1
Exhibit 10.51
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
Dated as of March 31, 1999, by and among
Waste Connections, Inc.,
Management Environmental National, Inc.,
RH Financial Corporation
and
The Shareholder listed on
Schedule A hereto
2
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT, dated as of March 31,
1999, is entered into by and among Waste Connections, Inc., a Delaware
corporation ("WCI"), Management Environmental National, Inc., a Washington
corporation ("MENI"), RH Financial Corporation, a Washington corporation ("RHFC"
and collectively with MENI, the "CORPORATIONS" and individually without
designation a "CORPORATION"), and the Shareholder listed on Schedule A hereto
(the "SHAREHOLDER").
WHEREAS, MENI is the sole general partner and RHFC is the sole limited
partner of Columbia Resource Co., L.P., a Washington limited partnership ("CRC")
and Xxxxxx-Buttes Limited Partnership, an Oregon limited partnership ("FBLP");
WHEREAS, FBLP owns and operates the Xxxxxx-Buttes Regional Landfill (the
"LANDFILL") located in Xxxxxx County, Oregon and engages in other related
activities;
WHEREAS, CRC is engaged in the handling and transportation of solid
waste and other related activities in the City of Vancouver and Xxxxx County,
Washington;
WHEREAS, FBLP owns all of the real estate used in connection with the
business and operation of the Landfill and CRC owns all of the real estate used
in connection with the business and operation of the two transfer stations
located in Vancouver, Washington, and descriptions of such real estate are set
forth on Schedule 3.12(b);
WHEREAS, the Shareholder owns all of the issued and outstanding capital
stock of each of the Corporations (the "CORPORATIONS' STOCK"); and
WHEREAS, WCI wishes to acquire from the Shareholder all of the
Corporations' Stock.
WHEREAS, WCI, MENI, RHFC and the Shareholder entered into a Stock
Purchase Agreement dated as of February 12, 1999 ("SIGNING DATE"), and Amendment
Xx. 0 xxxxxxx xxxxx xx xx Xxxxx 00, 0000 (xx amended, the "STOCK PURCHASE
AGREEMENT"), and they wish hereby to amend and restate the Stock Purchase
Agreement as herein provided.
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 that the
Stock Purchase Agreement is hereby amended and restated as herein provided and
further agree as follows:
1. PURCHASE OF CORPORATIONS' STOCK
1.1 SHARES TO BE PURCHASED. At the Closing (as defined in
Section 2), the Shareholder shall sell and deliver to WCI all of the issued and
outstanding shares of the Corporations' Stock, being the number of shares of the
Corporations set forth on Schedule 3.2 opposite the Shareholder's name. At the
Closing, WCI shall purchase the Corporations' Stock
1
3
and in exchange therefor shall deliver to the Shareholder at the Closing or
thereafter as provided by this Agreement the purchase price described in Section
1.2 (the "PURCHASE PRICE").
1.2 PURCHASE PRICE. The Purchase Price is Eighty-one Million Two
Hundred Fifty Thousand dollars ($81,250,000) cash, (i) minus the Closing Date
Debt (as defined in Section 3.22(a)), (ii) minus the outstanding balance of
CRC's debt under that certain Loan Agreement dated December 1, 1991, between
Industrial Revenue Bond Public Corporation of Xxxxx County, Washington and CRC
(the "BOND DEBT"), (iii) plus or minus, as the case may be, the amount by which
the Balance Sheet Date Current Assets (as defined in Section 3.22(b)) are
greater or less than the Balance Sheet Date Current Liabilities (as defined in
Section 3.22(b)), (iv) plus or minus, as the case may be, the amount of the Net
Profit or Net Loss (as hereinafter defined) of the Corporations for the period
from the Effective Date through the Closing Date, as reflected on Schedule 1.2,
(v) plus the present value of CRC's pollution liability self-insurance fund
maintained under agreement with Xxxxx County, as determined by Xxxxxxx &
Company, P.C. and reflected on Schedule 1.2, and (vi) minus all bonuses accrued
to employees of CRC, FBLP or the Corporations prior to the Effective Date and
payable after the Effective Date, as set forth on Schedule 1.2. As used herein,
the term "NET PROFIT" or "NET LOSS" shall mean the net profit or net loss of the
Corporations calculated in substantially the same manner that net profit and net
loss were calculated for the Corporations for the periods prior to the Effective
Date, and which net profits or losses shall be incurred in compliance with
Section 5 herein. The adjustment to the Purchase Price payable on the Closing
Date based on the Closing Date Debt, the Balance Sheet Date Current Assets and
the Balance Sheet Date Current Liabilities shall be based on estimates of such
amounts, but no adjustment will be made on the Closing Date to reflect Net
Profit or Net Loss. Within 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. If the difference
between the actual amounts of such items and the estimated amounts provided at
the Closing, when combined with the Net Profit or the Net Loss, as the case may
be, 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 Shareholder; 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 Shareholder shall
promptly pay such amount to WCI.
1.3 ALLOCATION OF THE PURCHASE PRICE. Two hundred thousand
dollars ($200,000) of the Purchase Price shall be allocated to the covenant not
to compete as described in Section 11.1(a) hereof, and the balance of the
Purchase Price shall be allocated to the Corporations' Stock.
1.4 EXCLUDED ASSETS. The Assets of the Corporations listed on
Schedule 1.4 (the "EXCLUDED ASSETS") shall be distributed to the Shareholder
prior to the Closing, and WCI shall acquire no interest in or claim to any of
the Excluded Assets provided that, if the Corporations are legally unable to
distribute the real estate described on Schedule 1.4 prior to the Closing Date,
the Corporations will, at the election of the Shareholder, either agree to
distribute such real estate to the Shareholder after the Closing Date at such
time as they are legally able to do so or retain ownership of such real estate
and agree to such recordable restrictions on the use of such real estate as the
Shareholder shall request.
2
4
2. CLOSING TIME AND PLACE
2.1 Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated herein (the "CLOSING") shall take place
as promptly as practicable (but in any event within five business days)
following the date on which the last of the conditions set forth in Sections 6
and 7 is fulfilled or waived, or on such other date as WCI and the Shareholder
shall agree (the "CLOSING DATE"). The Closing shall take place at the Law
Offices of Shartsis, Xxxxxx & Xxxxxxxx, LLP, Xxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000. At the Closing, WCI, the Corporations and the
Shareholder shall deliver to each other the documents, instruments and other
items described in Section 8 of this Agreement. The Purchase Price shall be
paid to the Shareholder at Closing in cash by wire transfer. At the election
of WCI and the Shareholder, the Closing of this transaction may take place
through an exchange of consideration and documents using overnight courier
service or facsimile. For financial reporting purposes, the Closing shall be
deemed effective as of March 1, 1999 (the "EFFECTIVE DATE").
2.2 TERMINATION.
(a) If the Closing Date has not occurred by March 31,
1999, either WCI or the Corporations and the Shareholder may terminate this
Agreement by notice to the other parties on that date or thereafter (the
"TERMINATION DATE"), unless the Corporations have not then obtained all of the
consents required by Section 6.7, in which event this Agreement shall terminate
10 days after written notice from WCI to the Shareholder or 10 days after the
later of (i) if any such consent is denied, the latest time for filing any
appeal or further appeal of such denial has lapsed; and (ii) if any such consent
is denied and such denial is appealed, the day the last appeal of such denial
has been dismissed, refused or decided adversely to the Corporation seeking the
appeal.
(b) The Corporations and the Shareholder shall have the
right to terminate this Agreement:
(i) Upon a breach of a representation or
warranty of WCI contained in this Agreement which has not been cured in all
material respects and which has had or is likely to have a material adverse
effect on the business or financial condition of WCI and is incapable of being
satisfied by the Termination Date;
(ii) If one or more of the transactions
contemplated by this Agreement are enjoined by a final, unappealable court order
not entered at the request or with the support of either Corporation and if the
Corporation against which such order is entered shall have used reasonable
efforts to prevent the entry of such order; or
(iii) If WCI (A) fails to perform in any
material respect any of its covenants in this Agreement and (B) does not cure
such default in all material respects within 30 days after written notice of
such default specifying such default in reasonable detail is given to WCI by the
Corporations or the Shareholder.
(c) WCI shall have the right to terminate this
Agreement:
3
5
(i) Upon a breach of a representation or
warranty of the Corporations or the Shareholder contained in this Agreement
which has not been cured in all material respects and which has had or is likely
to have a material adverse effect on the business or financial condition of
either of the Corporations and is incapable of being satisfied by the
Termination Date;
(ii) If the transactions contemplated by this
Agreement are enjoined by a final, unappealable court order not entered at
the request or with the support of WCI and if WCI shall have used reasonable
efforts to prevent the entry of such order; or
(iii) If either of the Corporations or the Shareholder (A) fails
to perform in any material respect any of its or his covenants in this Agreement
and (B) does not cure such default in all material respects within 30 days after
written notice of such default specifying such default in reasonable detail
is given to such person by WCI.
(d) WCI, the Corporations and the Shareholder shall have the
right to terminate the Agreement by mutual consent.
2.3 NOTICE AND EFFECT OF TERMINATION. On termination of this
Agreement, the transactions contemplated herein shall forthwith be abandoned and
all continuing obligations 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. Notwithstanding the foregoing, Sections
2.4, 3.33, 4.6, 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. If this Agreement has terminated due to the breach of any party, such
party shall remain liable for any damages arising from such breach.
2.4 EXCLUSIVE NEGOTIATIONS. Following execution of this
Agreement until the Closing Date or termination of this Agreement pursuant to
Section 2.2, the Corporations and the Shareholder shall not, and the Shareholder
shall not permit the Corporations' officers, directors, employees or agents to,
and the Corporations will not permit CRC or FBLP's partners, 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
Corporations, or to effect the merger of the Corporations with any party other
than WCI or one of its Affiliates. The Shareholder hereby confirms that no
person or entity presently has or may acquire any rights to purchase or
otherwise acquire the assets or the stock of the Corporations.
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATIONS AND THE
SHAREHOLDER
The Corporations and the Shareholder, jointly and severally, represent
and warrant that each of the following representations and warranties is true as
of the Signing Date and will be true as of the Closing Date.
3.1 ORGANIZATION, STANDING AND QUALIFICATION. Each of the
Corporations, CRC and FBLP is duly organized, validly existing and in good
standing under the laws of the State of Oregon or Washington, as the case may
be. Each of the Corporations, CRC and FBLP
4
6
has full corporate or other power and authority to own and lease its properties
and to carry on its business as now conducted. Except as set forth on Schedule
3.1, none of the Corporations, CRC or FBLP is 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, as of the Signing
Date, the authorized and outstanding capital of the Corporations, the names,
addresses and social security numbers or taxpayer identification numbers of the
record and beneficial owners thereof, the number of shares so owned, the
allocation of the cash, and wire transfer instructions for the Shareholder
relating to the bank account to which the Purchase Price should be sent. All of
the issued and outstanding shares of the capital stock of the Corporations are
owned of record and beneficially by the Shareholder, as set forth in Schedule
3.2, and are and as of the Closing Date will be free and clear of all liens,
security interests, encumbrances and claims of every kind except as set forth in
Schedule 3.2. Each share of the capital stock of the Corporations 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
Corporations. MENI is the sole general partner and RHFC is the sole limited
partner of CRC and FBLP. No option, warrant, call, conversion right or
commitment of any kind (including any of the foregoing created in connection
with any indebtedness of the Corporations, CRC or FBLP) exists which obligates
the Corporations to issue any of its authorized but unissued capital stock or
other equity interest, which obligates the Shareholder to transfer any
Corporations' Stock to any person, which obligates either CRC or FBLP to issue
any partnership interest to any person, or which obligates MENI or RHFC to
transfer any partnership in CRC or FBLP to any person
3.3 ALL STOCK BEING ACQUIRED. The Corporations' Stock being
acquired by WCI hereunder constitutes all of the outstanding capital stock of
the Corporations.
3.4 AUTHORITY FOR AGREEMENT. The Corporations and the
Shareholder have full right, power and authority to enter into this Agreement
and to perform their or his obligations hereunder. The execution and delivery of
this Agreement by the Corporations and the consummation of the transactions
contemplated hereby by the Corporations have been duly authorized by each of the
Corporations' Board of Directors. This Agreement has been duly and validly
executed and delivered by the Corporations and the Shareholder and, subject to
the due authorization, execution and delivery by WCI, constitutes the legal,
valid and binding obligation of the Corporations and the Shareholder enforceable
against the Corporations and the Shareholder in accordance with its terms.
3.5 NO BREACH OR DEFAULT. Except as disclosed on Schedule 3.5,
the execution and delivery by the Corporations and the Shareholder of this
Agreement, and the consummation by the Shareholder of the transactions
contemplated hereby, will not:
(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 material contract, agreement,
license or other instrument or obligation of any kind or nature to which any of
the Corporations, CRC, FBLP or the Shareholder is a party, or by which the
5
7
Corporations, CRC, FBLP or the Shareholder, or any of their assets, is or may be
bound or affected; or
(b) violate any law 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
either of the Corporations or the agreement of limited partnership of either CRC
or FBLP.
3.6 SUBSIDIARIES. Schedule 3.6 lists as of the Signing Date any
and all subsidiaries of the Corporations and any securities of any other
corporation or any securities or other interest in any other business entity
(other than CRC or FBLP) owned by the Corporations or any of the Corporations'
subsidiaries.
3.7 FINANCIAL STATEMENTS. The Corporations have delivered to
WCI, as Schedule 3.7, copies of financial statements ("FINANCIAL STATEMENTS")
for each of the Corporations', CRC's and FBLP's three most recent fiscal years
ending December 31, 1998 (the "BALANCE SHEET DATE"). Such Financial Statements
for CRC and FBLP are presented on both an individual and combined basis. Such
Financial Statements for the Corporations have been internally prepared. Such
Financial Statements of CRC and FBLP for the fiscal years ending December 31,
1996 and 1997 have been audited by Xxxxxxx & Company, P.C. The Financial
Statements for the three most recent fiscal years present fairly, in all
material respects, the financial positions of the respective Corporations and
CRC and FBLP as of the end of such fiscal years and the results of their
operations and their cash flows for the years then ended, and in the case of CRC
and FBLP, conform with generally accepted accounting principles except, in the
case of the unaudited Financial Statements for the fiscal year ending December
31, 1998, for the lack of explanatory footnote disclosures. Such footnote
disclosures, if included with the unaudited Financial Statements, would be
substantially similar in description and content to the footnote disclosure in
the audited Financial Statements for the year ended December 31, 1997. Except to
the extent reflected or reserved against in any of the Corporations', CRC's or
FBLP's balance sheets as of the Balance Sheet Date, or as disclosed on Schedule
3.7 or Schedule 3.8, none of the Corporations, CRC or FBLP had as of the Balance
Sheet Date, nor will any of the Corporations, CRC or FBLP have as of the Closing
Date, any liabilities of any nature, whether accrued, absolute, contingent or
otherwise, including, without limitation, tax liabilities due or to become due,
other than liabilities incurred in the ordinary course of business since the
Balance Sheet Date.
3.8 LIABILITIES. Parts I, II, III and IV of Schedule 3.8 are
accurate lists and descriptions of all liabilities of the Corporations, CRC and
FBLP required to be described below in the format set forth below.
(a) Part I of Schedule 3.8 lists, as of the Signing
Date, other than with respect to trade payables and as of the end of the month
prior to the Closing 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
6
8
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
month prior to the Closing Date through the Closing 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, as of the Signing
Date, all claims, suits and proceedings which are pending against any of the
Corporations, CRC or FBLP and, to the knowledge of the Corporations and the
Shareholder, all contingent liabilities and all claims, suits and proceedings
threatened or anticipated against any of the Corporations, CRC or FBLP. 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,
together with copies of all material documents, reports and other records
relating thereto to the extent that they are in the Corporations' or the
Shareholder's possession or control.
(c) Part III of Schedule 3.8 lists, as of the Signing
Date and 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
any of the Corporations, CRC or FBLP (including any Facility Property, as
hereafter defined), 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, as of the Signing
Date and 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 any of the
Corporations, CRC or FBLP is a party as lessor or lessee or, to the knowledge of
the Corporations or the Shareholder, affecting or relating to any Facility
Property, and includes a description of the nature and principal terms of such
leasehold interest, including, without limitation, the identity of the other
party thereto, the term of such leasehold interest (including renewal options),
the base rent and any additional rent owing thereunder (including any
adjustments thereto), security deposits, rights of first offer or first refusal,
purchase options, and restrictions on transfer.
Except as described on the applicable part of Schedule 3.8, the
Corporations, CRC, FBLP and the Shareholder have not 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
Corporations, CRC and FBLP:
(a) have been made available to WCI and its agents at
the Corporations' offices or at the offices of the Corporations' attorneys;
7
9
(b) have been, in all material respects, maintained in
accordance with all applicable laws, rules and regulations; and
(c) are accurate and complete, reflect all material
corporate transactions required to be authorized by each of the Corporation's
Board of Directors and/or shareholder of the Corporations, whether on behalf of
the Corporations, CRC or FBLP, or any other appropriate person or entity, and do
not contain or reflect any material discrepancies.
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 CRC or FBLP are 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 each of the Corporations,
CRC and FBLP (collectively the "GOVERNMENTAL PERMITS") owned by, issued to, held
by or otherwise benefiting the Corporations, CRC, FBLP or the Shareholder as of
the Closing Date. The status of the Governmental Permits related to the disposal
areas owned or used by CRC or FBLP, including, without limitation, any
conditions thereto and, if applicable, the expiration dates thereof, are also
described in Schedule 3.10(a). Schedule 3.10(a) also sets forth the name of any
governmental agency or other third party from whom the Shareholder, CRC, FBLP
and the Corporations 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 for any
filings by the Corporations required by the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX XXX"), no declaration, filing or registration
with, or notice to, or authorization, consent or approval or permit of, any
governmental or regulatory body or authority is, to the knowledge of the
Corporations and the Shareholder, necessary for the execution and delivery of
this Agreement by the Corporations or the consummation by the Corporations of
the transactions contemplated hereby. 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, to the knowledge of the Corporations and the
Shareholder, adequate for the operation of the business of each of the
Corporations, CRC and FBLP and of each Facility 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 Corporations or the Shareholder, threatened which may result in the
revocation, cancellation, suspension or adverse modification of any of the same.
Neither the Corporations nor the Shareholder 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) The Corporation, CRC and FBLP have made available to
WCI and its agents and representatives (i) all records, notifications, reports,
permit and license
8
10
applications, engineering and geologic studies, and environmental impact
reports, tests or assessments (collectively, "RECORDS, NOTIFICATIONS AND
REPORTS") that, to the knowledge of the Corporations and the Shareholder, (A)
are material to the operation of the business of each of the Corporations, CRC
and FBLP, 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 24 months by the Corporations,
CRC, FBLP or the Shareholder or their or his agents with respect to the business
of the Corporations, CRC and FBLP, and (ii) all material notifications from such
governmental agencies to the Corporations, CRC, FBLP, the Shareholder 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 Corporations, CRC and FBLP, the 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 owned by the Corporations,
CRC, FBLP or owned by the Shareholder or an Affiliate (as hereinafter defined)
of the Shareholder and leased to the Corporations, CRC or FBLP is, to the
knowledge of the Corporations and the Shareholder, 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 Corporations and the Shareholder, no Facility that is leased by the
Corporations, CRC or FBLP 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) To the knowledge of the Corporations and
the Shareholder, there are no circumstances, conditions or reasons that are
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
Corporations, CRC, FBLP or the Shareholder or an Affiliate of the Shareholder
and leased to the Corporations, CRC or FBLP, and to the knowledge of the
Corporations and the Shareholder there are no circumstances, conditions or
reasons which are 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
Corporations, CRC or FBLP from a third party who is not an Affiliate (as
hereinafter defined) of the Shareholder.
3.11 CERTAIN RECEIVABLES. Schedule 3.11 is an accurate list as
of the Signing Date of the accounts and notes receivable of the Corporations,
CRC and FBLP from and advances to employees, former employees, officers,
directors, the Shareholder and Affiliates of the foregoing which have not been
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
9
11
part by, or is under common control or ownership in whole
or in part with such person, in the case of WCI, the Corporations, CRC and FBLP
includes directors, officers and partners, 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 substantially all the fixed
assets (other than real estate) of the Corporations, CRC and FBLP, 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
containers, vehicles, machinery and equipment necessary for the operation of the
businesses of the Corporation, CRC and FBLP are in operable condition, and all
of the motor vehicles and other rolling stock of the Corporations, CRC and FBLP
are in compliance with all applicable laws, rules and regulations. All such
containers, vehicles, machinery and equipment are substantially free of known
defects that would cause them to fail. All leases of fixed assets are in full
force and effect and binding upon the parties thereto; neither the Corporations
nor, to the knowledge of the Corporations or the Shareholder, any other party to
such leases is in breach of any of the material provisions thereof.
(b) Each parcel of real property leased, owned, being
purchased, operated, or otherwise used by the Corporations, CRC or FBLP as of
the Closing Date (the "FACILITY PROPERTY"), including the street address and, in
the case of Facility Property owned or being purchased, the legal description
thereof, is listed on Schedule 3.12(b), and 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 Facility Property, as well as a current commitment for title insurance
issued by a title insurance company satisfactory to WCI with respect to each
Facility Property owned or being purchased by the Corporations, CRC or FBLP,
together with copies of all of the title exceptions referred to in each such
commitment. All leases listed on Schedule 3.12(b) are in full force and effect
and binding on the parties thereto; none of the Corporations, CRC or FBLP nor
any other party to any such lease is in breach of any of the material provisions
thereof; to the knowledge of the Corporations and the Shareholder, 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 the
Corporations, CRC or FBLP have not assigned any such lease or sublet all or any
part of the Facility Property which is the subject of any such lease. Except as
described on Schedule 3.12(b), there are no material physical or mechanical
defects in any Facility located on any Facility Property and each such Facility
is in good condition and repair.
(c) The Corporations, CRC and FBLP have 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 Corporations, CRC or FBLP, and have arisen only in the ordinary
course of business and
10
12
consistent with past practice; and (iii) the liens identified on Parts I and III
of Schedule 3.8 (collectively, the "PERMITTED LIENS"), provided that insofar as
this representation and warranty relates to title to any Facility Property owned
by a Corporation, CRC or FBLP for which title insurance is obtained as
contemplated by Section 6.9, such representation and warranty shall be limited
to the knowledge of the Corporation and the Shareholder. Except as described on
Schedule 3.12(b), there are no 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 Facility Property owned or
being purchased, 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. Neither the Shareholder nor the
Shareholder's Affiliates has entered into any transaction with or is a party to
any agreement, lease or other instrument, or as of the date of this Agreement is
indebted to or is owed money by, any of the Corporations, CRC or FBLP not
disclosed on the Financial Statements. Except as disclosed in the Financial
Statements, neither the Shareholder nor the Shareholder's 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 Corporations, CRC or FBLP.
3.14 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS.
(a) Schedule 3.14(a) lists, as of the Signing Date, and
includes copies of, all material contracts and agreements (other than leases and
documents included with Schedule 3.12(b)) to which any of the Corporations, CRC
or FBLP is a party or by which it or any of its property is bound (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). Except as disclosed on Schedule 3.14(a), all such contracts and
agreements included in Schedule 3.14(a) are in full force and effect and binding
upon the parties thereto. Except as described or cross referenced on Schedule
3.14(a), none of the Corporations, CRC or FBLP nor, to the Corporations' 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 Corporations, CRC, FBLP or the
Shareholder of a default thereunder, or exercised any options thereunder.
(b) Except as set forth on Schedule 3.14(b), there is no
outstanding judgment, order, writ, injunction or decree against the
Corporations, CRC or FBLP, the result of which could materially adversely affect
the Corporations, CRC or FBLP or any of their businesses or any of the Corporate
Properties, nor has any of the Corporations, CRC or FBLP been notified that any
such judgment, order, writ, injunction or decree has been requested.
3.15 INSURANCE. Schedule 3.15 is a complete list and includes
copies, as of the Signing Date, of all insurance policies in effect on the
Signing Date or, with respect to "OCCURRENCE" policies that were in effect,
carried by the Corporations, CRC or FBLP in respect of the Corporate Properties
or any other property used by the Corporations, CRC or FBLP
11
13
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 any material insurance coverage
of the Corporations, CRC or FBLP. 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 Corporations, CRC or FBLP and the
insurer has assumed defense of each suit or legal proceeding. All such
proceedings are fully covered by insurance, subject to normal deductibles.
3.16 PERSONNEL. Schedule 3.16 is a complete list, as of the
Signing Date, of all officers, directors and employees (by type or
classification) of the Corporations, CRC and FBLP 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 3.16 also lists the driver's license number for each driver of the
motor vehicles of the Corporations, CRC and FBLP.
3.17 BENEFIT PLANS AND UNION CONTRACTS.
(a) Schedule 3.17(a) is a complete list as of the
Signing Date, 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 Corporations,
CRC and FBLP, 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 as of the Signing Date. Except for the employee benefit plans
described on Schedule 3.17(a), the Corporations have no 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 3.17(a), all employee benefit plans
listed on Schedule 3.17(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 of 1986, as amended (the "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 3.17(a). Except as disclosed on
Schedule 3.17(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 3.17(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 Corporations, CRC or FBLP 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 none of the
Corporations, CRC or FBLP, nor a party-in-interest or disqualified person, has
engaged in any transaction or other activity which would give rise to such
liability. None of the Corporations, CRC or FBLP have participated in or made
contributions to any "MULTI-EMPLOYER PLAN" as defined in the Employee
12
14
Retirement Income Security Act of 1974 ("ERISA"), nor would the Corporations,
CRC or FBLP or any Affiliate be subject to any withdrawal liability with respect
to such 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 any of the Corporations, CRC or FBLP and any collective bargaining
group, nor have there ever been any such contracts in effect. The Corporations,
CRC and FBLP 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 Corporations' or any Shareholder's knowledge, threatened, against the
Corporations, CRC or FBLP 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
as of the Closing Date, existing or threatened against the Corporations, CRC or
FBLP; no union organizational activity exists respecting employees of the
Corporations, CRC or FBLP, and Schedule 3.17(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 Corporations, CRC
or FBLP. None of the Corporations, CRC or FBLP have experienced any labor
strike, slow-down, work stoppage, labor difficulty or other job action during
the last five years.
(c) No payment made to any employee, officer, director
or independent contractor of the Corporations, CRC or FBLP (the "RECIPIENT")
pursuant to any employment contract, severance agreement or other arrangement
(the "GOLDEN PARACHUTE PAYMENT") will be nondeductible by any of the
Corporations, CRC or FBLP because of the application of Sections 280G and 4999
of the Code to the Golden Parachute Payment, nor will the Corporations be
required to compensate any Recipient because of the imposition of an excise tax
(including any interest or penalties related thereto) on the Recipient by reason
of Sections 280G and 4999 of the Code.
3.18 TAXES.
(a) The Corporations, CRC and FBLP have 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. Except as set forth on
Schedule 3.18(a), 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 any of the Corporations, CRC or FBLP 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 Corporations, CRC and FBLP for
each of their last three fiscal years are attached as part of Schedule 3.18(a).
Copies of all other federal, state, local and other tax and information returns
for all prior years of existence have been made available to WCI and are among
the records of the Corporations, CRC and FBLP that will accrue to WCI at the
Closing.
13
15
None of the Corporations, CRC or FBLP has been contacted by any federal, state
or local taxing authority regarding a prospective examination.
(b) Except as set forth on Schedule 3.18(b) (which
schedule also includes the amount due with respect to the Corporations, CRC and
FBLP) the Corporations, CRC and FBLP 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 are adequate to cover any tax
liability as of the Signing Date.
(c) The Corporations, CRC and FBLP have withheld all
required amounts from their 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 Corporations, CRC and FBLP 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.
3.19 COPIES COMPLETE; REQUIRED CONSENTS. Except as disclosed on
Schedule 3.19, the certified copies of the Articles of Incorporation and Bylaws
of the Corporations, and the agreements of limited partnership of CRC and FBLP,
in each case as amended to the Signing Date, and the copies of all leases,
instruments, agreements, licenses, permits, certificates or other documents that
have been delivered to WCI in connection with the transactions contemplated
hereby are complete and accurate as of the Signing Date and are true and correct
copies of the originals thereof. Except as specifically disclosed on Schedule
3.19, the rights and benefits of the Corporations, CRC and FBLP will not be
adversely affected by the transactions contemplated hereby, and the execution of
this Agreement and the performance of the obligations hereunder will not violate
or result in a breach or constitute a default under any of the terms or
provisions thereof. None of such leases, instruments, agreements, licenses,
permits, site assessments, certificates or other documents requires notice to,
or consent or approval of, any governmental agency or other third party to any
of the transactions contemplated hereby, except the Required Governmental
Consents, such consents and approvals as are listed on Schedule 3.19, all of
which have been given or obtained.
3.20 CUSTOMERS, XXXXXXXX, CURRENT RECEIPTS AND RECEIVABLES.
Schedule 3.20 is a current, accurate and complete list of, and includes:
(a) the customers that CRC and FBLP serve on an ongoing
basis, including name, location and current billing rate, as of the Closing
Date;
(b) an accurate and complete aging of all accounts and
notes receivable from customers as of the last day of the month preceding the
month in which such Schedule is delivered, 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 3.11 and 3.20, , CRC's
and FBLP's accounts and notes receivable are collectible in the amounts shown on
Schedules 3.11 and 3.20; and
14
16
(c) the average monthly revenues of CRC and FBLP derived
from xxxxxxxx to its customers for each of the twelve months preceding the
Closing Date. Except as set forth on Schedule 3.20, neither the Corporations nor
any Shareholder has any knowledge of any reason why any of such average monthly
revenues after the Closing Date should not continue at approximately the same
rate as before the Closing Date.
3.21 NO CHANGE WITH RESPECT TO THE CORPORATIONS. Except as set
forth on Schedule 3.21, since the Balance Sheet Date, the business of each of
the Corporations, CRC and FBLP 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 Corporations, CRC or FBLP other than
changes in the ordinary course of business, none of 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 3.21, with
respect to the Corporations, CRC and FBLP, since the Balance Sheet Date, there
has not been:
(a) any material change any of their 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,
taken as a whole;
(b) any material damage, destruction or loss (whether or
not covered by insurance) adversely affecting any material portion of any of
their properties or business;
(c) any change in or agreement to change (i) either of
the Corporations' shareholders, (ii) ownership of either of the Corporations'
authorized capital or outstanding securities, (iii) either of the Corporations'
securities, or (iv) the identity or interest of any of the general or limited
partners of CRC or FBLP.
(d) any declaration or payment of, or any agreement to
declare or pay, any dividend or distribution in respect of either of the
Corporations' capital stock or any direct or indirect redemption, purchase or
other acquisition of any of a Corporation's capital stock;
(e) any increase or bonus or promised increase or bonus
in the compensation payable or to become payable, in excess of usual and
customary practices, to any of their directors, officers, partners, 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 their present or former officers or other key employees;
(f) any labor dispute or any other event or condition of
any character with respect to any of their employees, materially adversely
affecting any of their business or future prospects;
(g) any sale or transfer, or any agreement to sell or
transfer, any of their material assets, property or rights to any other person,
including, without limitation, the Shareholder and the Shareholder's Affiliates,
other than in the ordinary course of business;
15
17
(h) any cancellation, or agreement to cancel, any
material indebtedness or other material obligation owing to any of them,
including, without limitation, any indebtedness or obligation of the Shareholder
or any Affiliate thereof;
(i) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of their 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 their property, rights or
assets outside the ordinary course of business;
(k) any waiver of any of their 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
any of them is a party; or
(m) any other material transaction outside the ordinary
course of business.
3.22 CLOSING DATE DEBT; EFFECTIVE DATE CURRENT ASSETS AND
EFFECTIVE DATE CURRENT LIABILITIES.
(a) When delivered at the Closing, Schedule 3.22(a) will
list (i) the amount of the aggregate debt (excluding trade payables and the Bond
Debt) of the Corporations, CRC and FBLP outstanding on the Closing Date required
to be repaid by WCI or the Corporations, CRC or FBLP at or immediately after the
Closing Date and all prepayment penalties incurred or to be incurred by WCI or
the Corporations, CRC or FBLP in connection with the repayment of any such debt,
(ii) the amount of the aggregate debt (excluding trade payables and the Bond
Debt) of the Corporations, CRC and FBLP outstanding on the Closing Date which
will remain outstanding obligations 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 Corporations, CRC or FBLP by a third
party lender in connection with its most recent borrowing to finance equipment,
of all lease obligations of the Corporations, CRC or FBLP that are not
capitalized lease obligations, 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 Corporations,
CRC and FBLP (the "CLOSING DATE DEBT"). When delivered at the Closing, Schedule
3.22(a) will separately list the aggregate principal amount and all accrued but
unpaid interest on the Bond Debt. Schedule 3.22(a) will include wire transfer
instructions for creditors whose Closing Date Debt WCI has designated for
payment, and attached to Schedule 3.22(a) are pay-off letters or instructions
from such creditors in the form provided by WCI's bank or acceptable to WCI.
(b) Schedule 3.22(b) is an estimate as of the Signing
Date of the amount of the aggregate current liabilities (including any reserve
for unpaid taxes and any
16
18
accrued vacation benefits 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 each of CRC and FBLP as of the Balance Sheet Date (the "BALANCE
SHEET DATE CURRENT LIABILITIES") and the amount of the aggregate cash and other
current assets of each of CRC and FBLP as of the Balance Sheet Date, including
prepaid expenses the benefit of which survives the Closing Date and the accounts
receivable of each of CRC and FBLP earned prior to the Balance Sheet Date, and
collectible (less an allowance for doubtful accounts) on or after the Balance
Sheet Date (the "BALANCE SHEET DATE CURRENT ASSETS").
3.23 BANK ACCOUNTS.
(a) Schedule 3.23(a) is a complete and accurate list, as
of the Signing Date, of:
(i) the name of each bank in which the
Corporations, CRC and FBLP have 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 3.23(b) is a complete and accurate list, as
of the Signing Date, of:
(i) each credit card or other charge account
issued to each of the Corporations, CRC and FBLP; and
(ii) the name of each person to whom such credit
cards or other charge accounts have been issued.
3.24 COMPLIANCE WITH LAWS. Except as disclosed on Schedule 3.24,
the Corporations, CRC and FBLP have, to the knowledge of the Corporations and
the Shareholder, complied with, and are presently in compliance with, 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 3.24, to the knowledge of the Corporations and the Shareholder, there
has been no assertion by any party that any of the Corporations, CRC or FBLP is
in violation of any Laws. Specifically and without limiting the generality of
the foregoing, except as disclosed on Schedule 3.24:
(a) Except as permitted under applicable laws and
regulations, including, without limitation, the federal Resource Conservation
Recovery Act, 42 USC Section 6901 et seq. ("RCRA"), none of the Corporations,
CRC or FBLP has accepted, processed, handled,
17
19
transferred, generated, treated, stored or disposed of any Hazardous Material
(as defined in Section 3.24(e) below) nor has any of them accepted, processed,
handled, transferred, generated, treated, stored or disposed of asbestos,
medical waste, radioactive waste or municipal waste, except in compliance with
Environmental Laws. Notwithstanding the foregoing, the Shareholder shall not be
liable for any indemnification claim pursuant to Section 10.1 for breach of the
representation set forth in this Section 3.24(a) to the extent the Corporations,
CRC or FBLP accepted, processed, handled, transferred, treated, stored or
disposed of Hazardous Material, asbestos, medical waste, radioactive waste or
municipal waste without their knowledge based on misrepresentations or omissions
by third parties to the Corporations, CRC or FBLP as to the content of waste
accepted, processed, handled, transferred, treated, stored or disposed of.
(b) During the Corporations', CRC's or FBLP's ownership
or leasing of the Facility Property owned or leased by it and, to the knowledge
of the Corporations and the Shareholder, prior to such ownership or leasing of
such Facility Property, no Hazardous Material, other than that allowed under
Environmental Laws, including, without limitation, RCRA, has been disposed of,
or otherwise released on any Facility Property. Notwithstanding the foregoing,
the Shareholder shall not be liable for any indemnification claim pursuant to
Section 10.1 for breach of the representation set forth in this Section 3.24(b)
to the extent the Corporations, CRC or FBLP disposed of such Hazardous Material
at any Facility Property without their knowledge based on misrepresentations or
omissions by third parties to the Corporations, CRC or FBLP as to the content of
waste accepted for disposal.
(c) During the Corporations', CRC's or FBLP's ownership
or leasing of the Facility Property owned or leased by it and, to the knowledge
of the Corporations and the Shareholder, prior to such ownership or leasing of
such Facility Property, no Facility 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 Facility Property or any real property now or previously owned or
leased by any of the Corporations, CRC or FBLP. There are no pending and, to the
Corporations' and Shareholder's knowledge, no threatened actions or proceedings
from any governmental agency or any other entity involving remediation of any
condition of the Facility Property, including, without limitation, petroleum
contamination, pursuant to Environmental Laws.
(d) Except as allowed under Environmental Laws, the
Corporations, CRC and FBLP have not 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 Washington or Oregon 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.
3.25 POWERS OF ATTORNEY. None of the Corporations, CRC or FBLP
has granted any power of attorney (except routine powers of attorney relating to
representation
18
20
before governmental agencies) or entered into any agency or similar agreement
whereby a third party may bind or commit any of the Corporations, CRC or FBLP in
any manner.
3.26 UNDERGROUND STORAGE TANKS. Except as set forth on Schedule
3.26, no underground storage tanks containing petroleum products or wastes or
other hazardous substances regulated by 40 CFR 280 or Environmental Laws are
currently or have been located on any Facility Property. Except as set forth on
Schedule 3.26, none of the Corporations, CRC or FBLP have owned or leased any
real property not included in the Facility Property having any underground
storage tanks containing petroleum products or wastes or other hazardous
substances regulated by 40 CFR 280. As to each such underground storage tank
("UST") identified on Schedule 3.26, the Corporations have provided to WCI, on
Schedule 3.26:
(a) the location of the UST, information and material,
including any available drawings and photographs, showing the location, and
whether any of the Corporations, CRC or FBLP currently owns or leases the
property on which the UST is located (and if none of the Corporations, CRC or
FBLP currently own or lease such property, the dates on which it did and the
current owner or lessee of such property);
(b) the date of installation and specific use or uses of
the UST;
(c) copies of tank and piping tightness tests and
cathodic protection tests and similar studies or reports for each UST;
(d) a copy of each notice to or from a governmental body
or agency relating to the UST;
(e) other material records with regard to the UST,
including, without limitation, repair records, financial assurance compliance
records and records of ownership; and
(f) to the extent not otherwise set forth pursuant to
the above, a summary description of instances, past or present, in which, to the
Corporations', or the Shareholder's knowledge, the UST failed to meet applicable
standards and regulations for tightness or otherwise and the extent of such
failure, and any other operational or environmental problems with regard to the
UST, including, without limitation, spills, including spills in connection with
delivery of materials to the UST, releases from the UST and soil contamination.
Except to the extent set forth on Schedule 3.26, the Corporations, CRC
and FBLP have complied with Environmental Laws regarding the installation, use,
testing, monitoring, operation and closure of each UST described on Schedule
3.26.
3.27 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 3.27 lists
all patents, tradenames, fictitious business names, trademarks, service marks,
and copyrights owned by the Corporations, CRC or FBLP or which any of them 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). No patents, trade secrets, know-how, intellectual
property, trademarks, trade names, assumed names, copyrights, or designations
used by the Corporations, CRC or FBLP in any of their businesses infringe on any
patents, trademarks, or copyrights, or
19
21
any other rights of any person. Neither the Corporations nor the Shareholder
knows or has any reason to believe that there are any claims of third parties to
the 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.
3.28 ASSETS, ETC., NECESSARY TO BUSINESS. Each of the
Corporations, CRC and FBLP owns or leases all properties and assets, real,
personal, and mixed, tangible and intangible, and, except as disclosed on
Schedules 3.5, 3.10(a), 3.10(c), 3.14(a) and 3.19, 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) 3.14(a) and
3.19, are in full force and effect and there are no proceedings pending or
threatened which may result in the revocation, cancellation, suspension or
adverse modification of any of the same. Neither the Corporations nor the
Shareholder has any knowledge of any reason why all such Collection Franchises
and Governmental Permits and agreements will not remain in effect in accordance
with their terms after consummation of the transactions contemplated hereby.
3.29 CONDEMNATION. No Facility Property owned or leased by any
of the Corporations, CRC or FBLP are the subject of, or would be affected by,
any pending condemnation or eminent domain proceedings, and, to the knowledge of
the Corporations and the Shareholder, no such proceedings are threatened.
3.30 SUPPLIERS AND CUSTOMERS. To the knowledge of the
Corporations and the Shareholder, the relations between CRC and FBLP and each of
their customers are good. Neither the Corporations nor the Shareholder 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 CRC
or FBLP intends to cease providing such items to either of them, nor do either
of the Corporations or the Shareholder has knowledge of any fact (other than
general economic and industry conditions) which indicates that any of the
customers of CRC or FBLP intends to terminate, limit or reduce its business
relations with CRC or FBLP.
3.31 ABSENCE OF CERTAIN BUSINESS PRACTICES. None of the
Corporations, CRC, FBLP, or the Shareholder 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 CRC or FBLP in connection with any
actual or proposed transaction which (a) might subject the Corporation, CRC or
FBLP to any damage or penalty in any civil, criminal or governmental litigation
or proceeding, (b) if not given in the past, might have had an adverse effect on
the financial condition, business or results of operations of the Corporations,
CRC or FBLP, or (c) if not continued in the future, might adversely affect the
financial condition, business or operations of the Corporations, CRC or FBLP or
which might subject the Corporations, CRC or FBLP to suit or penalty in any
private or governmental litigation or proceeding.
3.32 NO MISLEADING STATEMENTS. The representations and
warranties of the Corporations and the Shareholder contained in this Agreement,
the Exhibits and Schedules
20
22
hereto and all other documents and information furnished to WCI and its
representatives pursuant 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.
3.33 BROKERS; FINDERS. No person has acted directly or
indirectly as a broker, finder or financial advisor for either of the
Corporations or the 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 either of the
Corporations or the Shareholder.
3.34 S CORPORATION MATTERS. Each of the Corporations has elected
to be treated as an S Corporation within the meaning of the Code for the years
listed on Schedule 3.34.
4. REPRESENTATIONS AND WARRANTIES OF WCI
WCI represents and warrants to the Shareholder that each of the
following representations and warranties is true as of the Closing Date:
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.
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 Corporations and the Shareholder, constitutes a
legal, valid and binding obligation of WCI. 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 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 GOVERNMENTAL AUTHORITIES; CONSENTS. Except for any filings
by WCI required by the HSR Act and any required filings with applicable state
regulatory authorities, WCI is not required to submit any notice, report or
other filing with any governmental authority
21
23
in connection with the execution or delivery by it of this Agreement or the
consummation of the transactions contemplated hereby, and no consent, approval
or authorization of any governmental or regulatory authority or any other party
or person is required to be obtained by WCI in connection with its execution,
delivery and performance of this Agreement or the transactions contemplated
hereby, except such as shall have been obtained by the Closing Date.
4.5 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 Shareholder 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.
4.6 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.
5. COVENANTS FROM SIGNING TO CLOSING DATE
5.1 OPERATIONS. Between the Signing Date and the Closing
Date, the Corporations will, and will cause CRC and FBLP to, and the Shareholder
will cause the Corporations 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 their properties and facilities, 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 their assets, properties, business operations and
rights;
(d) keep in full force and effect present insurance
policies or other comparable insurance coverage;
(e) use reasonable efforts to maintain and preserve each
of their business organizations intact, retain present employees and maintain
relationships with suppliers, customers and others having business relations
with any of them 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 each of
their continuing operations;
22
24
(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 each of
their 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 Corporations will not, and will not permit CRC and FBLP to, and the
Shareholder will not permit the Corporations 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 either of the Corporations or the agreement of limited partnership of
either CRC or FBLP;
(b) authorize, issue, transfer, pledge, distribute or
sell any of the Corporations' Stock or any other securities of the Corporations;
(c) except as set forth on Schedule 1.4 with respect to
Excluded Assets, declare or pay any dividend or make any distribution in respect
of the capital stock of the Corporations whether now or hereafter outstanding,
or purchase, redeem or otherwise acquire or retire for value any shares of the
capital stock or the Corporations;
(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 3.16 and 3.21,
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;
(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 1.4 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;
23
25
(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 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 Corporations or the
Shareholder to become untrue as of the Closing Date.
5.3 OBTAIN CONSENTS. Promptly after the Signing Date, the
Corporations, CRC and FBLP will, and the Shareholder shall cause them 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 Required
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 them or the Shareholder to consummate the
transactions contemplated by this Agreement.
5.4 ACCESS; CONFIDENTIAL INFORMATION. Between the Signing Date
and the Closing Date, the Shareholder and the Corporations will, and the
Shareholder will cause the Corporations 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, Facility Property and other properties, books and records of
the Corporations, CRC and FBLP, and will furnish WCI with such additional
financial and operating data and other information as to the business and
properties of the Corporations, CRC and FBLP as WCI may from time to time
reasonably request. The Shareholder will and will cause the Corporations 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 Shareholder and the Corporations shall provide to WCI such information and
materials regarding each of the Corporations', CRC's and FBLP's business as WCI
may reasonably request. WCI will cause all information obtained from the
Shareholder, the Corporations, CRC and FBLP, in connection with WCI's due
diligence review 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 Corporations, CRC, FBLP or the Shareholder. 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.
5.5 CONTROL OF THE CORPORATIONS' OPERATIONS. Nothing contained
in this Agreement shall give to WCI, directly or indirectly, rights to control
or direct any Corporation's
24
26
operations prior to the Closing Date. Prior to the Closing Date, each
Corporation shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision of its operations.
5.6 ACQUISITION TRANSACTIONS. From the Signing Date to the
Closing Date, or earlier termination of this Agreement, no Corporation nor the
Shareholder shall initiate, solicit, negotiate, encourage or provide information
to facilitate, and each of the Corporations and the Shareholder shall not, and
shall use its or his reasonable efforts to cause any officer, director or
employee of each Corporation, or any attorney, accountant, investment banker,
financial advisor or other agent retained by it or him not to, initiate,
solicit, negotiate, encourage or provide information to facilitate, any proposal
or offer to acquire all or any substantial part of the business or properties of
any Corporation or any capital stock (including without limitation the
Corporations' Stock) of any Corporation, whether by merger, purchase of assets
or otherwise, whether for cash, securities or any other consideration or
combination thereof (any such transactions being referred to herein as an
"ACQUISITION TRANSACTION"). Each Corporation and the Shareholder shall
immediately notify WCI after receipt of any proposal for an Acquisition
Transaction, indication of interest or request for information relating to any
Corporation in connection with an Acquisition Transaction or for access to the
properties, books or records of any Corporation by any person or entity that
informs the Board of Directors of any Corporation that it is considering making,
or has made, a proposal for an Acquisition Transaction. Such notice to WCI shall
be made orally and in writing.
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 Corporations and the Shareholder contained in this Agreement
or in any Exhibit, Schedule, certificate or document delivered by the
Corporations or the Shareholder 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 Corporations and the Shareholder 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 Corporations, CRC or
FBLP.
6.4 CERTIFICATES. The President of each of the Corporations
shall have delivered to WCI a certificate, dated as of the Closing Date, in form
and substance satisfactory to WCI and the Shareholder, certifying to the
fulfillment of the conditions set forth in Sections 6.1, 6.2 and 6.3, and the
Shareholder shall have delivered to WCI a certificate dated as of the Closing
25
27
Date, in form and substance satisfactory to WCI and the Shareholder, certifying
to the fulfillment of the conditions set forth in Section 6.1, 6.2 and 6.3
applicable to the Shareholder.
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 Shareholder shall have delivered the
items which he is required to deliver under Section 8 of this Agreement.
6.7 NECESSARY CONSENTS. All Necessary Consents shall have been
obtained.
6.8 HSR WAITING PERIOD. The waiting period applicable to the
consummation of this transaction under the HSR Act shall have expired or been
terminated.
6.9 TITLE INSURANCE. The Corporations shall obtain, at WCI's
cost and expense, an ALTA Owner's Standard Policy of title insurance for each
Facility Property owned by any of the Corporations, CRC or FBLP insuring fee
simple title to such Facility Property in one of the Corporations, subject only
to current real property taxes and assessments, standard printed conditions and
exceptions, and such title exceptions as shall have been accepted in writing by
WCI, containing such endorsements as WCI may reasonably require.
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDER AND THE
CORPORATION TO CLOSE
The obligations of the Corporations and Shareholder 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 Shareholder:
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 Shareholder a
certificate, dated as of the Closing Date, in form and substance satisfactory to
the Shareholder, certifying to the fulfillment of the conditions set forth in
Sections 8.1 and 8.2.
26
28
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 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.
7.7 HSR WAITING PERIOD. The waiting period applicable to the
consummation of this transaction under the HSR Act shall have expired or been
terminated
8. CLOSING DELIVERIES
At the Closing, the respective parties shall make the deliveries
indicated:
8.1 WCI DELIVERIES.
(a) WCI shall deliver the Purchase Price required to be
delivered on the Closing Date pursuant to Section 1.2(a).
(b) WCI shall execute and deliver to the Shareholder the
certificate set forth in Section 7.3.
8.2 SHAREHOLDER DELIVERIES.
(a) The Shareholder shall deliver to WCI the
certificates representing the outstanding Corporations' Stock free and clear of
all liens, security interests, claims and encumbrances, accompanied by stock
powers duly executed in blank.
(b) The Shareholder shall deliver evidence reasonably
satisfactory to WCI that all required third-party consents to the transactions
contemplated hereby, including without limitation all Required Governmental
Consents, were obtained and the Shareholder shall deliver an estoppel
certificate from the landlords under all real estate leases to which the
Corporations, CRC or FBLP is a party confirming the terms thereof and the rental
amount owing thereunder, certifying that such lease is in full force and effect,
that the lessee is not in default under any of the terms or conditions thereof,
that there have been no amendments or modifications to any such lease (or
specifying the same), and otherwise containing such statements and
certifications as WCI may require.
(c) The Shareholder shall deliver Schedule 3.22(a) to
this Agreement.
(d) The Corporations shall deliver to WCI evidence
satisfactory to WCI showing that all written employment contracts and all oral
employment contracts other than those that are terminable "AT WILL" without
payment of severance (other than normal severance
27
29
benefits approved by WCI) or other benefits with non-union employees of the
Corporations, CRC and FBLP (including, without limitation, stock options or
other rights to obtain equity in the Corporations, CRC and FBLP) have been
terminated, effective on or before the Closing Date.
(e) The Shareholder shall cause each officer and
director of each of the Corporations to deliver a resignation as an officer
and/or director of that Corporations together with a general release releasing
the Corporations from all obligations under any indemnification agreements, the
charter documents of the Corporations, or otherwise, arising out of or relating
to this Agreement or the consummation of the transactions contemplated thereby,
other than obligations arising after the Closing Date under this Agreement.
(f) The Corporations and the Shareholder shall execute
and deliver to WCI the certificates set forth in Section 6.4.
(g) FBLP shall execute and deliver to WCI a
Transportation Agreement (the "TRANSPORTATION AGREEMENT") with Tidewater Barge
Lines, Inc. ("TIDEWATER") substantially in the form of Exhibit 8.2(g).
(h) At the Closing, the Shareholder shall deliver to WCI
an opinion of counsel for the Shareholder, the Corporations, CRC and FBLP dated
as of the Closing Date, covering in substance the matters described in Exhibit
8.2(h).
(i) At the Closing, the Shareholder shall deliver to
WCI, the Corporations, CRC and/or FBLP such releases, assignments, conveyances
and other instruments executed by Tidewater as WCI shall reasonably request
pursuant to which Tidewater will acknowledge and confirm that to the extent it
previously had an interest in any contracts, assets, operations and lines of
business of the Corporations, CRC or FBLP, as of the Closing Date it no longer
has such interest.
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE SHAREHOLDER
9.1 NO DELAY. The Corporations, the Shareholder 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 Necessary 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 Shareholder and Tidewater listed on Schedule 9.2, all
of which relate to indebtedness of the Corporations, CRC or FBLP included in the
Financial Statements as of the Balance Sheet Date or WCI shall indemnify the
Shareholder and Tidewater and hold them harmless from and against
28
30
all losses, expenses or claims by third parties to enforce or collect
indebtedness owed by the Corporations, CRC or FBLP as of the Closing Date which
is personally guaranteed by the Shareholder or Tidewater pursuant to such
guaranties. The Shareholder and Tidewater may notify the obligees under such
guaranties that they have terminated their obligations under such guaranties.
The Shareholder shall, and shall use reasonable efforts to cause Tidewater to,
cooperate with WCI in obtaining such releases.
9.3 RELEASE OF SECURITY INTERESTS. On or after the Closing Date,
the Shareholder and his respective Affiliates shall cause those security
interests in the assets of the Corporations, CRC or FBLP that have been created
in favor of financial institutions or other lenders to secure indebtedness
(other than indebtedness of the Corporations, CRC or FBLP) of the Shareholder or
his respective Affiliates to be released in a manner reasonably satisfactory to
WCI, and shall cause all guaranties by the Corporations, CRC and FBLP relating
to the indebtedness of the Shareholder to be released to the reasonable
satisfaction of WCI.
9.4 CONFIDENTIALITY. Neither the Corporations nor the
Shareholder shall, nor shall they permit CRC or FBLP to, disclose or make any
public announcements of the transactions contemplated by this Agreement, except
as required by the HSR Act, without the prior written consent of WCI, unless
required to make such disclosure or announcement by law, in which event the
party making the disclosure or announcement shall notify WCI at least 24 hours
before such disclosure or announcement is expected to be made.
9.5 BROKERS AND FINDERS 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.
9.6 TAXES. WCI shall reasonably cooperate, at the expense of the
Shareholder, with the Shareholder with respect to any matters involving the
Shareholder arising out of the Shareholder's ownership of the Corporations and
the Corporations' interest in CRC and FBLP prior to the Closing, including
matters relating to tax returns and refunds 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 Shareholder
such files, documents, books and records of the Corporations, CRC and FBLP for
inspection and copying as may be reasonably requested by the Shareholder and
shall cooperate with the Shareholder with respect to retaining information and
documents that relate to such matters.
9.7 SHORT YEAR TAX RETURNS. After the Closing Date, the
Shareholder shall prepare at his sole cost and expense, all short year federal,
state, county, local and foreign tax returns required by law for the period
beginning with the first day of the Corporations' 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 substantially in
the manner and in accordance with elections used in prior periods by the
Corporations and shall be delivered to WCI together with all necessary
supporting schedules within the earlier of 120 days following the Closing Date
or 60 days before the date such returns are due for its approval (but such
approval shall not relieve the Shareholder of his responsibility for the taxes
assessed under these returns). The Shareholder 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
29
31
Date in excess of the amount of any reserve for taxes included in Effective Date
Current Liabilities and shall be responsible for all taxes incurred on the Net
Profits. At the time of the delivery of the returns, the Shareholder 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
Shareholder shall be entitled to receive all refunds shown on said returns or
attributable to prior periods and any such refunds received by the Corporations
or WCI shall be remitted to the Shareholder at the Shareholder's request. WCI
shall cause the Corporation, CRC and/or FBLP to file amended returns and refund
requests for periods prior to the Closing Date as reasonably requested by the
Shareholder.
9.8 GENERAL RELEASE BY THE SHAREHOLDER. Effective as of the
Closing Date, the Shareholder hereby fully releases and discharges each of the
Corporations, CRC and FBLP and their directors, officers, partners, agents and
employees from all rights, claims and actions, known or unknown, of any kind
whatsoever, which the Shareholder now has or may hereafter have against the
Corporations, CRC and FBLP and their directors, officers, partners, agents and
employees, arising out of or relating to events arising prior to or on the
Closing Date, except (a) as may be described in written contracts disclosed in
Schedule 9.8 and expressly described and specifically excepted from this release
in Schedule 9.8, (b) compensation as an employee of the Corporations for current
periods expressly described and excepted from such release on Schedule 9.8, (c)
for the obligations of the Corporations arising after the Closing Date under
this Agreement and (d) any right of indemnification, contribution or other
recourse against the Corporations, CRC and FBLP which he now has or may
hereafter have against the Corporations, CRC and FBLP provided that the
Shareholder shall not be entitled to indemnification, contribution or other
recovery with respect to any Claim (as hereinafter defined) based on breach of
the representations, warranties or covenants made in this Agreement, but only to
the extent the Shareholder is liable to any WCI Indemnitee with respect to such
breach (or would be so liable but for any of the limitations set forth in
Section 10.2). Notwithstanding the foregoing, this release shall not be deemed a
release of any rights that the Shareholder may have against any insurance
carrier of the Corporations, CRC or FBLP.
9.9 CERTAIN TAX MATTERS. The Shareholder acknowledges that WCI
may make an election under Section 338(h)(10) of the Code with respect to one or
both of the Corporations, and that after the Closing Date the Corporations may
cause either CRC or FBLP to make an election under Section 754 of the Code. The
Shareholder agrees that WCI, in its discretion, may make such elections;
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;
(b) The Shareholder shall sign such completed Form 8023
at WCI's request;
(c) WCI and the Shareholder shall agree upon the
allocation of the Purchase Price among the assets (including intangible assets)
of the Corporation; and
30
32
(d) WCI shall indemnify the Shareholder with respect to
all federal, state, county and local taxes required to be paid by him in
connection with such election by increasing the Purchase Price by the amount of
such taxes plus any amount necessary to pay taxes on the increased amount so
that after such payment the effects of such election by WCI will be effectively
"tax neutral" to the Shareholder.
9.10 AGREEMENT TO COOPERATE.
(a) Subject to the terms and conditions herein provided
and subject to the fiduciary duties of the respective boards of directors of the
Corporations and WCI, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using its reasonable efforts to obtain all necessary
or appropriate waivers, consents or approvals of third parties required in order
to preserve material contractual relationships of WCI, the Corporations, CRC and
FBLP, all necessary or appropriate waivers, consents and approvals to effect all
necessary registrations, filings and submissions and to lift any injunctive or
other legal bar to this transaction (and, in such case, to proceed with the
transaction as expeditiously as possible).
(b) Without limitation of the foregoing, if required by
applicable law, each of WCI and the Corporations undertakes and agrees to file
as soon as practicable, and in any event prior to 15 days after the Signing
Date, a Notification and Report Form under the HSR Act with the Federal Trade
Commission ("FTC") and the Antitrust Division of the Department of Justice (the
"ANTITRUST DIVISION"). Each of WCI and the Corporations shall (i) respond as
promptly as practicable to any inquiries received from the FTC or the Antitrust
Division for additional information or documentation and to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with antitrust matters and (ii) not extend any waiting
period under the HSR Act or enter into any agreement with the FTC or the
Antitrust Division not to consummate the transactions contemplated by this
Agreement, except with the prior consent of the other parties hereto. Each party
shall promptly notify the other party of any communication to that party from
the FTC, the Antitrust Division, any State Attorney General or any other
governmental entity and permit the other party to review in advance any proposed
communication to any of the foregoing.
(c) In the event any litigation is commenced by any
person or entity relating to the transactions contemplated by this Agreement,
WCI shall have the right, at its own expense, to participate therein, and the
Corporations will not settle any such litigation without the consent of WCI,
which consent will not be unreasonably withheld.
9.11 NOTIFICATION OF CERTAIN MATTERS. Each of the Corporations,
WCI and the Shareholder agrees to give prompt notice to each other of, and to
use commercially reasonable efforts to remedy, (i) the occurrence or failure to
occur of any event which occurrence or failure to occur would be likely to cause
any of its representations or warranties in this Agreement to be untrue or
inaccurate in any material respect at the Closing Date and (ii) any material
failure on its or his part to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it or him hereunder; provided,
however, that the delivery of any notice pursuant to
31
33
this Section 9.11 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
9.12 EMPLOYEES. After the Closing Date, WCI shall cause CRC's
and FBLP's main office employees (all of whom are listed on Schedule 9.12(a)
(the "OFFICE EMPLOYEES")) and facility employees (all of whom are listed on
Schedule 9.12(b) (the "FACILITY EMPLOYEES")) to either continue to be employed
by CRC or FBLP in his or her current position or to be offered a similar
position with a WCI Affiliate located in Xxxxx County at his or her current
compensation for a period of two years after the Closing Date for each Office
Employee and one year after the Closing Date for each Facility Employee. In the
event an Office Employee or Facility Employee is terminated by WCI without cause
(as hereinafter defined), WCI will continue to pay such employee's compensation
and will reimburse his or her costs under COBRA for the remainder of the
applicable employment term (the second anniversary of the Closing Date in the
case of Office Employees and the first anniversary of the Closing Date in the
case of Facility Employees), provided that any Office Employee or Facility
Employee whose employment by CRC or FBLP is terminated without cause and who
declines an offer for a similar position at a WCI Affiliate located in Xxxxx
County shall not be entitled to such compensation and reimbursement of COBRA
benefits. "CAUSE" means insobriety on the job, conviction of a misdemeanor
involving moral turpitude or a felony, illegal business practices in connection
with WCI's or its Affiliate's business, misappropriation of WCI's or its
Affiliate's assets, excessive absence of the employee from his or her duties
during usual working hours for reasons other than vacation, disability or
sickness, any material breach by the employee of any material condition of
employment or failure of the employee to perform competently and efficiently his
or her duties, as determined by WCI in its reasonable discretion.
9.13 NONCOMPETITION AGREEMENT. WCI acknowledges the existence of
that certain Noncompetition Agreement dated as of December 31, 1997, by and
between CRC and USA Waste Services, Inc. and agrees to indemnify the Shareholder
and hold him harmless against any and all claims, liabilities, damages and
expenses suffered or incurred by him, directly or indirectly, in connection with
any breach by WCI or its Affiliate of such agreement occurring after the Closing
Date.
10. INDEMNIFICATION
10.1 INDEMNITY BY THE SHAREHOLDER. The Shareholder, subject to
the limitations set forth in Section 10.2, covenants and agrees that he will
indemnify and hold harmless WCI, the Corporations and their respective
directors, officers and agents and their respective successors and assigns
(collectively the "WCI INDEMNITEES"), from and after the date of this Agreement
and until the expiration of the applicable period described in Section 10.2(e),
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 10.3(a)), or asserted by a WCI Indemnitee in
litigation commenced against the Shareholder provided that in either case any
such Claims Notice shall be given or the litigation commenced prior to the
expiration of the applicable period
32
34
described in Section 10.2(e) (irrespective of the date of discovery), with
respect to each of the following contingencies (all, the "10.1 INDEMNITY
EVENTS"):
(a) Any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of the Shareholder or
the Corporations 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 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 in excess of the
amount of liability with respect thereto, if any, set forth on Part II of
Schedule 3.8 arising from the design, development, construction, installation or
operation of any "ENVIRONMENTAL SITE" (as hereinafter defined) during any period
on or prior to the Closing Date but only to the extent the Environmental Site
Loss resulted from a failure to comply with applicable laws, rules, regulations,
ordinances, building codes, permits, licenses, franchises, municipal service
contracts, judgments, orders, injunctions or decrees. 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 a
Corporation, CRC or FBLP 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 exemplary damages and 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 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 for 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 Environmental Site resulting from activities thereat on or prior to the
Closing Date, whether such Release is into the air, water (including
groundwater) or land and whether such Release arose before, during or after the
Closing Date. The term "ENVIRONMENTAL SITE Losses" shall not include any losses
or deficiencies relating to the inefficiency or lack of optimal use, design or
function of any Environmental Site. 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 Hazardous Substances
contained in waste lawfully disposed of in a landfill during the time a
Corporation, CRC or FBLP owned and/or operated such landfill does not constitute
an Environmental Site Loss.
33
35
(c) All matters on Schedule 3.8, Part II, or required to
be described on Schedule 3.8, Part II, of which the Corporations or the
Shareholder has 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.
10.2 LIMITATIONS ON THE SHAREHOLDER'S INDEMNITIES.
(a) The obligations of the Shareholder to indemnify the
WCI Indemnitees as provided in Section 10.1 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 exceed two hundred fifty thousand dollars
($250,000) (the "GENERAL DEDUCTIBLE AMOUNT"); provided, that the amount of any
obligation of indemnity arising pursuant to Section 10.1(a) with respect to any
representation, warranty or covenant contained in Sections 3.1 through 3.5;
3.12(c), 3.18, 3.22, 9.7 and 9.10 hereof and pursuant to Section 10.1(c) shall
not be subject to the General Deductible Amount.
(b) The maximum amount which WCI can recover as a result
of one or more 10.1 Indemnity Events pursuant to the provisions hereof for
Claims shall not exceed:
(i) Sixty percent (60%) of the Purchase Price
(as adjusted pursuant to Section 1.2) if the Claims Notice for the 10.1
Indemnity Event is delivered to the Shareholder during the time period from the
Closing Date to and including the first anniversary of the Closing Date;
(ii) Forty-five percent (45%) of the Purchase
Price (as adjusted pursuant to Section 1.2) if the Claims Notice for the 10.1
Indemnity Event is delivered to the Shareholder during the time period from the
first anniversary of the Closing Date to and including the second anniversary of
the Closing Date; and
(iii) Thirty percent (30%) of the Purchase Price
(as adjusted pursuant to Section 1.2) if the Claims Notice for the 10.1
Indemnity Event is delivered to the Shareholder during the time period from the
second anniversary of the Closing Date to and including the third anniversary of
the Closing Date.
(c) Except to the extent the same shall directly result
in a material increase in insurance premiums on a prospective basis, the
Shareholder shall not be required to indemnify any WCI Indemnitee for any Claim
to the extent that such Claim has been reimbursed or is reimbursable through
insurance proceeds received or receivable by the WCI Indemnitee. Notwithstanding
the foregoing, the WCI Indemnitee shall not be obligated to pursue reimbursement
of any Claim through insurance proceeds but rather may be indemnified by the
Shareholder and may allow the Shareholder to pursue such insurance proceeds
directly, in which event the WCI Indemnitee shall reasonably cooperate with the
Shareholder in connection therewith. In the event the WCI Indemnitee obtains
insurance proceeds but the amount of such insurance does not cover the full
amount of the Claim, or in the event the Claim shall directly
34
36
result in an increase in insurance premiums on a prospective basis, the
Shareholder shall remain liable for the difference in the insurance proceeds 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. At the request of Shareholder, WCI will
maintain or obtain liability insurance to cover losses of the type described in
Section 10.1(b) to the extent available for the period set forth in Section
10.2(e). Shareholder shall promptly pay or reimburse WCI for the cost of such
insurance upon presentation of satisfactory evidence of the cost thereof.
(d) The indemnification provisions of this Section 10
shall be the exclusive remedy for any Claim for monetary damages arising under
this Agreement or from the transactions contemplated hereby or otherwise,
including claims under statute or common law, except for Fraud (as defined
below), 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 nonfulfillment by any party of any obligation or covenant in this
Agreement or any of the agreements contemplated hereby or entered into pursuant
hereto 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 in equity. For the purposes of
this Section 10, "FRAUD" shall mean criminal activity, fraud, fraudulent
inducement, intentional misrepresentation or concealment.
(e) The obligations of the Shareholder under Section
10.1 shall expire, unless a Claims Notice is given or litigation is commenced on
or prior to the third anniversary of the Closing Date or, with respect to Claims
based on Section 3.18, 90 days after the expiration of the applicable statute of
limitations.
10.3 NOTICE OF INDEMNITY CLAIM.
(a) In the event that any claim ("CLAIM") is hereafter
asserted against or arises with respect to any WCI Indemnitee as to which such
Indemnitee may be entitled to indemnification hereunder, the WCI Indemnitee
shall notify the Shareholder (the "INDEMNIFYING PARTY") in writing thereof (the
"CLAIMS NOTICE") within 60 days after (i) receipt of written notice of
commencement of any third party litigation against such WCI Indemnitee, (ii)
receipt by such WCI Indemnitee of written notice of any third party claim
pursuant to an invoice, notice of claim or assessment, against such WCI
Indemnitee, or (iii) such WCI 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 WCI Indemnitee.
(b) The Indemnifying Party may elect to defend any Claim
for money damages where the cumulative total of all Claims (including such
Claims) do not exceed the limit set forth in Section 10.2 at the time the Claim
is made, by the Indemnifying Party's own counsel; provided, however, the
Indemnifying Party may assume and undertake the defense of such a third party
Claim only upon written agreement by the Indemnifying Party that the
35
37
Indemnifying Party is obligated to fully indemnify the WCI Indemnitee with
respect to such action. The WCI Indemnitee may participate, at the WCI
Indemnitee's own expense, in the defense of any Claim assumed by the
Indemnifying Party. Without the written approval of the WCI Indemnitee, which
approval shall not be unreasonably withheld, the Indemnifying Party shall not
agree to any compromise of a Claim defended by the Indemnifying Party.
(c) If, within twenty (20) days of the Indemnifying
Party's receipt of a Claims Notice, the Indemnifying Party shall not have
provided the written agreement required by Section 10.3(b) and elected to defend
the Claim, the WCI 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. The
Indemnifying Party shall promptly, and in any event within ten (10) days after
demand therefor, reimburse the WCI Indemnitee for the costs of defending the
Claim, including attorneys' fees and expenses.
(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 10.3
shall not relieve the Indemnifying Party from the obligation to indemnify
hereunder but only to the extent that the Indemnifying Party establishes by
competent evidence that it has been prejudiced thereby.
(e) In the event both the WCI 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 WCI Indemnitee, or the Indemnifying
Party shall determine that such counsel has a conflict of interest in
representing both the WCI Indemnitee and the Indemnifying Party in the same
action or proceeding and the WCI Indemnitee and the Indemnifying Party do not
waive such conflict to the satisfaction of such counsel.
10.4 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 until the later
of the expiration of the period set forth in Section 10.2(e), or the final
resolution of all Claims for which a Claims Notice is given prior to the
expiration of the obligations of the Indemnifying Party under Section 10.2(e)
but only as to the representations and warranties relevant to such Claims.
10.5 NO EXHAUSTION OF REMEDIES; SUBROGATION; RIGHT OF SET OFF.
The Shareholder waives any right to require any WCI Indemnitee to (i) proceed
against the
36
38
Corporations; (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 the Shareholder 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 Indemnities may have
against the Shareholder or his successors. To the extent of any payment made by
Shareholder to any WCI Indemnitee on account of any Claim pursuant to this
Section 10, the Shareholder shall be subrogated to all of the rights of recovery
of such WCI Indemnitee, and such WCI Indemnitee shall, at the expense of the
Shareholder, execute all documents reasonably required and shall do all things
reasonably necessary to secure such rights and to enable the Shareholder
effectively to bring suit to enforce such rights.
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDER AND WCI
11.1 RESTRICTIVE COVENANTS. As to the Corporations, the
Shareholder and his Affiliates acknowledge that (i) WCI, as the purchaser of the
Corporations' Stock, is and will be engaged in the same business as CRC and FBLP
(the "BUSINESS"); (ii) the Shareholder and his Affiliates are intimately
familiar with the Business; (iii) the Business is currently conducted in the
States of Oregon and Washington and WCI intends to continue the Business in
Oregon and Washington and intends, by acquisition or otherwise, to expand the
Business into other geographic areas of Oregon and Washington where it is not
presently conducted; (iv) the Shareholder and his Affiliates 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 Shareholder and his
Affiliates 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 8 will not impair such ability. The Shareholder
covenants and agrees as set forth in (a), (b) and (c) below with respect to WCI,
CRC and FBLP:
(a) NON-COMPETE. For a period commencing on the Closing
Date and terminating ten (10) years thereafter (the "RESTRICTED PERIOD"),
neither the Shareholder nor any of his Affiliates shall, anywhere within the
State of Washington or Oregon, or in any county in Washington or Oregon where
CRC, FBLP or WCI or one of its subsidiaries owns or operates the Business or a
business similar to the Business (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, transportation, disposal, tire
processing and/or composting business, transfer facility, recycling facility,
materials recovery facility or solid waste landfill, except that the Shareholder
may engage in any such capacity in the operation of a tire processing business
using a method not used by CRC or FBLP if the Shareholder does not solicit any
tire processing customers of either CRC or FBLP in violation of clause (ii);
(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 or other assets to any
business engaged in the same business as CRC or FBLP; (iv) receive or purchase a
financial interest in, make a loan to, or make a gift in support
37
39
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 [x] the Shareholder may own, directly or
indirectly, solely as an investment, securities of any business traded on any
national securities exchange or NASDAQ, if the Shareholder is not a controlling
person of, or a member of a group which controls, such business and further
provided that the Shareholder does not, in the aggregate, directly or
indirectly, own 2% or more of any class of securities of such business; [y] to
the extent Tidewater is engaged in such activities on or after the Closing Date,
Shareholder shall not be deemed to be in breach of this Section 11.1(a) so long
as his ownership of equity securities of Tidewater does not exceed the amount
owned on the Closing Date and so long as Shareholder does not participate in
such activities on behalf of Tidewater; and [z] the Shareholder may engage in
any of the above activities as a direct or indirect majority shareholder of
Tidewater insofar as they relate to the transportation of solid waste by
Tidewater.
(b) CONFIDENTIAL INFORMATION. During the Restricted
Period and thereafter, the Shareholder and his Affiliates 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, know-how, 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 Shareholder or (ii) is general knowledge in the
solid waste handling and landfill business and not specifically related to the
Business. Notwithstanding the foregoing, Shareholder may disclose and discuss
confidential information with his legal and tax advisors, and as is required in
connection with any legal proceedings, and the Shareholder shall give WCI prior
written notice of such disclosure at least forty-eight (48) hours before such
disclosure is made, if possible.
(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 Shareholder, the
Corporations, CRC or FBLP, or made available to them relating to the Business,
but excluding any materials (other than the minute books of the Corporations)
maintained by any attorneys for the Corporations or the Shareholder prior to the
Closing, are and shall be the property of WCI and have been delivered or will be
delivered or made available to WCI at the Closing. Neither Shareholder nor
counsel to Shareholder or the Corporations shall have any obligation to furnish
materials excluded under the foregoing to WCI. All material that has been
delivered or will be delivered to WCI under the foregoing provisions will be
made available to the Shareholder upon reasonable request in connection with tax
or other legal compliance matters or in connection any dispute under this
Agreement.
(d) NON-SOLICITATION. Without the consent of WCI, which
may be granted or withheld by WCI in its discretion, the Shareholder and his
Affiliates shall not solicit any employees of the Corporations, CRC or FBLP to
leave the employ of the Corporations, CRC or FBLP and join the Shareholder or
any Affiliate in any business endeavor owned or pursued by the Shareholder.
38
40
(e) NO DISPARAGEMENT. From and after the Closing Date,
the Shareholder shall not, 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 are based on acts or omissions which are learned by
the Shareholder 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. Without limiting the generality of
the foregoing, the Shareholder shall not, directly or indirectly in any way in
respect of any such company or any such directors or officers, communicate with,
or take any action which is adverse to the position of any such company with any
person, entity or governmental or regulatory body or agency who or which has
dealings or prospective dealings with any such company or jurisdiction or
prospective jurisdiction over any such company. This paragraph does not apply to
the extent that testimony is required by legal process, provided that WCI has
received not less than five days' prior written notice of such proposed
testimony, nor does it apply to any statements made in connection with any
judicial proceeding, arbitration or mediation to which WCI or one of its
Affiliates and the Shareholder or one of his Affiliates (including Tidewater)
are parties seeking to resolve any dispute relating to the interpretation or
enforcement of this Agreement or the Transportation Agreement.
11.2 RIGHTS AND REMEDIES UPON BREACH. If the Shareholder or any
Affiliate 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 Shareholder
from any violation thereof.
(b) ACCOUNTING. The right and remedy to require the
Shareholder to account for and pay over to WCI all compensation, profits,
monies, accruals, increments or other benefits derived or received by the
Shareholder as the result of any transactions constituting a breach of the
Restrictive Covenants.
(c) SEVERABILITY OF COVENANTS. The Shareholder
acknowledges and agrees 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 the Restrictive Covenants shall not
thereby be affected and shall be given full effect, without regard to the
invalid portions.
39
41
(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
Shareholder 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 Shareholder 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
Shareholder 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 Shareholder may reasonably request for the purpose of carrying out this
Agreement. The Shareholder will cooperate with WCI and/or the Corporations 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.
12.2 ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, the successors or assigns of WCI and
the heirs, legal representatives or assigns of the Shareholder; provided,
however, that any such assignment shall be subject to the terms of this
Agreement and shall not relieve the assignor of its or his responsibilities
under this Agreement.
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. The Shareholder, the Corporations, CRC and FBLP
acknowledge that WCI will issue a press release following execution and delivery
of this Agreement. WCI will deliver a copy of the press release to the
Shareholder prior to its release. WCI agrees that prior to the Closing Date, it
will not file a post-effective amendment to its registration statement on Form
S-4 filed with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, to include the financial statements of the Corporations,
CRC or FBLP without Shareholder's consent.
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.
40
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 Shareholder: at his respective address set forth on
Schedule 3.2
With a copy to: Xxxxx X. Xxxxxxxxxx, Esq.
Stoel Rives LLP
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
If to WCI: Waste Connections, Inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx
Fax: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxx, Esq.
Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
12.6 ATTORNEYS' FEES. In the event of any dispute or controversy
between WCI on the one hand and the Corporations or the Shareholder 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 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington without regard
to its conflict of laws provisions.
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 Shareholder,
any such fees, expenses and disbursements paid or accrued by, or charged to, the
Corporations), provided that WCI shall pay all filing fees under the HSR Act.
41
43
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; CORPORATIONS. 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 Corporations, the
Shareholder 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 Corporations, the
Shareholder 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 Washington 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. Wherever reference is made in this Agreement to the "KNOWLEDGE" of the
Shareholder, such term means the actual knowledge of the Shareholder or any
knowledge which should have been obtained by the Shareholder upon reasonable
inquiry by a reasonable business person. 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
Corporations, such term means the actual knowledge of any management employee,
officer or director of the Corporations or any knowledge which should have been
obtained by any such person upon reasonable inquiry by a reasonable business
person.
12.15 DISCLOSURE SCHEDULES. The language in all parts of this
Agreement must be 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 cross reference so long as the
42
44
nature of the matter disclosed is obvious from a fair reading of the Schedule on
which the matter is disclosed.
13. GLOSSARY
The definitions of the terms used below can be found at the Section
indicated:
Term Section
---- -------
Acquisition Transaction Section 5.6
Affiliate Section 3.11
Antitrust Division Section 9.10(b)
at will Section 8.2(d)
Balance Sheet Date Section 3.7
Bond Debt Section 1.2
business day Section 12.14
Business Section 11.1
Cause Section 9.12
Claim Section 10.3(a)
Claims Notice Section 10.3(a)
Closing Section 2.1
Closing Date Section 2.1
Closing Date Debt Section 3.22(a)
Code Section 3.17(a)
Collection Franchises Section 3.10(a)
Confidential Information Section 11.1(b)
Corporations Parties
Corporations' Stock Recitals
CRC Parties
day Section 12.14
Effective Date Section 2.1
Effective Date Current Assets Section 3.22(b)
Effective Date Current Liabilities Section 3.22(b)
Environmental Site Section 10.1(b)
Environmental Site Losses Section 10.1
Environmental Laws Section 3.24
ERISA Section 3.17(a)
Excluded Assets Section 1.4
Facility Section 3.10(c)
Facilities Section 3.10(c)
Facility Employees Section 9.12
Facility Property Section 3.12(b)
FBLP Recitals
Financial Statements Section 3.7
Fraud Section 10.2(d)
FTC Section 9.10(b)
General Deductible Amount Section 10.2(a)
golden parachute Section 3.17(a)
43
45
Golden Parachute Payment Section 3.17(c)
Governmental Permits Section 3.10(a)
Hazardous Material Section 3.24(e)
Hazardous Waste Section 3.24(e)
HSR Act Section 3.10(a)
Indemnifying Party Section 10.3(a)
Indemnity Events Section 10.1
knowledge Section 12.14
Landfill Recitals
Laws Section 3.24
MENI Recitals
multi-employer plan Section 3.17(a)
Necessary Consents Section 5.3
Net Loss Section 1.2
Net Profit Section 1.2
occurrence Section 3.15
Office Employees Section 9.12
Permitted Liens Section 3.12(c)
Purchase Price Section 1.1
RCRA Section 3.24(e)
Real Property Recitals
Recipient Section 3.17(c)
Records, Notifications and Reports Section 3.10(b)
Release Section 10.1(b)
Representations and Warranties Section 10.4
Required Governmental Consents Section 3.10(a)
Restricted Area Section 11.1(a)
Restricted Period Section 11.1(a)
Restrictive Covenants Section 11.2
RHFC Recitals
Shareholder Recitals
Signing Date Recitals
Termination Date Section 2.2(a)
Tidewater Section 8.2(g)
Transportation Agreement Section 8.2(g)
UST Section 3.26
WCI Parties
WCI Indemnitees Section 10.1
44
46
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons thereunto duly authorized as of the date first above written.
WCI: WASTE CONNECTIONS, INC.
By:
-------------------------------------
Xxxxxx X. Xxxxxxxxxxxx
Chief Executive Officer & President
THE CORPORATIONS: (See Schedule A)
THE SHAREHOLDER: (See Schedule A)
45
47
SCHEDULE A TO AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
Each of the undersigned (i) Management Environmental National, Inc.,
(ii) RH Financial Corporation, and (iii) the Shareholder of Management
Environmental National, Inc. and RH Financial Corporation hereby agrees that it
or he is a party to the Amended and Restated Stock Purchase Agreement dated as
of March 31, 1999, among Waste Connections, Inc., Management Environmental
National, Inc., RH Financial Corporation and the Shareholder and further agrees
that it or he is bound by all of the terms and provisions thereof as though it
or he had executed the signature page thereof, it being understood that each of
the undersigned has executed this Schedule A in lieu of the signature page at
the Shareholder's request as a matter of convenience and confidentiality. Each
of the undersigned has executed this Schedule A as of the date of the Stock
Purchase Agreement.
THE CORPORATIONS: MANAGEMENT ENVIRONMENTAL
NATIONAL, INC.
By:
-------------------------------------
Xxxxxx X. Xxxxxx, President
RH FINANCIAL CORPORATION
By:
-------------------------------------
Xxxxxx X. Xxxxxx, President
THE SHAREHOLDER:
----------------------------------------
Xxxxxx X. Xxxxxx
48
TABLE OF CONTENTS
PAGE
----
1. PURCHASE OF CORPORATIONS' STOCK.....................................................1
1.1 Shares to be Purchased.......................................................1
1.2 Purchase Price...............................................................2
1.3 Allocation of the Purchase Price.............................................2
1.4 Excluded Assets..............................................................2
2. CLOSING TIME AND PLACE..............................................................3
2.2 Termination..................................................................3
2.3 Notice and Effect of Termination.............................................4
2.4 Exclusive Negotiations.......................................................4
3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATIONS AND THE SHAREHOLDER..............4
3.1 Organization, Standing and Qualification.....................................4
3.2 Capitalization...............................................................5
3.3 All Stock Being Acquired.....................................................5
3.4 Authority for Agreement......................................................5
3.5 No Breach or Default.........................................................5
3.6 Subsidiaries.................................................................6
3.7 Financial Statements.........................................................6
3.8 Liabilities..................................................................6
3.9 Accurate and Complete Records................................................7
3.10 Permits and Licenses.........................................................8
3.11 Certain Receivables..........................................................9
3.12 Fixed Assets and Real Property..............................................10
3.13 Related Party Transactions..................................................11
3.14 Contracts and Agreements; Adverse Restrictions..............................11
3.15 Insurance...................................................................11
3.16 Personnel...................................................................12
3.17 Benefit Plans and Union Contracts...........................................12
3.18 Taxes.......................................................................13
3.19 Copies Complete; Required Consents..........................................14
3.20 Customers, Xxxxxxxx, Current Receipts and Receivables.......................14
-i-
49
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
3.21 No Change With Respect to the Corporations..................................15
3.22 Closing Date Debt; Effective Date Current Assets and Effective Date
Current Liabilities.........................................................16
3.23 Bank Accounts...............................................................17
3.24 Compliance With Laws........................................................17
3.25 Powers of Attorney..........................................................18
3.26 Underground Storage Tanks...................................................19
3.27 Patents, Trademarks, Trade Names, etc.......................................19
3.28 Assets, etc., Necessary to Business.........................................20
3.29 Condemnation................................................................20
3.30 Suppliers and Customers.....................................................20
3.31 Absence of Certain Business Practices.......................................20
3.32 No Misleading Statements....................................................20
3.33 Brokers; Finders............................................................21
3.34 S Corporation Matters.......................................................21
4. REPRESENTATIONS AND WARRANTIES OF WCI..............................................21
4.1 Existence and Good Standing.................................................21
4.2 No Contractual Restrictions.................................................21
4.3 Authorization of Agreement..................................................21
4.4 Governmental Authorities; Consents..........................................21
4.5 No Misleading Statements....................................................22
4.6 Brokers; Finders............................................................22
5. COVENANTS FROM SIGNING TO CLOSING DATE.............................................22
5.1 Operations..................................................................22
5.2 No Change...................................................................23
5.3 Obtain Consents.............................................................24
5.4 Access; Confidential Information............................................24
5.5 Control of the Corporations' Operations.....................................24
5.6 Acquisition Transactions....................................................25
6. CONDITIONS PRECEDENT TO OBLIGATION OF WCI TO CLOSE.................................25
6.1 Representations and Warranties..............................................25
-ii-
50
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
6.2 Conditions..................................................................25
6.3 No Material Adverse Change..................................................25
6.4 Certificates................................................................25
6.5 No Litigation...............................................................26
6.6 Other Deliveries............................................................26
6.7 Necessary Consents..........................................................26
6.8 HSR Waiting Period..........................................................26
6.9 Title Insurance.............................................................26
7. CONDITIONS PRECEDENT TO OBLIGATION OF THE SHAREHOLDER AND THE CORPORATION TO
CLOSE..............................................................................26
7.1 Representations and Warranties..............................................26
7.2 Conditions..................................................................26
7.3 Certificate.................................................................26
7.4 No Litigation...............................................................27
7.5 Other Deliveries............................................................27
7.6 Necessary Consents..........................................................27
7.7 HSR Waiting Period..........................................................27
8. CLOSING DELIVERIES.................................................................27
8.1 WCI Deliveries..............................................................27
8.2 Shareholder Deliveries......................................................27
9. ADDITIONAL COVENANTS OF WCI, THE CORPORATION AND THE SHAREHOLDER...................28
9.1 No Delay....................................................................28
9.2 Release of Guaranties.......................................................28
9.3 Release of Security Interests...............................................29
9.4 Confidentiality.............................................................29
9.5 Brokers and Finders Fees....................................................29
9.6 Taxes.......................................................................29
9.7 Short Year Tax Returns......................................................29
9.8 General Release by the Shareholder..........................................30
9.9 Certain Tax Matters.........................................................30
-iii-
51
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
9.10 Agreement to Cooperate......................................................31
9.11 Notification of Certain Matters.............................................31
9.12 Employees...................................................................32
9.13 NonCompetition Agreement....................................................32
10. INDEMNIFICATION....................................................................32
10.1 Indemnity by the Shareholder................................................32
10.2 Limitations on the Shareholder's Indemnities................................34
10.3 Notice of Indemnity Claim...................................................35
10.4 Liability for Breaches of Representations and Warranties....................36
10.5 No Exhaustion of Remedies; Subrogation; Right of Set Off....................36
11. OTHER POST-CLOSING COVENANTS OF THE SHAREHOLDER AND WCI............................37
11.1 Restrictive Covenants.......................................................37
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 Attorneys' Fees.............................................................41
12.7 Applicable Law..............................................................41
12.8 Payment of Fees and Expenses................................................41
12.9 Incorporation by Reference..................................................42
12.10 Captions....................................................................42
12.11 Number and Gender of Words; Corporations....................................42
12.12 Entire Agreement............................................................42
12.13 Waiver......................................................................42
12.14 Construction................................................................42
12.15 Disclosure Schedules........................................................42
13. GLOSSARY...........................................................................43
-iv-
