1
EXHIBIT F
STOCK PURCHASE AND NOTE MODIFICATION AGREEMENT
BETWEEN
3CI COMPLETE COMPLIANCE CORPORATION
AND
WASTE SYSTEMS, INC.
DATED AS OF FEBRUARY 19, 1998
2
CONTENTS
PAGE
----
ARTICLE 1
THE CONSIDERATION
1.1. Purchase and Sale................................................... 2
1.2. Modification of 1995 Note........................................... 2
1.3. Reinstatement of 1995 Note Principal Amount......................... 2
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
2.1. Representations and Warranties of the Company....................... 2
2.1.1. Organization and Standing................................... 3
2.1.2. Agreement Authorized and its Effect on Other Obligations.... 3
2.1.3. Validity of Stock........................................... 3
2.1.4. Capitalization.............................................. 3
2.1.5. Reports and Financial Statements............................ 4
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF WSI
3.1. Representations and Warranties of WSI............................... 4
3.1.1. Organization and Standing................................... 4
3.1.2. Agreement Authorized and its Effect on Other Obligations.... 4
3.1.3. Ownership of 1995 Note...................................... 5
3.1.4. Investment Intent........................................... 5
3.1.5. Investor Sophistication..................................... 5
ARTICLE 4
ADDITIONAL AGREEMENTS OF THE COMPANY
4.1. Further Assurances.................................................. 6
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of WSI.......................... 6
5.1.1. Representations and Warranties of the Company True Through
Issuance Date............................................... 6
5.1.2. No Material Litigation...................................... 6
5.1.3. Opinion of Counsel.......................................... 6
5.2. Conditions Precedent to Obligations of the Company.................. 7
5.2.1. Representations and Warranties of WSI True Through Issuance
Date........................................................ 7
5.2.2. No Material Litigation...................................... 7
5.2.3. Opinion of Counsel.......................................... 7
-i-
3
PAGE
----
ARTICLE 6
MISCELLANEOUS
6.1. Entirety............................................................ 8
6.2. Counterparts........................................................ 8
6.3. Notices and Waivers................................................. 8
6.4. Termination of Representations, Warranties, etc..................... 8
6.5. Table of Contents and Captions...................................... 9
6.6. Successors and Assigns.............................................. 9
6.7. Severability........................................................ 9
6.8. Applicable Law...................................................... 9
-ii-
4
STOCK PURCHASE AND NOTE MODIFICATION AGREEMENT
STOCK PURCHASE AND NOTE MODIFICATION AGREEMENT (this "Agreement"), dated as
of February 19, 1998, among 3CI Complete Compliance Corporation, a Delaware
corporation (the "Company") and Waste Systems, Inc., a Delaware Corporation
("WSI").
WITNESSETH:
WHEREAS, the Company and certain of its affiliates are the Makers of (i) a
promissory note dated September 30, 1995, in the original principal amount of
$8,000,000 (the "1995 Note"), and a promissory note dated December 20, 1996, in
the original principal amount of $2,700,000 (the "1996 Note"), in each case,
payable to the order of WSI;
WHEREAS, all interest due under the Notes has, in accordance with the terms
of the Notes, been converted to principal;
WHEREAS, the Company is authorized to issue up to 1,000,000 shares of its
preferred stock, without par value;
WHEREAS, the Company issued to WSI 1,000,000 shares of its Series A
Preferred Stock in exchange for the cancellation of the 1996 Note and a
reduction in the principal amount of the 1995 Note in an amount equal to
$7,000,000 minus the principal amount of the 1996 Note as of January 1, 1997;
WHEREAS, the Company has issued all authorized shares of preferred stock
and the Company desires to be able to designate additional series of, and to
issue additional shares of, preferred stock;
WHEREAS, the Company has received all stockholder and board of director
approvals necessary to amend the Company's Certificate of Incorporation to
increase the authorized Preferred Stock to 16,050,000 shares and Common Stock to
40,450,000 (the "Amendment"), but is unable to file such Amendment until at
least twenty days after it has distributed an Information Statement listing the
requirements of the Securities Exchange Act of 1934 to its stockholders;
WHEREAS, such Information Statement is currently expected to be distributed
to the Company's stockholders on or about February 24, 1998, and the Amendment
is expected to be filed on or about the twentieth day following the actual date
of distribution;
WHEREAS, the Company desires to sell to WSI, and WSI desires to purchase
from the Company 750,000 shares of Series C Preferred Stock (the "Series C
Preferred Stock") in the form of the Certificate of Designation of Series C
Preferred Stock attached hereto as Exhibit A on the terms and conditions herein
set forth;
WHEREAS, WSI intends to modify the 1995 Note to reflect a reduction in its
principal amount equal to the $750,000 purchase price of the Series C Preferred
Stock;
WHEREAS, the Company intends to file the Certificate of Designation of
Series C Preferred Stock within seven days after the filing of the Amendment;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and to prescribe the terms and
conditions of the transactions contemplated hereby, the parties hereto hereby
agree as follows:
ARTICLE 1
THE CONSIDERATION
1.1. Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, the Company agrees to sell to WSI, and WSI agrees to
purchase and accept from the Company, 750,000 shares of the Company's Series C
Preferred Stock. The purchase price for such shares, due at the date of this
Agreement, shall be $750,000 payable by WSI by reduction of the principal amount
of the 1995 Note by
5
$750,000. The Company agrees to file the Certificate of Designation of Series C
Preferred Stock within seven days following the filing of the Amendment and to
issue to WSI certificates representing 750,000 shares of the Company's Series C
Preferred Stock as soon as practicable after the filing of the Certificate of
Designation of Series C Preferred Stock (the "Issuance Date").
1.2. Modification of 1995 Note. As consideration for the purchase and sale
in Section 1.1, on the date of this Agreement, WSI agrees to modify the 1995
Note by reducing its principal amount by $750,000 effective as of the date of
this Agreement.
1.3. Reinstatement of 1995 Note Principal Amount. If the 750,000 shares of
the Company's Series C Preferred Stock described in Section 1.1 are not issued
to WSI within ninety days of the date of this Agreement, the $750,000 principal
amount of the 1995 Note shall automatically be reinstated and this Agreement
shall be null and void.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
2.1. Representations and Warranties of the Company. The Company hereby
represents and warrants as follows:
2.1.1. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
state of Delaware, has full requisite corporate power and authority to
carry on its business as it is currently conducted, and to own and operate
the properties currently owned and operated by it, and is duly qualified or
licensed to do business and is in good standing as a foreign corporation
authorized to do business in all jurisdictions in which the character of
the properties owned or the nature of the business conducted by it would
make such qualification or licensing necessary, except where the failure to
be so qualified or licensed would not have a material adverse effect on its
financial condition, properties or business.
2.1.2. Agreement Authorized and its Effect on Other Obligations. The
execution and delivery of this Agreement has been authorized by the board
of directors of the Company, the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Company, and this Agreement is a valid
and binding obligation of the Company, enforceable against the Company
(subject to normal equitable principles) in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, debtor relief or similar laws affecting the rights of
creditors generally. The consummation of the transactions contemplated by
this Agreement will not conflict with or result in a violation or breach of
any term or provision of, nor constitute a default under (i) the
Certificate of Incorporation or Bylaws of the Company or (ii) any
obligation, indenture, mortgage, deed of trust, lease, contract or other
agreement to which the Company or any of its subsidiaries is a party or by
which any of them or their properties are bound.
2.1.3. Validity of Stock. On the Issuance Date, the Series C Preferred
Stock to be issued to WSI hereunder will be in due and proper form, will be
duly authorized by all necessary corporate action on the part of the
Company, and will be validly issued, fully paid and non-assessable shares
of Series C Preferred Stock, free of preemptive rights. Upon delivery of
the shares of Series C Preferred Stock, WSI will acquire valid and
marketable title to such shares of Series C Preferred Stock, free and clear
of any encumbrances. The Common Stock issuable upon conversion of the
Series C Preferred Stock has been duly authorized by all the necessary
corporate acts on the part of the Company and when issued will be validly
issued, fully paid and nonassessable shares of Common Stock of the Company
free of preemptive rights. Upon delivery of the shares of Common Stock upon
conversion of the Series C Preferred Stock, WSI will acquire valid
marketable title to such Common Stock free and clear of any encumbrances.
2.1.4. Capitalization. As of the Effective Date, the authorized
capitalization of the Company will consist of 15,000,000 shares of Common
Stock and 1,000,000 shares of preferred stock, without par value.
2
6
As of the Issuance Date, the authorized capitalization of the Company will
consist of 40,450,000 shares of Common Stock and 16,050,000 shares of
preferred stock, without par value.
2.1.5. Reports and Financial Statements. The Company has furnished to
WSI true and complete copies of its annual report (the "10-K") filed with
the Commission pursuant to the Exchange Act for the fiscal year ended
September 30, 1997, and (ii) the Company's quarterly report (the "10-Q")
filed with the Commission for the fiscal quarter ended December 31, 1997
(the 10-K and 10-Q collectively, the "Disclosure Documents"). The
consolidated financial statements of the Company and its consolidated
subsidiaries included in the Disclosure Documents were prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved and fairly present the
consolidated financial position for the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and changes in financial position of the periods then ended, and
the 10-K and 10-Q did not contain any untrue statement of a material fact
or fail to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading. Since September 30, 1997, the Company has
filed with the Commission all material reports, registration statements and
other material filings required to be filed with the Commission under the
rules and regulations of the Commission.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF WSI
3.1. Representations and Warranties of WSI. WSI represents and warrants as
follows:
3.1.1. Organization and Standing. WSI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, has full requisite corporate power and authority to carry on its
business as it is currently conducted, to own and operate the properties
currently owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the properties
owned or the nature of the business conducted by it would make such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not have a material adverse effect on its
financial condition, properties or business.
3.1.2. Agreement Authorized and its Effect on Other Obligations. The
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of WSI,
and this Agreement is a valid and binding obligation of WSI enforceable
(subject to normal equitable principles) in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, debtor relief or similar laws affecting the rights of
creditors generally. The consummation of the transactions contemplated by
this Agreement will not conflict with or result in a violation or breach of
any term or provision of, or constitute a default under (i) the Certificate
of Incorporation or Bylaws of WSI or (ii) any obligation, indenture,
mortgage, deed of trust, lease, contract or other agreement to which WSI or
any of its subsidiaries is a party or by which any of them or their
properties are bound.
3.1.3. Ownership of 1995 Note. WSI owns the 1995 Note free and clear
of any encumbrances or rights of any third parties and has the full right
and authority to cancel the indebtedness represented thereby as
contemplated by this Agreement. Upon consummation of the transactions
contemplated hereby, the portion of the debt evidenced by the 1995 Note
repaid upon issuance of the Series C Preferred Stock shall no longer be
outstanding.
3.1.4. Investment Intent. WSI is acquiring the shares of Series C
Preferred Stock solely for its own account and not with a view to the
public distribution thereof. WSI acknowledges that the shares of Series C
Preferred Stock being issued hereunder will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), and agrees that
it will only re-offer or resell the shares of Series C Preferred Stock in
compliance with the requirements of Rule 144 promulgated under the
Securities Act,
3
7
in accordance with any other available exemption from the registration
requirements of the Securities Act, or pursuant to a valid registration
statement under the Securities Act. WSI acknowledges that upon acquisition
of the shares of Series C Preferred Stock (other than in connection with a
registered offering thereof), and until such time, if any, as WSI has
received an opinion of counsel to WSI, in form and substance satisfactory
to the Company, that it is no longer necessary or advisable, the
certificate(s) representing such Series C Preferred Stock shall bear a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH
ANY OTHER APPLICABLE SECURITIES LAWS."
3.1.5. Investor Sophistication. WSI acknowledges and understands that
it must bear the economic risk of this investment for an indefinite period
of time. WSI has experience in analyzing and investing in entities like the
Company, can bear the economic risk of its investment, including the full
loss of its investment, and by reason of its business or financial
experience, has the capacity to evaluate the merits and risks of its
investment and to protect its own interests in connection with the purchase
of Series C Preferred Stock from the Company.
ARTICLE 4
ADDITIONAL AGREEMENTS OF THE COMPANY
4.1. Further Assurances. The Company hereby covenants and agrees to take
all actions within its power after the date hereof to effect the transactions
contemplated by this Agreement, including but not limited to the filing with the
Delaware Secretary of State of the Amendment and the certificate of designation
relating to the Series C Preferred Stock.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of WSI. The obligation of WSI to
consummate and effect the transactions contemplated hereby shall be subject to
the satisfaction of the following conditions or to the waiver thereof by WSI:
5.1.1. Representations and Warranties of the Company True Through
Issuance Date. The representations and warranties of the Company herein
contained shall be, in all material respects, true as of the date of this
Agreement and through and including the Issuance Date with the same effect
as though made at such date, except as affected by transactions permitted
or contemplated by this Agreement, and the Company shall have performed and
complied, in all material respects, with all covenants required by this
Agreement to be performed or complied with by the Company before the
Issuance Date.
5.1.2. No Material Litigation. No suit, action or other proceeding
shall be pending or threatened before any court or governmental agency in
which it will be, or it is, sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
5.1.3. Opinion of Counsel. WSI shall have received a favorable
opinion, dated as of the date of this Agreement, from Xxxxxx & Xxxxxx,
L.L.P., counsel for the Company, in form and substance satisfactory to WSI,
to the effect that (i) the Company has been duly incorporated and is
validly existing as a
4
8
corporation in good standing under the laws of the State of Delaware; (ii)
all proceedings required to be taken by or on the part of the Company to
authorize the execution of this Agreement and the implementation of the
transactions contemplated hereby have been taken; (iii) this Agreement has
been duly executed and delivered by, and is the legal, valid and binding
obligation of the Company and is enforceable against the Company in
accordance with its terms, except as enforceability may be limited by (a)
equitable principles of general applicability or (b) bankruptcy,
insolvency, reorganization, fraudulent conveyance or similar laws affecting
the rights of creditors generally; and (iv) the Series C Preferred Stock,
when issued, will have been duly authorized by all necessary corporate
action on the part of the Company, and will be validly issued, fully paid
and nonassessable shares of Series C Preferred Stock, free of preemptive
rights. Such opinion also shall cover such other matters incident to the
transactions herein contemplated as WSI may reasonably request.
5.2. Conditions Precedent to Obligations of the Company. The obligations of
the Company to consummate the transactions contemplated hereby shall be subject
to the satisfaction of the following conditions or to the waiver thereof by the
Company.
5.2.1. Representations and Warranties of WSI True Through Issuance
Date. The representations and warranties of WSI herein contained shall be,
in all material respects, true as of the date of this Agreement and through
and including the Issuance Date with the same effect as though made at such
date, except as affected by transactions permitted or contemplated by this
Agreement, and WSI shall have performed and complied, in all material
respects, with all covenants required by this Agreement to be performed or
complied with by WSI before the Issuance Date.
5.2.2. No Material Litigation. No suit, action or other proceeding
shall be pending or threatened before any court or governmental agency in
which it will be, or it is, sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
5.2.3. Opinion of Counsel. The Company shall have received a favorable
opinion, dated the date of this Agreement, from Blanchard, Walker, X'Xxxxx
& Xxxxxxx, counsel to WSI, in form and substance satisfactory to the
Company, to the effect that (i) WSI has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of Delaware; (ii) all corporate or other proceedings required to be
taken by or on the part of WSI to authorize the execution of this Agreement
and the implementation of the transactions contemplated hereby have been
taken; (iii) this Agreement has been duly executed and delivered by, and is
the legal, valid and binding obligation of WSI, and is enforceable against
WSI in accordance with its terms, except as enforceability may be limited
by (a) equitable principles of general applicability or (b) bankruptcy,
insolvency, reorganization, fraudulent conveyance or similar laws affecting
the rights of creditors generally. Such opinion shall also cover such other
matters incident to the transactions herein contemplated as the Company and
its counsel may reasonably request.
ARTICLE 6
MISCELLANEOUS
6.1. Entirety. This Agreement embodies the entire agreement among the
parties with respect to the subject matter hereof, and all prior agreements
between the parties with respect thereto are hereby superseded in their
entirety.
6.2. Counterparts. Any number of counterparts of this Agreement may be
executed and each such counterpart shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one instrument.
5
9
6.3. Notices and Waivers. Any notice or waiver to be given to any party
hereto shall be in writing and shall be delivered by courier, sent by facsimile
transmission or first class registered or certified mail, postage prepaid,
return receipt requested as follows:
IF TO THE COMPANY
Addressed to: With a copy to:
3CI Complete Compliance Corporation Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxxx, Xxxxx 000 700 Louisiana, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Crochet Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
IF TO WSI
Waste Systems, Inc. Blanchard, Walker, X'Xxxxx & Xxxxxxx
000 Xxxxxxxxxx, Xxxxx 000 Bank Xxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000 P.O. Drawer 1126
Attn: Xx. Xxxxxxx Pues Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal business hours
on any business day.
6.4. Termination of Representations, Warranties, etc. The respective
representations and warranties of the Company and WSI contained herein shall
expire on the Issuance Date.
6.5. Table of Contents and Captions. The table of contents and captions
contained in this Agreement are solely for convenient reference and shall not be
deemed to affect the meaning or interpretation of any article, section, or
paragraph hereof.
6.6. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
6.7. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
6.8. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Louisiana.
6
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed in their respective corporate names by their respective duly authorized
representatives, all as of the day and year first above written.
3CI COMPLETE COMPLIANCE
CORPORATION
By:
----------------------------------
Xxxxxxx X. Crochet, President
WASTE SYSTEMS, INC.
By:
----------------------------------
Xx. Xxxxxxx Pues
7
