ii) all capital
expenses made by the Corporation since the Closing Date, and (iii) all net
losses incurred by the Corporation since the Closing Date. The provisions of
this Section 9.10(b) shall not apply to any transaction which results in a
change of control of WCI.
(c) WCI agrees to maintain, at Shareholders' expense, any pollution
liability or other insurance reasonably requested by Shareholders, covering the
assets, business or operations of the Corporation or KCI. WCI agrees to provide
to Shareholders, upon request, evidence that such insurance continues to be in
effect and that all premiums due have been paid.
9.11 Closing Date Debt. WCI shall, on or promptly after the Closing Date,
pay or satisfy the Closing Date Debt.
10. INDEMNIFICATION
10.1 Indemnity by the Shareholders. The Shareholders and KCI, jointly and
severally, subject to the limitations set forth in Section 10.2, covenant and
agree that they will indemnify and hold harmless WCI, the Corporation and their
respective directors, officers and agents and their respective successors and
assigns (collectively the "WCI INDEMNITEES"), from and after the Closing Date,
against any and all losses, damages, assessments, fines, penalties, adjustments,
liabilities, claims, deficiencies, costs, expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation),
expenditures, including, without limitation, any Environmental Site Losses (as
such term is hereinafter defined) identified by a WCI Indemnitee in a Claims
Notice (as defined in Section 10.4(a)), provided that any such Claims Notice
shall be given prior to (i) for tax related Claims, the expiration of the third
anniversary of the date of filing of the Corporation's federal, and Nebraska
income tax returns for the fiscal year ending on the Closing Date, (ii) for all
other Claims, the third anniversary of the Closing Date, or (iii) in the case of
Fraud (as defined below) prior to ninety (90) days following the expiration of
the applicable statute of limitations (irrespective of the date of discovery),
with respect to each of the following contingencies (the "10.1 INDEMNITY
EVENTS"):
(a) Any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of the Shareholders, KCI or the
Corporation pursuant
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to the terms of this Agreement or any misrepresentation in or omission
from any Exhibit, Schedule, list, certificate, or other instrument
furnished or to be furnished to WCI pursuant to the terms of this
Agreement, regardless of whether, in the case of a breach of a
representation or a warranty, WCI relied on the truth of such
representation or warranty or had any knowledge of any breach thereof.
(b) Any Environmental Site Losses. As used in this Agreement,
"ENVIRONMENTAL SITE" shall mean any Facility, any UST and any other waste
storage, processing, treatment or disposal facility, and any other
business site or any other real property owned, leased, controlled or
operated by the Corporation or KCI or by any predecessor thereof on or
prior to the Closing Date. As used in this Agreement, "ENVIRONMENTAL SITE
LOSSES" shall mean any and all losses, damages (including penalties),
liabilities, claims, deficiencies, costs, expenses, and expenditures
(including, without limitation, expenses in connection with site
evaluations, risk assessments and feasibility studies) arising out of or
required by an interim or final judicial or administrative decree,
judgment, injunction, mandate, interim or final permit condition or
restriction, cease and desist order, abatement order, compliance order,
consent order, clean-up order, exhumation order, reclamation order or any
other remedial action that is required to be undertaken under federal,
state or local law in respect of operating activities on or affecting any
Facility, any UST or any other Environmental Site, including, but not
limited to (x) any actual or alleged violation of any law or regulation
respecting the protection of the environment, including, but not limited
to, RCRA and CERCLA or any other law or regulation respecting the
protection of the air, water and land and (y) any remedies or violations,
whether by a private or public action, alleged or sought to be assessed as
a consequence, directly or indirectly, of any Release (as defined below)
of pollutants (including odors) or Hazardous Substances from any Facility,
any UST or any other Environmental Site resulting from activities thereat
prior to Closing, whether such Release is into the air, water (including
groundwater) or land, and whether such Release is discovered before or
after the Closing Date. The term "RELEASE" as used herein means any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing into the ambient
environment. Notwithstanding anything in this paragraph to the contrary,
it is specifically understood and agreed that a Release composed solely of
any substance disposed of in compliance with any material Governmental
Permits or Hazardous Substances contained in household waste lawfully
disposed of in a landfill during the time the Corporation or KCI owned
and/or operated such landfill does not constitute an Environmental Site
Loss; and it is further understood that an Environmental Site Loss shall
not include any loss arising from the intentional or negligent acts or
omissions of WCI or the Corporation which occur after the Closing Date.
(c) All matters required to be described on Schedule 3.8, Part II,
of which the Corporation, KCI or any of the Shareholders have knowledge on
the Closing Date and which are not so described.
(d) All actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation)
incident to any of the foregoing.
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10.2 Indemnification by WCI. WCI, subject to the limitations set forth in
Section 10.2, covenants and agrees that it shall indemnify the Shareholders, KCI
and their respective directors, officers, agents, heirs, trustees,
beneficiaries, successors and assigns (collectively, "SHAREHOLDER INDEMNITEES"),
from and after the Closing Date against any and all losses, damages,
assessments, fines, penalties, adjustments, liabilities, claims, deficiencies,
costs, expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation), expenditures identified by a
Shareholder Indemnitee in a Claims Notice; provided that any such Claims Notice
shall be given prior to the third anniversary of the Closing Date, or in the
case of Fraud, prior to ninety (90) days following the expiration of the
applicable statute of limitations irrespective of the date of discovery with
respect to each of the following contingencies (the "10.2 Indemnity Events"):
(a) Any misrepresentation, breach of warranty or nonfulfillment of
any agreement or covenant on the part of WCI pursuant to the terms of this
Agreement or any misrepresentation in or omission from any Exhibit,
Schedule, list, certificate or other instrument furnished or to be
furnished to Shareholders or KCI pursuant to the terms of this Agreement,
regardless of whether, in case of a breach of a representation or
warranty, Shareholders or KCI relied on the truth of such representation
or warranty or had any knowledge of any breach thereof.
(b) Any breach or failure of WCI to pay or perform any of the
Assumed Contracts from and after the Closing Date.
(c) Any obligations and liabilities in respect of the Corporation,
and any obligations and liabilities of the KCI Business assumed pursuant
to this Agreement.
(d) All actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without
limitation, reasonable attorney's fees and expenses of investigation)
incident to any of the foregoing.
10.3 Limitations on Indemnities.
(a) The obligations to indemnify as provided in this Section 10
shall be equal to the amount by which the cumulative amount of all such
liabilities, claims, damages, deficiencies, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses, expenditures and
Environmental Site Losses with respect to any or all 10.1 Indemnity Events
or any or all 10.2 Indemnifying Events exceeds one hundred thousand
dollars ($100,000) (the "GENERAL DEDUCTIBLE AMOUNT"); provided, that the
amount of any obligation of indemnity arising with respect to any
representation, warranty or covenant contained in Sections 3.1 through
3.4, 3.23, 4.1 through 4.4, 9.2, 9.7 9.10 and 9.11 hereof and pursuant to
Section 10.2(b) (the "ABSOLUTE COVENANTS") shall not be subject to the
General Deductible Amount.
(b) Absent Fraud and except with respect to Claims based on the
breach of any of the Absolute Covenants, the maximum amount that any party
hereto can recover as a result of one or more 10.1 or 10.2 Indemnity
Events pursuant to the provisions hereof for Claims shall not in the
aggregate exceed 70% of the Purchase Price with respect to Claims made
prior to the first anniversary of the Closing Date, 55% of the Purchase
Price
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with respect to Claims made on or after the first anniversary of the
Closing Date and prior to the second anniversary of the Closing Date, and
40% of the Purchase Price with respect to Claims made on or after the
second anniversary of the Closing Date and prior to the third anniversary
of the Closing Date, and thereafter nothing in the absence of Fraud or
Claims with respect to any of the Absolute Covenants. The amount any party
can recover as a result of a 10.1 or 10.2 Indemnity Event shall also be
net of any tax benefit received by such party as a result of such
Indemnity Event. Notwithstanding the foregoing, Claims for breach of any
of the Absolute Covenants shall not exceed the total aggregate Purchase
Price received by Shareholders pursuant to this Agreement. For the
purposes of this Section 10, "FRAUD" shall mean fraud, fraudulent
inducement or intentional misrepresentation or concealment.
(c) Except to the extent the same shall directly result in a
material increase in insurance premiums on a prospective basis, the
Shareholders shall not be required to indemnify any WCI Indemnitee, nor
shall WCI be required to indemnify any Shareholder Indemnitee, for any
Claim to the extent that such Claim has been reimbursed or is reimbursable
through insurance proceeds received or receivable by the Indemnitee. The
Indemnitee shall allow the Indemnifying Party to pursue such insurance
proceeds and shall reasonably cooperate with the Indemnifying Party in
connection therewith. In the event the insurance does not cover the full
amount of the Claim, or in the event the Claim shall directly result in an
increase in insurance premiums on a prospective basis, the Indemnifying
Party shall remain liable for the difference in the insurance payment and
the amount of the Claim, or in the case of an increase in insurance
premiums, the amount of such increase directly attributable to the Claim,
subject to the other limitations set forth herein.
(d) The WCI Indemnitee or the Shareholder Indemnitee, as the case
may be, shall use reasonable efforts to mitigate any damages to which they
are entitled to Indemnification under this Section 10. The indemnification
provisions of this Section 10 shall be the exclusive remedy in respect of
any breach of warranty, representation or covenant by any party hereto,
and for any Claim for monetary damages arising under this Agreement or
from the transactions contemplated hereby, except for Fraud, provided that
nothing in this Section 10 shall be deemed to be the exclusive remedy or
shall limit the remedies of any party with respect to the breach or
nonfulfilllment of the covenants set forth in Section 11.1 hereof required
to be satisfied or fulfilled after the Closing Date. In addition, the
parties shall be entitled to pursue any claims for non-monetary relief to
which they may be entitled at law or equity.
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10.4 Notice of Indemnity Claim.
(a) In the event that any claim ("CLAIM") is hereafter asserted
against or arises with respect to any WCI Indemnitee or Shareholder
Indemnitee as to which such Indemnitee may be entitled to indemnification
hereunder, the WCI Indemnitee shall notify the Shareholders and KCI, or
the Shareholder Indemnitee shall notify WCI (as applicable collectively,
the "INDEMNIFYING PARTY") in writing thereof (the "CLAIMS NOTICE") within
30 days after (i) receipt of written notice of commencement of any third
party litigation against such Indemnitee, (ii) receipt by such Indemnitee
of written notice of any third party claim pursuant to an invoice, notice
of claim or assessment against such Indemnitee, or (iii) such Indemnitee
becomes aware of the existence of any other event in respect of which
indemnification may be sought from the Indemnifying Party (including,
without limitation, any inaccuracy of any representation or warranty or
breach of any covenant). The Claims Notice shall describe the Claim and
the specific facts and circumstances in reasonable detail, and shall
indicate the amount, if known, or an estimate, if possible, of the losses
that have been or may be incurred or suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend any Claim for money
damages where the cumulative total of all Claims (including such Claims)
does not exceed the limit set forth in Section 10.3(b) at the time the
Claim is made by the Indemnifying Party's own counsel. The Indemnitee may
participate, at the Indemnitee's own expense, in the defense of any Claim
assumed by the Indemnifying Party.
(c) If, within thirty (30) days of the Indemnifying Party's receipt
of a Claims Notice, the Indemnifying Party shall have failed to defend a
Claim, the Indemnitee shall have the right to assume control of the
defense and/or compromise of such Claim, and the costs and expenses of
such defense, including reasonable attorneys' fees, shall be added to the
Claim.
(d) The party assuming the defense of any Claim shall keep the other
party reasonably informed at all times of the progress and development of
its or their defense of and compromise efforts with respect to such Claim
and shall furnish the other party with copies of all relevant pleadings,
correspondence and other papers. In addition, the parties to this
Agreement shall cooperate with each other and make available to each other
and their representatives all available relevant records or other
materials required by them for their use in defending, compromising or
contesting any Claim. The failure to timely deliver a Claims Notice or
otherwise notify the Indemnifying Party of the commencement of such
actions in accordance with this Section 10.4 shall not relieve the
Indemnifying Party from the obligation to indemnify hereunder except to
the extent that the Indemnifying Party establishes by competent evidence
that it has been prejudiced thereby.
(e) In the event both the Indemnitee and the Indemnifying Party are
named as defendants in an action or proceeding initiated by a third party,
they shall both be represented by the same counsel (on whom they shall
agree), unless such counsel, the Indemnitee, or the Indemnifying Party
shall determine that such counsel has a conflict of interest in
representing both the Indemnitee and the Indemnifying Party in the same
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action or proceeding and the Indemnitee and the Indemnifying Party do not
waive such conflict to the satisfaction of such counsel.
10.5 Liability for Breaches of Representations and Warranties. The
liability of a party making the representations and warranties contained in this
Agreement and in any certificate, Exhibit or Schedule delivered pursuant hereto,
or in any other writing delivered pursuant to the provisions of this Agreement
(the "REPRESENTATIONS AND WARRANTIES") for a breach thereof shall survive the
consummation of the transactions contemplated hereby for the time periods set
forth in Section 10.1. Unless specifically provided otherwise in this Agreement,
the covenants contained in this Agreement shall survive the consummation of the
transactions contemplated hereby for a period of three (3) years following the
Closing.
10.6 No Exhaustion of Remedies or Subrogation; Right of Setoff. The
Shareholders and KCI waive any right to require any WCI Indemnitee to (i)
proceed against the Corporation; (ii) proceed against any other person; or (iii)
pursue any other remedy whatsoever in the power of any WCI Indemnitee. WCI may,
but shall not be obligated to, set off against any and all payments due any
Shareholder or KCI any amount to which any WCI Indemnitee is entitled to be
indemnified hereunder with respect to any 10.1 Indemnity Event. Such right of
set off shall be separate and apart from any and all other rights and remedies
that the WCI Indemnitees may have against the Shareholders, KCI or their
successors.
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS, KCI AND WCI
11.1 Restrictive Covenants. The Shareholders and KCI acknowledge that (i)
WCI, as the purchaser of the Corporation's Stock and the Assets, is and will be
engaged in the same business as the Corporation and KCI (the "BUSINESS"); (ii)
the Shareholders and KCI are intimately familiar with the Business; (iii) the
Business is currently conducted in the State of Nebraska and WCI intends to
continue the Business in Nebraska and intends, by acquisition or otherwise, to
expand the Business into other geographic areas where it is not presently
conducted; (iv) the Shareholders and KCI have had access to trade secrets of,
and confidential information concerning, the Business; (v) the agreements and
covenants contained in this Section 11.1 are essential to protect the Business
and the goodwill being acquired; and (vi) the Shareholders have the means to
support themselves and their dependents other than by engaging in a business
substantially similar to the Business and the provisions of this Section 11 will
not impair such ability. The Shareholders and KCI covenant and agree as set
forth in (a), (b) and (c) below with respect to the Corporation and the
Business:
(a) Non-Compete. For a period commencing on the Closing Date and
terminating five years thereafter (the "RESTRICTED PERIOD"), neither the
Shareholders nor KCI shall, anywhere within a ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "RESTRICTED AREA"), directly or indirectly, acting
individually or as the owner, shareholder, partner, or employee of any
entity other than WCI or one of its subsidiaries, (i) engage in the
operation of a solid waste collection, transporting, disposal and/or
composting business, transfer facility, recycling facility, materials
recovery facility or solid waste landfill; (ii) enter the employ of, or
render any personal services to or for the benefit of, or assist in or
facilitate the solicitation of customers for, or receive remuneration in
the form of salary, commissions or otherwise from, any business engaged in
such activities; (iii) as owner or lessor of real estate or personal
property, rent to or lease any facility, equipment
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or other assets to any business engaged in such a business; or (iv)
receive or purchase a financial interest in, make a loan to, or make a
gift in support of, any such business in any capacity, including, without
limitation, as a sole proprietor, partner, shareholder, officer, director,
principal, agent, trustee or lender; provided, however, that any of the
Shareholders or KCI may own, directly or indirectly, solely as an
investment, securities of any business traded on any national securities
exchange or NASDAQ, provided none of the Shareholders or KCI is a
controlling person of, or a member of a group which controls, such
business and further provided that the Shareholders and KCI do not, in the
aggregate, directly or indirectly, own 5% or more of any class of
securities of such business.
(b) Confidential Information. During the Restricted Period and
thereafter, the Shareholders and KCI shall keep secret and retain in
strictest confidence, and shall not use for the benefit of themselves or
others, all data and information relating to the Business ("CONFIDENTIAL
INFORMATION"), including, without limitation, knowledge, trade secrets,
customer lists, supplier lists, details of contracts, pricing policies,
operational methods, marketing plans or strategies, bidding information,
practices, policies or procedures, product development techniques or
plans, and technical processes; provided, however, that the term
"CONFIDENTIAL INFORMATION" shall not include information that (i) is or
becomes generally available to the public other than as a result of
disclosure by the Shareholders or KCI in breach of this or any other
Agreement with WCI, (ii) is general knowledge in the solid waste handling
and landfill business and not specifically related to the Business, (iii)
is independently developed by KCI or the Shareholders after the date
hereof, or (iv) is disclosed to KCI or the Shareholders by a third party
lawfully in possession of such information. Notwithstanding the foregoing,
Shareholders and KCI may disclose and discuss confidential information
with their legal and tax advisors, and as is required in connection with
any legal proceedings.
(c) Property of the Business. All memoranda, notes, lists, records
and other documents or papers (and all copies thereof) relating to the
Business, including such items stored in computer memories, on microfiche
or by any other means, made or compiled by or on behalf of the
Shareholders or the Corporation or KCI or made available to them relating
to the Business (other than those relating to Excluded Assets or Excluded
Liabilities), but excluding any materials (other than the minute books of
the Corporation) maintained by any attorneys for the Corporation or KCI or
the Shareholders prior to the Closing, shall be the property of WCI and
have been delivered or will be delivered or made available to WCI at the
Closing. WCI shall not destroy or dispose of any such memoranda, notes,
lists, records and other documents or papers, including such items stored
in computer memories, on microfiche or by any other means, for a period of
seven (7) years after the Closing Date without first giving the
Shareholders thirty (30) days prior written notice of such planned
disposal and the opportunity to receive and retain such records, subject
to the Shareholders' duties of confidentiality hereunder. Following the
Closing, for a reasonable period, WCI shall permit Shareholder reasonable
access to WCI's personnel as is reasonably necessary to assist
Shareholders in the transition of ownership in connection with this
Agreement.
(d) Non-Solicitation. For a period commencing on the date hereof and
terminating three (3) years from the Closing Date, without the consent of
WCI, which
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may be granted or withheld by WCI in its discretion, the Shareholders and
KCI shall not solicit any employees of the Corporation or WCI to leave the
employ of the Corporation or WCI and join the Shareholders or KCI in any
business endeavor owned or pursued by the Shareholders or KCI.
Notwithstanding the foregoing, it shall not be deemed a violation of this
subsection 11.1(d) for Shareholders or KCI to place advertisements in
general circulation announcing general employment opportunities with
Shareholders, KCI or their Affiliates. If an employee of WCI or the
Corporation responds to such general advertisement, and if the
Shareholders or KCI interview or employ such person, the Shareholders or
KCI, as the case may be, shall not be in breach of this subsection
11.1(d).
(e) No Disparagement. For a period commencing on the date hereof and
terminating five (5) years from the Closing Date, none of the Shareholders
or KCI shall, in any way or to any person or entity or governmental or
regulatory body or agency, denigrate or derogate WCI or any of its
subsidiaries, or any officer, director or employee, or any product or
service or procedure of any such company whether or not such denigrating
or derogatory statements shall be true and whether or not such statements
are based on acts or omissions which are learned by the Shareholders or
KCI from and after the date hereof or on acts or omissions which occur
from and after the date hereof, or otherwise. A statement shall be deemed
denigrating or derogatory to any person or entity if it adversely affects
the regard or esteem in which such person or entity is held by investors,
lenders or licensing, rating, or regulatory entities. This paragraph does
not apply to the extent that testimony or disclosure is required or
necessitated by legal process.
11.2 Rights and Remedies Upon Breach. If the Shareholders or KCI breaches,
or threatens to commit a breach of, any of the provisions of Section 11.1 herein
(the "RESTRICTIVE COVENANTS"), WCI shall have the following rights and remedies,
each of which rights and remedies shall be independent of the others and
severally enforceable, and each of which is in addition to, and not in lieu of,
any other rights and remedies available to WCI at law or in equity:
(a) Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to WCI and that money
damages would not provide an adequate remedy to WCI. Accordingly, in
addition to any other rights or remedies, WCI shall be entitled to
injunctive relief to enforce the terms of the Restrictive Covenants and to
restrain the Shareholders and KCI from any violation thereof.
(b) Accounting. The right and remedy to require the Shareholders and
KCI to account for and pay over to WCI all compensation, profits, monies,
accruals, increments or other benefits derived or received by the
Shareholders or KCI as the result of any transactions constituting a
breach of the Restrictive Covenants.
(c) Severability of Covenants. The Shareholders and KCI acknowledge
and agree that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of
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the Restrictive Covenants shall not thereby be affected and shall be given
full effect, without regard to the invalid portions.
(d) Blue-Penciling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of
the duration or geographic scope of such provision, such court shall
reduce the duration or scope of such provision, as the case may be, to the
extent necessary to render it enforceable and, in its reduced form, such
provision shall then be enforced.
(e) Enforceability in Jurisdiction. WCI and the Shareholders and KCI
intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographic scope
of the Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of
the breadth of such scope or otherwise, it is the intention of WCI and the
Shareholders and KCI that such determination not bar or in any way affect
WCI's right to the relief provided above in the courts of any other
jurisdiction within the geographic scope of the Restrictive Covenants as
to breaches of such covenants in such other respective jurisdictions, such
covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
12. GENERAL
12.1 Additional Conveyances. Following the Closing, the Shareholders, KCI
and WCI shall each deliver or cause to be delivered at such times and places as
shall be reasonably agreed upon such additional instruments as WCI or the
Shareholders may reasonably request for the purpose of carrying out this
Agreement. The parties hereto agree to cooperate with each other on and after
the Closing Date in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings or disputes of any nature
with respect to matters pertaining to all periods prior to the date of this
Agreement, except that each party will not be required to furnish information or
render assistance with respect to any Claim for indemnification brought pursuant
to Section 10 hereof.
12.2 Assignment. No party hereto may assign or transfer its rights and
obligations under this Agreement without the prior written approval of the other
parties hereto, which consent shall not be unreasonably withheld; provided,
however, WCI may assign WCI's rights under this Agreement to a wholly owned
subsidiary of WCI or as security to any of WCI's lenders without obtaining the
consent of any other party hereto. This Agreement shall inure only to the
benefit of and be binding upon the parties hereto and their respective heirs,
successors and representatives and permitted assigns.
12.3 Public Announcements. Except as required by law, no party shall make
any public announcement or filing with respect to the transactions provided for
herein prior to the Closing Date without the prior consent of the other parties
hereto.
12.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
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42
12.5 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if in writing and either
delivered personally, sent by facsimile transmission or by air courier service,
or mailed by postage prepaid registered or certified U.S. mail, return receipt
requested, to the addresses designated below or such other addresses as may be
designated in writing by notice given hereunder, and shall be effective upon
personal delivery or facsimile transmission thereof or upon delivery by
registered or certified U.S. mail or one business day following deposit with an
air courier service:
If to the Shareholders: at their respective addresses set forth
on Schedule 3.2
▇▇▇▇▇ Construction, Inc.
▇.▇. ▇▇▇ ▇▇▇
If to KCI: ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. Case, Esq.
▇▇▇▇▇▇▇, North, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to WCI: Waste Connections, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12.6 Applicable Law; Attorneys' Fees. This Agreement shall be governed by
and construed in accordance with the laws of the State of Nebraska without
regard to its conflict of laws provisions. In the event of any dispute or
controversy between WCI on the one hand and the Corporation, KCI or the
Shareholders on the other hand relating to the interpretation of this Agreement
or to the transactions contemplated hereby, the prevailing party shall be
entitled to recover from the other party reasonable attorneys' fees and expenses
incurred by the prevailing party, as awarded by the court. Such award shall
include post-judgment attorney's fees and costs.
12.7 No waiver Relating to Claims for Fraud . Notwithstanding anything
herein to the contrary, the liability of any party under this Agreement shall be
in addition to, and not exclusive of any other liability that such party may
have at law or equity based on such party's Fraud. Notwithstanding anything in
this Agreement to the contrary, none of the provisions set forth in this
Agreement, including, but not limited to, the provisions set forth in Sections
7.1 or 7.2, shall
41
43
be deemed a waiver by any party to this Agreement of any right or remedy which
such party may have at law or equity based on any other party's Fraud, nor shall
any such provisions limit, or be deemed to limit, (a) the amounts of recovery
sought or awarded in any such claim for Fraud, (b) the time period during which
such a claim for Fraud may be brought, or (c) the recourse which any such party
may seek against another party with respect to such a claim for Fraud.
12.8 Payment of Fees and Expenses. Whether or not the transactions herein
contemplated shall be consummated, each party hereto will pay its own fees,
expenses and disbursements incurred in connection herewith and all other costs
and expenses incurred in the performance and compliance with all conditions to
be performed hereunder (including, in the case of the Shareholders, any such
fees, expenses and disbursements paid or accrued by, or charged to, the
Corporation). State and local sales taxes or transfer fees arising from the sale
of the Assets shall be paid by WCI.
12.9 Incorporation by Reference. All Schedules and Exhibits attached
hereto are incorporated herein by reference as though fully set forth at each
point referred to in this Agreement.
12.10 Captions. The captions in this Agreement are for convenience only
and shall not be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
12.11 Number and Gender of Words; Corporation. Whenever the singular
number is used herein, the same shall include the plural where appropriate, and
shall apply to all of such number, and to each of them, jointly and severally,
and words of any gender shall include each other gender where appropriate.
12.12 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the other documents delivered pursuant hereto constitute
the entire Agreement and understanding between the Corporation, KCI, the
Shareholders and WCI and supersedes any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement may be modified
or amended only by a written instrument executed by the Corporation, KCI, the
Shareholders and WCI acting through its officers, thereunto duly authorized by
its Board of Directors.
12.13 Waiver. No waiver by any party hereto at any time of any breach of,
or compliance with, any condition or provision of this Agreement to be performed
by any other party hereto may be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or at any prior or subsequent time.
12.14 Construction. The language in all parts of this Agreement must be in
all cases construed simply according to its fair meaning and not strictly for or
against any party. Unless expressly set forth otherwise, all references herein
to a "DAY" are deemed to be a reference to a calendar day. All references to
"BUSINESS DAY" mean any day of the year other than a Saturday, Sunday or a
public or bank holiday in Nebraska or California. Unless expressly stated
otherwise, cross-references herein refer to provisions within this Agreement and
are not references to the overall transaction or to any other document.
42
44
12.15 Rights of Offset. In the event that there is a Post Closing
Adjustment in favor of WCI and the Shareholders or KCI, as the case may be, fail
to pay the amount due to WCI as provided in Section 1.5, WCI may, but shall not
be obligated to, reduce the principal amount due under either or both of the ▇▇▇
▇▇▇▇▇ Note or the ▇▇▇▇▇▇ ▇▇▇▇▇ Note by an amount equal to the sum owed to WCI by
Shareholders, KCI or both.
13. GLOSSARY
The definitions of the terms used below can be found at the Section
indicated:
Term Section
---- -------
Absolute Covenants Section 10.2
Affiliate Section 3.11
Agreement Page 1
Allocation Section 1.6
Assets Section 1.2
Assumed Contracts Section 1.2(b)
at will Section 8.2
Balance Sheet Date Section 3.7
Break-Up Fee Section 2.4
Business day Section 12.14
Business Section 11.1
Claim Section 10.3
Claims Notice Section 10.3
Closing Date Debt Section 3.23
Closing Date Current Liabilities Section 3.23
Closing Section 2
Closing Date Section 2
Closing Date Current Assets Section 3.23
Code Section 3.11
Collection Franchises Section 3.10
Company Parties
Confidential Information Section 11.1
Corporate Property Section 3.12
Corporation Parties
Corporation's Stock Recitals
Day Section 12.14
Delivered Documents Section 3.20
Environmental Site Section 10.1
Environmental Site Losses Section 10.1
Environmental Laws Section 3.25
ERISA Section 3.18
Exceptions Section 2.4
Excluded Assets Section 1.2
Excluded Liabilities Section 1.4
Facility Section 3.10
Financial Statements Section 3.7
Fixed Assets Section 1.2
Fraud Section 7.2
General Deductible Amount Section 10.2
43
45
Term Section
---- -------
Golden Parachute Payment Section 3.18
Governmental Consents Section 3.10
Governmental Permits Section 3.10
Hazardous Material Section 3.25
Hazardous Waste Section 3.25
Indemnifying Party Section 10.3
KCI Recitals
KCI Business Recitals
KCI Property Section 3.12
▇▇▇▇▇ Section 8.2
Knowledge Section 3.35
Laws Section 3.25
▇▇▇▇▇▇ ▇▇▇▇▇▇ Note Section 1.5
▇▇▇ ▇▇▇▇▇ Note Section 1.5
Necessary Consents Section 5.3
Permitted Liens Section 3.12
Post Closing Adjustment Section 1.5
Purchase Price Section 1.1
RCRA Section 3.25
Recipient Section 3.18
Records, Notifications and Reports Section 3.10
Release Section 10.1
Representations and Warranties Section 10.4
Required Governmental Consents Section 3.10
Reserves Section 1.5
Restricted Area Section 11.1
Restricted Period Section 11.1
Restrictive Covenants Section 11.2
▇▇▇ ▇▇▇▇ 1
Indemnity Events Section 10.1
Shareholder Indemnitees Section 10.7
Shareholders Parties
Shares Section 1.5
Signing Date Section 5
Value of the Shares Section 1.5
WCI Parties
WCI Indemnitees Section 10.1
WCI Stock Section 1.5
44
46
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
CORPORATION: ▇▇▇▇▇▇ COUNTY LANDFILL, INC.
By:
--------------------------------------
Its:
--------------------------------------
KCI:
▇▇▇▇▇ CONSTRUCTION, INC.
By:
--------------------------------------
Its:
--------------------------------------
WCI: WASTE CONNECTIONS, INC.
By:
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
SHAREHOLDERS:
-----------------------------------------
▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
45
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TABLE OF CONTENTS
PAGE
----
1. PURCHASE OF CORPORATION'S STOCK AND KCI'S ASSETS.....................................1
1.1 Shares to be Purchased......................................................1
1.2 Sale and Transfer of Assets.................................................1
1.3 Assumption by WCI of Certain Debt and Certain Contracts.....................3
1.4 Excluded Liabilities........................................................3
1.5 Purchase Price..............................................................3
1.6 Allocation of the Purchase Price............................................4
1.7 Excluded Assets.............................................................4
2. CLOSING TIME AND PLACE...............................................................4
2.1 Closing.....................................................................4
2.2 Termination.................................................................5
2.3 Notice and Effect of Termination............................................5
2.4 Break-Up Fee................................................................6
2.5 Exclusive Negotiations......................................................6
2.6 Corrections to Due Diligence and Schedules..................................6
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION, KCI AND THE SHAREHOLDERS..........7
3.1 Organization, Standing and Qualification....................................7
3.2 Capitalization..............................................................7
3.3 All Stock and Assets Being Acquired.........................................7
3.4 Authority for Agreement.....................................................7
3.5 No Breach or Default........................................................8
3.6 Subsidiaries................................................................8
3.7 Financial Statements........................................................8
3.8 Liabilities.................................................................8
3.9 Accurate and Complete Records...............................................9
3.10 Permits and Licenses.......................................................10
3.11 Certain Receivables........................................................11
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
3.12 Fixed Assets and Real Property.............................................11
3.13 Related Party Transactions.................................................13
3.14 Acquisition/Disposition of Assets..........................................13
3.15 Contracts and Agreements; Adverse Restrictions.............................13
3.16 Insurance..................................................................13
3.17 Personnel..................................................................14
3.18 Benefit Plans and Union Contracts..........................................14
3.19 Taxes......................................................................15
3.20 Copies Complete; Required Consents.........................................16
3.21 Customers, ▇▇▇▇▇▇▇▇, Current Receipts and Receivables......................16
3.22 No Change With Respect to the Corporation or the Business..................16
3.23 Closing Date Debt; Effective Date Current Assets and Effective
Date Current Liabilities...................................................18
3.24 Bank Accounts..............................................................18
3.25 Compliance With Laws.......................................................19
3.26 Powers of Attorney.........................................................20
3.27 Underground Storage Tanks..................................................20
3.28 Patents, Trademarks, Trade Names, etc......................................20
3.29 Assets, etc., Necessary to Business........................................21
3.30 Condemnation...............................................................21
3.31 Suppliers and Customers....................................................21
3.32 Absence of Certain Business Practices......................................21
3.33 Disclosure Schedules.......................................................21
3.34 No Misleading Statements...................................................22
3.35 Knowledge..................................................................22
3.36 Brokers; Finders...........................................................22
3.37 S Corporation..............................................................22
4. REPRESENTATIONS AND WARRANTIES OF WCI...............................................22
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
4.1 Existence and Good Standing................................................22
4.2 No Contractual Restrictions................................................22
4.3 Authorization of Agreement.................................................22
4.4 No Misleading Statements...................................................23
4.5 Brokers; Finders...........................................................23
4.6 Disclosure Schedules.......................................................23
5. COVENANTS FROM SIGNING TO CLOSING DATE..............................................23
5.1 Operations.................................................................23
5.2 No Change..................................................................24
5.3 Obtain Consents............................................................25
5.4 Access; Confidential Information...........................................25
5.5 Notice of Material Adverse Change..........................................26
5.6 Completion of Schedules....................................................26
5.7 Title Commitment...........................................................26
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI TO CLOSE..................................26
6.1 Representations and Warranties.............................................26
6.2 Conditions.................................................................26
6.3 No Material Adverse Change.................................................26
6.4 Certificates...............................................................26
6.5 No Litigation..............................................................27
6.6 Other Deliveries...........................................................27
6.7 Necessary Consents.........................................................27
6.8 Due Diligence..............................................................27
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDERS THE
CORPORATION AND KCI TO CLOSE...............................................27
7.1 Representations and Warranties.............................................27
7.2 Conditions.................................................................27
7.3 Certificate................................................................27
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
7.4 No Litigation..............................................................27
7.5 Other Deliveries...........................................................28
7.6 Necessary Consents.........................................................28
8. CLOSING DELIVERIES..................................................................28
8.1 WCI Deliveries.............................................................28
8.2 Shareholders' and KCI's Deliveries.........................................29
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATION, KCI AND THE SHAREHOLDERS..............30
9.1 No Delay...................................................................30
9.2 Release of Guaranties......................................................30
9.3 Release of Security Interests..............................................30
9.4 Confidentiality............................................................30
9.5 Broker's and Finder's Fees.................................................30
9.6 Taxes......................................................................31
9.7 Short Year Tax Returns.....................................................31
9.8 Certain Tax Matters........................................................31
9.9 Continued Employment.......................................................31
9.10 Covenants of WCI...........................................................32
10. INDEMNIFICATION.....................................................................32
10.1 Indemnity by the Shareholders..............................................32
10.2 Indemnification by WCI.....................................................34
10.3 Limitations on Indemnities.................................................34
10.4 Notice of Indemnity Claim..................................................36
10.5 Liability for Breaches of Representations and Warranties...................37
10.6 No Exhaustion of Remedies or Subrogation; Right of Setoff..................37
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDERS, KCI AND WCI.......................37
11.1 Restrictive Covenants......................................................37
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
11.2 Rights and Remedies Upon Breach............................................39
12. GENERAL.............................................................................40
12.1 Additional Conveyances.....................................................40
12.2 Assignment.................................................................40
12.3 Public Announcements.......................................................40
12.4 Counterparts...............................................................40
12.5 Notices....................................................................41
12.6 Applicable Law; Attorneys' Fees............................................41
12.7 No waiver Relating to Claims for Fraud.....................................41
12.8 Payment of Fees and Expenses...............................................42
12.9 Incorporation by Reference.................................................42
12.10 Captions...................................................................42
12.11 Number and Gender of Words; Corporation....................................42
12.12 Entire Agreement...........................................................42
12.13 Waiver.....................................................................42
12.14 Construction...............................................................42
13. GLOSSARY............................................................................43
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52
AMENDMENT NO. 1
TO
PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO PURCHASE AGREEMENT (the "Amendment"), dated as of
January 12, 1999, to be effective as of January 6, 1999, is entered into by and
among Waste Connections, Inc., a Delaware corporation ("WCI"), ▇▇▇▇▇▇ County
Landfill, Inc., a Nebraska corporation ("▇▇▇▇▇▇"), ▇▇▇▇▇ Construction, Inc., a
Nebraska corporation ("KCI") and ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ ("Shareholders").
WHEREAS, the parties hereto (the "Parties") have entered into a Purchase
Agreement dated December 11, 1998 (the "Purchase Agreement");
WHEREAS, the Parties desire to amend the Purchase Agreement as
contemplated and agreed to in that certain Agreement among the Parties dated as
of January 6, 1999 (the "January Agreement");
WHEREAS, this Amendment shall constitute the first of two amendments to
the Purchase Agreement and contains items numbers 1 and 2 that were to be agreed
upon pursuant to the January Agreement;
WHEREAS, all capitalized terms not defined herein shall have the meanings
ascribed to them in the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein and in the Purchase Agreement, the parties hereto, each intending to be
bound hereby, agree as follows
1. Section 1.5(a) is amended to read in its entirety as follows:
(a) eight million one hundred thousand dollars ($8,100,000), (i)
minus the Closing Date Debt (as defined in Section 3.23(a)), (ii) plus or minus,
as the case may be, the amount by which the Effective Date Current Assets (as
defined in Section 3.23(b)) are greater or less than the Effective Date Current
Liabilities (as defined in Section 3.23(b)), (iii) plus or minus, as the case
may be, the amount of the Net Profit or Net Loss (as hereinafter defined) of the
Corporation and the KCI Business for the period from the Effective Date through
the Closing Date, (iv) minus the Post Closure Liability (as hereafter defined)
and (v) plus $104,213.25 related to the purchase by the Corporation of
approximately 80 acres of land adjacent to the landfill and that shall be
included on Schedule 3.23(a) as Closing Date Debt. The Closing Date Debt shall
be based on pay-off letters obtained from the Corporation's and KCI's lenders.
The Effective Date Current Assets, Effective Date Current Liabilities, the Net
Profit, the Net Loss and the Post Closure Liability shall be based on estimates
of such amounts delivered to WCI by the Corporation and KCI at Closing. As used
herein, the term "Net Profit" or "Net Loss" shall mean the net profit or net
loss of the Corporation and the KCI Business calculated in materially the same
manner that net profit and net loss were calculated for the Corporation and the
KCI Business for the periods prior to the Effective Date, and which profits or
losses shall be incurred in compliance with Section 5 herein. The term "Post
Closure Liability" shall mean the amount
53
by which the Corporation's estimated closure and post closure liabilities with
respect to the landfill set forth on Schedule A (based on engineering estimates
taking into account the airspace depleted prior to the Effective Date) exceeds
the reserves established therefor (the "Reserves"), all as more specifically set
forth on Schedule 1.5(a)(iv).
At Closing, the following portion of the Purchase Price shall be paid to
the Shareholders and KCI in immediately available funds by wire transfer: eight
million one hundred thousand dollars ($8,100,000) (v) minus the Closing Date
Debt, (w) plus or minus, as the case may be, any estimated Net Loss or Net
Profit (x) minus the Post Closure Liability, (y) plus or minus, as the case may
be, the amount by which the estimated Effective Date Current Assets are greater
or less than the estimated Effective Date Current Liabilities, and (z) plus
$104,213.25 included in Closing Date Debt as set forth above. Within ninety (90)
days after the Closing, WCI and the Shareholders shall determine the actual
Closing Date Debt, Effective Date Current Assets, Effective Date Current
Liabilities, Net Profit or Net Loss, and Post Closure Liability. If the
difference between the actual amounts of such items and the estimated amounts
provided at Closing results in an increase in the amount that should have been
paid at the Closing over the amount that was so paid, WCI shall promptly pay
such amount to the Shareholders or KCI, as the case may be; if the result is a
decrease in the amount that should have been paid at the Closing from the amount
that was so paid, the Shareholders or KCI, as the case may be, shall promptly
pay such amount to WCI (the "Post Closing Adjustment").
2. A new Section 1.8 is added to read in its entirety as follows:
1.8 Additional Contingent Purchase Price. If within twelve (12)
months following the Closing Date, the Corporation receives a final and
unappealable permit to expand its municipal solid waste landfill beyond its
current existing total permitted air space by a minimum of 6,500,000 cubic
yards, WCI shall pay to Shareholders as additional contingent purchase price a
number of shares of WCI's Common Stock, par value $0.01 ("WCI Stock"), which
shall be delivered by WCI to the Shareholders within fifteen (15) days following
the date WCI receives notice that such permit is final and unappealable (the
"Final Date") determined as follows: The number of shares of WCI Stock to be
delivered pursuant to this Section 1.8 shall be an amount equal to one million
three hundred thousand dollars ($1,300,000) divided by the average of the
closing price of WCI Stock as quoted on the NASDAQ Stock Market for the five (5)
successive trading days for which a closing price is quoted following the Final
Date (the "Average Closing Price"). The Average Closing Price and the number of
shares of WCI Stock to be delivered pursuant hereto shall be appropriately
adjusted in the event of any change in WCI Stock during the period used in
determining the Average Closing Price, including without limitation any stock
dividend, stock split, reverse stock split, recapitalization, reorganization,
merger or consolidation. WCI shall not be obligated to issue any fractional
shares of WCI Stock, but shall instead pay the Shareholders cash in lieu of any
fractional share equal to the Average Closing Price multiplied by the fraction
of a share of WCI Stock that would otherwise be issued. WCI shall have sole
discretion in determining whether and on what terms it will pursue such permit,
and WCI shall not be liable to any of the Shareholders for any decision not to
pursue such permit or its failure to obtain such permit, without regard to the
reason therefor. Notwithstanding anything in this Section 1.8 to the contrary,
WCI reserves the right to, at its option or if applicable securities laws will
not permit the issuance of WCI Stock to Shareholders as contemplated herein, pay
such additional contingent purchase price to Shareholders in cash.
54
Shareholders acknowledge that the WCI Stock issued pursuant to this
Section 1.8 will be unregistered stock and Shareholders shall, as a condition to
the receipt thereof, execute any such documents as WCI shall reasonably request.
Each Shareholder further represents that:
(a) Each of the Shareholders is an "accredited investor" as defined
in Rule 501(a) under the Securities Act of 1933, as amended (the "Act").
Each of the Shareholders has such knowledge and experience in financial
matters, either alone or with the Shareholder's professional advisors,
that he or she is capable of evaluating the merits and risks of the
investment in the WCI Stock.
(b) Each of the Shareholders is a resident of the State of Nebraska.
(c) Each of the Shareholders has had access to such information
relating to WCI as such Shareholder feels is reasonably necessary to make
an informed investment decision with respect to the WCI Stock.
(d) Each of the Shareholders has had the opportunity to ask
questions and receive answers concerning the terms and conditions of this
Section 1.8 and to obtain additional information that WCI possesses or can
obtain without unreasonable effort or expense that is necessary to verify
the accuracy of the information provided with respect to the potential
issuance of the WCI Stock.
(e) In the event the conditions set forth in this section 1.8 are
met, each of the Shareholders will acquire the WCI Stock pursuant to this
Agreement for his or her own account, not as a nominee or agent. No one
else will have any interest, beneficial or otherwise, in any of the WCI
Stock issued to such Shareholder.
(f) Each of the Shareholders is able to bear the economic risk of
such an investment in the WCI Stock, is aware that he or she must be
prepared to hold such WCI Stock for an indefinite period and is aware that
the WCI Stock has not been registered under the Act, or registered or
qualified under the securities laws of any state, on the ground, among
others, that no unregistered distribution or public offering of the WCI
Stock is to be effected and the WCI Stock is to be issued by WCI without
any public offering within the meaning of section 4(2) of the Act.
(g) Without in any way limiting the representations herein, each of
the Shareholders further agrees that such Shareholder shall not encumber,
pledge, hypothecate, sell, transfer, assign or otherwise dispose of, or
receive any consideration for, any of the WCI Stock or any interest in
them, unless and until prior to any proposed encumbrance, pledge,
hypothecation, sale, transfer, assignment or other disposition, (i) a
registration statement on Form S-1 or S-3 (or any other form appropriate
for the purpose of replacing such form) under the Act with respect to the
WCI Stock proposed to be transferred or otherwise disposed of shall be
then effective, (ii)(a) he or she shall have furnished WCI with a detailed
statement of the circumstances of the proposed disposition, and (b) he or
she shall have furnished WCI with an opinion of counsel or no-action
letter issued by the Staff of the SEC (obtained at the Shareholders'
expense) in
55
form and substance satisfactory to WCI to the effect that such disposition
will not require registration of any such WCI Stock under the Act or
qualification of any such WCI Stock under any other securities law; or
(iii) Rule 144 is available with respect to such transaction.
(h) Each of the Shareholders understands and agrees that each
certificate or other instrument representing WCI Stock will bear a legend
on the face thereof (or on the reverse thereof with a reference to such
legend on the face thereof) which legend restricts the sale, transfer or
other disposition of the WCI Stock otherwise than in accordance with
Section 1.8(g) of this Agreement; provided, however, that WCI shall, on
the request of any of the Shareholders, cause such legends to be removed
from the certificates or other instrument evidencing the WCI Stock if such
Shareholder has held such WCI Stock for the period contemplated by Rule
144(k) under the Act and if the Shareholder is not then and has not been
during the three months preceding such request an affiliate of WCI (as
defined in Rule 144 under the Act).
Each of the Shareholders understands and agrees that the WCI Stock will be
"restricted securities" as that term is defined in Rule 144 under the Act and,
accordingly, that the WCI Stock must be held indefinitely unless subsequently
registered under the Act or an exemption from such registration is available.
3. Except as specifically amended hereby, the provisions of the Purchase
Agreement shall remain in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
56
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
CORPORATION: ▇▇▇▇▇▇ COUNTY LANDFILL, INC.
By:
--------------------------------------
Its:
------------------------------------
KCI ▇▇▇▇▇ CONSTRUCTION, INC.
By:
--------------------------------------
Its:
------------------------------------
WCI: WASTE CONNECTIONS, INC.
By:
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
SHAREHOLDERS:
--------------------------------------
▇▇▇ ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
57
AMENDMENT NO. 2
TO
PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 TO PURCHASE AGREEMENT (the "Amendment"), dated as of
January 12, 1999, to be effective as of January 6, 1999, is entered into by and
among Waste Connections, Inc., a Delaware corporation ("WCI"), ▇▇▇▇▇▇ County
Landfill, Inc., a Nebraska corporation ("▇▇▇▇▇▇"), ▇▇▇▇▇ Construction, Inc., a
Nebraska corporation ("KCI") and ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ ("Shareholders").
WHEREAS, the parties hereto (the "Parties") have entered into a Purchase
Agreement dated December 11, 1998 (the "Purchase Agreement");
WHEREAS, the Parties desire to amend the Purchase Agreement as
contemplated and agreed to in that certain Agreement among the Parties dated as
of January 6, 1999 (the "January Agreement");
WHEREAS, this Amendment shall constitute the second of two amendments to
the Purchase Agreement and contains, among other provisions, item numbers 3
through 7, to the extent that these remain outstanding obligations, that were to
be agreed upon pursuant to the January Agreement;
WHEREAS, all capitalized terms not defined herein shall have the meanings
ascribed to them in the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein and in the Purchase Agreement, the parties hereto, each intending to be
bound hereby, agree as follows
1. Section 11.1(d) of the Purchase Agreement is amended to read in its
entirety as follows:
(d) Non-Solicitation. For a period commencing on the date hereof and
terminating three (3) years form the Closing Date, without the consent of WCI,
which may be granted or withheld by WCI in its discretion, the Shareholders and
KCI shall not solicit any employees of the Corporation or WCI to leave the
employ of the Corporation or WCI and join the Shareholders or KCI in any
business endeavor owned or pursued by the Shareholders or KCI. Notwithstanding
the foregoing, it shall not be deemed a violation of this subsection 11.1(d) for
Shareholders or KCI to place advertisements in general circulation announcing
general employment opportunities with Shareholders, KCI or their Affiliates. If
an employee of WCI or the Corporation responds to such general advertisement,
and if the Shareholders or KCI interview or employ such person, the Shareholders
or KCI, as the case may be, shall not be in breach of this subsection 11.1(d).
In addition, it shall not be deemed a violation of this Section 11.1(d) for
Shareholders or KCI to solicit for employment or employ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and/or
▇▇▇▇ ▇▇▇▇▇▇▇▇ in any business endeavor owned or pursued by the Shareholders or
KCI.
58
2. A new Section 9.12 is added to the Purchase Agreement to read in its
entirety as follows:
9.12 Covenants of Shareholders and KCI. Shareholders agree that they
shall cooperate with the Corporation and WCI in obtaining all necessary UCC-3
termination statements.
3. Section 5.6 of the Purchase Agreement is amended to read in its
entirety as follows:
5.6 Completion of Schedules. The Corporation, Shareholders and KCI,
as applicable, shall prepare and submit to WCI the Schedules to this Agreement
in a form reasonably acceptable to WCI no later than December 22, 1998. The
parties hereto agree that any amendments to such Schedules submitted to WCI
after December 22, 1998 shall be to the mutual satisfaction of the parties and
shall, after such approval, replace the Schedules previously submitted.
4. A new Section 8.1(l) is added to the Purchase Agreement to read in its
entirety as follows:
(l) WCI shall execute and deliver a Finders Agreement with ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ in form and substance reasonably satisfactory to the parties.
5. Except as specifically amended hereby, the provisions of the Purchase
Agreement shall remain in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
59
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
CORPORATION: ▇▇▇▇▇▇ COUNTY LANDFILL, INC.
By:
--------------------------------------
Its:
-------------------------------------
KCI ▇▇▇▇▇ CONSTRUCTION, INC.
By:
--------------------------------------
Its:
-------------------------------------
WCI: WASTE CONNECTIONS, INC.
By:
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer & President
SHAREHOLDERS:
-----------------------------------------
▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
