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EXHIBIT 10.40
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
December 30, 2000 between EarthCare Company, a Delaware corporation
("EarthCare"), and Xxxxx Xxxxxx, an individual, and Solid Waste Ventures, Inc.,
a Arkansas corporation, ("SWV") (Xx. Xxxxxx and SWV are hereinafter referred to
jointly as ("Shareholders")), being the owners of record of certain of the
issued and outstanding stock of EarthCare Resource Management of Florida, Inc.,
a Florida corporation, f/k/a/ Liberty Waste Management, Inc. ("ERC").
WHEREAS, EarthCare previously acquired 356,000 shares of the then
issued and outstanding common stock of ERC, and desires to increase its
ownership of ERC to 100% of the total of the issued outstanding shares; and, the
Shareholders wish to transfer shares of the issued and outstanding stock of ERC
described in Section 1.1 below in a transaction intended to qualify as a
reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended; and,
NOW, THEREFORE, EarthCare and the Shareholders adopt this plan of
reorganization and agree as follows:
SECTION 1. EXCHANGE OF STOCK
1.2 Number of Shares. The Shareholders agree to transfer to
EarthCare at the Closing an aggregate of 520,100 shares, and
any and all right, title and interest therein, of common stock
of ERC, $.01 par value per share (the "Shares"), of the issued
and outstanding shares of ERC as of the date hereof, in
exchange for an aggregate of 520,100 shares of registered
voting common stock of EarthCare, $.0001 par value per share,
to be issued at the Closing to the Shareholders by way of
unregistered certificates as described more fully in Sections
1.2 and 3.14, below. The numbers of shares to be transferred
by each of the selling Shareholders is set forth in Schedule
1.1 hereto.
1.2 Delivery of Certificates by Shareholders. The transfer of
Shares by the Shareholders shall be effected by the delivery
to EarthCare at the Closing of the certificate(s) representing
the Shares, endorsed in blank or accompanied by stock powers
executed in blank, with signature guaranteed and with all
necessary transfer tax and other revenue stamps, acquired at
the Shareholders' expense, affixed.
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1.3 Further Assurances. At the Closing, and from time to time
thereafter, the Shareholders shall execute such additional
instruments and take such other action as EarthCare may
request in order more effectively to sell, transfer and assign
the Shares to EarthCare and to confirm EarthCare's title
thereto.
1.4 Changes in EarthCare's Capitalization. If between the date of
this Agreement and the Closing, the outstanding shares of
EarthCare common stock are, without the receipt of new
consideration by EarthCare, increased, decreased, changed into
or exchanged for a different number or kind of shares or
securities of EarthCare through reorganization,
reclassification, stock dividend, stock split, reverse stock
split or similar change in EarthCare's capitalization,
EarthCare will issue and deliver to the Shareholders in
addition to or in lieu of the EarthCare shares specified in
Section 1.1, voting stock of EarthCare in equitably adjusted
amounts. In the event of any such change in EarthCare's
capitalization, all references to EarthCare shares herein
shall refer to the number of EarthCare shares as thus
adjusted.
SECTION 2. CLOSING
The Closing contemplated by Section 1.1 shall be held at the principal
offices of EarthCare, 00000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000 on
December 8, 2000, unless another place or time is agreed upon in writing by the
parties.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SHAREHOLDERS
The Shareholders jointly and severally represent and warrant to, and
covenant with, EarthCare as follows:
3.1 Corporate Status. ERC is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Florida and is licensed or qualified as a foreign corporation
in all states in which the nature of its business or the
character or ownership of its properties makes such licensing
or qualification necessary.
3.2 Capitalization. The authorized capital stock of ERC consists
of 1,000,000 shares of capital stock, having a par value of
$.01 per share, of which 876,100 shares are issued and
outstanding, all fully paid and nonassessable. Seventy
thousand (70,000) additional shares will vest to Mr. Water's
benefit in two equal installments, effective July 7, 2001 and
July 7, 2002, which shares and all rights and title therein
and thereto are assigned to EarthCare hereby; pursuant to
Section 3.10, below, the parties agree to cause ERC to effect
full vesting of such shares prior to the Closing.
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3.3 Financial Statements. To Shareholders' knowledge, the
financial statements of ERC furnished to EarthCare, consisting
of balance sheets as of December 31, 1998 and December 31,
1999 and related statements of income for the periods then
ended, and the balance sheet as of September 30, 2000 ("ERC's
Latest Balance Sheet") and the related statements of income,
are correct and fairly present the financial condition of ERC
as of the dates and for the periods involved, and such
statements were prepared in accordance with generally accepted
accounting principles consistently applied.
3.4 Undisclosed Liabilities. To Shareholders' knowledge: ERC has
no liabilities of any nature except to the extent reflected or
reserved against in ERC's Latest Balance Sheet, whether
accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due;
and, ERC's accounts receivable are collectible in accordance
with the terms of such accounts, except to the extent of the
reserve therefor in ERC's Latest Balance Sheet.
3.5 Interim Changes. To Shareholders' knowledge, between September
30, 2000 and the date of this Agreement, there have not been
(1) any changes in ERC's financial condition, assets,
liabilities or business which, in the aggregate, have been or
could be materially adverse; (2) any damage, destruction or
loss of or to ERC's property, whether or not covered by
insurance; (3) any declaration or payment of any dividend or
other distribution in respect of ERC capital stock, or any
direct or indirect redemption, purchase or other acquisition
of any such stock; or (4) any increase paid or agreed to in
the compensation, retirement benefits or other commitments to
employees.
3.6 Title to Property. To Shareholders' knowledge, ERC has good
and marketable title to all properties and assets, real and
personal, reflected on ERC's Latest Balance Sheet, except as
since sold or otherwise disposed of in the ordinary course of
business, and ERC's properties and assets are subject to no
mortgage, pledge, lien or encumbrance, except for liens shown
thereon, with respect to which no default exists.
3.7 Litigation. There is no litigation or proceeding pending, or
to Shareholders' knowledge threatened, against or relating to
ERC, its properties or business, except as set forth in a list
certified by the President of ERC and delivered to EarthCare.
3.8 Access to Records, etc.. From the date of this Agreement to
the Closing, the Shareholders will cause ERC (1) to give to
EarthCare and its representatives full access during normal
business hours to all of its offices, books, records,
contracts and other corporate documents and properties so that
EarthCare may inspect and audit them; and, (2) to furnish such
information concerning ERC's properties and affairs as
EarthCare may reasonably request.
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3.9 Confidentiality. Until the Closing (and permanently if there
is no Closing), the Shareholders and their representatives
will keep confidential any information which they obtains from
EarthCare concerning its properties, assets and business. If
the transactions contemplated by this Agreement are not
consummated by January 1, 2001, the Shareholders will return
to EarthCare all written matter with respect to EarthCare
obtained by them in connection with the negotiation or
consummation of this Agreement.
3.10 Title to Shares. The Shareholders are the owners, free and
clear of any liens and encumbrances, of the Shares which the
Shareholders has contracted hereby to exchange. To the extent
that any of the Shares have not vested as of the date hereof,
the Shareholders and EarthCare will undertake all actions and
steps required to effect such vesting prior to the Closing.
3.11 Tax Matters. To Shareholders' knowledge: ERC has timely filed
all federal, state, sales tax, franchise tax, and other tax
returns which are required to be filed by it and has paid or
has made provision for the payment of all taxes which have or
may become due pursuant to said returns. All taxes, including,
without limitation, withholding and social security taxes due
with respect to ERC's employees, federal and state income tax
liabilities, corporate franchise taxes, sales, use, excise and
ad valorem taxes, due, payable or accrued by ERC on or before
the Closing Date have or will be paid. ERC has filed all
reports required to be filed by it with all such taxing
authorities.
3.12 Environmental Matters. To Shareholders' knowledge: Except as
disclosed to EarthCare in writing, there are no claims,
actions, suits, proceedings or investigations relating to any
Environmental Law (as hereinafter defined) pending or
threatened against or affecting ERC. Except as disclosed to
EarthCare in writing: (i) no release of any hazardous
substance, medical waste, toxic waste or regulated substance
has occurred or is occurring as a result of the business of
ERC; (ii) no hazardous substance, medical waste, toxic waste
or regulated substance is currently present at, or has been
previously generated, stored, treated or disposed of at any
landfill by ERC or through the conduct of the business of ERC
except deminimis amounts mixed with household waste; (iii) no
underground or partially underground storage tank has been or
is currently located at any facility of ERC; (iv) the
business, activities and processes heretofore and/or presently
conducted by ERC complied and presently comply in all material
respects with all applicable Environmental Laws; (v) no
facility of ERC is listed on any list, registry or other
compilation of sites that require, or potentially require,
removal, remedial action or any other response under any
Environmental Law as the result of the presence, release or
potential release of any hazardous substance, medical waste,
toxic waste or regulated substance; (vi) ERC has not received
any notice that ERC is liable or responsible, or potentially
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liable or responsible, for any costs of any removal, remedial
action or release of any hazardous substance, medical waste,
toxic waste or regulated substance; and (vii) there is no
pending litigation or administrative proceeding ( and
Shareholders do not have reason to know of any potential or
threatened litigation or administrative proceeding) in which
it is asserted that ERC has violated or is not in compliance
with any material Environmental Law. For the purposes of this
Agreement, "Environmental Law" means any law, statute or act
of the United States of America, the State of Florida, or any
political subdivision thereof, that relates to the condition
of the air, ground or surface water, land or other parts of
the environment, to the release or potential release of any
substance or radiation into the air, ground or surface water,
land or other parts of the environment, or to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or other handling of substances that might pollute,
contaminate or be hazardous or toxic if present in the air,
ground or surface water, land, or other parts of the
environment. ERC has not received any notice to the effect
that the landfills and other disposal sites to which waste
material transported by ERC has been delivered are not
properly licensed pursuant to applicable Environmental Laws to
receive the material disposed of therein.
3.13 No Brokers or Agents Fees. No agent, broker, finder,
representative or other person or entity acting pursuant to
the authority of ERC or Shareholders will be entitled to any
commission or finders fee in connection with the origination,
negotiation, execution or performance of the transactions
contemplated under this Agreement.
3.14 Investment Intent. The Shareholders are acquiring the
EarthCare common stock described herein for their own
respective accounts (and not for the account of others) for
investment and not with a view to the distribution thereof.
The Shareholders will not sell or otherwise dispose of such
shares without registration under the Securities Act of 1933,
as amended (the "Securities Act"), or an exemption therefrom,
and the certificate or certificates representing such shares
may contain a legend to the foregoing effect. The Shareholders
have had access to sufficient financial and other information
about EarthCare, including (without limitation) copies of
periodic reports filed with the Securities and Exchange
Commission. The Shareholders understand that they may not sell
or otherwise dispose of such shares in the absence of either a
registration statement under the Securities Act or an
exemption from the registration provisions of the Securities
Act. Nothing contained herein shall be deemed to preclude the
Shareholders from disposing the shares acquired under this
Agreement in accordance with applicable federal and state
securities laws.
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SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF EARTHCARE
EarthCare represents and warrants to, and covenants with, the
Shareholders as follows:
4.1 Corporate Status. EarthCare is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and is licensed or qualified as a foreign
corporation in all states in which the nature of its business
or the character or ownership of its properties makes such
licensing or qualification necessary.
4.2 Authority to Contract. The execution, delivery and performance
of this Agreement by EarthCare has been duly approved by its
Board of Directors, and no further corporate action is
necessary on the part of EarthCare to consummate the
transactions contemplated by this Agreement, assuming due
execution of this Agreement by the parties hereto.
4.3 No Brokers or Agents Fees. No agent, broker, finder,
representative or other person or entity acting pursuant to
the authority of EarthCare will be entitled to any commission
or finders fee in connection with the origination,
negotiation, execution or performance of the transactions
contemplated under this Agreement.
4.4 Accuracy of Information Furnished by EarthCare. No
representation, statement or information made or furnished by
EarthCare to ERC in this Agreement, or in connection with the
transactions contemplated hereby including, without limitation
copies of EarthCare's filings with the Securities and Exchange
Commission, contains or shall contain any untrue statement of
any material fact or omits or shall omit any material fact
necessary to make the information contained herein true.
4.5 Reports. EarthCare has filed, and prior to the closing of the
transactions contemplated hereby shall have filed, all
required Securities and Exchange Commission filings, all of
which have complied, or at the date of filing shall comply,
subject to any required post filing amendments, in all
material respects with all applicable requirements of the
Securities and Exchange Act. As of their respective dates of
filing, and subject to any such post filing amendments, none
of such filings contained, or shall contain, any untrue
statement of a material fact or omitted or shall omit a
material fact, required to be disclosed therein. The shares of
EarthCare to be issued to the Shareholder hereunder are, or
will be, registered pursuant to an effective Form S-3
Registration Statement
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SECTION 5. CONDUCT OF ERC PENDING THE CLOSING
From and after the execution and delivery of this Agreement except in
the ordinary course of business and until the Closing Date, except as otherwise
provided by the prior written consent or approval of EarthCare:
5.1 Conduct of Business. The Shareholders will cause ERC to
conduct its business and operations in the manner in which the
same has heretofore been conducted and the Shareholders will
use their best efforts to cause ERC to: (i) preserve ERC's
current business organization intact; (ii) keep available to
EarthCare the services of ERC's current employees and ERC's
agents and distributors and (iii) preserve ERC's current
relationship with customers, suppliers and others having
business dealings with ERC.
5.2 Maintenance of Property. The Shareholders will cause ERC to
maintain all of its properties in customary repair, order and
condition, reasonable wear and use excepted, and will maintain
its existing insurance upon all of its properties and with
respect to the conduct of its business in such amounts and of
such kinds comparable to that in effect on the date of this
Agreement.
5.3 Extraordinary Actions. The Shareholders will take action to
insure that ERC will not: (i) pay any bonus or increase the
rate of compensation of any of ERC's employees or enter into
any new employment agreement or amend any existing employment
agreement; (ii) make any general increase in the compensation
or rate of compensation payable or to become payable to ERC's
hourly-rated employees; (iii) sell or transfer any of ERC's
assets (iv) obligate itself for capital expenditures other
than in the ordinary course of business and not unusual in
amount; or, (v) incur any material obligations or liabilities,
which are not in the ordinary course of business, or enter
into any material transaction.
5.4 Capitalization, etc. The Shareholders shall not permit ERC to
issue or enter into any subscriptions, options, agreements or
other commitments in respect of the issuance, transfer, sale
or encumbrance of any shares of ERC common stock, or to
declare or pay any dividend or other distribution.
5.5 Articles of Incorporation, Bylaws. The Shareholders will take
action to insure that ERC will not amend its Articles of
Incorporation or Bylaws.
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SECTION 6. CONDITIONS PRECEDENT - EARTHCARE
All obligations of EarthCare under this Agreement are subject, at
EarthCare's option, to the fulfillment, before or at the Closing, of each of the
following conditions:
6.1 Representations and Warranties True at Closing. The
Shareholders's representations and warranties contained in
this Agreement shall be deemed to have been made again at and
as of the Closing and shall then be true in all material
respects.
6.2 Due Performance. The Shareholders shall have performed and
complied with all the terms and conditions required by this
Agreement to be performed or complied with by him before the
Closing.
6.3 Books and Records. The Shareholders shall have caused ERC to
make available to EarthCare all books and records of ERC,
including minute books and stock transfer records.
6.4 Revocation of Prior Authorizations. The Shareholders shall
have delivered to EarthCare certified copies of resolutions of
ERC's Board of Directors revoking as of the Closing all prior
authorizations, powers of attorney, designations and
appointments relating to the signing of checks, borrowing of
funds, access to corporate safe-deposit boxes and other
similar matters, to the extent requested by EarthCare.
6.5 Resignations. There shall have been delivered to EarthCare the
signed resignations of such directors of ERC as EarthCare
shall request, dated as of the Closing.
SECTION 7. CONDITIONS PRECEDENT - THE SHAREHOLDERS
All obligations of Shareholders under this Agreement are subject, at
Shareholders' option, to the fulfillment, before or at the Closing, of each of
the following conditions:
7.1 Representations and Warranties True at Closing. EarthCare's
representations and warranties contained in this Agreement
shall be deemed to have been made again at and as of the
Closing and shall then be true in all material respects.
7.2 Due Performance. EarthCare shall have performed and complied
with all the terms and conditions required by this Agreement
to be performed or complied with by it before the Closing.
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SECTION 8. INDEMNIFICATION
8.1 Indemnification of EarthCare. The Shareholders agree to
indemnify EarthCare against any loss, damage or expense
(including reasonable attorney's fees) suffered by EarthCare
from (1) any breach by the Shareholders of this Agreement; or
(2) any inaccuracy in or breach of any of the representations,
warranties or covenants by the Shareholders herein.
8.2 Indemnification of Shareholders. EarthCare agrees to indemnify
the Shareholders against any loss, damage or expense
(including reasonable attorney's fees) suffered by any of the
Shareholders from (1) any breach by EarthCare of this
Agreement; or (2) any inaccuracy in or breach of any of
EarthCare's representations, warranties or covenants herein.
8.3 Defense of Claims. Upon obtaining knowledge thereof, the
indemnified party shall promptly notify the indemnifying party
of any claim which has given or could give rise to a right of
indemnification under this Agreement. If the right of
indemnification relates to a claim asserted by a third party
against the indemnified party, the indemnifying party shall
have the right to employ counsel acceptable to the indemnified
party to cooperate in the defense of any such claim. So long
as the indemnifying party is defending any such claim in good
faith, the indemnified party will not settle such claim. If
the indemnifying party does not elect to defend any such
claim, the indemnified party shall have no obligation to do
so.
SECTION 9. TERMINATION
This Agreement may be terminated (1) by mutual consent in writing; (2)
by either the Shareholders or EarthCare if there has been a material
misrepresentation or material breach of any warranty or covenant by the other
party; or, (3) by either the Shareholders or EarthCare if the Closing shall not
have taken place, unless adjourned to a later date by mutual consent in writing,
by July 30, 2001.
SECTION 10. GENERAL PROVISIONS
10.1 Survival of Representations and Warranties Indemnifications.
The representations, warranties, indemnifications, obligations
and agreements of the parties contained in this Agreement, or
in any writing delivered pursuant to provisions of this
Agreement, shall survive the Closing for a period of 3 years
with the exception of (i) representations and warranties
concerning Section 3.12 hereof, Environmental Matters, which
will survive for as long as any claims may be asserted under
the applicable periods of limitation for violations of any
environmental law, rule or regulation, and (ii) the
representations and warranties concerning Section 3.11, Tax
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Matters, which will survive for the full period of any
applicable statutes of limitations.
10.2 Waiver or Extension of Conditions. The Shareholders or
EarthCare may, but need not, extend the time for or waive the
performance of any of the obligations of the other party,
waive any inaccuracies in the representations or warranties by
the other party, or waive compliance by the other party with
any of the covenants or conditions contained in this
Agreement. Any such extension or waiver shall be in writing
and signed by the Shareholders and EarthCare. Any such
extension or waiver shall not act as a waiver or an extension
of any other provisions of this Agreement.
10.3 Notices. Any notice, request or other document shall be in
writing and sent by registered or certified mail, return
receipt requested, postage prepaid and addressed to the party
to be notified at the following addresses, or such other
address as such party may hereafter designate by written
notice to all parties, which notice shall be effective as of
the date of posting, substitute; or alternatively by hand
delivery or complete fax transmission. Notices are effective
upon receipt.
(i) If to EarthCare:
Attention: President
EarthCare Company
00000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Copy to: Xxxxx X. Xxxxxxxx
General Counsel
00000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx XX 00000
(ii) If to Shareholders:
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Copy to:
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10.4 Governing Law. This Agreement shall be governed by the laws of
the State of Texas.
10.5 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective heirs, representatives, successors and assigns
10.6 Headings. The subject headings of the Sections of this
Agreement are included for purposes of convenience only and
shall not affect the construction or interpretation of any of
its provisions.
10.7 Counterparts. This Agreement may be executed simultaneously 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.
10.8 Entire Agreement; Modification. This Agreement (including the
schedules attached hereto) and the documents delivered
pursuant hereto constitute the entire agreement and
understanding between the parties, and supersede any prior
agreements and understandings relating to the subject matter
hereof. This Agreement may be modified or amended by a written
instrument executed by all parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
SHAREHOLDERS: Solid Waste Ventures,Inc.
By:
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Its:
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Xxxxx Xxxxxx
EARTHCARE EarthCare Company
By:
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Xxxxxxx X. Xxxxxxx Xx.
Vice President and
Chief Financial Officer
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SCHEDULE 1.1
The Shareholders will respectively sell and transfer at the Closing the numbers
of Shares set forth opposite their respective names:
ShareHolder Shares:
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Solid Waste Ventures, Inc. 450,100
Xxxxx Xxxxxx 70,000
As noted in Section 3.2 of the Agreement, the Shares to be sold and transferred
by Xx. Xxxxxx are scheduled to vest in two equal installments on July 7, 2001
and July 7, 2002. The parties agree to take all necessary steps and actions to
cause ERC to effect such vesting prior to the Closing rather than according to
the existing schedule.
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